Progress towards Biofuels for Marine Shipping

December 30, 2021

Print This Article Share it With Friends

by Tor I. Simonsen, Noah D. Weiss, Susan van Dyk, Elke van Thuijl, Sune Tjalfe Thomsen (IEA Bioenergy Task 39) Status and identification of barriers for utilization of advanced biofuels in the marine sector -- Biomass has the potential to fully supply the marine sector with sustainable fuel and is a promising solution for both reducing carbon emissions and meeting sulphur regulations, which were thoroughly described in the 2017 IEA bioenergy report on Biofuels for the marine shipping sector1.

The benefits of biofuels have to some extent been recognized by the maritime sector, where the interest in biofuels in the last 5 years have been visible through progress in engine development, in sea-going biofuel trials of blends, as well as in 100% biofuel trials. However, greater use of biofuels in the sector is limited by the volumes presently available with delays in commercialization of technologies. This report seeks to uncover the largest barriers for the commercialization of biofuels for the marine sector, as identification of the current barriers will excel concrete actions from various stakeholders advancing the employment of sustainable biofuels in the maritime sector.

International shipping conveys the transportation of the majority the world’s goods, with global shipping trade reaching $US 14 trillion in 2019. This service is facilitated by large marine vessels running primarily on heavy fuel oil, accounting for 2-3% of the global GHG emissions while being the largest source of anthropogenic sulphur emissions. The negative effects of these emissions extend to both terrestrial and aquatic life, including human health. In response to this, the International Maritime Organization (IMO) has established targets to decrease the carbon intensity of the shipping sector by 50% in 2050, and has from 2020 restricted the maximum allowed sulphur content of marine fuels used in international waters from 3.5 wt.% to 0.5 wt.%.

Along with more stringent international regulations, stronger national and supranational regulations follows, resulting in a large pressure on the marine shipping sector to transition quickly to more sustainable fuel solutions.

To better understand the barriers for the commercialization of marine biofuels, interviews were conducted with 7 key stakeholders involved with the marine freight transportation sector. The interviews demonstrated the great complexity and many considerations related to transitioning marine fuels. It shows the overall barrier towards biofuel investment is the lack of economic incentives. Many stakeholders are also considering the overall level of uncertainty related to price development of biofuel feedstocks, sustainability criteria, as well as regulatory policies to be major barriers for major biofuel investments. However, among the interviewed stakeholders little concern was expressed towards the technical barriers of scaling-up, establishing supply chains, or adopting engine and fuel systems for new biofuels. In contrast, the common denominator for the largest identified barriers by the stakeholders (and this report in general) is the uncertainty of the future economic and political development.

Encouragingly, a number of shipping industry stakeholders, identifies biofuels as a the most promising short- to mid-term solution for both reducing carbon emissions and meeting sulphur regulations, which have been documented through interview presented in this report. Also, with increasing international stringency on sulfur emissions and ship energy efficiency, the price gap between fossil- and biofuels is declining. Especially in some local markets where elevated pricing – due to long distance to major fuel hubs – combined with CO2 pricing and additional hedging cost savings, unite to provide a real opportunity for biofuels to compete with the fossil alternatives.

There seems to be a general demand among major maritime stakeholders to accelerate the transition towards sustainable solutions. This was clear from the stakeholder interviews, and is evident as industry coalitions are currently pushing international policy makers to create stronger policies towards realizing net-zero carbon vessels. However, several barriers for biofuel commercialization emerge as the landscape of technologies is revealed. The chemical complexity of different biofuels, variation and availability of biomass, and the plethora of biofuel production methods makes a ‘one-biofuel-fits-all’ scenario unrealistic and creates pressure on local solutions, while making the investment in any single biofuel technology risky.

The use of biomass as a sustainable source of energy has been target of international discussion as some biofuels are unsustainably produced, or are based on feedstocks competing with food production. This has led to policy fluctuation on the criteria of sustainability of biofuels. An internationally recognized standard defining the sustainability criteria of biofuels would thus support the further development of biofuel technologies. Likewise, other biofuel-promoting policies should focus on creating a predictable framework and long-term stability to lower the investment risk. Additionally, more national and supranational policies are needed to support local fuel demands and adapt to differences in biomass availability.

The current marine (fossil) fuel standard ensures comparison and evaluation of fuel quality, fuel engine compatibility, safety and price. The complexity of the majority of biofuels associated with the wide range of feedstocks and production processes creates incompatibility with the current marine fuel standards. The lack of a dedicated marine fuel standard for biofuels obstructs their use, trade and production, and is therefore a barrier for commercialization. The establishment of alternative marine fuel standards is a long and complex task. The process requires large investment in R&D as well as successful sea-going trials involving several marine stakeholders including shipowners, fuel producers, bunkering companies, and engine and fuel system Original Equipment Manufacturers (OEMs).

Initial trade and utilization of a new fuel technology can be accelerated by technical reports, publicly available or technical specification. The recent IMO interim guidelines on using ethanol and methanol as marine fuels is a great step in the right direction. It facilitates the usage of ethanol and methanol making them more attractive for ship operators. The perspectives of using sustainably produced methanol as an alternative marine fuel are promising. As the current production of ethanol and methanol from sustainable electricity is almost not existing, renewable ethanol or methanol will likely be dominated by biomass sources at least until the 2030s-2040s. Biobased methanol or ethanol fuels are therefore viable options for ship operators to reach the IMO 2030 emission targets.

Likewise, some stakeholders put emphasis on the advantages of HFO-compatible drop-in biofuels as they dramatically lower the capital investments associated with the required port infrastructure as well as reduces the need for vessel retrofits. Drop-in fuels based on existing waste streams would contribute to a circular economy without risking competition with food/feed or increase indirect land-use and can achieve significant emission reductions.

The crucial role of policies is to set the regulatory framework to encourage the implementation of maritime biofuels. Since biofuel technologies are diverse and the biomass type and availability differ greatly between nations, biofuel implementations rely on multiple stakeholders and supply chains. This makes establishment of national and supranational level policies particularly important, as these can more specifically support the local supply chains adapted to the technological maturity and biomass availability.

The current sulphur regulations and GHG targets made by IMO demand vessels to gradually increase their energy efficiency and lower their carbon intensity. . The latter is defined as a CO2 reduction per transport work, as an average across international shipping, by at least 40% by 2030 and 70% by 2050. This carbon intensity regulation will, according to IMO, lead to a reduction of total annual GHG emissions from international shipping by at least 50% by 2050 (compared to 2008). The shipping sector is not adapted to quick changes as the small margin business of deep-sea shipping require long-term stable policies to ensure minimal risks investing in new fuel technologies such as biofuels. Without policies targeting alternative fuel technologies more directly such as carbon taxation or renewable fuel mandates, the transition from fossil to alternative fuels will be slow.

Finding an economic and sustainable fuel solution to substitute current marine fuel technologies is a complex task on several levels. The field is experiencing intense research and political attention, creating a fast-paced environment with new research breakthroughs and changing policies. This is an indication of a positive global movement towards a sustainable maritime sector. However, it also creates a high-risk investment environment in a sector being aware of the fact that no single biofuel technology will fit all. In the light of the large investment risks associated with biofuel technologies, technical as well as regulatory actions towards lowering these risks are heavily needed to facilitate the fast-moving transition towards a sustainable marine sector. READ MORE