Are Biofuels a Viable Alternative for the Shipping Sector?

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  • Some shippers are exploring the use of biofuels as the 2020 deadline approaches.
  • It complies to the new regulations but the cost of blending mandates a steep price rise.
  • Their low-temperature functionality and shorter shelf life further complicate the matter.
  • SWOT analysis established large scale production and storage problems.
  • Some Mediterranean suppliers has change using it but this requires better infrastructure and engine modules.

The International Maritime Organization (IMO) has set the January 1, 2020 deadline for sulphur fuel oil use beyond which only low sulphur fuel oils will be allowed for ships. Now, shippers are exploring various options to comply with the new sulfur-limiting rules as the shipping industry is preparing for a major disruption of the types of fuels to be used in ships, writes Tsvetana Paraskova for Oilprice.com

One is to use Ultra Low Sulphur Fuel Oil (ULSFO) or marine gas oil (MGO). Another option is to install the so-called scrubbers—systems that remove sulfur from exhaust gas emitted by bunkers.

Some in the industry have also been exploring using biofuels as cutter stock to blend with the fuels.

How viable is the biofuel option?

While biofuels have advantages in terms of reduced emissions, so they would be more ‘environmentally-friendly’ than other options, the characteristics, energy content, and costs of biofuels for blending in the shipping industry are disadvantages that ship owners and operators can’t ignore.

According to data by S&P Global Platts, the price of biodiesel for blending significantly exceeds the price of marine gas oil.

  1. The biofuel blending for shipping would be much more complicated than road fuel blending mandates, because of the nature of the shipping industry where ships flying any flags move between ports in various countries.
  2. According to sources in the fuel buying market who spoke to S&P Global Platts, the issue of which country gets the mandate for biofuel blending and emissions is complex when it comes to shipping.

Apart from this issue, there are others that could prevent biofuel from becoming a mainstream solution for the shipping industry to reduce emissions. These are the lower energy content of biofuels compared to marine gas oil, the poor performance of biofuel in cold temperatures, less stability when blended, and short shelf life, biofuel and bunker buyer sources told Platts.

Biofuel Usage So Far

Some fuel suppliers in the Mediterranean have already started blending biofuel into their products.

Earlier this month, a container vessel that normally runs on a combination of fossil fuels like heavy fuel oil and marine gas oil was bunkered using hydrotreated vegetable oil made from used cooking oil, said the GoodShipping Program, which promotes the use of biofuel in the shipping industry.

According to an October 2017 report supported by funding from Innovation Fund Denmark and International Energy Agency (IEA) Bioenergy, the new IMO sulfur content rules mean that an estimated 70 percent of the fuels currently used by the shipping sector needs to be modified or changed.

SWOT Analysis of Biofuels

While the biofuel feedstock has extremely low sulfur content, the weaknesses of this type of fuel are that marine biofuels are not cost competitive with fossil fuels; and the fact that there isn’t enough long-term fuel testing data for marine biofuels, according to the SWOT analysis in the report. Other weaknesses include concerns about storage and the oxidation stability of the fuel; and the fact that commercial production of high biofuel volumes has not yet been established.

Risks & Benefits

“Considering that merchant vessels remain operational for more than 30 years, ship operators would be taking a big risk using a fuel that is not yet guaranteed to work with the installed engines for such a long period of time,” the report says.

While the environmental benefits of using cleaner low-sulfur biofuels in shipping are clear, the lack of stable policy framework for marine biofuels leaves ship owners and operators hesitant to use such fuels, while biofuel suppliers are not rushing to build large-scale advanced biofuel plants, according to the IEA Bioenergy report.

“Biofuels for the shipping sector is a technical and economical opportunity for biofuel producers, just as biofuels meet the coming fuel regulations within the sector. However, larger scale introduction of biofuels requires involves a directed effort between engine manufacturers, biofuel suppliers, ship owners, and infrastructure (port) operators,” it said.

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Source: Oil Price

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