Green Energy Trends

ESAI Energy Hydrogen Project Tracker: Larger projects coming on stream in 2022-2024

LCFS Quarterly Update: LCFS data for the full year 2021 highlights strong growth in electric charging in the on road sector along with continued growth in renewable diesel. Data also continues to show a trend toward lower CI feedstocks in biodiesel and renewable diesel production. A large surplus of credits developed in the final two quarters of the year . The strong growth in renewable diesel production this year will keep the California market in surplus in the near term. After falling by roughly 60 percent from levels early in 2021, LCFS credit prices are expected to remain low to 2023 as the market remains in surplus.

Biofuels: Ethanol blending economics have reversed again in Brazil with ethanol prices rising on poor harvest conditions. The sharp rise in gasoline prices in recent weeks might reverse this trend again, but sugar and ethanol supply shortages will keep ethanol blending low in the near term. This pull from Latin America and rising US gasoline demand has contributed to a tighter US ethanol market. Biomass-based diesel feedstock tightness is expected to continue in 2022, despite increased production in Latin America. Uncertainty over vegetable oil supply from the Black Sea due to the Russia-Ukraine conflict will offset some of Latin America’s growth. The pull from food markets in Europe is likely to continue and the recent actions by Argentina and Indonesia to suspend exports of biodiesel feedstocks will further limit availability. At the same time, the expansion in U.S. renewable diesel capacity will bolster demand. Altogether, these factors point to continued tightness and high prices. D4 RINs have reversed higher due to the tightness in biodiesel feedstock, even with higher diesel prices. These supply issues and high feedstock costs will limit the downside for biodiesel prices and D4 RINs in the near term.

Biofuel Feedstocks: US Market Outlook: Soybean oil continues to be the primary feedstock in the US biodiesel market, but the use of alternative low feedstocks like tallow and UCO are growing. We expect this trend to continue. However, with some of the new capacity coming online potentially relying onsoybean oil at least initially, soybean oil will continue to grow in 2022.

Lithium Supply: Lithium prices have risen significantly since 2016 because of strong growth in demand from the EV market. Even though COVID disrupted the market and weakened prices in 2020, prices returned to a record high of $17,000/mt in 2021. Prices have surged to$80,000/mt so far in 2022. In addition to rising prices of cobalt and nickel, lithium’s increase puts upward pressure on battery costs. Battery pack costs had fallen in 2021 but are rising this year.

Electric Vehicle Sales: Electric vehicle sales showed tremendous growth during the first quarter of 2022 when compared to year ago levels. However, they were down compared to fourth quarter levels. Altogether, ESAI Energy is forecasting more moderate growth in 2022 after the sharp increase in 2021.

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