Bio-bunkers to account for 0.5% of shipping demand by 2030 - IEA
The FuelEU Maritime regulation is expected to drive the global shipping sector’s biofuel consumption to an estimated 1.8 billion litres (1.6 million mt) by 2030, the International Energy Agency (IEA) said in a report.
PHOTO: Aerial view of Rotterdam harbour in the Netherlands. Getty Images
1.8 billion litres roughly equates to around 1.6 million mt, given that the density of fatty acid methyl ester (FAME) listed in the EU’s Renewable Energy Directive (RED II) is typically 0.88 kg/litre.
Regionally, biofuel bunker demand in the EU is forecast to reach 1.5 billion litres (1.3 million mt) by 2030. Asia-Pacific demand is forecast to reach nearly 200 million litres (176,000 mt) mainly led by Singapore and the US at 100 million litres (88,000 mt).
The rest of the world is expected to account for negligible biofuel bunker demand, according to IEA projections.
The use of biofuels is anticipated to remain modest, as liquefied natural gas (LNG) is also being considered as an alternative to conventional fuels. In addition, shore power will contribute to meeting the EU’s greenhouse gas (GHG) reduction targets.
“Nevertheless, biodiesel remains cost-effective compared with other alternative fuels, is compatible with the existing shipping fleet and offers GHG reduction potential in line with the legislation,” the report adds.
Total global demand for residue oils, including used cooking oil, palm oil mill effluent (POME) and tallow, is projected to reach approximately 30 million mt/year by 2030.
The production of maritime biofuels will require around 900,000 mt/year of this feedstock.
“In the European Union, residue oils will make up much of this feedstock, as legislation prohibits the use of food- and feed-based fuels,” the report states.
Bio-premiums here to stay
In Rotterdam, the POMEME-based B24-VLSFO blend is currently priced at a $178/mt premium over VLSFO.
POME is a by-product generated during palm oil production that can be further processed into POMEME by biodiesel refineries. POMEME-based biofuels qualify for advanced biofuel rebates through the Dutch HBE system.
Rotterdam’s B24-VLSFO UCOME is priced at a $247/mt premium over VLSFO and Singapore’s B24-VLSFO UCOME carries a $129/mt premium over VLSFO.
The IEA report forecasts that the price of bio-bunker blends is unlikely to decrease significantly beyond current levels by 2030, given the strong demand for feedstocks from the road and aviation sectors, as well as the “high cost of alternatives such as bio-methanol.”
By Konica Bhatt
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