Brazil eyes sustainable shipping fuel market

Brazil is looking to ride a wave of sustainable marine fuel as part of the shipping industry's effort to halve maritime carbon emissions by 2050.

Talks are still underway on which new fuels will dominate the international shipping industry in the coming decades, but Brazil's pioneering role in biofuels is expected to spill over into this emerging segment of the maritime fuels market, Lavinia Hollanda, founder of the local energy consultancy Escopo Energia, said during a recent webinar on the sustainable shipping fuels.

In the context of the Paris climate accord, the International Maritime Organization (IMO) aims to reduce CO2 emissions produced by international shipping by 70pc by 2050 and reduce overall greenhouse gas emissions by 50pc by 2050. The ambitious targets have spawned discussions about potential fuels that could replace heavy fuel oil, which accounts for about 80pc of the sector's emissions, and marine gas oil that represents about 20pc.

Hollanda said early talks have narrowed the potential candidate fuels to five finalists that they hope will be narrowed to two or three global trendsetters. Among the early candidates are Fischer–Tropsch diesel, hydrated vegetable oil (HVO) or green diesel, and straight vegetable oil (SVO) or biodiesel.

Brazil mainly uses soybeans to meet a current 12pc biodiesel blend that is scheduled to rise to 13pc in March 2021.

The other two potential sustainable maritime fuels are compressed biogas and hydrodiesel, a hydrogen-based diesel fuel. Brazil's biogas production is starting to take off with rising investment from the sugar and ethanol industry as well as landfill-based projects.

Brazil still needs to hash out regulatory details for these fuels, according to Heloisa Borges Esteves, director of oil, gas and biofuels at the Brazilian government's energy research company Epe. "Ninety percent of global trade is carried by ships, including food and fuel, which makes sustainable fuels for the maritime transport industry very complex," she said in the webinar, adding that each country will have different available feedstocks to use for sustainable maritime fuel production.

She added the drop-in fuels will be key in the market, adding that Brazil already expects to expand green diesel production over the next decade.

If the global shipping industry were a country, it would be the sixth biggest emitter of CO2 in the world, Borges said.

The discussions about sustainable marine fuels are taking place as Brazil works on legislation to incentivize coastal shipping as an alternative to trucking. The proposal includes increased access of foreign vessels and lower taxes on marine fuel.