Fathom Spotlight: Sailing on Sustainability

Biofuels remain as a continuously contentious topic of debate at IMO level

In an economic climate where maritime fuel costs are set to break record highs by 2015, as a result of environmental pressures to reduce global sulphur emission from 1.0% to 0.1% under MARPOL Annex VI. Where, technological developments battle to innovate to stay ahead of compliance.  Where, biofuels remain as a continuously contentious topic of debate at IMO level and steps towards a regulatory framework of "do's and dont's" in the carriage and blending of biofuels is exemplified through the recent IMO Resolution MSC.325(90), 2014. Greenhouse gas emissions are no longer a debate of ethics, but rather go straight to the heart of corporate cost analysis.

In this week's spotlight we shine the light onto the global race towards the commercialisation and verification of biofuels for the maritime industry that is well and truly underway and accelerating at pace.

Growing Interest for Biofuels

Following Annex VI of the MARPOL Convention, the issue of combating sulphur emissions is no longer an eco-indulgence reserved for the conscientious. The flip side is that, in light of stringent regulatory requirements, biofuels could be fast becoming 'cost advantageous' in comparison to their low-sulphur competitors. This year Jacob Sterling, Maersk's former Environmental Manager summed it up quite simply, "We use 10 million tonnes of bunker fuel a year for our ships. Instead of buying expensive low-sulphur oil in 2015 we would equally like to buy some kind of low quality second generation biofuels, where we also get a carbon dioxide advantage."

The 'Game Changing' Report

The new report, 'Aviation and Marine Biofuels, 2014' launched by Navigant Research holds information that could potentially be a game changer for the development of intelligence and action around biofuels within the maritime industry.

The target proposed in the report? For biofuel production capacity to reach 3.3 billion gallons by 2024 which would represent 1.5% of total aviation and marine fuel consumption.

The report focuses on the need to hedge against emerging market demands, regulations, and certification pathways. With fuel costs as central, the report provides an in-depth look at advanced biofuels produced from sustainable non-food sources to overcome industry feed-stock constraints and high capital investment demands.

The Pivotal Research Efforts

A maritime industry specific project already underway in Norway is 'ReShip', in collaboration with Aston University (UK). The method, ingenious in design, utilises low quality wood waste left over from logging and converts it into crude pyrolysis oil, via the process of fast pyrolysis wherein material is heated without oxygen. The major barrier to mass production is its compatibility with diesel engines. Therefore the project aims to explore the idea of 'multi-component fuel' – put simply this looks at which fossil fuels can be added to the blend. However, Prof Bridgewater, head of research, aims to go beyond generic diesel/biofuel ratios to test concentration levels in other fossil fuels.

Commercial investment into pyrolysis oil is taking off to the tone of a recent EUR€20 million investment from Fortum, Finland, in collaboration with UPM and Valmet, to develop a plant that will be, the 'first of its kind in the world on an industrial scale' towards developing this technology for a commercial market.

On-board the voyage to revolutionise our current dependency on fossil fuels, it is speculated the European Commission will also be investing EUR€32m into a new biofuel plant, again based on forest residues technology. The trail of logic being, investment into the macro-production of crude pyrolysis oil will completely alter the maritime industry – ensuring sustainable growth and prosperity.

On trend with sustainable corporate efficiency, Maersk in partnership with Progression Industry, a division of Eindhoven University of Technology's Department of Mechanical Engineering in the Netherlands, is developing a renewable lignin-based marine fuel called Cyc1Ox for Maersk Oil Trading, the Maersk Line Fuel supplier. If Progression Industry can produce the fuel to meet criterion there is a formal agreement to purchase 50,000 metric tons. Though this will help to reduce emissions and costs, particularly in Emission Control Areas (ECA's), the company's focus is to produce a cheaper substitute to their USD$7 billion annual bill on fuel. For Maersk Line, testing biofuels is a part of a wider strategy to reduce emissions by 25% by 2020 to ensure corporate sustainability.

Reliability is Key to Sustainability

An anecdote close to home puts this into perspective – when the price of oil goes up by USD$1 per barrel, the relayed increase to the U.S Navy is EUR$30 million per annum. The U.S Navy now says it is seeking 37 million gallons of drop-in biofuels in what it describes as a major step towards reducing its reliance on petroleum to produce reliability in overall fuel supply. This translates into the commercial maritime industry, as commercial fleets bare the brunt of fluctuation as well. To pluck out an example, in the chaos to comply with low-sulphur fuel standards under EU regulation, switching fuel type would cost Maersk Line, the world's biggest shipping container group, an estimated USD$200 million a year.

Forecasting for the future

Innovative development in this area is motivated largely by market demands stemming from compliance. The risk, being that some maritime firms through cost assessment analysis may find it cheaper to pay fines for non-compliance than invest in changing fuels or fitting technology.

"The potential for not following the regulations is there, because you can save a lot of money" according to Mads Stensen, Global Adviser on sustainability at Maersk Line.