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Shipping and Biofuels: A match made in heaven?

A few weeks back, Boskalis, Wartsila and GoodFuels Marine announced the formation of a joint-venture which will look into the commercial viability of biofuels in the shipping industry. According to GoodFuels Marine’s estimates, by 2030 sustainable biofuels could contribute 5-10% of the total global marine fuel mix.

Hellenic Shipping News Worldwide (www.hellenicshippingnews.com) interviewed Mr. Dirk Kronemeijer, CEO, GoodFuels Marine, on this ambitious, yet feasible, project, which could help wean shipping from the use of fossil fuels, thus eliminating once and for all the issue of reducing the industry’s emissions. Timing couldn’t be better, as shipping has been targeted by multiple fora and is facing a hefty financial bill.

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Can you elaborate on the latest collaboration between Boskalis, Wartsila and GoodFuels Marine on the field of sustainable “drop in” marine biofuels for the shipping industry?

The main objective of the collaboration is to demonstrate that marine biofuels offer a truly sustainable, safe, reliable scalable, competitive, low emission alternative to traditional marine fuels such as HFO and Marine Diesel Oil (MDO) and Marine Gasoil (MGO).

The shipping industry has limited options to reduce CO2 and other emissions. Offering remarkable reductions in CO2, SOx, HC and CO emissions, biofuels offer a viable alternative to fossil fuels.

As part of the energy mix alongside LNG and other energy efficiency measures, sustainable biofuels can genuinely contribute to a more sustainable and low emission future for the shipping industry. This is why we have such vocal support from stakeholders right across the industry, from the shipowners and OEMs to NGOs, government and ports. It ticks so many boxes for so many organisations.

As terminology is always elusive, can you clearly define what “drop in” marine biofuels are and how they can be used in the shipping business?

Sustainable biofuel requires little or no infrastructure to be invested in to deliver “drop” in biofuel. All that is required is a standard fuel tank and ex-pipe facility at berth or a standard bunker barge.

For a smooth market introduction of marine biofuels, the fuel should be comparable and compatible with current shipping fuels. This ‘drop-in’ quality ensures current logistical and operational systems can remain in place and every party can stay in a ‘business-as-usual’ mode.

Today, the hype seems to revolve around LNG bunkering in more and more ports and countries worldwide, including Rotterdam. Why do you think that biofuels could evolve into a commercially viable alternative?

Shipping is the last of the major transport modes to turn its eye to biofuels as way of becoming less emission-intensive. Lack of legislation, the complexity and fragmentation of international ship movements and bunkering operations, and cheap fossil fuel (HFO) availability are factors preventing the introduction of biofuels in the marine fuel mix until now.

With stricter regulations on shipping emissions having been implemented for SOx and NOx, and with CO2 regulations for the newbuild fleet already in place and more looming, the shipping industry is forced to look at alternatives to traditional hydrocarbon bunker fuels.

The main focus of this project will be to deliver and analyse the initial offtake supply, securing industry certification and putting in place the building blocks for large-scale production. In addition to product development and analysis, the consortium will initiate a global scalability study involving leading ship-owners, universities, NGOs, ports, biofuel companies and other leading stakeholders, to identify tangible opportunities for scaling supply for the international commercial shipping fleet.

We estimate that by 2030 sustainable biofuels could contribute 5-10% of the total global marine fuel mix. To go from “estimate” to academically sound figures, GoodFuels Marine is undertaking a global study to research the scaling of the supply and demand of sustainable marine biofuels.

Which is going to be each of the three partners’ role into this two-year pilot programme?

The consortium was initiated by GoodFuels Marine, which wanted to make the market for sustainable marine fuels. GoodFuels Marine searched for an icon shipping brand to partner with at launch and found Boskalis.

GoodFuels Marine supplies and develops the various fuels and blends, and ensures the sustainability of the products, Wärtsilä tests them and Boskalis uses them in its vessels.

Boskalis has provided the financial backing to make the pilot possible. Besides providing funding to source biofuels for testing at Wärtsilä and for the bunkering of its own vessels, Boskalis is also making its own vessels available for the testing of ‘Boskalis on Bio’.

As the leader in developing alternative fuel solutions that reduce emissions, enable compliance with environmental regulations, and minimise the carbon footprint of global shipping, Wärtsilä will monitor the impact biofuels have on engine performance, emissions and component lifetimes. The project provides Wärtsilä with the opportunity to test different fuels and will ultimately extend the range of fuel options from which its customers can choose. Wärtsilä believes that both LNG and biofuels offer viable, cost effective, and environmentally sustainable alternatives to conventional liquid fuels.

What can be the added benefits of biofuels, versus other competitive alternative fuels?

There are both operational and financial considerations. For example, operationally, the Boskalis vessels operate around the world and do not call upon a fixed set of ports. Vessels are commonly deployed for prolonged periods of time in remote locations with very limited infrastructure. The current global LNG bunker network is too limited to guarantee global sourcing. A drop-in biofuel gives Boskalis the flexibility to bunker when it is available and to fall back on 100% fossil fuel when there are no other alternatives.

Financially, the current biofuel feedstock does not require costly modifications to the vessels. Converting existing vessels into LNG powerplants is a very costly proposition, which is currently not compelling for Boskalis.

Which vessel types, sizes are you targeting?

We see great opportunities for all types of vessels. In the near term, vessels operating mainly in the vicinity of ports are an obvious target, as they benefit so greatly from the reduced emission profile of our biofuels – especially as port authorities are increasingly focusing on emission reductions.

As was the case in the jet biofuel market, the first volumes will geographically concentrate on where the incentives are. We therefore expect the same “usage hotspots”, for example Western Europe, the Nordics, west coast North America, then followed by Australia, Asia and so on.

In terms of costs and availability, where do you think that this nascent industry, when it comes to marine, can be classified, compared to rival energy sources?

We estimate that by 2030 sustainable biofuels could contribute 5-10% of the total global marine fuel mix. To go from “estimate” to academically sound figures, GoodFuels Marine is undertaking a global study to research the scaling of the supply and demand of marine biofuels.

There are both regulatory and market drivers behind this. Over the past decade, the shipping industry has faced a number of emissions reduction regulations, pertaining to SOx (Emissions Control Areas), NOx (Tier I, II and III) and energy efficiency to reduce carbon (Energy Efficiency Design Index). There are also significant market drivers. On a local scale, a number of ports have introduced incentive schemes that offer reduced port fees to those shipowners that meet the exceptional criteria for reduced emissions. On a macro scale, we are increasingly seeing major international shippers and charterers act as the “demand side”; influencing shipowners to reduce emissions.

Faced with the pressure of reducing emissions in their supply chain, these shippers and charterers, as well as a number of pioneering shipowners such as Boskalis, no longer consider corporate social responsibility merely a buzzword, but fundamentally base their business strategy around CSR and creating a better planet.

Sustainable marine biofuels are not at an experimental stage – they are providing a commercially viable solution today, which is why more and more shipowners are actively pursuing this route.

Will biofuels require for additional retrofitting on existing ships’ engines, in order to be able to run smoothly?

No, this is why the ‘drop-in’ quality is so attractive to many shipowners. (See comment above re ‘drop-in’ quality.)

Do you think that in the future, an operating vessel can produce its own fuels, or at least part of them?

We don’t foresee this development, as economies of scale are essential to producing fuels at a competitive price level and production on a vessel will not be of sufficient size to achieve this. In addition, space on a vessel is costly and any production equipment will take up significant space.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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