US bill could boost biofuel demand from ocean-going vessels

A bill put forward by two US representatives aims to promote use of biofuel blends by ocean-going vessels and address the regulatory barriers that have held back uptake of biofuels in the US.

PHOTO: Aerial view of the Port of Philadelphia, US. Getty Images

US representatives Mariannette Miller-Meeks and John Garamendi on Thursday introduced the Renewable Fuel for Ocean-Going Vessels Act. If the bill passes through Congress, it will make biofuel blends supplied to ocean-going vessels meet Renewable Fuel Standard (RFS) requirements.

The bipartisan bill proposes to include biofuels supplied to ocean-going vessels in the “additional renewable fuel” section of the Clean Air Act. This would allow companies to get renewable identification number (RIN) credits for biofuel blends supplied to ocean-going vessels, which is currently not possible.   

The RFS programme is monitored by the US Environmental Protection Agency (EPA) and sets volume requirements for renewable fuels used in the transport sector. These include biomass-based diesel and advanced biofuels.

Refiners and blenders are required to supply minimum amount of renewable fuel to the transport sector. They can do it by either producing the actual physical volumes (in this case biofuel) or by purchasing RINs.

When a biofuel batch is produced, a RIN is generated and assigned to it. The RIN specifies information like the type of biofuel and the feedstock used to produce it. These RINs can be bought or sold in the open market.

Currently, biofuels supplied to international vessels don't count towards RFS requirements. As a result, refiners and blenders are required to retire the RINs associated with the biofuel supplied (meaning they get wasted). If the bill is approved it will allow companies (blenders/refiners) to use or sell the RINs associated with the biofuels they supply to ocean-going vessels. 

The regulatory disparity has made biofuel bunkers more expensive and dented biofuel demand from ocean-going vessels in the US, multiple sources have told ENGINE.

Potential game-changer

If the bill passes through Congress, it should make biofuel blends more cost-effective for ocean-going vessels in the US, Iowa Biodiesel Board’s executive director Grant Kimberley told ENGINE. Suppliers would be able to supply biofuel blends to ocean-going vessels while preserving the value of their RIN credits that they previously had to forfeit. This can, in turn, enable more competitive bunker pricing against other regions.

The Iowa Biodiesel Board represents the biodiesel industry in the US state of Iowa. Kimberley says the bill will help biofuel producers expand their production and create new channels of biofuel demand from ocean-going vessels. He has noted that marine biofuel demand in the US has already been growing.

This marine biofuel growth has likely mainly been driven by uptake from harbour crafts. From the beginning of this year, harbour craft vessels in Californian waters have had to burn at least 99% renewable diesel (R99).

Meanwhile, distillate fuel oil consumption has fallen to a 20-year low across California and the rest of the US West Coast region. This decline can be attributed to the growing market share of biofuels and renewable diesel, on the back of clean fuel programmes that incentivise their use, the US Energy Information Administration (EIA) said earlier this year.

In the proposed bill, US representative Miller-Meeks says biofuel subsidies for ocean-going vessels could stimulate demand from tankers and passenger ships. This should further boost the overall marine biofuel market in the US.

“International shipping companies and cruise lines are increasingly seeking low-carbon biodiesel and renewable diesel to meet climate goals and consumer demand,” Kurt Kovarik said.

Kovarik is the vice president of the US biofuel trade association Clean Fuels Alliance America. He says the proposed legislation will remove regulatory barriers, enabling producers to meet the low-carbon fuel needs of shipping companies at a competitive price. This shift will also allow refiners and blenders to retain RINs for biofuel burnt by ocean-going vessels, which are currently being sacrificed, Kovarik argues.

Next steps

The bill put forward needs to be approved by both chambers of Congress: the House of Representatives and the Senate, before it can be sent to the President for a final approval.

Kimberley says it is uncertain whether the bill will be approved by early next year. He emphasises that several more steps need to be taken before the bill can be passed. Kimberley also urges shipping firms and other maritime organisations to contact their state representatives and senators. They should explain the importance of the bill for shipping decarbonisation.

Support from other Members of Congress is needed to get the bill approved, he says.

"The commitments to decarbonizing the transportation sector are the strongest we’ve ever seen, and that includes the marine industry. We all have an interest in encouraging ocean-going vessels to reduce the marine industry’s greenhouse gas impact through the use of biodiesel," Kimberley concludes.

US representatives Nikki Budzinsk and Carlos A. Giménez have also co-sponsored the bill.

By Nithin Chandran

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