Trend of methyl, used cooking oil and ammonia market

Decarbonization movements to tackle global warming have been observed mainly in developed countries but the trend might change as Donald Trump administration would begin in the US in 2025. Trump named Liberty Energy CEO Chris Wright as energy secretary on Nov 16, 2024 and clearly shows his administration's intention to return to fossil fuels.

In Japan, production costs for clean energy became higher than planned due to a depreciation of the yen. The situation on decarbonization is changing from when Yoshihide Suga administration in October 2020 made "Cabon neutral declaration in 2025". We will discuss movements of ethanol, used cooking oil and ammonia for 2025.

Ethanol prices might be volatile
Ethanol prices were relatively stable in 2024 but might be volatile in 2025. As Trump administration would begin, Ukraine war might come to an end and trade negotiations with other countries are expected to be tough. The situation is uncertain. If crude oil prices greatly fluctuate on the back of these factors, ethanol prices would show volatile movements along with the crude oil market. From the point of view of environmental values, it is difficult to forecast policies of Trump administration on usage obligations of bio fuels and tax exemption based on US Renewable Fuel Standard (RFS).

Demand for ethanol is steadily growing in the world. Besides Brazil, India and Japan plan to increase blend ratio of ethanol to gasoline. But a Japanese trader said, "These actions are conducted only gradually and have a limited impact on the market."

The market might soar if production of feedstock corn and sugarcane sharply decreases due to unseasonable weather. In particular, players are concerned whether a mountain fire that broke out last August in Brazil is still affecting production of sugarcane.

Cosmo's SAF project at Sakai is key
In the used cooking oil market, market players have considerable interest in the hydrogenated esters and fatty acids (HEFA) project to produce sustainable aviation fuel（SAF）at Cosmo Oil's Sakai refinery. The company plans to start the production just before the EXPO 2025 OSAKA, KANSAI, JAPAN and aims to supply to Japanese and non-Japanese airline companies. The project is featured as the first large scale production of SAF (about 30,000kl/year) and the first project with the certification of CORSIA in Japan.

The feedstocks are 100% domestic used cooking oil, which is collected from industrial players such as Tokyo Metro and from households, and is supplied through SAFFAIRE SKY ENERGY.

In Tokyo, citizens are collecting used cooking oil at gas stations affiliated to Cosmo Oil. SAF produced from used cooking oil is a nearby practical carbon neutral project and Cosmo's production is drawing attention as a test for domestic SAF to be widely used.

Price gap support for ammonia
In the clean ammonia market, players are waiting for results of the Supply Chain Structuring Support Project for Low Carbon Hydrogen (focusing on the price difference). This project is implemented based on the Law to Facilitate Supply and Use of Low Carbon Hydrogen for Smooth Transfer to Decarbonized Growth Economic Structure (Hydrogen society facilitating law). Certified companies would obtain support from the government for 15 years for the price difference between clean energy that these companies would supply and exiting fuels. Results were expected to be announced in autumn 2024 but was postponed to the beginning of 2025. The scale of the project is rumored to be smaller than initially planned. But who wins the grant would be a test for the development of the project going forward.