Major bunker hubs like Singapore and major shipping companies, especially container lines, are turning to biofuel bunkers around the world, and their popularity is also reflected in the increasing number of marine biofuel samples audited by Veritas Petroleum Services, a senior VPS executive told S&P Global Commodity Insights in an interview.
“From 2020 to 2022, our biofuel testing work has grown 14-fold,” said VPS Managing Director for Asia, Middle East and Africa, Rahul Choudhuri, adding that “the larger shipowners have all completed their testing.” .
Biofuels are increasingly being sought to reduce greenhouse gas emissions from marine fuels. The renewable fraction of marine fuel used in bunkering is an important parameter because it is used to quantify the emissions reduction achieved through the use of that fuel, Choudhuri said.
S&P Global projects that global biofuel consumption will reach around 10.5 million tonnes in 2050 as uptake progresses, assuming accelerated decarbonization in both the public and private sectors.
Singapore, the world’s largest bunker port, reported more bio-bunker fuel sales than LNG last year. Bunker sales in 2022 included approximately 140,000 tons of biofuel blends for more than 90 biofuel bunker operations, exceeding 16,000 tons of LNG bunker sales.
In 2023, sales of marine biofuels in Singapore are expected to continue growing, Choudhuri said, adding that three key developments in Singapore gave biofuels a much-needed boost.
Last year, under the auspices of the Marine Fuels Committee, the Singapore Shipping Association published an FAQ on biofuel bunkers for ocean-going vessels.
“We felt this was important to get Singapore (biofuels) ready,” said Choudhuri, who is currently vice chair of that committee.
“Then the GCMD was involved in a project on biofuels to determine their quality, supply chain integrity and security. We (VPS) have worked very closely with them,” said Choudhuri.
According to Choudhuri, one aspect of this project dealt with Neat biofuel being secured in China and shipped to Singapore where it was blended and shipped, with a focus on determining the integrity of the supply chain, how safe it is and what its properties are it has the fuel are what happens to the mixture – whether it looks good, bad or stable.
The third development is the WA 2:2022 – an interim national standard for the specifications of marine biofuels – which was developed under the purview of the Singapore Standards Council’s Chemical Standards Committee (CSC), said Choudhuri, who is also the chair of the CSC Technical Committee for Bunkering.
“Currently there is no standard for biofuels in the world and we felt that the ISO is too slow and doesn’t look at it specifically as it has other problems to solve,” Choudhuri said.
“If users pay attention to WA 2, they can be sure of getting a high-quality biofuel,” added Choudhuri.
Separate, misplaced concerns
Singapore allows up to B50 biofuel blends under WA 2, but the most commonly used currently is B24, Choudhuri said.
A MARPOL Annex II requirement prohibits suppliers from carrying biofuels as cargo beyond 24% of the mix unless they have a chemical tanker notation.
“Future bunker tankers arriving in Singapore must have chemical tanker notation because now we are preparing to deliver biofuel blends which can be more than 24%,” said Choudhuri, adding that Singapore is also the SS 648 – the Code of Practice for Bunker Mass Flow Measurement – to address biofuel bunkering.
“The parameters of biofuels closely mimic those of fossil fuels, such as viscosity and density. So, in principle, the MFM can support biofuel bunkering… but we want to change the standard to show that the equipment is capable of handling it and make the MFM mandatory for bunkering.
Ships used to be designed to burn vegetable oils. Shipowners can use them with minor modifications to their engines and minimal changes to bunker infrastructure. So it’s viable, Choudhuri said.
There are some concerns about the availability of biofuels as “SAF (sustainable aviation fuel) could get the most out of them,” he said.
“However, I don’t think that’s a big concern. I think supply will be created when demand is created,” he said.
Ahead of IMO 2020 there was a lot of concern about VLSFOs, what the new 0.5% marine fuels will be – will they be stable, compatible and even plentiful? However, the shipping industry has shown resilience and nobody is raising such concerns right now, Choudhuri said, adding that they are now a mainstream fuel.
While there will be a green premium for biofuels, especially HVO, current regulations like CII and upcoming regulations will make biofuels more price competitive with conventional fossil fuels, Choudhuri said.
HVO currently costs about twice the value of very low sulfur heating oil – the most commonly used marine fuel with 0.5% sulfur – while FAME prices are about 30% to 50% higher than VLSFO depending on the blend ratio, according to industry sources.
Platts valued MF 0.5% S Singapore FOB Cargo at $527.46/mt on May 4 and MF 0.5% S Fujairah FOB Cargo at $540.12/mt on May 3, S&P Global data showed.
However, some sources claimed that the IMO’s CII does not recognize the decarbonization effects of using biofuels. However, Choudhuri said India submitted a submission to the IMO before the Marine Environment Protection Committee 80 and recommended that biofuels should be given a zero-carbon factor.
“If you use a lower carbon factor, you improve the CII, which meets IMO requirements,” Choudhuri said.
Although the carbon factor for biofuels is not yet clear, it will appear in MEPC 80, Choudhuri said, adding that “this part of the discussion is part of life cycle assessment”.