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Argus Media: Bunker biofuel pilot projects launch in Asia

21 Dec 2020

Sammy Six of global energy and commodity price reporting agency Argus Media on Friday (18 December) published a summary on the take up of biofuel at various Asian shipping markets despite the relatively high cost and lack of governmental incentives in place:

The marine industry has shifted its attention to accommodating the International Maritime Organisation’s (IMO) greenhouse gas (GHG) strategy, after having to adjust to the Covid-19 pandemic and the implementation of the IMO’s global sulphur cap in marine fuels.

The IMO’s goals consist of reducing carbon emissions in the maritime sector by 40pc by 2030 and by at least 50pc by 2050 from 2008 levels.

Biofuels, such as biodiesel and ethanol, are another type of alternative shipping fuel that could meet the IMO’s decarbonisation goals. They emit negligible sulphur and carbon emissions, while they can easily be blended with conventional bunker fuels.

Several large container shipping lines are carrying out pilot studies to produce second generation biofuels. Danish shipping firm Maersk launched last year a type of biodiesel derived from used cooking oil (UCO). French shipping firm CMA CGM has a partnership with Shell to supply some of its fleet with a similar fuel, which is a blend of 80pc very-low sulphur fuel oil (VLSFO) and 20pc biofuel made of UCO.

But the handling of fuels derived from biomass is largely unfamiliar to shipowners and questions remain especially regarding scalability and availability. Some biofuels can also not be considered “drop-in” fuels as existing vessels’ engines will need to be modified extensively to be able to use them, which means they are typically only considered as a viable alternative for newbuilds.

Biofuels are more expensive than conventional fuels and so depend on governmental incentives and levies on carbon fuels to compete on price. Such support frameworks mainly exist in Europe and North America but remain largely absent in Asia.

The Maritime and Port Authority of Singapore in 2017 supported a letter of intent between UK-Australian mining company BHP and Dutch biofuels producer GoodFuels to support a biofuels pilot project. Singapore shipowner Eastern Pacific Shipping on 15 October this year appointed GoodFuels to supply one of its Medium Range tankers with biofuel bunkers.

A group of South Korean companies including Hyundai, Korea Bio Energy, Korea Shipbuilding and others, signed an initial deal in August this year to promote the adoption of bio heavy oil in shipping, produced from animal and plant oil and residues from biodiesel production.

South Korea’s SK Chemicals has also said it will look into increasing its biofuel output by 50pc to accommodate rising demand for biofuels from the shipping sector. The company already created blends of biodiesel with conventional fuels to produce low-sulphur fuel oil to meet the IMO’s 2020 0.5pc sulphur cap in marine fuels that took effect on 1 January this.

Japanese shipping firm Mitsui OSK Lines in December this year carried out a biodiesel trial on one of its tugboats at the port of Nagoya. The fuel is a blend of UCO and algae derivative from biotechnology venture company Euglena. GoodFuels last year delivered biofuels on board a bulk carrier owned by Japanese shipping firm NYK.

China, one of the world’s largest biofuel and ethanol producers, has yet to consider renewable fuels as part of its low-carbon shipping strategy as it remains focused for now on boosting its VLSFO output.

 

Photo credit and source: Argus Media
Published: 21 December, 2020

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