News / Global biofuel production capacity predicted to be unable to meet shipping demand

Photo: VesselFinder

UK ship classification organisation Lloyd’s Register (LR) has warned shipowners and their decarbonisation-conscious customers that the cost of liquefied bio methane (LBM), the presumed drop-in replacement for LNG in the latest generation of newbuilds, is rapidly increasing compared with other forms of biofuel.

Shipping giants are looking to biofuels as one of the few options available to them to meet oncoming FuelEU guidelines, which mandate an increasingly aggressive schedule of CO2 emission reductions from existing ships, beginning in January next year, and culminating in an 80% reduction by 2050.

However, LR expects the cost of many biofuels to fall between 2020 and 2030 as production ramps up.

“The ability to be transported in existing supply chains and used in traditional engines without modification makes price forecasting simpler than for many other alternative fuels,” its report says.

The cost of LBM, however, is expected to increase. Maersk, which set out to kick-start an e-methanol bunkering industry by funding global startups, has shifted its pathway to one of LNG, followed by LBM.

But not only is the overall supply of biofuel feedstock liable to be constrained and shared between transport modes, LR added there is a major discrepancy between different forms of biofuel, leading to the possibility of shipowners and their customers being misled.

“Assuming no net carbon emissions from land-use change”, LR said EU figures, which have used cooking oil biodiesel (often called ‘UCO’) to reduce CO2 emissions by 84%, provide a CO2 emissions reduction sufficient to meet with the EU’s toughest incoming rules.

However, palm oil biodiesel with an ‘open effluent pond’ – wherein no methane is captured from the production process – provides a saving of just 20%, and hydrotreated vegetable oil (HVO), a replacement for conventional heavy bunker fuel, is 22%.

Reports from environmental groups, though, point to a grimmer situation, with difficult-to-quantify but still very real concerns over forest clearance for virgin palm oil production potentially leading to a greater carbon footprint than conventional fossil fuels.

“Although biofuels are readily produced in most countries from wide-ranging oil seed crops, with waste cooking oil being derived from their use, the scale of production is more appropriate for a percentage blend in marine fuel to meet conventional fueled diesel ships rather than complete replacement of fossil fuels,” LR determined.