Shell makes early move on biodiesel launch in Hong Kong

Shell Hong Kong today becomes the first oil major in the city to commercially launch the 5 per cent biodiesel blend product, targeting corporate customers seeking to meet their greenhouse gas emission reduction and development sustainability goals.

But the unit of European international oil major Royal Dutch Shell has no plan to launch the cleaner-burning fuel at its network of fuel stations, citing uncertain demand and limited storage capacity at this stage.

Local mass transport market demand is almost non-existent since there is no mandatory blending requirement of local diesel supply, leaving only voluntary demand from the government, industrial and commercial sectors to support experimental usage.

"Demand from the commercial sector does exist since corporates are increasingly aware of the importance of sustainability development and environmental protection," said Shell Hong Kong chairman Daniel Ng Ngai-hung. "The key [to mass commercialisation] is for the government to legislate policies or offer other support such as subsidies."

Mandatory biodiesel blending ranges between 5 and 10 per cent in the United States and 7 per cent in Europe. Indonesia, Malaysia, the Philippines, South Korea and Taiwan also have mandatory blending requirements.

Shell has previously been working with Gammon on trial sales and distribution in the city, including the construction of a fuel blending facility for a sum that Ng declined to disclose.

Shell sources its biodiesel from Middle East-funded ASB Biodiesel, which this year started operating in Tseung Kwan O at a HK$1.36 billion, 100,000-tonne-a-year plant that makes biodiesel from waste cooking oil and grease trap waste sourced from restaurants and caterers.