Q&A: Marine CO2 goals need culture shift: TotalEnergies

  • : Biofuels, Hydrogen, Oil products
  • 24/05/20

A cultural change in buying behaviour and supply patterns is necessary for the shipping sector to meet its decarbonisation targets and may be the biggest hurdle to overcome, strategy and projects director for TotalEnergies' marine fuels division Frederic Meyer told Argus. Edited highlights follow:

What is the biggest challenge standing in the way of the maritime industry in meeting decarbonisation targets and the fuel transition ?

A cultural change is required — for decades the maritime sector has relied on by-products with high energy density from the crude refining process such as fuel oil. The industry will now have to pivot its attention towards fuels developed for the purpose of consumption within the maritime industry. This will also require time as the sector looks to level up, and it remains to be seen whether there will be enough time to meet the International Maritime Organisation (IMO)'s net-zero by or around 2050 targets. But we have seen some good progress from cargo owners who are seeking scope 3 emissions related documents.

How does TotalEnergies see marine biodiesel demand moving in the short term?

In the short term, there is little incentive for the majority of buyers in the market. This is due to a lack of any regulatory mandates, as well as limited impact from existing regulations such as the IMO's carbon intensity indicator (CII) and the EU's Emissions Trading System (ETS).

Despite providing a zero emission factor incentive for biofuels meeting the sustainability criteria under the EU's Renewable Energy Directive (RED), EU ETS is still on a staggered implementation basis beginning with only 40pc this year, rising to 70pc next year and 100pc in 2026. Further, EU ETS prices have been quite low, which also weighed on financial incentives for marine biodiesel. Therefore, many buyers are currently waiting for further incentives and signals from the regulators before purchasing marine biodiesel blends.

Another point impacting demand is the current edition of ISO 8217, which does not provide much flexibility when it comes to marine biodiesel blend percentages and specifications. The new 2024 edition will likely provide greater flexibility for blending percentages, as well as a provision for biodiesel that does not meet EN14214 specifications. This will provide greater flexibility from a supply point of view.

However, there remains stable demand from buyers who can pass on the extra costs to their customers.

And how do you see this demand fluctuating in the medium to long term?

If the other alternative marine fuels, such as ammonia and methanol, that are currently being discussed do not develop at the speed necessary to meet the decarbonisation targets, then marine biodiesel demand will likely be firm.

Many in the market have voiced concerns regarding biofuel feedstock competition between marine and aviation, ahead of the implementation of sustainable aviation fuel (SAF) mandates in Europe starting next year. With Argus assessments for SAF at much higher levels than marine biodiesel blends, do you think common feedstocks such as used cooking oil (UCO) will get pulled away from maritime and into aviation?

With regards to competition among different industries for the same biofuel feedstock, suppliers may channel their feedstock towards aviation fuels due to the higher non-compliance penalties associated with SAF regulations as opposed to those in marine, which would incentivise greater demand for SAF. An area that can be explored for marine is the by-product when producing SAF, which can amount to up to 30pc of the fuel output. This could potentially feed into a marine biodiesel supply pool. So it's not necessarily the case that the two sectors will battle over the same feedstock if process synergies can be found.

Regarding fuel specifications, market participants have told Argus that the lack of a marine-specific fuel standard for alternatives such as marine biodiesel is feeding into uncertainty for buyers who may not be as familiar with biofuels. What impact could this have on demand for marine biodiesel blends from your point of view?

Currently, mainstream biodiesel specifications in marine biodiesel blends are derived from other markets such as the EN14214 specification from road diesel engines. But given the large flexibility of a marine engine, there is room to test and try different things. For "unconventional" biofuels that do not meet those road specifications, there needs to be a testing process accompanied by proof of results that showcase its safety for combustion within a marine engine.

Some companies may not have the means or capacity to test their biodiesel before taking it into the market. But TotalEnergies always ensures that there are no engine-related issues from fuel combustion. Suppliers need to enact the necessary testing and take on the burden, as cutting out this process may create a negative perception for the product more generally.

Traders should also take on some of the burden and test their fuels to ensure they are fully compatible with the engine.

With many regulations being discussed, how do you see the risk of regulatory clashes impacting the industry?

The simple solution would be an electronic register to trace the chain of custody. In the French markets, often times the proof of sustainability (PoS) papers are stored onto an electronic database once they are retired to the relevant authority. This database is then accessible and viewable by the buyer, and the supplier could also further deliver a "sustainability information letter" which mirrors the details found in the PoS. It is important for the maritime sector to adopt an electronically traceable system.

What role could other types of fuels such as pyrolysis oil potentially play in the maritime sector's decarbonisation targets?

We have teams in research and development at TotalEnergies which are studying the potential use of other molecules, including but not limited to pyrolysis oil, for usage in the maritime sector. It may become an alternative option to avoid industry clashes, as pyrolysis oil would not be an attractive option to the aviation sector.

We are currently exploring tyre-based pyrolysis oil, but have only started doing so recently so it remains an untapped resource. We need to figure out the correct purification and distillation process to ensure compatibility with marine engines. For the time being we are specifically looking at tyre-based pyrolysis oil and not plastic-based, but we may look at the latter in a later stage.

The fuel would also have to meet the RED criteria of a 65-70pc greenhouse gas (GHG) reduction compared with conventional fossil fuels, so we are still exploring whether this can be achieved.


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24/06/14

Venezuela to require appointments at some gas stations

Venezuela to require appointments at some gas stations

Caracas, 14 June (Argus) — Venezuelan drivers will need to schedule appointments in order to purchase gasoline from retail outlets selling government subsidized fuel, oil minister Pedro Tellechea told Argus on Friday. The subsidized gasoline is still inexpensive, at 2¢/liter, and plentiful, Tellechea said, despite drivers often waiting in line for hours for the fuel. But under a plan to modernize the stations selling the subsidized gas with new pumps and flat screen monitors, an appointment system will soon be required for purchases. Venezuela raised gasoline prices to 50¢/liter in 2020, to what the government has called a "international price," but then set aside stations meant just for members of the ruling party and other groups, where they could buy gasoline for much less. Today about 60pc of the country's 1,800 retail gas stations sell at unsubsidized prices. Half of Venezuela's gas stations will be refurbished this year, with pumps that can fill up an SUV in 20 seconds, supply 700 vehicles a day, and accept all forms of payment, Tellechea told reporters at a model station in Altamira, east Caracas, on Friday. "There aren't in South America gas stations right now just like the ones you are seeing today," he said. "Drivers won't have to wait in line at subsidized stations, they will have their appointments programmed to the second." Tellechea said Venezuelans are now using 95,000 b/d of gasoline but he declined to say how much is being produced domestically. Tallecha said oil production was growing, reaching "above 950,000 b/d" on Friday, but that included about 40,000 b/d of condensates and natural gas liquids. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Phillips 66 to balance fossil and renewable fuels


24/06/14
24/06/14

Q&A: Phillips 66 to balance fossil and renewable fuels

Houston, 14 June (Argus) — With Phillips 66's Rodeo, California, refinery expected to ramp up to over 50,000 b/d of renewable fuels production by the end of this quarter, all eyes are on the refiner for what is next. Zhanna Golodryga , executive vice president of emerging energy and sustainability for Phillips 66, talked to Argus at the refiner's Houston headquarters about how the company looks at investments, its focus on sustainable aviation fuel (SAF) production and why Texas might be the Silicon Valley of the energy transition. The conversation has been edited for clarity and length. When Rodeo reaches full capacity, it will represent about 3pc of your overall output. What will your fleet look like longer-term and what will be the renewables/petroleum split? Not all the refineries in our portfolio are created equal, and when we look at them what I call them is "lower-carbon energy hubs". Not low, lower, because it's going to be a combination of everything. We're looking at the assets we have in the portfolio and what we can do to help bring in lower carbon solutions and what can we build out. Our focus is going to continue to be SAF. We understand the limitations of feedstocks and we have a very strong commercial organization that is now working on providing feedstocks just for Rodeo. But we're also thinking about what we can do to bring in different feedstocks. Energy transition opportunities aren't going to replace our traditional fossil fuel refining. It's an "and", not an "or". You've highlighted a future focus on SAF. Does that mean a move away from renewable diesel (RD)? I think we have flexibility to do both and it will be market driven going forward. We have to look at demand but there is demand for SAF globally, not just in the US. Demand for gasoline is not as strong as demand for diesel and sustainable aviation fuel. That is what our focus is and then we want to diversify the feedstock. What is your outlook for RD? I think RD is here for quite some time. It's hard to predict what's going to happen by 2050 but I think we will have the demand. It's going to take a long time to electrify all future transportation. I think we have a much better opportunity for now to focus on what we're really good at. That's fuels, renewable fuels. You have faced activist investor pressure calling for Phillips 66 to focus on its core refining business. How do investors feel about the Rodeo conversion and your future plans? We have taken a pragmatic approach to the energy transition. We have criteria that we follow prior to taking any projects over the line, specifically the energy transition type projects. They must meet five key prerequisites: the right returns, the right technology that has been proven at scale, the right regulatory environment, preferably involve a partnership and be done at the right time. We have to prove with Rodeo that this is, as I call it, our license to continue to grow the business. This is our license to operate additional energy transition business. This one is going to be done extremely well. What are the policy tailwinds and headwinds to your renewables investments? When we look at our opportunities in our energy transition portfolio, we are building our economic model for them to produce the right returns without any incentives. That is our starting point. On the other hand, the IRA [US Inflation Reduction Act] has been a bipartisan initiative and we think it's going to stand for the greater good of the planet. We have to think globally, as we have the Humber refinery in the UK. It's interesting for us to see what's possible in the US with the IRA incentives, versus more of a stick in Europe. But the challenge for us is permitting and timing. We probably could have brought Rodeo online sooner if we didn't have to wait for some permits. Our headquarters are in Texas and Texas is the "energy transition Silicon Valley". I'm repeating someone's words and those are the words of Bill Gates. But I believe that. We're perfectly positioned on the Gulf coast to go to the next phase and build something here. You've mentioned Phillips 66's 265,000 b/d Sweeny refinery in Old Ocean, Texas, as a low carbon energy hub. Does that mean it is a candidate for renewable fuel conversion or co-processing? It could be an option, maybe not at Sweeny, but in the Gulf coast, maybe Lake Charles. It's driven by our hardware, just like what we've done at Rodeo. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

S Africa's ANC, DA agree to form government


24/06/14
24/06/14

S Africa's ANC, DA agree to form government

Cape Town, 14 June (Argus) — South Africa's African National Congress (ANC) and Democratic Alliance (DA) political parties today agreed to form a government while the first sitting of the new parliament was underway. The agreement, which includes the Inkatha Freedom Party (IFP), paves the way for ANC leader Cyril Ramaphosa to be re-elected president. The parties will assume various positions in government broadly in proportion to their share of seats. The government of national unity (GNU) agreement is the result of two weeks of intense negotiations after the ANC lost its long-held majority in the national election on 29 May. It secured 40.2pc of the vote, and the centre-right, pro-market DA retained its position as the official opposition with 21.8pc. The deal scuppers the possibility of an alliance between the ANC and the two largest left-wing parties, MK (uMkhonto weSizwe) and the Economic Freedom Fighters (EFF), which credit ratings agency Fitch warned could pose risks to macroeconomic stability . MK party unseated the EFF in the election to come third, winning 14.6pc of the vote. The EFF secured 9.5pc, and the IFP came a distant fifth with 3.85pc. The MK and EFF are populist parties that campaigned on agendas including wide-scale land expropriation without compensation, nationalisation of economic assets — including mines, the central bank and large banks and insurers — halting fiscal consolidation and aggressively increasing social grants. The GNU parties agreed the new administration should focus on rapid economic growth, job creation, infrastructure development and fiscal sustainability. Other priorities include building a professional, merit-based and non-partisan public service, as well as strengthening law enforcement agencies to address crime and corruption. Through a national dialogue that will include civil society, labour and business, parties will seek to develop a national social compact to enable South Africa to meet its developmental goals, they said. The GNU will take decisions in accordance with the established practice of consensus, but where no consensus is possible a principle of sufficient consensus will apply. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Low-CO2 biofuel feedstock imports to rise: USDA


24/06/13
24/06/13

Low-CO2 biofuel feedstock imports to rise: USDA

New York, 13 June (Argus) — A new US tax credit kicking off next year that is more generous for fuels that produce fewer greenhouse gas emissions will likely spur more imports of low-carbon feedstocks, the US Department of Agriculture (USDA) said in a report this week. A raft of government incentives, including the federal renewable fuel standard and low-carbon fuel standards (LCFS) in states like California, has already spurred a boom in renewable diesel production, upping demand for feedstocks that can be used to make the fuel. The US was a net soybean oil importer for the first time ever in 2023 because of strong demand from domestic refineries, and the value of US imports of animal fats and vegetable oils more than doubled from 2020 to 2023 according to the report. That trend could become even more pronounced next year as the Inflation Reduction Act's 45Z tax credit, which offers up to $1.75/USG for sustainable aviation fuel and up to $1/USG for other fuels like renewable diesel, comes into force. The credit can only be claimed for fuel produced in the US, likely cutting biofuel imports and sending more feedstocks that would have been refined abroad to the US instead, the report says. The 45Z credit will also be more generous to fuels with lower carbon intensity, upping demand for waste feedstocks like used cooking oil that already fetch greater discounts in LCFS programs. Fast-rising imports of China-origin used cooking oil have already frustrated some agricultural groups, which lose out if there are more ample supplies of waste feedstocks. The report says that while soybean oil was the "crucial feedstock" allowing for the recent growth in US renewable diesel, its share of the feedstock mix has been trending downwards because of competition from lower-carbon feedstocks and lower-cost canola oil from Canada. While soybean oil exports have plunged because of the renewable diesel boom, they could recover slightly if refineries increasingly turning to waste feedstocks cuts into US soybean oil's current premium over global vegetable oils. The report adds that soybean oil's role in renewable diesel production is also at risk from rising supplies of soybean meal, which is produced alongside oil at crush plants and where the global demand picture is less clear. "Based on global demand for soybean meal, soybean oil cannot continue to fuel renewable diesel production growth at current rates during the next few years without major changes to global soybean meal demand, shifts in exporter market shares, or lower supplies in other exporting countries," the report says. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Neste supplies SAF to Emirates at Changi airport


24/06/13
24/06/13

Neste supplies SAF to Emirates at Changi airport

Singapore, 13 June (Argus) — Dubai-owned airline Emirates has started using blended sustainable aviation fuel (SAF) supplied by Finnish biofuels producer Neste on flights departing from Changi airport from Neste's Singapore refinery. The two companies had signed a partnership in October 2023 for 3mn USG (8,600t) of blended SAF in 2024 and 2025, with Neste supplying over 6,000t of blended SAF to Emirates at Amsterdam's Schiphol airport this year. Neste has since supplied more than 2,600t of blended SAF into Changi's fuelling system over the past few weeks, with Emirates' deputy president and chief operating officer Adel Al Redha indicating a move towards "longer term agreements to help scale up a steady supply of SAF for operations". Emirates said it is the first international visiting airline using SAF supplied at Changi from Neste's Singapore refinery. By Deborah Sun Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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