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The UAE has given the green light to the National Policy on Biofuels in efforts to boost the production and consumption of locally produced biofuels, according to a statement. The move comes on the heels of the country joining the Global Biofuels Alliance last July and witnessing a steady growth in its biofuels sector since 2015. The framework for the policy has yet to be published online.
What we know so far: The policy will introduce a regulatory framework for biofuel distribution, set benchmarks for biofuel production and usage, enforce production standards and mandates for the fuel within the nation. It will also help regulate biofuel trade operations, define uniform biofuel specifications, and oversee production and commerce.
Biofuels production is already heating up: UAE’s Circular Economy Council inaugurated Dubai-based Lootah Biofuels’ cooking oil reprocessing plant with a capacity of 100 tons per day in 2022. Tadweer signed an agreement with Austria’s OMV last year to explore investments in biofuels and biowaste production in the country and BP invested USD 10 mn in US startup WasteFuel to support the establishment of a UAE-based biofuels plant. Adnoc Distribution said it is planning to supply biofuel to its business-to-business (B2B) customers back in November, and more recently, Lootah Biofuels and the UAE’s Energy and Infrastructure Ministry signed an MoU to develop, promote, and deploy the use of biofuels.
And biofuels trading is gaining traction: Swiss-based Vitol Bunkers made its first biofuels delivery back in December, sourced from its UAE-based refinery in Fujairah. Emirati logistics giant DP World inked an agreement with Singapore-based shipping company Pacific International Lines to develop green solutions for global supply chains including powering vessels using biofuel blends on the sidelines of COP28. Ethiopia and the UAE’s Adnoc also signed a letter of intent to expand cooperation in biofuel feedstock production, carbon credit generation, and agriculture in August.
UAE’s Lootah is leading the push: Establishing a binding biofuel blend law — which would force companies to have a minimum share of biofuels in its energy mix — would aid in decarbonizing hard-to-abate sectors including aviation, marine, and heavy-duty transport, which consume high-energy-density fuels, Lootah CEO Yousif Saeed said last October. This is especially important given that other green alternatives that can power aircrafts, ships, or heavy machinery like hydrogen, require expensive infrastructure and are still in the early phases, Saeed explained.
Biofuel blending could boost waste management: Investing in biofuels can also boost agriculture and food and beverage industries by transforming by-products into energy sources, Saeed said. Combined with government recycling incentives, a biofuel blending mandate would promote a circular economy leading to better waste management (given that biofuels are produced from waste like manure, organic refuse, and spent cooking oil) and energy security.
Biofuels will be traded on a UAE-based carbon exchange soon: The Abu Dhabi Global Market (ADGM) is the first authority to classify biofuel contracts under the category of environmental financial instruments and to authorize the operation of exchanges and clearing houses for both immediate and futures trading of biofuels, according to the Abu Dhabi-based carbon certificates trading exchange AirCarbon Exchange (ACX). ADGM awarded the Mubadala-backed ACX — which currently stands as the world’s first regulated carbon exchange — a license to allow the exchange to trade biofuel contracts globally in 2022.
