Biofuels and liquefied natural gas (LNG) will likely be the most economical alternative marine fuels well into the 2030s, speakers at the Marine Fuels 360 conference in Singapore on 7 October said.
But they also emphasised a need to adopt new biofuel feedstocks on top of current widely-used biodiesel or used cooking oil (UCO) methyl ester (Ucome), because Ucome supplies will likely prove insufficient with growing UCO feedstock demand from the sustainable aviation fuel (SAF) sector, which can usually pay higher as compared to the marine industry.
"We expect biofuels supply to remain comfortable at least through 2028. If the IMO's Net-Zero Framework is adopted in October 2025 and applied from 2028, we would anticipate a step-up in demand," said Jesper Sørensen, global head of alternative fuels and carbon markets at bunker company KPI OceanConnect.
Sørensen stressed the need to be open to other biofuel feedstocks in addition to UCO, because that alone will not meet future demand. This includes options like cashew nut shell liquid (CNSL), subject to additional refining and fit-for-use testing. Engine-maker guidance will also help scale these streams responsibly, he said.
And while hydrotreated vegetable oil (HVO)'s higher price point will keep its use in shipping targeted, it is a direct replacement for distillate fuel and excellent where low-particulate matter engine performance is important — such as for ships travelling in colder climates that require low cold filter plugging point (CFPP) HVO, or in other sensitive operating conditions. "In practice, fatty acid methyl esters (FAME) does the mileage, whereas HVO covers the conditions," Sørensen said.
Uncertain regulatory environment could limit demand
The current uncertain regulatory environment makes it challenging for any long-term investments in alternative fuels for at least the next decade, but biofuels and LNG are fairly mature fuels and can be interim solutions, Captain Raghav Gulati, head of safety and technical operations at mining company Anglo American, said.
Infrastructure is available, the industry is aware of the risks, and there are also certain standards in place to measure fuel quality, he added. LNG is already scaling with more supply coming into the market and new infrastructure being developed in different regions of the world, and has been historically commercially comparable to conventional fuel.
That said, there are encouraging signs of companies working to secure demand. "From our estimates, roughly 80pc of biofuel demand in Singapore is fulfilled on term [contracts] this year, versus predominantly spot last year," Sørensen noted.
Gulati also emphasised the need for costs of alternative marine fuels to be spread more evenly across the supply chain, with more passed on to end-users, for example. "Everyone feels the buck stops at the charterer, but that's not true — it's a bigger supply chain."
Ethanol — the new alternative marine fuel on the block?
Ethanol, also known as ethyl alcohol, has been included in International Maritime Organisation's (IMO) International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code) since December 2020, Chris Chatterton, maritime advisor for the Global Centre for Green Fuels (GCGF) said. "Ethanol just hasn't been developed to its full potential yet," he added.
"But now that there are nearly 100 vessels globally running on dual-fuel methanol technology, ethanol producers can consider supplying this additional demand as both fuels are completely miscible. The next step would be to co-combust methanol and ethanol with a tri-fuel engine, not just a dual-fuel one," Chatterton said. As of October, there are around 941 vessels globally which have been preliminarily scheduled to be retrofitted to use both methanol and ethanol, according to GCGF's estimates.
Ethanol is already produced at scale globally, is around 25pc more energy dense than methanol, and slightly safer to handle, he noted. There is an emerging ISO standard for ethanol as a marine fuel too.
With US and Brazil as key producers, ethanol's price is also relatively stable, which is important to shipowners — although demand from alcohol-to-jet SAF plants will also likely price the shipping sector out of the market, Chatterton told Argus on the sidelines of the conference.
But overall, the panellists said biofuels and LNG are good stepwise solutions in the long decarbonisation journey.
"This is a lifetime or century-long change we're looking at, and we cannot go from zero to 100 in a week. We need to move away from treating biofuels as an experimental fuel, and towards it as a practical and strong lever to navigate through regulatory burdens on the industry," Gulati said.
