German THG, biomethane diverge on saturated downstream

German THG biofuel tickets and unsubsidized manure biomethane certificates have diverged since the beginning of March, despite THG Advanced Double Counting/THG Other categories seeing support in recent weeks.

In comparison, unsubsidized manure biomethane, usually destined for Germany's transport biofuel sector as bioLNG, has seen steady declines over the same period.

Since the beginning of March, Platts-assessed current year THG Advanced Double Counting and THG Other have climbed 21.90% and 14.75%, respectively. By April 17, current year THG Advanced Double Counting had risen from Eur219.60/mtc to Eur267.76/mtc. Current year THG Other had started the same period at Eur122.00/mtc before reaching Eur140.00/mtc.

Conversely, Platts-assessed current-year unsubsidized manure biomethane that would be exported into the THG markets saw declines of approximately 3.53% for unsubsidized Denmark manure from the beginning of March, while unsubsidized Netherlands manure declined 5.04%. By April 17, unsubsidized Denmark manure had fallen to Eur55.95/MWh from Eur58.00/MWh, while unsubsidized Netherlands manure weakened to Eur57.925/MWh from Eur61.00/MWh over the same period.

Transport bioLNG saturated

Biomethane market sources said this had largely been driven by weak demand for bioLNG in the downstream transportation sector. Supply remained healthy for biomethane seeking to monetise through the THG. As a result, downward pressure continued to be exerted on biomethane prices despite supported THG levels.

"You need somebody to buy on the downstream, but there is nobody," said one biomethane trading source in Europe. "The market has changed into a buyer's market as there is too much biomethane and not enough demand."

"They are not going to see any upside in the German (THG Other) quota even if it hits Eur200.00/mt," said another biomethane market participant.

The oversupply of biomethane into the THG has also been recognized by biofuel ticket market participants. "The 2025 price hike that we were expecting hasn't really happened, big volumes from the biomethane quota are really supplying the market for THG," a biofuel source said.

THG market pressured upwards

At the same time, THG quotas remained supported as a result of lower biofuel availability, as well as the suspension of a user on the German government Nabisy database sending uncertainty through the tickets market.

Since the start of April, lower water levels on the Rhine have caused navigation issues for ships and barges, resulting in delays and reduced carrying capacity for vessels. This has led to lower deliveries of physical biofuels, with biofuel market sources reporting that some obligated parties have been using THG tickets to meet obligations instead.

The suspension of an unknown user on Germany's Nabisy database has also pushed THG prices up this month, amid fears that a further clampdown on biofuel fraud was on the horizon, potentially removing supply from the physical market.

Biofuel market sources added that the market was already jittery as a result of previous uncertainty around imported biofuel feedstocks two years ago, while more recently, Brussels had been paying a closer eye to certifications applied to the biofuels market.

In March, the European Commission threatened the global certification body International Sustainability and Carbon Certification (ISCC) with a 2.5-year suspension amid concerns over fraudulent POME certificates.