With marine fuel greenhouse gas emissions regulations tightening, ship owners are looking for financially feasible low-carbon fuels to add to their marine fuel repertoire. Argus spoke with Dionysis Diamantopoulos, head of alternative fuels at bunker supplier and trading firm Baseblue, about ship owners' options. Edited highlights follow.
Do you expect onboard CO2 capture and storage technology to become more important in the next five years?
The big question for carbon capture technology is the storage capacity for the seized CO2. For example, if an available technology only allows 200t of CO2 to be captured on a voyage for the full capacity of CO2 tanks, then if we take into account that 1t of fuel produces on a tank-to-wake assessment context 3.2t of CO2, this means that after burning 62.5t of fuel oil/gasoil on the vessel that would fill the entirety of the storage capacity of the carbon capture equipment. Considering that this consumption could be a 2-3 day sail for some vessels running on 30-plus day voyages, the proportion of time "online" and "offline" of this technology would be inefficient.
In addition, questions over the development of carbon capture technology is dependent on the availability of infrastructure worldwide to collect the captured CO2. If a vessel calls at, say, Brazil and then west Africa, and has a full carbon capture tank from the second day of the voyage and cannot discharge the captured CO2 at a west African port, we have further "offline" time of the capture technology. Other questions could include the space on deck/holds and further design considerations for the carbon capture technology.
In 2030 what do you expect the global marine fuel mix to look like?
In the immediate future, conventional fuel will remain the front runner, followed by biofuels due to the ability of existing fleets/engines to burn them. LNG usage could also increase if orders/deliveries of new building dual-fueled vessels increase.
The IEA's director, Mr Birol, said recently that he expects LNG prices to drop due to the inflow of cargoes of LNG from the US and Qatar in the upcoming year. In the years to come, we will also see more methanol dual-fueled vessels on the water, and different areas worldwide will surely develop to supply these vessels with sustainable methanol types. Ammonia will eventually join the mix after infrastructure developments and protocols have been set for the safety of bunkering procedures.
Do you think that next year's FuelEU regulation will be sufficient to encourage the move to sustainable marine fuels?
The reality is that we must start somewhere, and FuelEU is a solid driving factor in pushing our industry to begin incorporating alternative fuels in the energy mix.
It is vital that FuelEU and EU ETS is incorporated gradually into shipping. A charge to completely eradicate emissions within the next year or so would not be reasonable, viable or achievable.
This phase-in period also assists in avoiding stranded assets and global trade disruptions.
To comply with FuelEU, shipowners must know each alternative marine fuel's well-to-wake (full lifecycle) greenhouse gas emissions scores, but there is a lot of confusion around these. What well-to-wake emissions would you say each fuel has?
It is not a question of my own or others opinion; it is rather what can be proven with the relevant documentation, for example, from the proof of sustainability documentation that ISCC-certified suppliers can publish. This also showcases why having a proper paper trail and documentation that officially accompanies the supplies is important.
If we are talking about the default values, they would be: B100 16.37 gCO2eq/MJ; B30 MGO 70.18 gCO2eq/MJ; B30 VLSFO 71.73 gCO2eq/MJ. Fossil LNG are default values based on the type of engine. For LNG Diesel DF, it is 76.13 gCO2eq/MJ.
We have not yet delivered bio-LNG or bio-methanol, so we are unsure of the GHG savings.
China is lagging behind Singapore in terms of biodiesel bunker (B24) sales. Do you expect Chinese biodiesel bunker demand to pick up next year?
Singapore is the king of bunkering in the region and ranks as one of the largest global bunkering hubs/ports.
But Hong Kong's biofuel supplies, namely B24 VLSFO, have started and have picked up. Specifically, we at Baseblue already have recurring customers who lift biofuel blends in Hong Kong.
Is conventional bunker trading this year more or less competitive than last year?
Conventional bunker trading this year is more competitive compared to previous years. In my opinion, this has to do with various factors.
First, crude oil prices have been under pressure. Whenever prices are under pressure, smaller trading houses try to take advantage of the fewer financing needs and appear more competitive.
Next, bunker trading companies have sprouted exponentially over the last few years, which is enough to increase competition.
