Last year, the International Maritime Organization (IMO) approved its 2023 Net-Zero Framework that set a target to eliminate greenhouse gas (GHG) emissions from the global shipping industry by 2050. The framework consists of a Global Fuel Standard that requires ships to gradually reduce the GHG Fuel Intensity (GFI) of the energy they use as well as a Pricing Mechanism whereby ships exceeding GFI thresholds are required to pay for remedial units while ships that use zero or near-zero (ZNZ) fuels can earn surplus units to trade or bank in the future. The global shipping industry consumes around 4.5 million barrels of oil per day, and is responsible for ~3% of GHG emissions. Biofuels are widely considered a first alternative by shipowners to quickly cut their emissions since they are easily mixed with traditional bunker fuels.

Unlike hydrogen or ammonia, food-based biofuels can be used in existing engines and fuel tanks with minimal or no modifications. Not surprisingly, their use is accelerating, particularly in major bunkering hubs like Singapore and Rotterdam where bio-blended fuel sales rose from 300,000 tonnes in 2021 to over 1.6 million tonnes in 2024. 

However, the experts are warning that the rapid adoption of vegetable oil-based biofuels threatens to trigger a massive demand shock, potentially driving up vegetable oil prices. According to research by the International Council on Clean Transportation (ICCT), shipping demand alone could drive demand for biofuels to 140 billion litres by 2035, roughly triple the entire current global market for vegetable oil biofuels. Such a massive increase in consumption of vegetable oil could potentially also triple their prices, adding an extra burden to low-income households, net food-importing nations and the nearly 700 million people living with food insecurity worldwide.

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Meanwhile, increasing biofuel use can accelerate deforestation primarily through the rising demand for agricultural land to grow feedstocks like palm oil, corn, soy, and sugarcane. Indeed, surging biofuel demand has led to direct clearing of tropical forests for palm oil and soy plantations in Southeast Asia and South America. When existing agricultural land is converted to grow biofuel crops, farmers often move to new areas, creating a domino effect that drives deforestation onto another forest frontier. Studies have shown that some vegetable oil biofuels can actually have higher lifecycle emissions than traditional fossil fuels when accounting for deforestation and land-use changes.

Meanwhile, every dollar spent on crop-based biofuels is a dollar not invested in genuinely sustainable e-fuels like green ammonia or methanol. Research by Transport & Environment indicates that 90% of global biofuels rely on food crops, and the land used could be better used for solar energy, which is far more efficient. Green methanol created from biomass sources like agricultural waste, municipal waste, and wood waste through gasification, as well as ammonia are considered highly scalable and superior for long-term decarbonization, particularly in shipping, since they can be produced using renewable electricity and captured CO2.

IMO is facing significant pressure to follow the lead of the EU and the International Civil Aviation Organization (ICAO)  by restricting high-risk Indirect Land Use Change (ILUC) biofuels. The European Union’s FuelEU Maritime and RefuelEU Aviation already excludes food/feed-based biofuels from counting toward their respective sustainability targets, while  ICAO includes Indirect Land Use Change (ILUC) emissions in its CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) life cycle assessments. If the IMO adopts similar standards, shipowners relying on high-ILUC biofuels could find their fuel classified as non-compliant, leading to heavy penalties under the Global Fuel Standard (GFS). 

Wind-Assisted Propulsion

Previously, we reported that Cargill, a leading global commodities trader with significant ocean transportation operations, is pioneering wind-assisted propulsion (WAP) technology to decarbonize shipping. In August 2023, Cargill and BAR Technologies’ pioneering “WindWings” technology successfully set sail in August 2023 on the Pyxis Ocean, a Kamsarmax vessel owned by Mitsubishi Corporation and chartered by Cargill. The system used large, automated wing sails to harness wind power, allowing ship engines to be powered down while maintaining standard speeds.

Well, the experiment was a huge success, with trial data released by Cargill following a six-month maiden voyage confirming the technology’s effectiveness in reducing carbon footprints. The two installed wings, each standing 37.5 metres tall, saved an average of 3 tonnes of fuel per day for the 81,000 dwt vessel, with savings reaching up to 11 tonnes per day in near-optimum conditions. According to Cargill, wind-assisted propulsion can save up to 30% of a ship’s fuel consumption, a potential game-changer considering that fuel costs account for nearly half of a shipowners’ operating expenses. Building on the success of the Pyxis Ocean, Cargill is now expanding its commitment to maritime sustainability by investing fully in wind-power.

Cargill is hardly alone: WAP in shipping is projected to start going mainstream by 2030, transitioning from a niche technology to a standard feature for decarbonizing the maritime sector. Analysts anticipate that around 10,000 ships worldwide will be equipped with wind-assisted propulsion systems by 2030, with numbers projected to rise up to 40,000 by 2050.

By Alex Kimani for Oilprice.com

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