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UECC reduces emissions in 2023 by more than doubling bio bunker fuel use

UECC boosted the use of ISCC-certified sustainable biofuel B100 on both owned and time-chartered ships to 14,000 mt last year, up from 6,500 mt in 2022.

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UECC

United European Car Carriers (UECC) recently announced its progress of using alternative bunker fuels and said it was on track to exceed its goal of a 45% emissions reduction by 2030 after more than doubling biofuel usage across its fleet last year.

UECC boosted the use of ISCC-certified sustainable biofuel B100 on both owned and time-chartered ships to 14,000 metric tonnes (mt) last year, up from 6,500 mt in 2022.

The company achieved a total tank-to-wake emissions reduction of over 60,000 tonnes across its 14-vessel fleet in 2023, of which it is estimated increased biofuel use accounted for 40,000 tonnes, with the remainder coming from LNG. This was a near-250% increase on the emissions cut of 24,200 tonnes achieved in 2022.

TheEuropean sustainable shortsea carrier said it has made significant strides in decarbonisation of its fleet of pure car and truck carriers (PCTCs) with the addition of five LNG-fuelled newbuilds and the increased rollout of biofuels in recent years - and this is now showing commercial payback for clients in the light of new green regulations, according to Energy and Sustainability Manager Daniel Gent.

“Consequently, we are well on the way to reach or exceed our 45% emissions reduction target by 2030. This clearly has a positive impact for those bio-supportive cargo owners in terms of reducing costs related to the EU Emissions Trading System (EU ETS),” Gent said.

“Furthermore, 85% of the vessels in our fleet achieved a C-rating last year with the IMO’s Carbon Intensity Indicator (CII) and this year we expect all our ships to achieve this rating or above.”

Gent also pointed out the UECC fleet is already in surplus in relation to the requirement for an average 14.5% reduction in GHG intensity by 2035 under the FuelEU Maritime regulation due to be implemented next year.

The environmental performance of UECC’s current fleet of nine owned and five time-chartered PCTCs has been enhanced through delivery over the past seven years of five eco-friendly newbuilds - a pair of dual-fuelled LNG vessels and trio of multi-fuel LNG battery hybrid units.

The use of LNG reduces emissions of CO2 by around 25%, SOx and particulate matter by 90% and NOx by 85%, while the latest battery hybrid newbuilds exceed the IMO target to reduce carbon intensity by at least 40% from 2008 levels by 2030.

UECC is now looking at sourcing alternative carbon-neutral fuels such as bio-LNG and e-LNG for these vessels to further improve their green performance, according to Gent.

UECC’s adoption of alternative fuels has expanded exponentially since the programme was launched in 2020 with piloting the use of biofuel on its vessel Autosky, bolstered by valuable support from owners of its time-chartered vessels, clients such as BMW, fuel suppliers like GoodFuels, industry partners, and parent companies NYK and Wallenius Lines.

“We are now in the fifth year of running our biofuels programme and it has gone from strength to strength. UECC has sought to take a leading role through early-stage analysis of new biofuels to evaluate their potential in terms of technical suitability, sustainability and commercial viability, both  to deliver the best solution for our customers and give the sector a blueprint for assessment and adoption of such fuels based on these three pillars,” Gent explained.

He added that, in terms of sustainability criteria, the company looks for biofuels with the biggest environmental impact, with a typical minimum 90% reduction in GHG intensity from well-to-wake compared with conventional marine fuels. 

UECC has steadily expanded the use of green fuels to cover 30% of its fleet in 2023, up from 18% in 2022, and is on track to achieve 50% coverage this year towards the goal of 80% by 2030, though Gent is confident of surpassing this figure.

He said being proactive in trialling new alternative fuels has also promoted engagement with fuel providers, which has led to UECC’s latest initiative together with biofuel supplier ACT Group as part of an industry collaboration to test the Cashew Nut Shell Liquid (CNSL)-based biofuel FS.100 that he believes has “great potential for sustainable shipping”.

“Increasing the pool of sustainable drop-in fuels offers a pathway for shipping to achieve rapid emissions cuts on existing vessels. Combining alternative fuels with energy efficiency measures such as hull cleaning and electrification with shore power can further accelerate decarbonisation,” Gent said.

“By progressively advancing the use of alternative fuels, we are reducing emissions exposure for our clients and securing regulatory compliance long into the future, while also promoting industry efforts to reach the net-zero goal,” he concluded.

 

Photo credit: United European Car Carriers
Published: 21 June, 2024

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Alternative Fuels

Argus Media Q&A: Aviation may pull feeds away from marine, says BV

Biofuel feedstocks could be routed away from marine fuels to meet demand from the aviation sector if the latter is willing to pay higher prices associated with sustainable aviation fuel, says Bureau Veritas.

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Biofuel feedstocks could be routed away from marine fuels to meet demand from the aviation sector if the latter is willing to pay higher prices associated with sustainable aviation fuel (SAF), Bureau Veritas (BV) Marine & Offshore's global market leader for sustainable shipping Julien Boulland told Argus. Edited highlights follow:

19 July 2024

Marine biodiesel has been the largest alternative fuel uptake, with over 1mn t sold in Rotterdam and Singapore last year. But with Argus assessments showing premiums above $225/t to VLSFO dob ARA, how do you see marine biodiesel demand in the medium- to long-term?

Shipowners and ship operators have to run an individual cost-analysis on whether the premiums could be offset by potential savings under EU emissions trading system (ETS) and FuelEU Maritime regulations, as well as any future regulations such as the International Maritime Organisation (IMO) economic pricing mechanism.

In terms of emissions, biofuels still emit CO2 on a tank-to-wake basis, but less on a well-to-wake basis compared to their fossil equivalents. This will also vary depending on the feedstock for the biofuel as well as the production process.

Under the current IMO regulations for energy efficiency, including the Ship Energy Management Plan (SEEMP) and its requirements for fuel reporting (DCS), there might be some indirect commercial benefits for owners, too. For example, a better CII (Carbon Intensity Indicator) score may make a vessel more appealing to charterers and help its owner secure more favourable rates.

There are also other factors to consider, such as Scope 3 emissions rights, which can influence demand, as we currently see from voluntary demand from cargo owners seeking those documents.

But this will also have a geographic impact on demand, as larger container liner companies usually utilise the east-west route and they might prefer to opt for bunkering the marine biodiesel blend in Singapore due to lower prices.

What are the risks associated with bunkering marine biodiesel in relation to conventional ship engines? How significant is the recent FOBAS report that implied a correlation between the use of "unidentified" biofuels and engine pump injector damage?

We have supported our shipowner clients in numerous pilots to trial biofuels such as fatty acid methyl ester (Fame) and hydrotreated vegetable oil (HVO) in variable blends.

Overall, these trials have gone smoothly, but we have learned a few things along the way.

Firstly, engines do not need to be modified, but since biofuels have slightly different physical properties, it is necessary to find the right engine adjustments. A very good knowledge of the fuel properties is key in determining the right adjustments, and the new revision of ISO 8217 on marine fuel specifications is crucial in supporting this process. Another key finding is the importance of receiving full information on fuel characteristics from the supplier. Finally, BV plays a key role in ensuring full fuel certification on several aspects, including sustainability and physical properties.

Used cooking oil (UCO) can also feed into SAF and with potentially greater refining margins. Do you think some feedstocks will be pulled away from marine?

When it comes to methanol, we believed marine would take up more of the feedstock compared with the chemicals industry due to greater willingness to pay larger premiums.

But with biofuels, it seems to be the other way around where aviation could end up pulling biofuel feedstocks away from maritime. In terms of fuel consumption, the marine and aviation industries are comparable but if aviation are willing to pay more, then it will likely get more of the feedstocks required to produce SAF.

What are the implications of the new ISO specifications, what are the key takeaways for marine biodiesel uptake?

More has to be done, but now we have parameters for assessing biofuel blend specifications.

It was very well accepted by the industry, and now operators and shipowners have a standard to rely on. 

But it doesn't resolve the question around feedstock cross-industry competition. However, it does also open the door for off-spec Fame residue blends to become ISO-certified — depending on further testing.

With IMO aiming for "global regulations for a global market", how do you see conflicts between different regulations affecting the market?

We are closely following the IMO development process for a global economic pricing mechanism.

IMO has assigned a working group of technical experts to look at this mechanism from an apolitical perspective.

In terms of potential regulatory conflicts, we have the example of the Netherlands, where the Dutch emission authority requires the delivery of Proof of Sustainability (PoS) certificates for applying to the scheme of Dutch renewable tickets (HBE-G) which can be traded, but this PoS cannot be used for other purposes, such as the EU ETS. To circumvent this hiccup, we may see the development of new digital certificates, such as an accompanying ISCC-certified Proof of Compliance (PoC).

By Hussein Al-Khalisy

Related: FOBAS announces publication of ISO 8217:2024 marine fuel specifications and FAQs

 

Photo credit and source: Argus Media
Published: 23 July, 2024

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Bunker Fuel

ENGINE on Fuel Switch Snapshot: HSFO remains cheapest across hubs

Brent’s steep fall brings VLSFO down; Singapore premiums over Rotterdam narrow; EU to impose tariffs on Chinese biodiesel imports.

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ENGINE on Fuel Switch Snapshot: HSFO remains cheapest across hubs

Once a week, bunker intelligence platform ENGINE will publish a snapshot of alternative and conventional bunker fuel prices in the world’s two biggest bunkering hubs. The following is the latest snapshot:

22 July 2024

  • Brent's steep fall brings VLSFO down
  • Singapore premiums over Rotterdam narrow
  • EU to impose tariffs on Chinese biodiesel imports

A sharp drop of $2.40/bbl ($18/mt) in front-month Brent futures has pushed down conventional fuel prices for yet another week. 

Bio-blend prices have also declined amid decreases in both bio- and conventional fuel components. 

Rotterdam’s VLSFO-equivalent LNG benchmark has bucked the downward trend and inched up by $3/mt in the past week.

LNG bunker fuel is priced $16/mt higher than VLSFO in Singapore, making VLSFO the cheaper option for dual-fuel vessels bunkering there. Conversely, LNG is the more cost-effective choice for dual-fuel ships bunkering in Rotterdam.

The ARA’s B24-VLSFO UCOME price premium over Singapore’s has widened from $19/mt to $32/mt as Singapore’s price has dropped.

VLSFO

VLSFO demand has improved slightly in the ARA in the past week, following slow activity the week before, a trader said. This seems to have prevented Rotterdam’s VLSFO benchmark from following Brent's significant decline.

Singapore’s VLSFO benchmark has tracked more of the crude benchmark's price drop, slipping by $14/mt in the past week. Most suppliers recommend lead times of up to 14 days for VLSFO in the port, but some can manage deliveries within five days.

When factoring in estimated EUA costs, Rotterdam’s VLSFO price has declined by $7-9/mt, while Singapore’s price has fallen by $16/mt.

Biofuels

Singapore’s B24-VLSFO UCOME price has declined by $7/mt in the past week, while its B24-LSMGO UCOME price has fallen by $9/mt. The two bio-bunker benchmarks have declined amid declining values for pure VLSFO ($4/mt) and LSMGO ($9/mt).

On Friday, the European Commission announced that it will impose provisional duties of up to 36.4% on biodiesel imports from China. PRIMA said “the EU anti-dumping results and its associated duties (ADDs) have effectively killed off Chinese biodiesel trading prospects into Europe”.

A lack of EU demand for Chinese biodiesel could result in more Chinese UCOME being exported to meet demand in countries like Singapore, sources say.

Rotterdam’s B30-VLSFO HBE price has declined by $8/mt in the past week, while its B30-LSMGO HBE price has dropped by a greater $14/mt. A $32/mt drop in the ARA POMEME price assessed by PRIMA Markets has pulled both benchmarks lower.

Biofuel price premiums over pure conventional fuels in Rotterdam are $189/mt for B30-VLSFO HBE blends and $136/mt for B30-LSMGO HBE blends. These premiums have narrowed by $9-12/mt in the past week.

The EU’s provisional duties on Chinese biodiesel imports could tighten availability of bio feedstocks for bio-bunker blending across Europe.

LNG

Rotterdam’s LNG bunker price has risen by $22/mt to $652/mt in the past week. The price rise has tracked an increase in the front-month NYMEX Dutch TTF Natural Gas contract.

The upward trend can be attributed to supply concerns at the Freeport LNG export terminal on the US Gulf Coast, a major source of European LNG supply. Some 5.4% of Europe's total LNG imports last year came from Freeport LNG.

Several LNG cargoes from Freeport LNG were held back from being exported by supply disruptions caused by Hurricane Beryl. This has contributed to push Rotterdam's LNG price higher in the past week.

Singapore's LNG bunker price has decreased by $11/mt, driven by a falling NYMEX Japan/Korea Marker (JKM) price.

The JKM price increased some in the middle of last week due to active deals to meet summer demand, before falling amid ample supply and high inventory levels, according to a report by the Japan Organization for Metals and Energy Security (JOGMEC).

By Konica Bhatt

 

Photo credit and source: ENGINE
Published: 23 July 2024

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Bunker Fuel

Island Oil records USD 29.0 million net profit in FY 2023, second-best year in 30-year history

Total comprehensive income for FY 2023 was USD 32.5 million, down 25% from USD 43.2 million in FY 2022, showed financial figures.

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Island Oil and Island Petroleum receive ISCC EU certification for bio bunker fuels

Editor’s note: Manifold Times on Tuesday (16 July) released a report detailing financial figures of Island Oil Holdings calculated under guidelines from international ESG reporting standards that also assesses the cost of non-financial items such as emissions, social contributions, etc.

The report has been updated on Friday (19 July) with figures based on the entity’s actual financial results calculated using standard accounting practices.

Cyprus-based Island Oil (Holdings) Limited, which principal activities include marine fuel trading and physical bunkering operations, recorded its second-best year in its 30-year history for the financial year ended 31 December 2023.

The group posted net profit of USD 29.0 million in FY 2023, a 29% decrease over net profit of USD 41.0 million in FY 2022.

Total comprehensive income for FY 2023 was USD 32.5 million, down 25% from USD 43.2 million in FY 2022.

Revenue was USD 1.40 billion in FY 2023, 23% lower from revenue of USD 1.82 billion in FY 2022.

“The Group’s development to date, financial results and position as presented in the consolidated financial statements, are considered satisfactory,” stated Chrysostomos S. Papavassiliou, Chief Executive Officer/Chairman of the Board of Directors.

“The bunkering industry has become very competitive, and the Group has developed its pricing policy accordingly in an effort to further penetrate the market.”

Papavassiliou acknowledged an imperative for sustainable practices in the industry and noted the Group is poised to implement an ESG and decarbonisation strategy.

“This ambitious initiative aligns with our dedication to environmental stewardship and underscores our role in contributing to a low-carbon future. We are also committed to environmental responsibility in our operations, aiming to enhance our energy efficiency and decrease our Greenhouse Gas (GHG) emissions,” he shared.

“The Group recognises the maritime industry’s ongoing transition to alternative fuels, driven by international and EU regulations, including the EU Emissions Trading System (EU ETS). Proactively responding to this shift, the Group has obtained in 2023 the International Sustainability and Carbon Certification (ISCC EU) as recognised biofuel traders, enabling the Group to engage in the trading of marine biofuels.”

In 2023, two subsidiary companies of the Group obtained the International Sustainability and Carbon Certification (ISCC EU), as recognised Traders of biofuels. In particular, Island Oil Limited, the Group’s marine fuels trading arm, has attained certification as Trader of biofuels.

Additionally, Island Petroleum Limited, which offers physical supply of marine fuels, has achieved the same certification, as Trader with Storage of biofuels.

The Group is also involved in two projects funded by its Research and Innovation Fund including a pilot initiative on using biomethane as a drop-in marine biofuel.

“This pilot initiative aims to demonstrate an up to 80% reduction in lifecycle GHG emissions using BioMethane as a marine biofuel. Leveraging innovative technologies, the team has established a virtual gas grid with a mobile biogas Upgrading, Storage, and Refueling Unit (USRU),” the company said in the report.

“Successful evaluation would lead to scaling up the model, integrating local biogas production, BioMethane upgrading, and utilisation in PetroNav Ship Management’s fleet,” it said. PetroNav Ship Management is one of the Group’s subsidiaries.

Related: Island Oil and Island Petroleum receive ISCC EU certification for bio bunker fuels
Related: Island Oil eyes Korean market with new Seoul office
Related: Island Oil continues expansion into Chinese markets with new Hong Kong trading office

 

Photo credit: Island Oil
Published: 23 July 2024

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