Dutch government boosts fuel renewables mandates ahead of expected government change

A higher renewables content in transportation fuel in the Netherlands took effect April 4, ahead of an expected government change.

The Dutch Cabinet announced a boost in the annual obligation for renewable energy in the Staatscourant, the government gazette.

The party with the highest number of wins in the most recent Dutch election, the Party for Freedom, or PVV, is in talks with other parties to form a coalition but is not yet in power. In its election manifesto it advocated leaving the Paris climate accord.

Initially proposed in August, the Dutch annual obligation for renewable energy is to be increased by 20 petajoule/year, effective 2024-25.

In 2024 the annual obligation will require a 28.4% share of renewable energy in the transport sector, rising to 29.4% in 2025. The increased mandate for 2024 will apply retroactively from Jan. 1, 2024. Previously the mandate only required a 19.9% share of renewable energy, according to the Ministry of Infrastructure and Water Management.

The Dutch Emissions Authority was not immediately available for comment.

This contrasts with developments in Sweden, where a government elected in 2022 jettisoned the previous administration's ambitious 2024 targets for biofuel and rolled them back to the European Union's minimum mandated levels.

Emissions goal

The Netherlands aims to save about 1.5 million mt/year of CO2 emissions. This reduction is equivalent to the emissions generated by a coal-fired power plant in Eemshaven over a four-month period, according to an announcement sent to the market.

Despite the immediate implementation, for the years after 2025 the Dutch government is committed to ongoing revisions in line with the European Union's Renewable Energy Directive, or RED-III.

Market sources expect Dutch renewable energy targets to transition in 2026 from energy share to an emissions-reduction based mandate based on the greenhouse gas savings from renewable energy.

Obligated parties may meet mandates through the delivery of physical renewable fuels, including biofuels, or through sourcing of hernieuwbare brandstofeenheden tickets, or HBEs.

Bullish sentiment

In response to the announcement, HBE market sources noted bullish market sentiment in the advanced biofuel ticket market, with offers and indicative values heard higher throughout the day.

"The market went up," one source said. "Tomorrow will probably be even higher."

In the biofuels markets, a trader said, "We should have a price increase on both biofuels [biodiesel and ethanol], HVO and indirectly on feedstocks as well."

Platts, part of S&P Global Commodity Insights, assessed HBE-Advanced tickets for 2024 at Eur9.21/GJ and Used Cooking Oil Methyl Esther on a FOB basis in the Amsterdam-Rotterdam-Antwerp region at $597/mt above ICE gasoil April 3.