A breakthrough in fuel and propulsion technologies is being driven by private sector initiatives and mushrooming policy. Six green shipping lanes were in fact designated as an early goal by the 2021 Clydebank Declaration for the year 2025. Therefore, it’s possible that we are already starting to move toward the multi-fuel scenario that the International Chamber of Shipping (ICS) believes will determine the direction of shipping in the future.
War of the currents
Like many others, they believe that the best options are ammonia, biofuels, LNG, methanol, and e-fuels. Ammonia, biofuels, and hydrogen, according to the International Energy Agency, could meet more than 80% of the sector’s needs by 2070. The International Renewable Energy Agency, on the other hand, sees ammonia and particularly green methanol as essential for the industry. While some players appear to be hedging their bets by maintaining a hand in every pot, the jostling between advocates and opponents of these numerous fuels in the background has a passing resemblance to the “war of the currents” that occurred in the late 19th century. The current top four are LNG, ammonia-ready, LNG-ready, and LPG.
Shifting goals
Despite the shifting goals, it can be useful to gain a glimpse of the situation for those key fuel types as of the third quarter of 2022. This article sheds some light on the actual situation occurring at four significant bunkering ports using the Baltic Exchange sample as a point of comparison. Only Rotterdam now makes available data on alternative bunker sales quantities. At the time of writing, the other three either don’t, won’t share, or haven’t gotten back to us. Even with LNG, which has been in use for well over a decade, data on physical deliveries, where available, show very limited real amounts.
All things considered, the picture that is starting to take shape is one in which authorities, bunker suppliers, ship and cargo interests, and others come together at these locations through partnerships, investments, studies, and trials in anticipation of a paradigm based on an even closer overlap between fuel production, storage, bunkering, and port facilities.
Fujairah
Although Fujairah has been subtly looking into ways to provide alternative energy, there are currently no formal plans in place because they are still viewed as being premature and risky.
However, GAC and a joint venture between Uniper and Neutral Fuels are able to provide biofuel blends. As a logistics enabler, Monjasa joined those two partners in 2022.
In February 2022, LNG bunkering was launched thanks to a collaboration with ADNOC. A new LNG export terminal’s construction contracts were won in May, and its completion is targeted for 2026 to 2028. The two new LNG trains would also supply the potential bunkering industry.
Methanol and ammonia are currently unavailable, although research is apparently being done on hydrogen.
Houston
With the use of alternative fuels and participation in green shipping lanes, Houston adopted a decarbonization policy in April 2022 with a net zero target for 2050.
The American Association of Port Authorities designated ammonia as a “viable fuel” because of its accessibility, adaptability, and yield potential. A waterborne ammonia terminal that belongs to Vopak Moda Houston was commissioned in December 2021 and is currently fully operational and prepared for a variety of uses, including bunkering.
The Vopak Terminal Deer Park, on the other hand, provides biofuel storage that can be expanded to feed bunkering operations.
Houston, on the other hand, isn’t prepared for hydrogen, but the nearby Port of Corpus Christi is preparing to transform into a hub for hydrogen export by working with Howard Energy Partners to renovate the latter’s Javelina plant, which might potentially serve bunkering facilities in the USG range.
Concerning LNG, Pilot LNG and GAC came to heads of agreement wherein Pilot LNG would provide GAC with LNG for sale in the important Galveston Bay area, which encompasses the ports of Houston, Galveston, and Texas City as well as the Galveston Offshore Lighting Area. The front-end engineering and design contract for the Galveston LNG Bunker Port was then awarded in November 2021.
Rotterdam
Rotterdam is preparing for alternative fuels.
Biofuels are available and supply is increasing.
By Q1 2022 it had doubled joy after reaching 200,000 m3 in Q1 2020.
While UPM is now planning a new biorefinery at the port, Goodfuels has long been supplying biofuels and also enjoyed a partnership with VARO Energy since 2018.
Other prominent players include Delta Energy Fuel Supply & Trading which started supplying biofuel blends in July 2021.
With regards to hydrogen, a large import and storage facility is nearing completion thanks to the involvement of major industry names.
Moreover, the port has inked an agreement with Uniper for the production of green hydrogen within the port territory.
In turn, the neighbouring port of Amsterdam has already tested hydrogen bunkering.
LNG bunkering began in 2011 and is now available both on a shore-to-ship and ship-to-ship basis.
Nine LNG bunker vessels operate in the area, three of which are permanently deployed.
Besides, the port has partnered with Gidara to develop Advanced Methanol Rotterdam, a waste-to-methanol facility whose prospective customers include an assortment of bunkering companies.
Singapore
Singapore is forging ahead with its alternative fuel developments and has the interest of several stakeholders.
With regards to ammonia, recent agreements include an MoU between Sumitomo Corporation and Keppel FELS, another one binds ITOCHU ENEX, ITOCHU Corporation and Vopak Terminals Singapore; while another one brings together ABS and other knowledge and industry partners – so far all at feasibility stage.
Fratelli Cosulich signed an MoU with CIMC SOE for the construction of an ammonia bunkering barge that follows a Joint Development Program agreement with RINA and Seatech Solutions.
Maersk is likewise in the bunker tanker game, spearheading a study by a variegated group of stakeholders including Singapore’s Maritime and Port Authority (MPA), with the goal of commencing operations by 2030.
Meanwhile, the Castor Initiative is examining safety and procedures for ammonia bunkering, at the same time as DNV with Surbana Jurong and the Singapore Maritime Academy are studying the safety and operational guidelines to be tested in two sandbox trials.
In biofuels, Rotterdam’s Goodfuels is a also prominent player here too.
In 2022, V-Bunkers began barge deliveries of bio-fuel VLSFO blends, while the local Chevron refinery reached a deal with MOL for the supply of cooking oil-based blends for one of its panamaxes.
Driving this trend, FueLNG conducted over 460 operations during that year.
Lastly, the Methanol Institute sees Singapore taking up a large role as a bunkering and trading hub for alternative fuel.
In January 2022, the Methanol Institute, SeaTech Solutions and Singfar International will study applications of methanol as an alternative bunker fuel.
Conclusion
While the wheels of a marine fuels revolution are starting to turn, the challenge of decarbonising the shipping sector is massive.
First, most projects are at the pilot stage, if not merely at the drawing board.
It is to be seen when and to what extent will these fuels reach the wide availability for the respective bunkering options to make sense operationally.
The estimated price tag is in the range of $38-$118 billion a year between 2022 and 2050 according to DNV, the tally comprising onboard and onshore investments.
But by one account decarbonizing shipping could cost as much as $1 trillion.
Third, the higher price of green fuels than of traditional ones remains a turnoff.
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Source: Ship & Bunker
