By 2030, biofuel will be ‘the biggest alternative fuel in the world’ and by 2050 it could meet 20%-25% of global bunker fuel requirements, says Dirk Kronemeijer, CEO & Founder of GoodFuels.
Speaking at a webinar on alternative marine fuels yesterday (27 October) hosted by the Centre for Management Technology, Kronemeijer said that biofuel is becoming cheaper to produce and ‘can already compete quite successfully in the Dutch market with very low sulphur fuel oil (VLSFO).’
While biofuel may have been 20% more expensive than fossil fuel in 2015/2016, with scalability, technical and legislative improvements every year it is becoming more capable of competing with fossil fuels, he said.
While aviation may be slightly ahead of shipping on the carbon lobby, maritime is catching up quickly, he noted, and its ‘one big advantage’ is the flexibility of the marine 2-stroke engine, which can use lower quality biofuels.
Because of sector fuel specifications and parameters, ‘these aren’t fuels you can put into a truck or plane’ and this therefore gives ‘greater economic viability’ for biofuels in the shipping sector.
Noting that GoodFuels currently has 100 permanent customers, Kronemeijer said that while LNG may currently have a more global spread, biofuel is ‘more local’ and can ‘go where the incentives are’. He pointed to its availability in Europe and the US West Coast.
Although it had been hoped that biofuels’ price competitiveness would have gained traction in 2020 as the shipping sector switched to what had been expected to be much more expensive low sulphur fuel, Kronemeijer said that even though the impact of COVID-19 had depressed bunker prices, ‘we managed to keep competitive with fossil fuel’.
He also highlighted the increasing scalability of biofuels. While 50% of these fuels are currently produced from used cooking oil, this share is going down as advanced biofuels – sourced from domestic waste and lignin, for example – are added to the fuel mix.
An energy shift in other industry sectors could also ‘free up’ biofuel for the shipping sector, he noted. While around 80%-90% of biofuel is currently consumed by the land-based transport sector, cars and trucks will increasing move to electric and hydrogen propulsion.
While national and regional incentives in some parts of the world may be supporting the development of the marine biofuels market, the world’s largest bunkering hub, Singapore, has yet to adopt any such incentivisation measures – although significant quantities of biofuel are produced in SE Asia, with volumes also exported to Europe.
Prashanth Athipar, Principal of Ocean Freight Sustainability at BHP, also took part in the webinar and, while supportive of biofuels, he acknowledged the current absence of price competitiveness between biofuels and fossil-based marine fuel in Singapore. He pointed to a price differential between biofuel and VLSFO in the order of hundreds of dollars.
This is such a huge commitment from a pricing differential – and the customer is not going to pay for it,’ he said.
‘We will take it, but it is hard to justify commercially.’
