The International Council on Clean Transportation (ICCT) has published a research estimating the maximum potential vegetable oil demand for international shipping under the International Maritime Organization’s Net-Zero Framework (NFZ).
IMO Net-Zero Framework
The proposed Net-Zero Framework (NFZ) by the International Maritime Organization (IMO) applies to ships of 5,000 tons or more engaged in international trade, with the goal of achieving net-zero emissions by around 2050. The framework uses Greenhouse Gas Fuel Intensity (GFI) targets that become progressively stricter.
- Tier 2 Penalty (Base Compliance): Ships failing to meet the base target face a penalty of $380 per tonne CO2e or can use banked credits from over-compliant vessels.
- Tier 1 Penalty (Direct Compliance): Ships with a deficit only against the stricter Tier 1 target face a reduced penalty of $100 per tonne CO2e but cannot access banked credits.
- Fuel Eligibility: The framework is fuel-neutral, evaluating fuels solely on life-cycle GHG emissions. This currently lacks safeguards to address indirect emissions and sustainability risks like land-use change from crop-based biofuels.
Biofuel Demand and Supply Constraints
The ICCT’s modeling shows that using biofuels is a cost-effective compliance pathway compared to the Tier 2 penalty. Hydroprocessed vegetable oil (HVO), also known as renewable diesel, is a key option.
- Cost-Effectiveness: Renewable diesel derived from used cooking oil (UCO-RD) is the cheapest compliance pathway among the biofuels analyzed, followed by biodiesel and other virgin vegetable oil (VO)-based renewable diesel.
- Supply Constraint: The global supply of waste-derived fuels, which are highly preferred for their lower sustainability risks, is extremely limited. The total global availability of UCO is estimated to produce about 13.6 billion liters of renewable diesel.
- Energy Coverage: This limited supply of UCO-derived fuel is sufficient to meet only about 4.9% of the international shipping sector’s projected energy demand for 2035 under the NFZ, even if all of it were immediately diverted to the maritime sector.
- Competition for Feedstock: Waste fats and oils (UCO and tallow) are already in high demand across the road transport and aviation sectors to meet their own sustainability and GHG reduction goals.
- Virgin Vegetable Oils: Using virgin vegetable oils (like palm or soy oil) to meet the remaining demand would likely cause environmental issues like land-use change and increased indirect emissions.
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Source: ICCT
