Star Bulk, a major dry bulk shipping company, plans to start using biofuels to power its fleet. This move is in response to new EU regulations that will come into effect next year, reports S&P Global.
Optimum Choice
Brussels is set to introduce FuelEU Maritime rules that mandate ship operators to cut the greenhouse gas emissions intensity of fuels used by vessels in EU-related trades by 2% from 2025, 6% from 2030, 14.5% from 2035, 31% from 2040, 62% from 2045 and 80% from 2050, against 2020 baselines.
With EU officials warning that shipping firms simply using conventional, oil-based fuels would not be able to comply, many analysts have predicted more biofuels will enter the bunker pool as they can be used on a drop-in basis by ships without propulsion systems for alternative fuels.
“We will be using, going forward, some form of biofuels in order to achieve compliance,” said Capetanakis. “We are making the calculations to see what the optimum choice of blend ratio is.”
Currently, B24 — with 24% biocomponents — is the most common bio blend marine fuel globally, but B30 is often supplied in Europe’s top refueling hub of Rotterdam, where a sufficient number of chemical tanker barges enable the supplies of higher grades.
“Whether it’s going to be B24, B30 or B50 is something to be determined going forward,” said Capetanakis, adding that the majority of bio blends in the market are expected to be based on used cooking oil methyl ester (UCOME), but “surely” more will appear as demand picks up.
Biobunker fuels generally cost more than oil-based bunkers due to limited feedstock, and some industry participants have suggested shipping firms would limit its use to lower compliance expenses.
Fuel use
Star Bulk’s fleet consumes roughly 1 million mt/year of marine fuels, of which the vast majority are high sulfur fuel oil, followed by 0.1%-sulfur marine gasoil while VLSFO is rarely used.
More than 95% of the company’s ships are installed with scrubbers, suggesting HSFO could also be a compliance option in the International Maritime Organization’s Emissions Control Areas when technical and legal requirements are met, according to Capetanakis.
The next ECA coming into force will be in the Mediterranean from May 2025, and Capetanakis suggests MGO could be the company’s main alternative when HSFO is not used.
While MGO is a “well-known” grade, “you will need to be much more careful” with the properties of ultra-low sulfur fuel oil with 0.1%S,” Capetanakis said. “But I don’t think that we will have a supply problem overall.”
Looking forward, Star Bulk will begin to invest in ships capable of burning LNG, methanol or ammonia if regulators provide more clarity, according to Capetanakis.
Member states of the International Maritime Organization are set to finalize new regulations to achieve their decarbonization targets next year, which could include a carbon levy and global GHG standards for marine energy.
“We are waiting for the regulations to be finalized,” said Capetanakis, who also serves as the chair of the International Bunker Industry Association, which represents bunker industry participants and has consultative status at the IMO.
“We are waiting for a much more clear picture in terms of pricing, in terms of technology advancements before we move in any serious investment on such vessels,” Capetanakis added.
The IMO has set targets to reduce life-cycle GHG emissions from international shipping by 20%-30% by 2030 and 70%-80% by 2040 against 2008 levels, before transitioning to net-zero shipping close to 2050.
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Source: S&P Global
