Biodiesel Offers Best Decarbonisation Bang for the Buck - ABS

September 14, 2024

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by Gary Howard (Seatrade Maritime News) Biodiesel has the lowest cost per tonne of well-to-wake GHG emissions savings among alternative fuels today and across two of three future scenarios, according to an ABS report. -- Under a new ABS index, biodiesel showed up to 24 times more CO2 equivalent greenhouse gas (GHG) emissions per dollar on a well-to-wake basis compared to other alternative fuels, as detailed in the ABS 2024 Sustainability Outlook.

The publication explores various fuel pathways the maritime industry may adopt in the pursuit of the IMO’s 2050 net zero emissions goal, as well as their performance against 2030 and 2040 GHG emissions reductions targets.

Looking at current prices per gigajoule of energy, biodiesel was the second cheapest of the fuels listed, beaten only by VLSFO. Forecasting 2030 prices, ABS sees VLSFO becoming even cheaper while a significant drop in blue liquid hydrogen prices takes it to second place, pushing biodiesel to third.

The report considered a wide range of fuels and production pathways on a well-to-wake basis, accounting for well-to-tank emissions from production and distribution as well as tank-to-wake emissions from using the fuel onboard. Current standard grey fossil production methods were lined up against blue production methods, where well-to-tank emissions are offset by either carbon capture or the use of renewable biomass feedstocks, and green production methods, where fuels are produced from electrolysis and further processes powered by renewable energy.

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ABS’ figures show VLSFO, fossil LNG and LPG all failing to meet either 2030 or 2040 GHG emissions targets when measured by grammes of CO2 equivalent emitted per megajoule on a well-to-wake basis. e-LNG, blue ammonia, blue hydrogen, bio-LNG, and biodiesel all comfortably meet the 2030 targets today, and are each expected to meet the 2040 targets as production efficiency improves over the next decade and beyond. e-ammonia, green hydrogen, biomethanol, e-methanol, and e-diesel all meet the stricter 2040 targets already.

The report introduced a new index to compare alternative fuel pathways, the GHG Abatement Cost (GAC), which subtracts the cost of VLSFO from each sustainable fuel, then divides the remaining cost by the fuel’s CO2 equivalent GHG reduction compared to VLSFO.

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“The significant potential of e-fuels to reduce greenhouse gas emissions is hindered by the considerable expenses associated with the e-LH2, e-NH3, and e-Methanol pathways, which could restrict their widespread adoption,” said the report.

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More details on the GAC index, ABS’s methodology, and the findings of the 150-page report can be found at the interactive Beyond the Horizon website, or at the Carbon Fuel Pathways and Transformational Technologies report. READ MORE

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Biofuels an early decarbonisation option for existing ships (Seatrade Maritime News)
Greta Thunberg view won’t help shipping’s fuel transition -- Sustainability arguments need to mature before the maritime sector selects which decarbonisation solutions it prefers rather than taking “knee-jerk” reactions. (Seatrade Maritime News)
Global biofuel production capacity predicted to be unable to meet shipping demand (The Loadstar)

Excerpt from Seatrade Maritime News: The latest analysis on biofuels from Lloyd’s Register (LR) suggests that such fuels, with low capital expenditure requirements and scope to extend the working lives of many existing ships, are likely to play an important role.

LR’s Fuel for Thought: Biofuel Report points out that the adoption of biofuels by the owners of ships in service today is likely to prove a key strategy where conversions and retrofits to use low- or zero-carbon fuels, such as methanol or ammonia, is neither practical nor affordable.

Used as ‘drop-in’ replacements for traditional fuels, they require minimal changes to machinery and shipboard operation but can cut greenhouse gas emissions by up to 84%, the report claims.

Biofuels are usually compatible with existing machinery, bunker tanks, and fuel supply systems. They use the same bunkering infrastructure as the fuel oils that are used today, and training requirements for ships’ crews are minimal compared to other future fuels.

The fact that feedstock is readily available for biofuel development is a key advantage, as existing emission regulations tighten and FuelEU Maritime enters force in European waters in January. Owners of passenger ships, ro-ro’s, and container ships will be particularly hard hit by the regulatory penalties from FuelEU unless they have adopted appropriate fuel management strategies.

The biofuels most likely to prove suitable for ships are Fatty Acid Methyl Ester (FAME) and Hydrotreated Vegetable oil, the LR analysis concludes. But owners and operators should keep abreast of biofuel development as many other biofuel possibilities are likely to develop, some of which may well have implications for shipboard plant. The report assesses the considerations for engines and machinery, and suggests risk management strategies for trials of biofuels that have not yet been tested in ships’ engines.

The report also stresses that shipping will have to compete with other transport sectors, including aviation. And the price of biodiesel blends is likely to rise as feedstock prices climb from rising demand. READ MORE

Excerpt from Seatrade Maritime News: A lively debate developed at the Global Maritime Environmental Congress (gmec) at SMM as Mark O’Neil, CEO of Columbia Group, argued that the environmental arguments need to properly develop before we decide on the cure.

O’Neil said: “We are taking the western medicine approach, treating the symptom and not the causes of carbon pollution, looking at the painkiller and not the massage that gets rid of the pain. And my fear is that we are being asked to invest huge amounts on assets, which have a 20–25-year lifespan, where the holistic environmental argument is not yet developed.”

On a recent trip to Shanghai, O’Neil said there were plenty of electric cars, but the energy for these cars was largely derived from fossil fuel power stations, while the fossil energy use for mining the lithium for these cars is huge. “So, no electric car has any hope of satisfying the holistic, long-term environmental argument.”

He added: “I would caution the maritime sector before running down the alternate fuel line and the alternate technology line to just let the environmental argument catch up. The Greta Thunberg argument, fantastic as it is, is more of a knee-jerk argument, it’s more about the clamour, the let’s do something about it, it’s the microscopic view, and we very much need a telescopic view.”

Dr Gunnar Steisch, CTO at MAN Energy Solutions, however, believes, “The technology to drive the transition is already widely available today, what is missing is sufficient quantities of fuels and the regulations to drive this [the production of green fuels]…what is lacking is the fuel and the incentives to invest in large scale green fuel production.

Meanwhile, Steve Esau, COO of SEA-LNG saw the major challenge in the decarbonisation process was that two different industries, maritime and energy, with different cultures needed to collaborate to achieve the transition.

“The shipping industry, which has historically bought its fuels on a spot basis, always looking for the best price, and there’s the energy sector that needs to make new fuels, and that requires massive capital intensive investment in 20-year projects to supply these new fuels, and to underpin these new projects you need long-term contracts,” explained Esau.

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Therefore, the answer to the immediate decarbonisation will be a blend and “the most likely solution is carbon stripping technology to existing fuels, biofuels and with other fuels too. We in our managed fleet are advising clients to optimise what they do, which is as important in the future fuels,” said O’Neil. READ MORE

Excerpt from The Loadstar:

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. READ MORE