SINGAPORE (Reuters) - Finnish biofuel producer and oil refiner Neste (NESTE.HE) is spending 1.4 billion euros (£1.2 billion) to more than double output at its Singapore refinery to meet rising global demand for renewable energy.
The refinery produces renewable fuels, mainly from waste and residues such as used cooking oil, animal fat from food industry waste, fish fat from fish processing waste and residues from vegetable oil processing.
The Singapore expansion, Neste’s single biggest investment to date, will increase renewable fuel output by up to 1.3 million tonnes per year (tpy) from the current 1 million tpy, chief executive Peter Vanacker told Reuters.
“We believe that the market in renewables will quadruple at least until 2030,” he said in an interview ahead of a ceremony to kick off the expansion.
Neste is aiming to capitalise on global growth in diesel and jet fuel consumption, Vanacker added.
The expanded plant in Tuas, in the western part of the city-state, which is expected to be ready by the first half of 2022, will produce renewable versions of both products.
“The amount of sustainably-sourced palm oil is extremely small in our feedstock portfolio,” Vanacker said, adding that Neste’s renewable diesel was not comparable with biodiesel, which uses the vegetable oil as a primary raw material.
The European Union no longer considers palm oil as a green fuel.
The Singapore plant will also be able to produce up to 1 million tpy of renewable jet fuel as well as raw materials for various polymers and chemicals.
Neste, which currently makes renewable fuels from facilities in Singapore, Rotterdam and Porvoo, Finland, is also starting up a company in Shanghai to source waste residues for export to Singapore, said Vanacker.
While it ships more than 50% of its global production to Europe and the bulk of the rest to North America, Neste hopes to grow in Asia, although Vanacker said this would require tougher regulations curbing carbon dioxide emissions.
Neste has signed 15 memorandums of understanding with leading airlines and airports and is in the midst of negotiating sales contracts, he said.
It signed an agreement with Air BP, the aviation division of BP (BP.L), in April, this year to deliver sustainable aviation fuel to airline and airport customers in Sweden.
Neste, which is 44.7% owned by the state of Finland, also operates two conventional oil refineries in Finland although renewables account for 70% of group profits.
By 2030, it plans to use wastes and residues and replace some crude oil as feedstock for those refineries and is currently developing technology to realise this goal.
Reporting by Jessica Jaganathan and Koustav Samanta; editing by Richard Pullin