Participants at the Argus biofuels conference said lower-grade or "bottom-of-the-barrel" biofuels — such as biodiesel that does not meet road fuel standards — offer a near-term and cost-effective means of meeting maritime industry demand for lower emission bunkering fuel.
Attendees at the conference told Argus that higher-quality biofuels such as biodiesel with a low cold filter plugging point (CFPP), as well as drop-in fuels including hydrotreated vegetable oil (HVO) and hydrotreated esters and fatty acids for sustainable aviation fuel (HEFA-SPK) will primarily be directed at road and aviation markets, meaning higher costs and less availability for maritime use.
New bio-based fuels such as pyrolysis oil may also play a role in the maritime sector moving forward.
The included chart shows northwest European prompt prices for various biofuel bunkering blends and hydrotreated vegetable oil (HVO) produced from used cooking oil (UCO), as well as conventional marine fuels. Delivered prices for blends with Advanced Fame 0C CFPP — produced from feedstocks listed under Annex IX A of the Renewable Energy Directive (RED II) — incorporate a deduction of the value of renewable fuel unit (HBE) tickets, which can be claimed for the blending of advanced biofuels into marine fuel in the Netherlands. These prices are calculated using liquid biofuel components, including European benchmark prices, which are traded to road fuel specifications and any blend with lower specification components would be priced at a discount.
Prices may become more competitive as shipping activities will be included in the EU Emissions Trading System (ETS) from 2024, which will require shipowners to pay for 40pc of their emissions from 2025, 70pc from 2026 and 100pc from 2027.
