INTERVIEW: Euglena bets big on alternative feedstock as UCO, POME dominate market

Malaysia as strategic location

Euglena plans to set up a joint venture(opens in a new tab) with oil companies Eni and Petronas to build a Phoenix Biorefinery project located within Petronas' Pengerang Integrated Complex in Johor, Malaysia this year. The commercial plant is set to begin operations by the second half of 2028, with the biofuel facility construction valued at around $1.3 billion and aims to process 650,000 mt/year of feedstock with a yield of up to 12,500 b/d of various biofuels such as SAF, HVO and bio-naphtha by coming online by the second half of 2028.

The project anticipates profits of over Yen 6 billion/year for Euglena, holding a 15% stake, based on a biofuel price of Yen 300/liter and a joint venture net profit margin exceeding 20%.

Samsung E&A Co., the construction and engineering arm of South Korea's Samsung Group has recently secured the contract to build this biorefinery which will use Ecofining technology and pretreatment equipment developed by Eni and Honeywell UOP.

Euglena's project is expected to start operations by the second half of 2028 and will produce sustainable aviation fuel and next-generation biodiesel fuel, including renewable diesel or hydrotreated vegetable oil.

The country has emerged as an important biofuels hub in Asia and is already one of the world's largest producers and exporters of POME.

Meanwhile, under the Malaysia Aviation Decarbonisation Blueprint, the Ministry of Plantation and Commodities is collaborating with the Ministry of Investment, Trade and Industry to develop a national SAF strategy.

Highlighting the plant’s advantage, Nitta said its strategic location within the complex will leverage existing facilities and utilities, providing easy access to major international shipping routes. This would enable the plant to meet the growing global demand for biofuels in the aviation and transportation sectors.

Euglena’s project is expected to start operations by the second half of 2028 and will produce sustainable aviation fuel and next-generation biodiesel fuel, including renewable diesel or hydrotreated vegetable oil.

The projected 650,000 mt/year of raw materials feedstock processing capability could yield up to 12,500 b/d of various biofuels, such as SAF, HVO and bionaphtha.

Eyes on alternative feedstock

UCO and POME are already under pressure due to rising demand amid improving regulatory policies and a higher focus on low-carbon fuels.

To overcome supply issues, Euglena is betting heavily on commercializing alternative feedstocks, including algae-based oils, in the 2030s. These have the potential to become a significant resource in the future.

"To bridge this supply-demand gap, the global biofuel industry must explore additional feedstock resources," Nitta said.

"One promising avenue is microalgae oil, which we are actively developing. By 2030, our goal is to deliver a meaningful contribution to the market with this technology, transitioning from R&D to full commercialization while establishing large-scale, low-cost microalgae cultivation in the early 2030s," he said.

The Euglena executive said a separate plant is dedicated to microalgae production, but the output would be delivered to the biorefinery project too.

Euglena is also exploring a two-way approach that combines autotrophic and heterotrophic methods for mass cultivation of microalgae and algal oil, Nitta said.

This approach provides a unique competitive advantage, boosting yields and facilitating flexibility while maintaining efficiency in scale and production.

Earlier this year in August, Petronas and Euglena agreed to jointly research(opens in a new tab) large-scale algae-based renewable feedstock production technology.

The partnership aims to scale up production technology for microalgae, a critical raw material for sustainable biofuels such as SAF and advanced biodiesel variants, HVO.

This agreement involves the development of large-scale production technologies encompassing cultivation, algae collection, oil extraction and leveraging byproducts like defatted algae.

Overcoming hurdles, new partnership

With Asia in focus, many companies are establishing operations to secure vital feedstocks in this rapidly growing market.

"Every company globally is coming to Asia to secure feedstock, there are tons of the residue of the biomass in South Asia on account of a huge population," Nitta said.

He also highlighted that while Europe is leading this market followed by the US with a slightly different strategy, Asia is soon going to be in a steering position due to various growth factors.

Addressing life cycle assessment and related cost challenges also remain essential for Euglena's biofuel endeavors. The company aims to leverage its partnership with Petronas and Eni to tackle these issues.

"Through our partnership with Petronas and Eni, we have easy access to this abundant biomass potential. If we can utilize these residues, similar to our UCO strategy, we can make LCA more feasible," Nitta said.

Eni's expertise in biorefinery operations and global feedstock sourcing complements Euglena's technological innovation in biofuel production. Petronas offers a strategic advantage with its access to biomass and its prime location in Malaysia, positioned to serve both European and Asian markets, he added.

The executive also highlighted that Euglena is exploring the "book and claim" model to trade emissions reduction certificates, aligning with global sustainability trends. While not yet part of initiatives like Narita Airport’s Scope 3 SAF trading project, it is in discussion to integrate such frameworks.

In May, Euglena partnered with Japan Airport Terminal Co. to develop a SAF supply chain for Haneda Airport, targeting Japan’s ambitious 2030 goal of 10% SAF in jet fuel, requiring almost 220,000 kiloliters annually based on 2022 usage. 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 S&P Global Commodity Insights. on Dec. 26 assessed UCO FOB North Asia flat at $995/mt, while UCO FOB Straits assessed flat at $1,005/mt, in line with similar indicative range. Meanwhile, UCOME FOB North China was flat at $1,050/mt, with UCOME FOB Straits unchanged at $1,170/mt. The Asia SAF-Jet Fuel Spread was assessed at $1,201.88/mt on Dec. 26 up $44.29/mt from the previous assessment.