As the bunkering industry gears up for the International Maritime Organization’s tighter sulfur emission standards from 2020, some market participants have been promoting the blending of biofuels as one possible way of reducing emissions.
Alternate to scrubbers
Increasing the proportion of biofuels in the marine distillate bunker fuel pool would be one alternative to installing scrubbers — a system used to collect excess sulfur while burning traditional marine fuel — as a way of meeting the new 0.5% IMO sulfur limit that comes into force on January 1, 2020.
“If biofuels are cheaper than other cutterstocks, suppliers will use them,” one global bunker buyer said, adding that some physical bunker suppliers in the Mediterranean are already blending biofuel into their products.
FAME biofuel
FAME is a type of biofuel that can be made from any fatty acids. It is regularly used in road fuels in order for governments to reach EU mandated greenhouse gas savings.
The latest revision to the International Organization for Standardization’s distillate marine fuels specification — ISO 8217:2017 — introduced a higher “de minimis” allowance for FAME biofuel within the fuel mix and also added three new specifications that allow an even higher proportion of FAME.
Biofuel in road transport and shipping sector
But when it comes to blending biofuel into bunker fuel, there are a series of issues that have left market participants in both bunker and biofuel markets wary about any potential uptick in biofuel incorporation.
First off, what is straightforward when it comes to road transport is far less black-and-white in the shipping sector.
Currently across Europe, in accordance with the Renewable Energy Directive legislation, each EU country has a mandate to blend biofuel into road fuel to meet their obligations. Sales at a particular fuel station depends on the mandate of the nation where it is located.
But this is not the case with the shipping sector. “All depends on the flag, where you are buying the product from,” said one bunker buyer, highlighting the potential for confusion between where a refueling port is located, what flag a particular ship flies, and the nationality of the bunkering company in determining the mandate fulfillment.
“Well shipping is already getting very complicated with 2020 issues,” one physical bunker supplier in Europe said.
Specifications a main concern
However, the main concerns with the use of biofuel are its poor cold temperature properties, short storage shelf life and also stability issues when blended.
“There are the obvious complaints about CFPP,” said one biofuel source.
Each blend of biofuel has very specific cold weather properties, called its Cold Filter Plugging Point (CFPP).
As a result, the beneficial winter properties of gasoil can be significantly hindered and could cause problems far outweighing the benefits from using some biofuels in the fuel mix.
“FAME has never been a proven engine killer, however it clogs up lines and filters when it is cold,” the global bunker buyer said.
As a result, storage issues come to the fore for shipowners when it comes to deciding on fuel for a long journey during which the marine distillate fuel could be in tank for a long time.
“Issues arise when you tank [the product] for a long period of time — which can result in serious issues with slurry formation — going from warm to cold temperature zones repeatedly,” the buyer said.
There are also concerns over stability. As feedstocks for FAME biofuel are diverse, the fuel’s properties are also variable. Oxidation stability in particular can be affected by the presence of biofuel components.
Energy content
In addition, many kinds of biofuel don’t have as high an energy content as marine gasoil, or even jet fuel, which has in the past led to issues with uptake of biofuel outside of use as a road fuel.
“The question for biofuel is the energy content — typically it is good for road fuel but it doesn’t have enough for marine fuel,” said one biodiesel market source.
Hydrotreated vegetable oil
To some extent, this can be resolved through the use of hydrotreated vegetable oil (HVO), a cleaner type of renewable fuel with a lower sulfur content than FAME blends and more energy per volume. HVO also has preferential cold weather properties, but it comes at a higher price.
“HVO is the logical choice to blend into low sulfur marine fuel as it gives more energy and has lower sulfur levels,” a second biofuel source said. “There are the obvious complaints about CFPP which are fixed with using HVO, but the issue there is price,” another source added.
The deciding factor
In the end despite its environmental advantages, the deciding factor on biofuel use in the marine sector will likely come down to cost, with many biofuel producers and traders saying they remain pessimistic as to their chances of breaking into the new market any time soon.
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Source: S&P Global
