Off-spec bio-blends widen pricing spread

Market: Biofuels, Oil products
15/02/24

The range of prices for marine biodiesel blends in Europe has widened as cheaper product that does not meet the region's road diesel engine specifications — as defined by the European EN14214 standard — gains market share.

Indicated values and fixed deals in Rotterdam for delivered bunker fuel made of pure biodiesel (B100) from advanced feedstocks — defined by Annex IX Part A of the EU's recast Renewable Energy Directive — were broadly reported at $897-1,000/t between 26 January and 7 February. But some suppliers quoted prices as high as $300/t higher for B100 blends meeting the EN14214 standard.

Argus assessed the calculated B100 advanced Fame 0°C CFPP dob ARA range price at an average of $1,127.95/t over the same period, with the price standing at $1143.36/t on 13 February. The calculated dob ARA range price incorporates a deduction for HBE-Gs, which are used by companies that bring liquid or gaseous fossil fuels into general circulation and are obligated to pay excise duty or energy tax on fuels, but it is also based on assessments for EN14214 standard biodiesel.

Shipowners may be tempted to burn cheaper fuels, but doing so could prove to be risky. Original equipment manufacturers of ship engines such as MAN and Wartsilla currently licence their engines to utilise and combust fuels that are in line with current ISO specification list, ISO8217:2017.

According to MAN service letters, biodiesel properties should meet either EN14214 or ASTM D6751 standards in order to be used for their engines. This means that shipowners using fuels that do not meet these standards are at risk of potentially voiding their warranty or insurance cover in the case of any damage to engines caused by off-spec fuels.

However, some market participants said shipowners can obtain a green light from their insurance provider by providing a specification sheet ahead of bunkering.

ISO is currently developing a new specification standard, ISO 8217:2024, which many market participants expect to broaden the coverage of alternative marine fuels and potentially establish a standard that is more flexible and applicable to the maritime sector. MAN said if a biodiesel standard is established in a new ISO 8217 edition, it will recommend following this version.

By Hussein Al-Khalisy

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08/11/24

Carbon intensity reg pivotal to biobunkers in 2025

New York, 8 November (Argus) — The International Maritime Organization's (IMO) carbon intensity indicator (CII) regulation will propel biofuel bunker demand in 2025 as its restrictions tighten. The CII regulation came into force in January 2023 and thus far has had a muted effect on shipowners' biofuel bunker demand. But 2025 could be a pivotal year. CII requires vessels over 5,000 gross tonnes (gt) to report their carbon intensity, which is then scored from A to E. A and B vessel scores are regarded as superior energy efficiency, while C, D and E are considered moderate to inferior scores. The scoring levels are lowered yearly by about 2pc, so a vessel with no change in CII could drop from from C to D in one year. If a vessel receives a D score three years in a row or E score the previous year, the vessel owner must submit a corrective action plan. The IMO has not established penalties or restrictions for vessels scoring D. Thus, theoretically a ship owner could have scored D in 2023 and 2024 with no consequences. Year 2025 will mark CII's third year, when ship owners whose vessels were scoring D in 2023 and 2024 will need to rethink their sustainability approach or risk getting D again and having to produce corrective actions plans in 2026. That is in addition to the ship owners whose vessels will score E in 2024. To improve its CII score, a ship owner could reduce its speed and burn low-carbon fuels, among other solutions. Biofuel is the only plug-and-play low-carbon fuel option that does not require a costly vessel retrofitting. in 2023 of the vessels 5,000 gt and over, 3,931 scored D, 1,541 scored E and 3,967 did not report scores, according to the latest IMO data ( see chart ). Assuming that the non-responders refrained from reporting to avoid sharing their low D and E scores, then the total number of D and E scoring vessels could be as high as 9,439, or 33pc of the total vessel count. The bulk of the vessels reporting D and E were dry bulk carriers at 1,853 and 641, respectively, followed by oil tankers at 743 and 349, respectively, according to IMO data. The dry bulk carrier category also had the highest number of non-responders at 1,015 vessels. The vessel classification society American Bureau of Shipping concluded that a reference case container vessel with 154,000t deadweight could see its rating improve from D to C in 2025 if it switched from burning conventional marine fuel to B25 biofuel. FuelEU, EU ETS: All bark, no bite Separately from the CII regulation, ship owners traveling in, out and within EU territorial waters will see the implementation of a new FuelEU marine regulation on 1 January and the tightening of the existing EU ETS regulation. But neither would be major driving forces behind biofuel for bunkering demand in 2025. The EU ETS will require that vessel operators pay for 70pc of their CO2 emissions next year. But even with the added cost of CO2, a B30 biofuel blend is more expensive than conventional marine fuel. In Rotterdam in October, B30 — comprised of 30pc used cooking oil methyl ester (Ucome) and 70pc very low-sulphur fuel oil (VLSFO) — with a 70pc CO2 cost added would have averaged $924/t, compared with VLSFO with added 70pc CO2 cost at $682/t, according to Argus data. In order for the EU ETS to entice ship owners to burn biofuels, at current VLSFO and Ucome prices, the price of CO2 has to rise up to $300/t. And CO2 has fluctuated from $55-$102.5/t from January 2023 to October 2024. Starting on 1 January 2025, the EU's FuelEU regulation will require that vessel fleets' lifecycle greenhouse gas intensity is capped at 89.34 grams of CO2-equivalent per megajoule (gCO2e/MJ) through 2029. For vessels which do not meet this cap, a low biofuel blend can meet the requirement. A B5 blend, comprised of 5pc Ucome and 95pc VLSFO, emits less than 89 gCO2/MJ. At this rate, albeit higher, demand for biofuels would not spike dramatically. Unlike the CII scores which apply to individual vessels, FuelEU applies to vessel pools. Different shipping companies are allowed to pool their vessels together to share compliance and meet the EU ETS emissions limits. Thus several biofuel or LNG burning vessels can compensate for the emissions generated by the majority of the older, less fuel efficient vessels burning conventional marine fuel in the pool. By Stefka Wechsler CII vessels rating Number of vessels (5,000 GT and over) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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08/11/24

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08/11/24

Canada climate plans not equally at risk post-Trudeau

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Talks to restart as port of Vancouver lockout drags

08/11/24

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08/11/24

Talks to restart as port of Vancouver lockout drags

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Fund woes to hit Australian post-winter bitumen imports

08/11/24

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08/11/24

Fund woes to hit Australian post-winter bitumen imports

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Hungary’s Mol cuts forecast for 2024 refinery runs

08/11/24

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08/11/24

Hungary’s Mol cuts forecast for 2024 refinery runs

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