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Argus Media: Decarbonisation in the bunker market

Argus estimates around 45% of the fuel mix will have to come from non-oil sources and almost all of that will need to be zero or low carbon to meet 2030 targets.

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Jonty Richardson, Manager, Consulting of global energy and commodity price reporting agency Argus Media on Friday (12 March) published a summary on the various ways the bunker market will achieve IMO 2030 targets now that IMO 2020’s sulphur cap has been implemented:

With the International Maritime Organization's (IMO) 2020 sulphur regulation changes now in the rear-view mirror, IMO 2030 represents the next major milestone in the bunker market. There are different ways that the market will meet these targets and the stricter ones outlined for 2050.

The reduction of the maximum sulphur content of bunker fuel from 3.5% to 0.5% required action from refiners and shipowners to mitigate the impact of the significant drop in demand for high-sulphur fuel oil and the corresponding increase in very-low sulphur fuel oil demand. The market has made the switch to low-sulphur marine fuel without too much of a fuss and the next topic of conversation for the IMO is decarbonisation.

The IMO in 2018 outlined an initial strategy for the reduction of greenhouse gas (GHG) emissions in the shipping industry, which detailed key milestones for the medium and long term. These targets use 2008 as the baseline year, providing targets for 2030 and 2050.

IMO 2030

IMO 2030 targets a reduction in average carbon intensity (CO2 per tonne-mile) of at least 40% by 2030. Although low and zero carbon alternatives to bunker fuel will be a hot topic over the next decade, they will not be the most notable contributors to meeting IMO 2030 GHG reduction targets and their contribution will come to the forefront of discussion in the long-term outlook. This leads to the question of how will this 40% reduction in carbon intensity be achieved?

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The drive towards GHG reduction started much earlier, with the adoption of mandatory technical and operation measures dating back to 2011, when amendments to MARPOL Annex VI regulations codified the requirements with regard to Energy Efficiency Design Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP). EEDI stipulates the required energy efficiency of new vessels and the IMO estimate that these two measures will together reduce around 420mn t/yr of CO2, equal to a reduction of 20-25% from the baseline.

Slow steaming represents another means by which carbon intensity can be reduced. This practice became commonplace 2010-2014 with crude prices above $100/bl. The improvement in efficiency is evident in the relationship between seaborne trade and historic bunker demand shown in the figure below. With slow steaming still present in the current market and with some limitations to application in the container market due to the increased voyage length, there are some limitations to its further employment.

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LNG as a transition fuel

In addition to design and operational improvements, a certain degree of fuel switching will also play a part in meeting the 2030 target. Demand for LNG as a bunker fuel has increased significantly but remains a relatively small portion of the overall global market. LNG is future proof when it comes to sulphur content. There is global infrastructure in place to facilitate expansion and the technology is established. LNG releases around 20% less CO2 than fuel oil and marine gasoil, meaning that alongside other measures it is likely to satisfy targets outlined for 2030. Despite being a selling point at present and through the medium term, this represents a notable drawback in the longer term as LNG’s CO2 reduction profile versus established marine fuels is insufficient to satisfy 2050 targets.

IMO 2050 and the need for zero carbon fuels

IMO 2050 will introduce far stricter targets, necessitating a 50% reduction of GHG emissions from shipping by 2050. In order to meet this more aggressive target by 2050, zero carbon fuels will need to play a part in the fuel mix beyond 2030. There are many possible options, each with its unique selling points and caveats. LNG will likely continue to play a part due to the life cycle of vessels, but one or more of biofuels, hydrogen, methanol or ammonia represent potentially notable contributors to the global pool of bunker fuel in the long term.

For these fuels to gain traction as a viable alternative to existing bunker fuels such as fuel oil and gasoil, they will need to make economic sense, be available in sufficient quantities, scalable and ideally have a high enough energy density to facilitate long haul voyages without notable sacrifices to capacity. Whether it is one option that moves to the forefront, or a combination of the different fuels, these targets will not be met without them.

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Argus estimates that around 45% of the fuel mix will have to come from non-oil sources and almost all of that will need to be zero or low carbon. Ammonia and methanol both have the advantage of an established global infrastructure and are relatively easy to store and transport compared to a fuel like hydrogen. Biofuels are also an interesting option, due to HVO and FAME also having established global infrastructure, but the sustainability of feedstock source is a key determinant of the overall sustainability and the limitation of indirect land use change is increasingly prioritised, which limits available volumes. Legislation in key road transport markets across the world and domestic financial incentives for blending these fuels could price them at a level that limits their viability in the marine fuels sector.

Despite the current furore surrounding these zero and low carbon bunker fuels, it is too early to speculate about the significance to which each of these fuels may contribute to the fuel mix in 2050, but it is safe to assume that at least one of them will see significant growth. The conviction demonstrated in the pushback from some stakeholders within the industry regarding IMO 2020, the GHG reduction targets for 2030 and 2050 should be taken seriously. It is not a question if zero carbon fuels will be present in the fuel mix, but of which will emerge as the most significant.

 

Photo credit and source: Argus Media
Published: 18 March, 2021

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Wind-assisted

Singapore: EPS orders its first wind-assisted propulsion system for tanker

Firm signed a contract for its first ever wind-assisted propulsion system, partnering with bound4blue to install three 22-metre eSAILs® onboard “Pacific Sentinel”.

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Singapore: EPS orders its first wind-assisted propulsion system for tanker

Singapore-based Eastern Pacific Shipping (EPS) on Thursday (22 February) said it signed a contract for its first ever wind-assisted propulsion system, partnering with bound4blue to install three 22-metre eSAILs® onboard the Pacific Sentinel

The turnkey ‘suction sail’ technology, which drags air across an aerodynamic surface to generate exceptional propulsive efficiency, will be fitted later this year, helping the 183-metre, 50,000 DWT oil and chemical tanker reduce overall energy consumption by approximately 10%, depending on vessel routing.

Suitable for both newbuilds and retrofit projects, the system delivers energy efficiency and cost savings for a broad range of vessels, regardless of their size and age.

Singapore: EPS orders its first wind-assisted propulsion system for tanker

José Miguel Bermudez, CEO and co-founder at bound4blue, said: “Signing an agreement with an industry player of the scale and reputation of EPS not only highlights the growing recognition of wind-assisted propulsion as a vital solution for maximising both environmental and commercial benefits, but also underscores the confidence industry leaders have in our proven technology.”

“It’s exciting to secure our first contract in Singapore, particularly with EPS, a company known for both its business success and its environmental commitment.”

“We see the company as a role model for shipping in that respect. As such this is a milestone development, one that we hope will pave the way for future installations across EPS’ fleet, further solidifying our presence in the region.”

Cyril Ducau, Chief Executive Officer at EPS, said: “EPS is committed to exploring and implementing innovative solutions that improve energy efficiency and reduce emissions across our fleet.” 

“Over the past six years, our investments in projects including dual fuel vessels, carbon capture, biofuels, voyage optimisation technology and more have allowed us to reduce our emissions intensity by 30% and achieve an Annual Efficiency Ratio (AER) of 3.6 CO2g/dwt-mile in 2023, outperforming our emission intensity targets ahead of schedule. The addition of the bound4blue groundbreaking wind assisted propulsion will enhance our efforts on this path to decarbonise.”

“With this project, we are confident that the emission reductions gained through eSAILs® on Pacific Sentinel will help us better evaluate the GHG reduction potential of wind assisted propulsion on our fleet in the long run.”

Pacific Sentinel will achieve a ‘wind assisted’ notation from class society ABS once the eSAILs® are installed. 

 

Photo credit: Eastern Pacific Shipping
Published: 23 February, 2024

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Crime

Vietnam: Two ships seized over 170,000 litres of unknown origin diesel oil

Vietnam Coast Guard said vessels were transporting various quantities of oil cargo: KG-91487- DR was transporting about 145,000 litres and KG-91602-TS transported about 25,000 litres.

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Vietnam: Two ships seized over 170,000 litres of unknown origin diesel oil

The Vietnam Coast Guard on Tuesday (20 February) said it seized a total of about 170,000 litres of unknown origin diesel oil in an operation. 

Patrol boats belonging to Coast Guard Region 4 Command detected two fishing boats – KG-91487- DR and KG-91602-TS – displaying several suspicious signs.

Initial investigations found all vessels without invoices and documents proving legal origin of the oil material.

The vessels were transporting various quantities of oil material: KG-91487- DR was transporting about 145,000 litres and KG-91602-TS transported about 25,000 litres.

The authorities made records of administrative violations,and escorted the vessels to Fleet Port 422 in Phú Quốc city, Kiên Giang province for further investigations and handling in accordance with the law.

 

Photo credit: Vietnam Coast Guard
Published: 23 February, 2024

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LNG Bunkering

Galveston LNG Bunker Port joins SEA-LNG coalition

SEA-LNG said move will further enhance its LNG supply infrastructure expertise and global reach, while giving GLBP access to the latest LNG pathway research and networking opportunities.

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Galveston LNG Bunker Port joins SEA-LNG coalition

Galveston LNG Bunker Port (GLBP), a joint-venture between Seapath Group, one of the maritime subsidiaries of the Libra Group, and Pilot LNG, LLC (Pilot), a Houston-based clean energy solutions company, has joined SEA-LNG, according to the latter on Wednesday (21 February). 

SEA-LNG said the move will further enhance its LNG supply infrastructure expertise and global reach, while giving GLBP access to the latest LNG pathway research and networking opportunities.

GLBP was announced in September 2023 and will develop, construct and operate the US Gulf Coast’s first dedicated facility supporting the fuelling of LNG-powered vessels, expected to be operational late-2026.

The shore-based LNG liquefaction facility will be located on Shoal Point in Texas City, part of the greater Houston-Galveston port complex, one of the busiest ports in the USA. This is a strategic location for cruise ship LNG bunkering in US waters, as well as for international ship-to-ship bunkering and cool-down services. GLBP will offer cost-effective turn-key LNG supply solutions to meet growing demand for the cleaner fuel in the USA and Gulf of Mexico.

Jonathan Cook, Pilot CEO, said: “With an initial investment of approximately $180 million, our LNG bunkering facility will supply a vital global and U.S. trade corridor with cleaner marine fuel. We recognise that SEA-LNG is a leading partner and a key piece of the LNG bunkering sector, and will give us access to insights and expertise across the entire LNG supply chain.

“LNG supports environmental goals and human health by offering ship operators immediate reductions in CO2 emissions and virtually eliminating harmful local emissions of sulphur oxides (SOx), nitrogen oxides (NOx) and particulate matter.”

President of Seapath, Joshua Lubarsky, said: “We are very pleased to be supporting the decarbonization of the maritime industry through strategic, and much needed, investments into the supply of alternative fuels.  We are also happy to be a part of SEA-LNG which has done a wonderful job in advocating for advancements in technology in this vital sector.”

Chairman of SEA-LNG Peter Keller, said: “We’re proud to welcome another leading LNG supplier to the coalition and are looking forward to a mutually beneficial relationship. With every investment in supply infrastructure in the US and worldwide, the LNG pathway’s head start increases. Global availability, alongside bio-LNG and e-LNG development, makes LNG the practical and realistic route to maritime decarbonisation.

“All alternative fuels exist on a pathway from grey, fossil-based fuels to green, bio or renewable fuels. Green fuels represent a scarce resource and many have scalability issues, so we must start our net-zero journey today with grey fuels. LNG is the only grey fuel that reduces greenhouse gas emissions, well-to-wake, so you need less green fuel than alternatives to improve emissions performance.”

 

Photo credit: SEA-LNG
Published: 23 February, 2024

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