Speaker 1 (00:04):
Good morning and good afternoon, everyone. Thanks for joining the session today. This is the third in obviously is navigating transition series. The first session we discussed carbon capture, the second session we tried to scratch the surface on the hydrogen economy. And in this session, we're going to be talking about renewable fuels. It's been a growing focus for the majors and also for the independent refiners. And I'm hosting this session with my public, obviously, us refining on, if you haven't already, please do check out. Brad's renewable diesel note from mid-September, which covers a number of the topics, we'll touch on today.
Speaker 2 (00:42):
Yeah. Thank you, barrage. So good morning, everyone. So we have three speakers today. We have Umberto Carerra, head of international business development and licensing for refining and Eni. We've got change, a bolus CEO of world energy, and we have Paul Bates and chief operating officer at green energy. , we want to make sure that the session is as interactive as possible. So if you do have a question, please submit it online for the system and we will get to as many as possible. So we'll go right to QA with Brian.
Speaker 1 (01:12):
Thanks. So maybe we'll start with Eugene. So renewable, looks to become an increasing part of the transition plan for the larger majors, as well as your finance load. Energy is also expanding, output in us. Could you talk about, what you're doing and, and the role you believe renewable fields will play in the future energy mix and, and you know, what exactly is driving the increased activity and interest recently?
Speaker 3 (01:37):
Yeah, it's interesting. 2020 is pick your cliché the tipping point year or, the year of the perfect storm or whatever the analogy is. But, there clearly have been an awful lot of, announcements about in particular, renewable diesel and renewable jet projects, on, around the world, both sides of the Atlantic, for sure. Um, and, and that seems to be happening kind of this year. Obviously bioethanol and biodiesel had been around a long time. Bioethanol all the way back to the seventies, biodiesel back to the nineties. So kind of what's happening now. And in short, it's really about, capital flows and following the money. Um, if you were putting a penny in debt equities, in an independent refining sector in 2013 in the us, you would have less than, if you put a dollar in, you'd have less than a dollar today, you put it into, into integrated, oil companies in 2013, you'd have, even lower returns and the independence and the independent refiners in the states are, are really having a challenging year, obviously because of COVID and other things.
Speaker 3 (02:54):
And so, if you were, if you'd lost half of your market cap, you would be at the head, the class, in the U S so as you look out on the, on the horizon, you've got ESG pressures and, not only is it a current issue, but, um, the oil, so oil, refining sectors is, really facing changes. And so it raises the question of if we know what we're going to be getting out of the question, or what are we going to get into. And I think a lot of those pressures is what's called mandating in, the desire to trigger new projects, in the states and around the world.
Speaker 1 (03:41):
And maybe we can, move on to the airport. So building on some of Jean's comments, could you elaborate on some of the trends on Europe and particularly the regulatory regime and what supports there are, and you know, how we expect them and able fields market to develop in Europe? Absolutely.
Speaker 4 (04:00):
Thanks for us. W you, look, we were talking beforehand about terminology is one of the challenges we've got, we're all using the same terms to mean different things. And so I'll probably use different terms to Regina is used. And we're trying to explain, I see three major themes in the UK and Europe and, and those, increasing mandates, he introduction of sustainable aviation fuel SAF, as we're calling it here in new book, jet fuel, and gene referred to it as, and then the final column, there are what we call, development fields in the UK advanced fuels in the, in the EU. And, and in amongst those three columns, if you like of the whole renewables package, um, we we're seeing different challenges. The mandates in the UK were currently legislated at 9.6% as the, as the bio fuel content of the road, field pool.
Speaker 4 (05:05):
We, that that will increase between now and 2030. We, we, we see going up to something close to 14% and that'll happen within the next two years. Um, that's our view. Um, the EU is, is, is mandated at 14% by 2030. They're already talking about red three now, which is, which is mooting levels of 24%. But, but all of that means a bigger pool, like a pool. And that's not just bio-diesel, it's bioethanol biomass and bio me sane hydrogen, or, or these alternative fuels are increasingly important in the mix there. And the big end of the end for all of this is sustainable aviation fuel. The airlines are mandated to use sustainable aviation fuel. That is the just really isn't in there in, in large quantities at the moment the technologies are there, but the supply is not there, but the feed stock will then be, and I'll talk about that a little bit later on, I suspect, um, that, that that'd be in competition for the same feedstock that the road fuels are looking for.
Speaker 4 (06:18):
And those are difficult projects and more capital intense projects. Your end consumer is likely to be an airline. And I do see challenges there with signing up a long-term contract with an airline at the moment. That's, you know, the credit risk rating of that, that event, or off-taker is a big challenge to support the investment that's required for those projects. And finally, you've got development fuels. Um, this is a big mover for the UK, certainly also for, for the EU, development fuel, is defined differently in each, each member state, but in the UK, essentially, that's a, that's a, that's a novel fuel that's produced from a feedstock, which is just not in the fuel food chain at any point in time. Um, it could be municipal waste, it could be tires, it could be waste wood, um, and tying of technologies you're looking at, there are more akin to refining technologies, gasification pyrolysis.
Speaker 4 (07:18):
So there's a capital intense projects, but, um, with a strong mandates to support them, the, the UK has, has a trajectory or requirement today. We're, we're obliged to blend some development fuels. There isn't any, so you go to the buyout, the out is, considerably more expensive than, than the CFO buyer top of that. You've got, um, do you know an increase use of fuels like bio methane, we're seeing that coming into the market more and more. So anaerobic digesters producing gas that's compressed into the, into the gas network, pulled out somewhere compressed into a vehicle. Um, that's, that's another source of the mandate. We're seeing more and more ethanol in the next, don't forget the not all of Europe is on Eaton yet. That's, that's, that's going to happen across Europe. That's a big increase in the, in the pool to supply the mandates, um, by a methanol's also, we're seeing some hydrogen coming into the pool, um, and all of this sits on the, the sort of Damocles, which is the, the eventual ban of internal combustion engines.
Speaker 4 (08:32):
So, um, we've, you know, the, the UK, certainly this week has come out with some major major announcements in new internal combustion engine sales are banned from 2030 UK. So, so how does that fit with your capital investment program in your, and your returns that you require in order to, to, to make those investments? So that's challenge that we have to deal with. And then I guess the final theme that we're, that we're all thinking about and, and hoping won't happen is a hard Brexit, what impact that will have on tariffs and say close as well. So, I mean, a hard Brexit will imply a tariff on imports of biofuel from Europe to the UK, or from UK to Europe. And that will influence the trade plays that we see there as well. So quite a lot going on, um, in amongst COVID pandemic as well to challenge us.
Speaker 2 (09:32):
Great. Thank you, Paul. Um, I guess we'll go over to Eni for Umberto. You know, you've been a pioneer in co-developing some of the hydrogenation technology, um, you've recently completed a couple of, conversions of hydrocarbon refineries to buyer wineries. Can you just talk about what makes us successful projects, you know, is it location? Is it feedstock access? Is it something else? Um, and then what are the impediments to sanction more projects like that?
Speaker 5 (09:59):
Okay, thank you. Thank you very much. And good morning and afternoon, depends on the county. Say you are, um, yeah, what's what are the, the successful elements for, for the, for the project of, of our, to be a refinery? First of all, let me mention technology. we, as you and I, we have, we have always believed that investing in R and D projects and the eco finding technology is one of the products we, we develop, in the early 2000. And actually we, got the licensee Nico finding technology back in 2007. And there is now coal licensed by warpy, which is our lead, licensure. Eh, we'll say a company at this stage apart, the nest capacity is the most widely commercialized technology for if a product, which I guess you'd call that more than 90% of today, if a refining capacity, we believe in eco-friendly technology to the point that, we move it from the lab phase immediately after, today in industrial scale, eh, application in Venice.
Speaker 5 (11:12):
And we went in operation back in 2014. So she's, we have mature, quite, important operational anthological, field experience, which gave us, I would say the basis for improvement the, to achieve, today high performances, but on top of it, there are many other additional benefits that we believe made the Vanessa and Jayla a successful project. First of all, would like to fade the plant location is basically a very calm, very, I mean, it's part of an existing industrial, refining complex. So we get maximum Finnerty with existing assets. You can name a logistic, thank either gen in any other kind of utilities necessary for running the bureau refinery. And that also helps us to minimize CapEx. And also too, while you are invested, we got the quiet, reduced time to market for the first product we deliver. then of course, those two refinery where we had an immediate access to the final program market, that allow us to capture the entire value chain guaranteed by having a premium or renewable diesel.
Speaker 5 (12:34):
the other important element, I guess, is part of the success is, we are on the trading, market, with our ETS now, ATB, which is any trade in value biofuels company, which was used to supply, which is our trading are to supply our refinery and through ease on the worldwide, operation to collect all the free stock, which is, a very important one of the key success factor for, for the bureau refinery is the, the security of supply and type of supply. Last about, I say, not least, I would say that that the system is very flexible to different fish stock. So this is also another very important element, flexibility to treat different fish stock because a fish stock are not a huge are different. And, so we need to be able to capture the best opportunity for an optimized, the, margin, back to the question that was also the last part, I guess, was about what are the impediments to do essential more?
Speaker 5 (13:50):
I will say, one of the, the uncertainty that, new investment need to consider are basically, the regulatory framework we'll know, we all know that the current transformation process is pretty massive driven by the regulation framework is very important in this frame, as mentioned by my colleague before it's developed, in a, in a solid and clear manner, but also obligations are important to be compliant with this, with the plot. Otherwise there is the risk of that taste some time some people prefer to pay penalties rather that comply with the obligations.
Speaker 2 (14:34):
Great. Thank you for that. Um, I guess going back to gene, so, you know, we think we have a new administrator again in the U S um, how supportive do you think Biden is likely to be of renewable diesel, um, versus, you know, it being the individual states that have been carrying the load recently, and then when you think about all the regulatory programs that support that comics, Rens, you know, the BTC, um, the LCFS it's, do you see any risks to those programs?
Speaker 3 (15:06):
Well, it's interesting. I think a couple of things have happened in during the current administration, the current and Trump administration. The administration has not been particularly friendly to, energy transition technologies generally, and the, and lower carbon fuels more specifically. Um, but the response to that was a little bit unexpected. What happened is, is it really shifted leadership from the us federal government, into states, provinces in Canada, and, and really importantly, private companies. And so really for the first time now, with, with the net zero pledges that we're seeing coming from leading companies and all different sectors, we're seeing corporate, leadership that didn't exist four years ago at the level that it does now. And so your, your question is about the durability of, of, federal and state programs.
Speaker 3 (16:11):
And that in this side of the, the Atlantic, I would say broadly speaking across the world, we're in except inexorably moving in the direction of, of regulation that is, is going to be, um, more and more favorable to lower carbon, um, energy sources, certainly our, our, our renewable diesel, facility, renewable jet or sustainable aviation fuel. We're going to use that phrase that, that, that works to, is in Los Angeles county, in California and, and, and the California low carbon fuel standard has been really a leading, um, regulation in the, in the states. It pulls product from, not only from around the United States, but from around the world into California. Um, that that program is, is extremely durable. Other states are now adopting similar kind of low carbon fuel standards, which are interesting because they really incentivize a greater and greater reduction of carbon impact.
Speaker 3 (17:20):
And there's lots of ways to do that. As Paul had mentioned, even within, an existing facility, we're working on renewable hydrogen, they're renewable natural gas, we're working on sustainable aviation fuel and renewable diesel and blending of bio diesel and making bring gasoline. So it's all points earlier as we're, we're, we're, we're flat on this, isn't one technology, this is a drive towards reducing carbon impacts, but, the F the federal program in the state, the states is, is the renewable fuel standard that is not going anywhere. And it's been under as much of attack. And as, as it could be in the, in the last four years, it's withstood that there's bipartisan support for, for the renewable fuel standard or some successor version of it, but it's not going away. So broadly speaking, I would say you're going to see more and more, regulation towards lower carbon fuels. Not less,
Speaker 1 (18:23):
Maybe we can go back to a year better. I wanted to talk a little bit about the industry dynamics and how you expect them to develop over the longterm. So you see, it seems a new players into the market over time. Would you expect to see this play this market dominated by refiners and majors, or would you expect, you know, maybe some agricultural companies wanting to move downstream and gently open the market and, you know, for me, and I's perspective, how important,
Speaker 5 (18:56):
In this business? Yeah, obviously, I mean, this is a quite, an area which is a pretty new, I will say, no, it's not a consolidated, type of business. And, the, the market that is now providing, is definitely a very potent, what can you say, these that will attract a lot of newcomers, I guess, and if I think could be, what are the new calmer into the renewable, fewer, it's definitely, I guess I will thirst my Mandy's coming to the conventional refiners that might consider to convert their traditional refineries into bio refineries as we did in Jayla and Vanessa, for instance, and that is, I think is a very important, element, because, they need to restore their asset value into a market already dominated by, today by an excess of fewer fossil fuel capacity.
Speaker 5 (20:04):
So, for sure fewer will decreasing over the time we need, and, and who owns these assets, the need to think how to get a game money out of it. So the conversion, is one possibility, but there is an element of risk and important risk, I guess, to keep in mind because, the supply and demand balance, today is in a very delicate phaser, to find the proper dynamic equilibrium. And, if I look, what has been published worldwide in term of project to be calm, be refinery, is she needs can't over supply capacity compared to the demand evolution the next in this decade or so it's something that, is, need to be really, thought twice prior to, investment the, the other, the other, the five better, the type of stock, for the mule refineries.
Speaker 5 (21:13):
Also give the opportunity, for agriculture and food industry in general, to explain their value chain and maybe capturing downstream, their own, their own typical, product entering into a entry into, in the, in the so-called waste value today, waste is becoming heavy, a lot of value, particularly for the one that is, most rewarding in terms of cargo intention. Yeah, Beckman. So this is, so these kind of industry is, as the opportunity to enter into, the waste treatment. I would say when I say waste treatment, I mean, towards, fewer. And so it's, it's are the new commerce into these kind of a business. Um, but, and then I will say that the third category that, may come into the, the, the, the, the game, I call it the, the feedstock collector, which is a relatively a new type of business, but these absolutely necessity now, these kinds of activity, because, fish stock is, normally producing very limited quantities and widely dispersate.
Speaker 5 (22:33):
So those collector are part of the supply chain. Absolutely necessarily for the, who invest into, his own capital into, the bureau refinery and among, among everything else. The, the security or fiscal supply is probably one of the most critical elements for the bureau to find any project success. And I see a natural, I will say, a new type of partnership, which is already in place in, in many example, to be formally between the fist stock producer and the bureau refiners. So vertical integration for me is a key represent, logic, I will say, consequence of, or produce a fifth stock or endorphin stock and transform the feed stock into, biofuels.
Speaker 1 (23:38):
That's great color. So maybe we can delve a little bit deeper on that last fall. Um, you know, what's your, the, or the overall kind of feedstock availability, and maybe you can talk a little bit about the various elements, the animal fats, et cetera. Um, you know, as, as the demand for that feed stock grows, um, how do you expect to see the supply and demand of the various feed stock markets? Sure.
Speaker 4 (24:04):
Um, well, yeah, it's a, it's a challenge. It's always been a challenge. Um, the, go back 10, 15 years ago, and pretty well every restaurant in, in, in UK, in Europe, they, they didn't, they didn't have their use coconut oil collected, or they paid someone to take it away. Now, now there's a pretty sophisticated collection industry out there collecting, used cooking oil from restaurants and from food factories and from supermarkets globally. Um, the demand is definitely growing up in Berkeley, just taught correctly about that. I mean, they, they they're the best lowest carbon feed stock is always going to be a used cooking or category three tallow, um, animal fats. And, and those markets are already, already quite well developed and they are global markets, but, but there is more out there. There are markets which are not currently, um, collecting and supplying, and there are big markets which are not currently collecting and supplying.
Speaker 4 (25:09):
Um, and, and in part it's down to the admin that's required because it's one thing to collect and supply the physical oil. But the, the key element that you have to have with it is the, is the data, the sustainability data, where did it come from? How did it get there? How much water has been pulled off? All of this data tracking exercise is, really quite sophisticated for, for that kind of industry. Um, and its where some, some markets, you know, they don't, they don't see an incentive to, to do that. So they're, so they don't collect for the, for the biosimilars industry. There's a lot of effort going in at the moment to developing tools, to improve the sustainability tracking, make it easier, make it better, make it tighter, make it closed loop. Um, we're involved with one ourselves with a partner company called bar ledger, which uses a blockchain based devices, which, you know, we have to be charting in the very near future, um, so that we can get a closed loop on, on, on the sustainability data.
Speaker 4 (26:19):
And I think as, as that rolls out and as we can, we can capture this data more easily at the source. Then we'll be able to tap into other markets which are currently not collecting Brazil, for example, a hundred million people. You just don't use cooking oil coming out of Brazil. There's plenty of use coconut oil in Brazil. It probably mostly goes down the sewer. Um, so there are markets which are untapped. And the big question is, is there enough to supply all of the HVO renewable diesel demand to supply all of the sustainable aviation fuel? I suspect not. Um, if all of these projects which are talked about at the moment come to fruition, I suspect there is, there will be a, a tightness of feedstock, um, which means that those projects will run other Royals as well. Um, it also means that some of these other powerful, we talked about like, buy a me thing like hydrogen.
Speaker 4 (27:18):
And, and, and don't forget ethanol because ethanol does count in a lack of a lot of markets as well. And a lot of markets aren't blending to the, to the limit there, and there are other ways to create ethanol from cellulosic from, I mean, we've seen some very novel technologies, carbon off gases from steelworks being converted into ethanol. Um, that's a fantastic concept if you think about it because it's carbon capture and it's correct your renewable fuel. Um, so you, you, you will see some of these other projects pricing as well as the suppliers that feed stocks become constrained. But, um, so for me, it's really about the, the sustainability tracking, creating the technology and the systems to create secure, easy to use system that a guy driving a van to restaurants can, can have on his app on his, on his phone. Um, then it's about logistics. And I talked about having to be a global collector, um, aggregator trade. It's what we do. We have, we have a global procurement team. Um, we have collectors and you've gotta be able to handle this in all shapes and sizes, and it doesn't suit every business, but you do have to be able to deal with small quantities as well as large quantities and aggregate it up. And that's a challenge. I mean, there are, it's not believe it or not. There was IP involved in handling a flexi bag.
Speaker 4 (28:50):
It's not the easiest thing to deal with, and you have to learn about that and there's people involved. And so, so there's, these, these, these techniques are necessary if you want to want to capture all of the oil because it's not every market, um, can put it on a ship, um, and in big quantities, but there are small quantities in every market and you have to aggregate them all together. And that, that logistics now our capability, which does involve a lot of people on the way is very, very important. Um, and then finally, we'll see other new feature docs coming in, and we talked about tall oil for years and this in the bar diesel industry, but, um, it, it will start to become processed these kinds of kind of oils. Um, I mentioned carbon off gas is solid waste, solid food rice often still ends up in landfill. Um, you know, can have considerable fat content in those sorted food, food waste. There are ways to get at it, our gear starting to resurface again, um, as, as, as a feed stock takes a lot of energy to get it out of the algae. You could scrape oil when you get it out. And if somebody has cracked up that technology, that's another, another source. So there are other sources out there. Um, but, but the big challenge is how many of these projects will be built, what the actual demand will be.
Speaker 2 (30:12):
Great. That's great. Colorful. Thank you. Um, Jean, maybe we can just round out sort of the feed stock here. You know, we know about the carbon intensity differentials between all the, how do you think about sourcing? Um, do you think that ultimately the market will become more efficient so that the different value, let me reflect.
Speaker 3 (30:36):
Yeah, look, I think the, the feedstock, um, question is answered by who can get the best net backs to the, to the feedstock supplier. And, and that's all about end use markets, and that's all about aggregating the, the, the, the most amount of value per molecule. And, if you're in a place where you can do that, there, there, there are traditional refining operations that are in better places. And in worse places, there are traditional refining operations that are views, better inputs or worse inputs, or have better, efficiencies or worse efficiencies from an operations point of view. That's all true here too, just because we build a bunch of new projects. Doesn't mean that they all get fed feed stock. Um, the, the, the feed stock question is really an end-use question. Can you get the best net back?
Speaker 3 (31:29):
Can you get that in the, can you aggregate the best value? And on the feedstock side, particularly when you're doing CGI accounting, you get a double return to logistics. So you get the normal servings of whatever you get by being well located, either your end use markets or feedstock sources or both. And then you get in, in the way that the California program works and increasingly other low carbon programs, around, north America, the way that works is you get the double benefit of having the efficiencies of logistics turn into a lower CEI score, which gets you a better, better credit value. So it's really a very much a logistics space. Again, I agree with Paul and in terms of what he was saying in terms of the expanse of the available feedstock pool, it will expand even within the feed stocks that we use currently, that pool is expanding, and we'll continue to expand.
Speaker 3 (32:29):
There will be new feedstocks and enter the mix as well. So that's all part of it. I certainly agree with what Umberto was saying that this is increasingly alliances between, the folks that have the re refining capacity that renewable diesel and renewable jet, or, or biodiesel, whatever, whatever your, your, your, your production facility is really increasingly gets integrated as a piece of a supply chain. It's not an entity unto itself, which is close out in the sources. We weren't feedstock from wherever it wants to on any given day. There's really now an opportunity to derive value back into the supply chain and actually improve the efficiencies at, at the source of the, of the feedstocks as well. But that requires partnership between between, renewable diesel producers and the suppliers. So that's, that's kind of where the future of this is. It's not that everybody that wants to take, a refinery that's no longer, productive and converted into a renewable diesel and rapists sustainable aviation fuel facility will work. That doesn't necessarily mean just because it wasn't a productive, traditional refinery doesn't mean it's going to be a productive, renewable diesel refinery is there's got to be a strategic fit. And so that, that's what I think really over the next few years, you're really gonna see these networks of partnership at merge.
Speaker 2 (34:03):
Okay. Um, and then, you know, we, we touched on it a little bit earlier in the call, but on sustainable aviation fuel. Now there've been a lot of pledges from the airlines in this, in this field airports targets, well, maybe, maybe both Humberto and Jean. You know, can you just talk about how important do you see the role of that being over the long-term that as attractive as renewable diesel, you know, what are the differences between those, those two sort of production methodology, and then has impacted your thoughts at all on business America over to you first?
Speaker 5 (34:40):
Okay, thank you. Talking about, suffer a sustainable aviation fuels, I mean, obvious shown, fuel elevation is probably the visual sector is the, if they are, to obey abate, the, the, the carbon intensity, I mean, very difficult to replace a jet fuel. No they say in the, in the, flies. So if I could, and, and they used to want to very, very, very impacting on the G H D emission. He said a billion over a billion Tom Perrier, at least the, before Covey that back in 2019. So he's a major obviously pollutant in a way, or, but, but it's difficult to, to be changed at, in term of fewer. So, to me, the bureau of UL, the BOJ represent at this stage in the short and medium term, they only, the only sustainable aviation fuel that is realistically available, to reduce the emissions.
Speaker 5 (35:56):
And, um, and also the [inaudible] technology is already has already achieved the, a, an industrial maturity that is already good to be used, into the Jetta. If I, if we go back after, when the COVID the crisis will, disappear. I mean, nowadays we all know the deviation, traffic is collapsed. I will say almost to you, you say a low number. It's it's all right. I mean, sooner or later, we believe, that we, this, will recover, despite the new, wave two smart or smart working will be widely used after this COVID experience. But, the issue will we resume, we believe that we'll, go back to typical numbers. And, um, if we, if we think that a few percentage of, BOJ into the amount of a gesture that will be use, for a vacation is a remainder, is a business opportunity.
Speaker 5 (37:17):
There is a premium to luck or capacity of DOJ nowadays, although the programmer or the regulation to, to use a [inaudible] steel, I will say at the very beginning, I will say, I mean, the only, the only program available is Scotia, which has the beauty of being internationally applied. And this is something that I think is needed to have a uniform, framework for deviation, but, it's at the very beginning, it will take time to, to develop, but again, it's, by any means for me, the most promising, market into the bureau of yours.
Speaker 3 (38:08):
Yeah. So, I'll, I'll just, I'll just add a couple of thoughts. I, I agree, we will fly again. Again, we are, the, thing is that the, the recovery of the airline industry is going to be a private public partnership. And, and because of that, the airlines are going to have to build back better. It's not going to be a return to what was, there's going to be a significant, um, significant pressure on airlines. And they certainly know this, at least they've been at the forefront of, trying to develop staff. Um, and, and we have to world energy has been around since the mid 1990s. We seem to always try to do things well before they're commercially viable, and we've been doing a sustainable aviation fuel for much longer than it's been commercially viable.
Speaker 3 (39:05):
So back to, 2015, there is no, compelling reason to, to take, renewable diesel and convert it into a renewable diesel gallon and converted it into a sustainable aviation fuel gallon other than to begin to build that market. So we've been, we've been doing that, now for, for quite a few years, and, um, and, and, and folks are buying on. We just announced that, program this week with a rule with rolls Royce and testing, and we're doing with them, we've, we're, we're fueling with shell, we're fueling, Amazon, flights. We work closely with United in the United States. The, this sector will emerge because it has to emerge, it has to emerge. So, they're not, we're not going to be flying electric airplanes anytime soon. There has to be a liquid fuel solution. Um, and so there has to be a S a F industry that emerges, and it will, it's starting to now and, and really picking up speed, obviously, COVID is dramatically impacted, aviation, the aviation industry, girling and aviation fuel specifically, but as the demand picks up S SAF will be a much bigger part of the demand picture going forward.
Speaker 3 (40:32):
And so I think most of us that are doing renewable diesel activities are at least looking at how to build out the supply of, of SAF and, and in our conversion project where we're converting to a 360 million gallon facility in LNA, we're in the midst of that effort. Now, we'll have the ability to do, up to half of that plant. We'll be able to do, I think others will be looking to build that kind of optionality into their projects as well.
Speaker 1 (41:06):
Awesome. That's great Keller. So thank you all. Um, I think we can open up to questions from the audience, so, for the remainder of the time, but, um, just as a reminder, if you do have a question, please submit it online and we can try and get to as many as we can. Um, the first one that actually is something we've touched on, but maybe last, get more explicitly for Jean and for Paul, a similar question, but, in California as a potential look to ban internal combustion engines by 2035 in the UK now at the finding of sales, 2030, um, you know, does that in your eye limit, the opportunity for you in, in renewable tools or is that, is the market still big enough to, to kind of absolve that the next 10, 15 years
Speaker 3 (41:51):
Suspect we have similar views, but Paul, why don't you go first?
Speaker 4 (41:56):
Yeah, I'll look at banning internal combustion engines. Doesn't mean to say that that that's sales from 2030 or 2035, doesn't mean to say you stop selling gasoline and diesel, and then the requisite bio components from 2030 or 2035, that the demand will continue and will be there for quite some time after that car generally lasts 14, 15 years before it gets scrapped. So you can imagine it will, it will decline somewhat gradually. Um, it, it does make it more difficult of course, because these bigger projects need to be financed. So you have to, we're going to look at them and we're going to say, look is, is, is that project still going to be there? What's my, what's my exit value on that project? Is it, is it, is it, is it there? It's gonna make it more difficult. Um, it's going to focus on expanding existing plants. I think much more than building grassroots ones. That's, that's, it's going to be a lot easier. I think, to justify an expansion of existing plant. It definitely challenges things. And, and, and to Jean's point of course, aviation fuel is, is, is much more likely to be a liquid for many years to come than, than, than road fuels. It might, it might focus the market or aviation fuel rather than diesel equivalents.
Speaker 3 (43:20):
So I, I might be in the minority on this, but, I actually see these, these kinds of developments all very much in line with what we're doing. I don't see us as a biodiesel company. I don't see us as a renewable diesel company. I don't see us as a sustainable aviation fuel company. I see us as a low carbon energy company, and, and as society is pushing, towards, greater and greater regulation, whether it's reduction of internal combustion engines in the UK by 2030, or in California by 2035 or, or somewhere else by some other day, it's all pointing in the same direction. And so, and so what we're doing now in 2020 leads us to better solutions, better solutions and better solutions that innovation doesn't happen in a vacuum, right? It doesn't, you don't wake up one day and, and, and innovate you.
Speaker 3 (44:17):
Innovation is an incremental activity and, and you just keep getting after it day after day after day, you don't build your project and then say, that's that you keep on working on it. You keep on finding ways and keep on finding. And so, I don't think we find ourselves in it at some point in the 2030s in which liquid lower carbon liquid fuels are no longer necessary. I think they're going to be more and more necessary, not less and less. And, and Mike, they move more towards the aviation and less towards, and the automobile as more automobiles, become, electric or some other, non-liquid fuel technology. yeah, perhaps, but in the diesel side of the equation, you're going to see continued use of diesel applications for as far as the occupancy, certainly in the aviation world. We just talked about that. There's no change coming anytime soon. So if, if, if we're in the industry of finding ways to transition to lower carbon motor fuels, I think that industry as a, nothing by growth potential for as far as the, I can see regardless, and even because of the impetus to, ban transportation, you know, passenger cars, internal combustion, passion, passenger cars, and in places that tend to lead like California and like the UK,
Speaker 2 (45:46):
Right. Um, Umberto, another one for you here from the audience. So you obviously have business development in your title. Um, can you just talk about how 2020 is, has changed or how you think about business development? Obviously we've seen all these new supply announcements we've seen the ice bands you have COVID I imagine it's somewhat different than it was a year ago. Yeah,
Speaker 5 (46:09):
I think, our, our, business development, is, um, it aligned, what are the Eni, strategy, along the decarbonization pathway that we have, we have, announced, and, so [inaudible], initiative, to decarbonize. one of these is to increase our capacity. Nowadays we have one, 1 million tones. We are moving towards a 5 million Tonsor in the coming, ER sizzle. This is a way, that, we contribute in, in our, in our, in, in implementing our strategy. And, as far as I see, 2020 is an acceleration is an analysis of, of, of implementing these strategies. So, um, so simply accelerating a process which has already started, I say, during my first part of the intervention already many years ago, is not something coming out of blue, but you have been investing, since many years, starting from R the R and D. And, and, this crisis is, I say it's an opportunity for us to implement even faster, what we have, in our, in our strategy and using the tool we have developed ourself most of ourselves,
Speaker 1 (47:50):
Maybe the next question. Um, I'll aim at, Paul, um, you touched on, the feedstock points, um, that there may be some sort of shortages as the market grows, but, you know, as these markets, as the revenue through sport continues, um, and everything we currently know, you know, how much all the demand can be replaced, by the next five, 10 years.
Speaker 4 (48:19):
Um, well, look, gene talked about innovation. That's the point that the market will work for market. We'll find ways to create, um, more and more renewable fuels. They won't all be what we think of them, of them today, but there are, there are many, many projects out there. We tend to think call them development fields or advanced fields, which are looking at no whole feedstock sources, very low carbon fuels as well. Um, which will, will fill the gaps here. It's not all going to be conventional use cooking or tallow, the convert to bio-diesel or hydro treated into HBO, or, or into sustainable jet fuel. It's going to be other sources as well.
Speaker 4 (49:06):
It's going to be taking carbon and then converting that into, into an ethanol or methanol. And they kind of gasoline out of that. If you can't get it in as ethanol or methanol, it's going to be using municipal waste. It's going to be using tires. And we're involved in a number of projects, looking at, looking at normal feed stocks along those lines, where you, where you, where you take something, which is a genuine waste, which is a problem to dispose of. And you convert that into, into a renewable fuel. And it's all part of the circular economy, which is another theme as well, which other industries talk about much more than we do in the renewable as well. But, but, you know, the circular economy is very important to other industries and being motivated to do that. Some of these projects are going to going to be producing feed stocks for the petrochemicals industry as well, rather than going into fuel.
Speaker 4 (49:59):
And that you'll see that the pet Kim's industry, um, w we'll pay a higher price for a renewable Napster than the oil industry and say, because, you know, they need to meet, need to meet that. And, you know, plastics today, we can't get plastic into, into fuel, but, but legislation is continually under review. And we'll see plastic come into the fuel supply chain as, as a feedstock potential in the not too distant future. I'm absolutely sure. So I think the market will work. The market will, innovators will we'll find new technologies, we'll find new feedstocks, which will, which will substitute the [inaudible] and the Talos. But we also find we'll use cooking Trello, cause there's still an awful lot of it, which is wasted.
Speaker 1 (50:56):
Think, I think we'll finish that. So, Gene better, Paul, thank you so much on behalf of Brad. And I never know, I'll be, obviously we really appreciate your time. Thank you very much for listening and watching.