Euglena to explore Bangladesh feedstock potential to strengthen Japan SAF supply chain

Japanese biofuel company Euglena project aims to explore the feasibility of building a raw material supply chain for Sustainable Aviation Fuel (SAF) in Bangladesh, the company said on Feb. 3.

The company has been selected by Japan's Ministry of Economy, Trade and Industry (METI) has selected Euglena Co., Ltd. for its "FY2023 Supplementary Global South Future-Oriented Co-Creation Project Subsidy".

The project will examine the potential for used cooking oil (UCO) recovery and oilseed crop cultivation in the country, which remains largely untapped as a SAF feedstock supplier.

However, sourcing sufficient UCO as a key feedstock has become increasingly difficult due to rising global demand and price fluctuations. While several Asian countries have established UCO recovery businesses, Bangladesh has not yet developed significant infrastructure for such initiatives.

The company also highlighted that Euglena has operated in Bangladesh for over a decade through its Euglena GENKI Program and social businesses supporting local farmers.

Leveraging these networks, the company will conduct a feasibility study from February to December 2025 in collaboration with Grameen Euglena, a joint venture with Bangladesh's Grameen Group.

The study will focus on establishing a UCO collection network, assessing oilseed crop cultivation on underutilized land or during fallow periods, and evaluating Bangladesh's potential to supply SAF feedstocks to Japan.

If successful, the initiative could provide economic opportunities in Bangladesh while strengthening Japan's SAF supply chain. Japan aims to replace 10% of its aviation fuel consumption with SAF by 2030.

The METI subsidy program supports feasibility studies and pilot projects in Global South countries, aiming to strengthen Japan's economic partnerships while addressing critical supply chain gaps.

In an interview with S&P Global Commodity Insights, Euglena said that UCO and POME will be the core feedstocks for biofuel production but there is a possibility the two products would not be enough to meet burgeoning demand, leading to a hunt for alternative feedstocks such as microalgae oil which company ais to commercialize by 2030 to meet demand.

Petronas and Euglena have also agreed to jointly research large-scale algae-based renewable feedstock production technology.

Beyond Bangladesh, Euglena has been expanding its SAF efforts across Asia. The company is a key partner in the Phoenix Biorefinery Project in Malaysia, a $1.3 billion biofuel production facility being developed in collaboration with Petronas and Eni.

The biorefinery, located at the Pengerang Integrated Complex in Johor, Malaysia, is set to begin operations in 2028 and will process 650,000 mt of feedstock annually, including used cooking oil, animal fats, and microalgae oils, to produce SAF, hydrotreated vegetable oil (HVO), and bio-naphtha. The company has partnered with Petronas to scale up microalgae-based renewable feedstock production, targeting commercialization in the early 2030s.

Samsung E&A Co., the construction and engineering arm of South Korea's Samsung Group has secured a $955 million contract to build this project.

Euglena is also involved in SAF supply chain initiatives in Japan, collaborating with Japan Airport Terminal Co., Ltd. to establish a commercial SAF distribution system at Haneda Airport.

Under the agreement, Japan Airport Terminal will underwrite a first series of unsecured straight bonds (green bonds) issued by Euglena for Yen 1 billion ($6.44 million), with a payment date slated for May 10, 2024, and a maturity date of May 10, 2030.

The two companies aim to create a supply chain for delivering SAF to Haneda Airport and explore opportunities for commercializing SAF supply to airlines once the chain is operational. According to the statement, if the Japanese government's proposed target of SAF accounting for 10% of jet fuel supply by 2030 were applied to Haneda's 2022 aviation fuel consumption, about 220,000 kiloliters/year of SAF would be needed.

The companies plan to develop a system capable of supplying up to 50,000 kl/year of SAF, about 23% of the required amount.

Platts, part of Commodity Insights, assessed SAF FOB Straits down 24 cents/bbl from the previous assessment at $206.38/bbl on Jan 31.