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Trade goes on with emerging products like biofuels

Bryan Wu
Bryan Wu11/24/2022 04:16 PM GMT+08  • 8 min read
Trade goes on with emerging products like biofuels
nterpriseSG is supporting local traders of biofuels like PS Energy which prefers to manufacture biodiesel from used cooking oil (UCO). Photo: Bloomberg
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As part of Singapore’s efforts to deepen and widen its trade flows, it is diversifying the types of products it trades in line with global macroeconomic trends, including oil price uncertainty and climate objectives.

Lee Pak Sing, Enterprise Singapore’s assistant chief executive, says Singapore has traded in products relevant at different points in history. “Not only have we increased the volume of trade, but we have also diversified into products of increasing importance,” says Lee, citing Singapore’s early trading days in spices, tin, then rubber, before it moved into precious metals, agricultural commodities and electronics.

“Today, newer products on the market are accounting for decarbonisation. Diversifying our trade flows into these products, such as carbon credits or electric vehicles (EV) metals like copper, nickel and cobalt, is one way to remain relevant to the global economy.”

EnterpriseSG is also supporting local traders that are expanding into new trading products. This increasingly significant range of products also includes biofuels, which Lee believes will see an increase in trading levels shortly. Says Lee: “Traditional fuel like liquefied petroleum gas (LPG) and liquefied natural gas (LNG) will continue to be traded and will still have its place but I believe biofuels will become a source of energy that people will increasingly rely on.”

As opposed to the natural formation of traditional fuel from fossilised remains over millions of years, biofuels can be synthesised from agricultural, domestic or industrial bio­waste in a much shorter period, with products such as biodiesel suitable for use with diesel-powered vehicles.

Consequently, biodiesel has a lower carbon footprint relative to petroleum diesel and can even reduce lifecycle greenhouse gases by up to 86%, according to new research published in the peer-reviewed scientific journal Environmental Science & Technology. The International Energy Agency (IEA) has identified replacing fossil fuels with biofuels as one of the primary ways to decarbonise the carbon-intensive transport sector.

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Companies like Singapore-based last-mile fuel distributor PS Energy have similarly recognised the urgency of reducing the global carbon footprint and are driving change in energy consumption. In early 2022, PS Energy partnered with an oil major to blend biofuels, producing the first biodiesel B7 in Singapore.

Although biodiesel can be manufactured from feedstock such as vegetable oil, animal fats and various combinations of these oils and fats, PS Energy director Patrick Ng says the company chooses to use biodiesel made from used cooking oil (UCO) that has been sourced sustainably. For example, 7% of PS Energy’s biodiesel B7 is made from UCO or so-called used cooking oil methyl ester (UCOME), which complies with the standards published by the European Committee for Standardization for fatty acid methyl esters (FAME), the most common type of biodiesel.

“We have supplied biodiesel B7 and bio-marked gas oil (MGO) to the Singapore Grand Prix 2022 and several Singapore government agencies,” says Ng, adding that PS has also delivered biodiesel to customers in the Philippines. “While biodiesel may be used in its pure form (B100) or blended with petroleum diesel at any concentration, it is rarely used in its purest form as B100 due to its tendency to degrade rubber seals or gaskets and coagulate at cold temperatures.” Biodiesel is a “drop-in fuel” used in diesel engines and existing infrastructure with little or no modifications to the engines while providing almost the same fuel consumption as the engines running on conventional diesel. In Europe, biodiesel B7 and B10 are widely used in light-duty and heavy-duty diesel cars, trucks, tractors, and electrical generators.

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He believes there is still plenty of room for the broader adoption of biofuels. For example, proponents urging hydrogen and ammonia have gained traction in the maritime sector. However, the changes can be difficult to implement and the conversion process can be expensive for many ship owners. In the case of hydrogen, it requires a complete engine substitute with fuel cells if it is not burned directly as fuel. In short, the alternative has to be affordable for the entire industry, not only for the largest and most profitable companies. “There are too many limitations, and these are not feasible solutions shortly.”

On the other hand, biodiesel shows properties similar to fossil-fuel-based diesel and will not require completely modifying the ships’ existing equipment. Ng adds: “For those reasons, biodiesel is the only real alternative to reduce emissions in the short term that can apply to [all industry players] right away.”

Asia’s renewable feedstock market

With global demand for biodiesel expected to double over the next five years to meet decarbonisation targets — biofuels were identified at UN climate summit COP27 as a critical driver for India’s low-carbon growth — the supply of renewable feedstock must keep up. Asia, a region which accounts for a fifth of the world’s food and agriculture exports, has proven to be a rich source of renewable feedstock in the expanding market.

Singapore-based company Apeiron Bioenergy says its experience in the biofuel and waste-based feedstock market since 2007 and on-the-ground exposure has helped the company penetrate Asia’s waste-based feedstock market. “We have unique expertise and insights on the ecosystem and supply chain of the biofuel market, and we expect demand for UCO to grow exponentially in the coming decade,” says Apeiron’s director Chris Chen.

Identifying the growth opportunities, Chen says Apeiron is transitioning from trading renewable feedstock such as UCO to becoming a vertically-integrated bioenergy player by building and acquiring collection and processing facilities to convert UCO into biofuels. Apeiron has grown significantly and achieved a 2021 revenue of US$260 million ($358 million) with a 50% CAGR from 2018 to 2021.

Europe is the largest import market for biofuels, with Asia a primary export market. “This may change shortly as more and more downstream refineries are being set up in the US and Asia, driven by decarbonisation policies,” adds Chen.

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In the future, Apeiron is looking to ramp up its collection capacity to support the demand for renewable feedstock. To assist the company in its growth, EnterpriseSG has supported Apeiron’s internationalisation plans to uncover new UCO collection sites overseas and to search for suitable warehouses in the region. Through organic and inorganic growth, the company has acquired or built collection and processing facilities across Singapore, Malaysia, the United Arab Emirates (UAE), Vietnam, Thailand, the Philippines, Indonesia and China.

Chen says Apeiron is “actively expanding” across all the regions it operates in, focusing on Southeast Asia, the UAE and China. “In addition, we are exploring strategic investment and cooperation opportunities to utilise technologies and innovation from both upstream and downstream activities, given its access to feedstocks and multiple waste streams.”

Meanwhile, PS Energy’s growth plans include developing a digital fuel distribution platform to optimise its traditional operations through an integrated system comprising remote monitoring and seamless digital management of inventory, invoicing, pricing, credit management, financing, and fuel deliveries.

“We recognised early that an innovative and agile company has distinct advantages in our industry. The Singapore oil and gas sector has a very established ecosystem, but there is room to improve transparency and traceability in existing practices,” says PS Energy’s Ng. “Oil price is fundamentally volatile, so we constantly face credit, pricing and liquidity risks. At the same time, customers are looking for faster, more efficient, and smarter fuel delivery services.”

Ng says its cloud-based business platform, developed as part of the first cohort of EnterpriseSG’s Scale-up SG programme in 2019, is now central to its digital fuel distribution services. He attributes the company’s recent growth despite the challenging macroeconomic environment to its digitalisation efforts. “Digitalisation automated almost all our business processes enabling us to refocus our time and effort from the daily toil of manual administration work to tackling niche market requirements and demands and scaling our scope of services and products.”

Last year, the company expanded into the Philippines, setting up a dedicated sales office in Manila for its fuel distribution operations. It is also exploring other regional markets like Myanmar and Indonesia. “Asean countries vary widely regarding biodiesel feedstock availability and adoption. By expanding into the region, we will be able to explore and seek out new suppliers of biodiesel to use as a blend stock,” says Ng.

He also says that there will be increased opportunities for PS Energy to work with local business partners in adopting biodiesel, especially in cases where they need the logistics means or business scale to secure a reliable biodiesel supply. With its core strength in last-mile fuel distribution and its enhanced digital platform, Ng says PS Energy is well-positioned to extend its consistent and reliable biodiesel B7 to the region. “We will strive to understand and meet each customer’s unique requirements, given that we ensure flexibility in our operations and biodiesel product offerings. We at PS Energy will support our customers’ transition seamlessly to alternative fuels.”

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