The potential for biofuels like FAME (Fatty Acid Methyl Ester) and HVO (Hydrotreated Vegetable Oil) to decarbonize the shipping industry seems promising. However, significant supply challenges must be addressed before biofuels can be a viable solution on a large scale. The information comes from detailed interviews and surveys by DNV with biofuel suppliers and shipping companies. They revealed that while over 60 ports have engaged in biofuel bunkering since 2015, major hubs like Rotterdam and Singapore have taken the lead in 2023. Although biofuels have shown a promising outlook, their current contribution to global supply remains minuscule.
Biofuel Potential and Greenhouse Gas Regulations
Promising Biofuel Outlook
The utilization of FAME and HVO in maritime operations represents a viable pathway toward reducing shipping emissions, albeit presently modest. This year, the maritime sector has seen around 0.7 million tonnes of oil equivalent (Mtoe) in biofuel use. If compared to global energy consumption, this figure constitutes merely a minor fraction. DNV highlights this to suggest that the scalable implementation of biofuels holds numerous possibilities, but it requires overcoming supply and logistical barriers. There is a focus on whether biofuels can notably contribute to meeting stringent GHG regulations like the CII, EU ETS, and FuelEU Maritime. It’s essential that biofuels align with rigorous sustainability and GHG saving standards, and that compliance is verified through a system called Proof of Sustainability (PoS).
Constraints on Biofuel Supply
Addressing feedstock scarcity and stringent GHG savings requirements marks a pivotal determinant for scaling biofuel use in maritime shipping. One of the most significant hurdles lies in the limited availability of feedstocks, especially those derived from waste sources such as used cooking oil (UCO). This scarcity constrains efforts to produce advanced biofuels. Some suppliers are investigating alternative feedstocks and optimizing their existing production capabilities to offset this limitation. Adding complexity, the EU mandates that biofuels must not be sourced from food or feed crops, further restricting the eligible supply pool. The extensive sustainability criteria reduce the volume of biofuels able to meet regulatory standards, posing additional obstacles.
Navigating Logistical and Regulatory Challenges
Logistical Barriers in Biofuel Infrastructure
The low current usage of biofuels in shipping presents substantial logistical challenges. This diminishes the incentives for developing dedicated infrastructure, complicating the supply chain. Particularly for FAME, the requisite storage and transport facilities are cumbersome and costly, unlike HVO which has seen broader acceptance. Such logistical issues require strategic foresight and substantial investments. Moreover, regulatory ambiguity in regions like mainland China exacerbates distribution costs. Fuels with higher FAME content, including B30, B50, and B100, necessitate IMO Type 2 tankers. Therefore, it becomes imperative to overcome these logistical barriers to facilitate the broader adoption of biofuels in the maritime sector.
Regulatory Hurdles and Economic Factors
Aviation biofuel regulations like ReFuelEU Aviation offer clearer guidance, often resulting in higher profit margins for suppliers, thus favoring the aviation sector. Maritime shipping, on the other hand, grapples with more generalized GHG regulations, which are less financially lucrative. Suppliers often lean towards the aviation market due to these clearer, sector-specific targets. Furthermore, alternative fuels such as LNG and e-fuels, as well as the demand from other hard-to-electrify segments in road transport, create competitive pressures. Maritime biofuel adoption struggles not only with regulatory inconsistencies but also with strong competition from these other sectors.
Ensuring Compatibility and Sustainability
Ship-Specific Biofuel Assessments
Conducting ship-specific assessments of FAME and HVO is vital to verify their compatibility with various ship engines and prevent equipment damage. Biofuels like FAME can pose risks such as power loss, necessitating meticulous evaluations to ascertain their practicality for individual vessels. Experts from DNV, like Knut Ørbeck-Nilssen and Øyvind Sekkesæter, underscore the importance of this detailed scrutiny. They advocate for integrating biofuels into comprehensive decarbonization strategies alongside other energy efficiency measures and alternative fuels. Success in this endeavor relies heavily on the seamless amalgamation of these components to ensure operational reliability and environmental sustainability.
Future Prospects and Strategic Approaches
The potential of biofuels like FAME (Fatty Acid Methyl Ester) and HVO (Hydrotreated Vegetable Oil) to reduce the carbon footprint of the shipping industry looks encouraging. Nonetheless, considerable challenges in supply must be tackled before biofuels can be implemented on a large scale. This insight is derived from comprehensive interviews and surveys conducted by DNV with biofuel suppliers and shipping companies. These surveys revealed that over 60 ports have engaged in biofuel bunkering since 2015, with major hubs such as Rotterdam and Singapore taking the forefront in 2023. Despite the promising future for biofuels, their present contribution to the global supply remains very small. This minimal contribution highlights the need for further development in production and distribution to meet the demand required for a significant impact. Advancing the infrastructure and addressing supply chain issues are critical for biofuels to become a central component in decarbonizing the shipping industry.
