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DNV releases technical article on use of biofuel bunkers in shipping

DNV released the guide after receiving many requests regarding safe operation of ships using biofuels and/or biofuel blends and how to comply with international regulations when using these bunker fuels.

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Classification society DNV on Tuesday (21 February) released a technical article to clarify the regulatory status and other considerations on the usage of such fuels after seeing an increasing interest in biofuel bunkers or biofuel blends. The following is an excerpt of it:

Relevant for shipowners, managers, seafarers, maritime training institutes and flag states. 

DNV has received many requests regarding the safe operation of ships using biofuels and/or biofuel blends and how to comply with international regulations when using these fuels. Below is a summary of regulatory issues, safety and operational aspects:

Types of biofuels

Three types of biofuels are relevant for maritime shipping:

  • FAME (Fatty acid methyl ester) is produced from vegetable oils, animal fats or waste cooking oils by transesterification, where various oils (triglycerides) are converted to methyl esters. This is the most widely available type of biodiesel in the industry and is often blended with regular marine diesel. International standards: ISO 8217:2017, EN 14214, ASTM D6751, EN 590
  • BTL (Biomass to liquid) fuels are synthetic fuels that are produced from biomass by means of thermo-chemical conversion using the Fischer-Tropsch process or the methanolto-gasoline process. The final product can be fuels that are chemically different from conventional fuels such as gasoline or diesel but can also be used in diesel engines. International standards: EN 16709, EN 15940
  • HVO/HDRD (Hydrogen vegetable oil / Hydrogenation derived renewable diesel) is the product of fats or vegetable oils – alone or blended with petroleum – refined by a hydrotreating process known as fatty acids-to-hydrocarbon hydrotreatment. Diesel produced using this process is often called renewable diesel to differentiate it from FAME biodiesel. HVO/HDRD can be directly introduced in distribution and refuelling facilities as well as existing diesel engines without any further modification. International standards: ASTM D 975

Currently, FAME is the most prominently used biofuel in marine applications. It is either used in blends with traditional petroleum fuels or as 100% biofuel

Biofuels and their effect on GHG regulations

The Maritime Safety Committee has invited all relevant IMO bodies to assess their respective involvement in the human element within their remit and report back to the committee with a view to devising an outline for a holistic approach on the human element, taking into account resource and budgetary implications within the IMO. In this regard, HTW 9 invited member states and other interested parties to submit papers to HTW 10 in February 2024.

Model training courses

IMO model courses intend to assist instructors in developing training programmes for seafarers as per the International Convention of Standards of Training, Certification and Watchkeeping for Seafarers (STCW), 1978. The model courses are subject to regular review to ensure that they are consistent with the current IMO instruments and reflect best practices and modern technologies.

HTW 9 validated a large number of model courses, as there was a backlog due to time constraints in the remote sessions of the last two years. 

The following model courses are now validated and will be published soon:

  • EEDI and EEXI
    The EEXI and EEDI only consider the so-called tank-to-wake approach, meaning that only the carbon content of standard reference fuels the vessel is designed for is considered. For that reason, the usage of biofuels has no effect on the EEXI or the EEDI.
  • CII (Carbon Intensity Index)
    In view of IMO DCS reporting as well as the CII calculation methodology – as per the 2022 SEEMP Development Guidelines, Resolution MEPC.346(78), and the CII Calculation Methods Guidelines, Resolution MEPC.352(78) – in case of fuel types not covered by the guidelines, the conversion factor Cf is to be obtained from the fuel oil supplier and supported by documentary evidence.
    Any non-standard approach in the determination methodology of tank-to-wake emissions for biofuels is subject to acceptance by the vessel’s flag administration as well as the RO handling the IMO DCS and CII verification on behalf of the flag, where an addition to the list of fuel types used and applicable conversion factors needs to be reflected in the SEEMP Part II.
    In case of acceptance of the flag state administration, the usage of biofuels, also in form of blends with traditional petroleum fuels, will have a significant impact on the reduction of the CII value
  • EU MRV
    As per Regulation (EU) 2015/757, in case of alternative fuels, the monitoring plan shall contain “the methodologies for determining the emission factors, including the methodology for sampling, methods of analysis and a description of the laboratories used, with the ISO 17025 accreditation of those laboratories, if any”. It is worth noting that Directive (EU) 2018/2001 (EU RED II), Annex V, Part C provides a methodology for greenhouse gas emissions from the production and use of transport fuels, whereas per point 13, the CO2 emissions of the fuel in use shall be taken to be zero for biofuels and bioliquids.
  • The proposed method for calculation of the CO2 emission factor for biofuel and biofuel blends should be included in the ship’s MRV Monitoring Plan along with an addition to the list of fuel types used and method for determination of fuel density, with the revised plan being subject to acceptance from the Accredited Verifier, such as DNV.

Note: The full copy of DNV’s technical article on biofuels can be found here

 

Photo credit: DNV
Published: 23 February, 2023

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LNG Bunkering

Titan completes first STS LNG bunkering operation in Cuxhaven

Port of Cuxhaven in Germany had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth, says Titan.

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Titan completes first STS LNG bunkering operation in Cuxhaven

LNG bunker fuel supplier Titan on Thursday (11 July) said it completed the first-ever LNG bunkering operation by ship in the port of Cuxhaven.

Titan’s bunker vessel Optimus successfully delivered LNG to dredger Vox Ariane operated by its long-term client Van Oord. 

“Our ship-to-ship bunkering in Cuxhaven represents a pioneering step in the region's LNG infrastructure development, as the port had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth,” it said in a social media post. 

“LNG infrastructure development is part of a broader trend, with more ports across Germany adopting LNG operations to support shipping’s clean fuels transition.”

Titan added the improved LNG bunkering capabilities in Cuxhaven, a Niedersachsen Ports GmbH & Co. KG port, also opened up the pathway to maritime decarbonisation via liquified biomethane (LBM) and then renewable e-methane going forward.

 

Photo credit: Titan
Published: 12 July, 2024

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LNG Bunkering

UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Firm said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier in the Port of Drammen, Norway.

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UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Norwegian roll-on/roll-off shipping line United European Car Carriers (UECC) on Wednesday (10 July) said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier Auto Achieve in the Port of Drammen on 4 July.

The firm said this was the first time UECC received LNG by barge to any of their vessels in their home country Norway. 

“We also believe that it was the first time LNG was delivered by barge to any vessel in Drammen, and most likely the entire Oslofjord,” UECC said in a social media post.

The LNG was supplied by the Molgas Energy Holding vessel Pioneer Knutsen, owned by Knutsen Group OAS.

“UECC is very pleased to see the expansion of the LNG barge network in Norway,” it said. 

 

Photo credit: UECC
Published: 12 July, 2024

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FuelEU

OceanScore reveals ship segments set to feel EUR 1.3 billion sting of FuelEU penalties

Container segment will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%, says firm.

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OceanScore Managing Director Albrecht Grell

Hamburg-based technology platform OceanScore on Tuesday (9 July) said the financial impact of FuelEU Maritime is focusing the minds of shipping companies as they face potential penalties for non-compliance with greenhouse gas (GHG) intensity reduction targets - and OceanScore has identified those segments set to be hit hardest.

The following is an article by OceanScore elaborating on the matter:

Vessels in the passenger/cruise, container, RoPax, bulker and tanker segments will have significant cost exposure from the complex regulation due to be implemented from 1 January next year, despite a relatively modest initial target of a 2% cut in GHG intensity, according to OceanScore.

The firm’s data analytics team has calculated that shipping will rack up total FuelEU penalties of €1.345 billion in 2025 through analysis of the 13,000 vessels over 5000gt trading within and into the EU/EEA that are subject to the regulation. This is based on data on trading patterns and fuel mix from 2022 - the last full year currently available.

Containers bear burden

The team has been able to determine FuelEU compliance balances and resulting penalties for each vessel using OceanScore’s proprietary data modelling incorporating AIS data, Thetis emissions data, bunker intelligence and advanced analytics/AI. It has factored in the likely fuel mix for each vessel between EU ports and to/from the EU, as well as in ports.

Vessels will be hit with a penalty of €2400 per tonne of VLSFO-equivalent for failing to meet the initial 2% reduction target relative to a 2020 baseline for average well-to-wake GHG intensity from fleet energy consumption of 91.16 gCO2e per megajoule (MJ) - or emissions per energy unit. The GHG intensity requirement applies to 100% of energy used on voyages and port calls within the EU/EEA and 50% of voyages into and out of the bloc.

As with the EU Emissions Trading System (EU ETS), it is the container segment that will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%.

“It is critical for shipping companies to determine a baseline for expected FuelEU costs to secure proper planning and budgeting processes to compare different mitigation options, as well as to decide what to do with outstanding compliance balances,” says OceanScore Managing Director Albrecht Grell.

“This will require, to a higher degree than the EU ETS, a corporate strategy to determine how to reduce the compliance balance/deficit, how to commercialise a surplus and deal with deficits that remain.”

Wide spread of vessel liabilities

OceanScore has found that liabilities per vessel will differ widely across the various segments due to increasingly diversified fuel choices, including greater uptake of biofuels and LNG. Passenger vessels will be penalised the most with an average of €520,000 per vessel annually, followed by RoPax at €480,000 and RoRo at €314,000, with an average penalty for container ships of only €214,000, according to OceanScore.

Grell points out there are also massive discrepancies between vessels within these segments, with a number of ships in the passenger and RoPax segments exposed to penalties of between €1.8m and €2.5m, and payment obligations for some container ships approaching €1m. This is driven by higher energy consumption simply due to vessel size and trading profile.

While penalties will arise from so-called compliance deficits for vessels using conventional fuels, surpluses totalling an estimated €669m will be generated mainly by vessels fuelled by LNG and LPG with significantly lower carbon intensity.

LNG carriers will account for 78% of the total market surplus and gas carriers 8%, while a further 8% will be generated by container ships that have seen a modest uptake in alternative fuels in recent years.

Pooling can halve costs for the industry

Taking into account this estimated compliance surplus, the net cost of FuelEU penalties for shipping from 2025 would be €680m, which indicates that pooling of vessels can roughly halve the gross burden for the industry.

Penalties will, in segments typically using conventional fuels with comparable carbon intensities such as HFO, LFO or MDO, be roughly proportional to the overall fuel consumption, thus correlating with the EU ETS cost.

Initial costs of FuelEU for most conventionally fuelled vessels, prior to pooling, will be around one-third of those associated with the EU ETS next year when the latter regulation will have 70% phase-in. But ultimately FuelEU is likely to prove a much more costly affair as the requirement for GHG intensity cuts rises to 6% by 2030 and then accelerates to reach 80% by 2050.

“It is therefore incumbent on shipowners to define their strategies not only towards fuel choices and the use of onshore power but also towards handling of residual compliance balances such as pooling, banking and borrowing of balances, to mitigate the financial impact of FuelEU. However, pooling will also come at a cost, while banking and borrowing will incur interest costs and only push liabilities into the future,” Grell explains.

‘Sound administrative processes’

He further points out that pooling compensations paid between different shipping companies will effectively divert cash flow away from the EU that it would otherwise have earned from FuelEU penalties – but that this effect is intended by the regulator to “reward” early adopters of clean fuels.

Another factor that will curb potential income for the EU from this regulation is that the compliance gap has been reduced to only 1.6% by 2022, as average GHG intensity from shipping has come down by 0.4% to 90.82 gCO2e per MJ, mainly due to increased LNG carrier calls to Europe after gas supplies via pipelines from Russia were halted when the latter invaded Ukraine. Given this trend and increasing adoption of biofuels, the 2% compliance gap will probably be closed before the first tightening of reduction targets in 2030.

Grell says the priority for shipping companies, especially at this early stage while cost exposure is relatively low, is to get to grips with the complexity of the regulation and tackle the risks arising from the fact the party liable for penalties - the DoC holder, or possibly shipowner - is not the one responsible for emissions, which is typically the charterer.

“As well as having costs oversight, companies require reliable monitoring and reporting mechanisms with high-quality emissions data. They must also have in place complex contractual arrangements and sound administrative processes to manage compliance and mitigate the financial consequences of the new regulation,” Grell concludes.

Related: FuelEU: New regulation leaves DoC holder with fuel liabilities risk, says OceanScore
Related: ‘Big opportunity’ for bunker traders, suppliers on upcoming FuelEU regulation, forecasts OceanScore

 

Photo credit: OceanScore
Published: 12 July, 2024

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