WFW: Biofuels Trump LNG as Most Popular Alternative for the Next 5 Years

by Jasmina Ovcina Mandra (Offshore Energy) In 2021, LNG was the most popular alternative fuel considered by shipowners for use in the (then) next five years; twice as many as those who said they were considering biofuels.

That position has now virtually reversed, with biofuels at the same level of response as LNG in 2021 while LNG has fallen by nearly half.

These are the findings of a recent survey carried out by the London-based law firm Watson Farley & Williams (WFW) titled ‘The Sustainability Imperative – Part 2’.

The report is a continuation of a survey made two years ago and it explores how the attitudes of the stakeholders in the shipping industry have changed with regard to Environmental, Social, and Governance (ESG) goals.

When it comes to alternative fuels, the perception seems to have changed considerably over the past two years as the need for decarbonization of the sector became a widely acceptable factor in business operations and investment decisions.

WFW’s survey shows that in 2021, 12% of shipowners said they were not considering using alternatives to bunker oil within the next five years, a figure that has now dropped to under 2%.

The other big change is that LNG or LPG are being considered as alternative fuel sources by just 35% of shipowners, versus 60% in the previous survey. This may reflect rocketing gas prices, security of supply and growing awareness about ‘methane slip’ and the impact of methane emissions, or possibly a recognition that gas is a transitional measure.

Replacing gas as the top choice among alternatives are biofuels, which almost 60% of shipowners are considering using by 2028. Almost half, meanwhile, are considering hydrogen (as a fuel), wind or solar power.

Biofuels are an easy fuel in the sense of handling and implementation as they can be used on the existing infrastructure. They provide an immediate solution to decarbonize shipping, as they can be blended or dropped into existing conventional fuels with little or no technological developments required on vessels.

Methanol and clean ammonia also are now considerably more popular than they were two years ago, although more shipowners are still leaning towards LNG/LPG, hydrogen, wind, solar and biofuels.

And there are yet more options being contemplated – as evidenced by the debate around the potential of nuclear power and liquid salt reactors.

Therefore, all eyes are set on the IMO’s MEPC meeting in July this year when the sector’s governing body is expected to revise its GHG strategy aligning with the Paris emission reduction goals, setting a clear signal to the sector. READ MORE