World Biofuel Maritime Shipping Study

The bioenergy maritime shipping study published by International Enery Agency Bioenergy Task 40 describes main properties of biofuels in relation to maritime shipping, examine current shipping lanes and major tradable biomass sources (including AR, BR, CA, MY, RU and Baltic States), capacities, costs and obstacles, together with other factors that will influence future biofuels shipping opportunities.

Concerns over climate change and energy security combined with high fossil fuel costs have resulted in an unprecedented demand on biomass as an alternative fuel. In future, with expansion in 2nd generation biofuels, demands for biomass will increase. Since large sources of biomass are not often found where they are needed, long-distance transport of biomass and biofuels will put new demands on maritime shipping capacity.

This study examines two maritime shipping markets; dry bulk, and liquid bulk. Dry bulk tankers commonly carry commodities such as ores and grains and are segregated by capacity; from 20-35,000 tonne Handysize, which is accessible to many ports, to the 100-300,000 tonne Capesize, which cannot even pass through the Panama Canal and only the largest seaports can handle. Large liquid bulk carriers commonly carry crude oil & LNG while smaller chemical tankers often have stainless steel or coated tanks that can handle aggressive chemicals.

Efficient seaports are often critical to enabling cost effective transportation of biomass. The most advanced ports can accommodate large ships and offer a range of facilities for handling and storage and well as excellent land transport connections; such as Rotterdam, Singapore Hamburg and Hong Kong. The least efficient ports, often nearer to biomass sources, have low port productivity and poor transportation logistics; such as in Africa and South America.

The most transported biofuel is ethanol. Of 2.8 billion litres in ethanol exports in 2008, Brazil shipped 97%, primarily to Europe, Japan, India and the US. Net exports of biodiesel were 1.1 billion litres in 2007, the largest shippers being the US, Indonesia and Argentina, primarily to the EU and Japan. Wood pellets have become a major biofuel export due to EU demand. Of 1.8 million tonnes exported in 2006-7, Canada was the largest exporter at 740,000 tonnes, much to Belgium and the Netherlands. Exports from the Baltic States have fallen sharply due to lack of wood, while the US South is projected to be a major exporter.

Raw biomass is also shipped by sea. In 2006 20% of 231 million m3 of wood chips and particles produced were exported. The largest exporters were Australia, South Africa and Chile; the largest importers were Japan, China and Finland. Most of these imports were for pulp and paper, but increasingly they are expected to be exported for energy. Palm oil is shipped in large volumes, 12.7 million tonnes in 2007-08. Major exporters were Malaysia and Indonesia, the major importers China and India. While most palm oil is shipped as a food product, like wood chips it may be increasingly shipped for energy.

Ethanol and biodiesel are shipped in chemical tankers. Brazilian ethanol is shipped through five ports to various European ports including Antwerp and Rotterdam. Products such as fast pyrolysis oil, not yet ocean shipped, initially will require chemical tankers due to a low pH, and will probably utilize smaller ports like Quebec in Canada and small Argentinean ports. Pellets are increasingly shipped in very large ocean going dry-bulk tankers. They must be covered to protect against water, must be loaded to minimize fines, and procedures are changing to minimize dangers of off-gassing and fire. Canada’s pellets are shipped from the ports of Vancouver and Prince Rupert in the West and Halifax in the East, primarily Antwerp, Rotterdam and Stockholm. It is projected that biomass concentrations in Quebec will result in major exports from the St. Lawrence Seaway, either as pellets, or as products of bio-refineries. US South exports are shipped from the deep-water port of Panama City, Florida. Most wood chips for energy were transported on smaller ships from Baltic ports to district heating and power plants in Sweden and power plants in the UK. The pulp and paper industry has been shipping wood chips long distances from Australia and Brazil, suggesting that longer distance travel is possible for energy.

Products became increasingly manufactured in low-cost countries such as China and India in 2005-08 resulting in a huge demand for shipping to bring products to traditional consuming countries. 4

Shipping rates skyrocketed accordingly, putting competitive long-distance transport of biofuels at risk. It took a financial crisis which led to a worldwide economic recession in 2008 to bring shipping rates crashing to extremely low levels.

Obstacles to competitive maritime shipping biomass include; shipping demand for other products, reliability of biomass supply from plants, port inadequacies, lack of back-haul, and characteristics of biofuels requiring specialty shipping. Anticipate new or growth routes include;

Pellets- Vancouver to UK and China, Quebec to EU, Chile to China and Japan, Australia to China, Norway to EU, Russia to EU
Biofuels- Brazil and Argentina to EU, North America, Asia.

Two major issues in maritime shipping of biofuels are:

1. Getting large quantities of biomass from regions that have poor land transportation infrastructures and ports, such as Africa and parts of South America, to countries where biomass is in great demand, such as in the EU;

2. Preparing for the technological breakthroughs anticipated in 2nd generation biofuels and the demands it will have on new shipping.

To improve the viability of trade routes to far-flung biomass sources will take major investment in ports and biomass conversion plants. Investing in ports to reduce costs is risky, unless large volumes of biomass supply are assured. Similarly investing in biomass production that must be shipped through old, inefficient ports is also risky. Something must be done to reduce those risks to enable efficient, low-cost production and transport of biomass. Options to do this include;

- Manufacturing purpose-built ships for products like pellets, bio-oil, wood chips etc

- Forming consortiums of biomass shippers

- Promoting long-term maritime shipping contracts now that shipping costs are low

- Developing “Biomass investment funds” to modernize and enhance ports and port facilities in areas of high biomass potential, supported by guarantees of volume purchases and contracted prices

- Investing in 2nd generation biofuel plants right in developing countries where there is surplus biomass

It is projected that more than 150 new Handysize tankers will be required just to handle exports of biofuels to 2014. It is further projected that with anticipated breakthroughs in 2nd generation biofuel technologies an additional 400 similar sized ships will be required to 2030 to handle biofuel exports. It is surmised that flexible ship designs are needed to control initial costs while allowing subsequent modification at lower cost; for example, building Panamax oil tankers in such a way that they can later be converted easily to Chemical tankers. Download study