IBIA CONVENTION: Shipping Firms Need Long-Term Supply Deals to Secure Biofuels - Neutral Fuels

Karl Feilder of Neutral Fuels was speaking at the IBIA annual convention in Dubai last week. Image Credit: Ship & Bunker

When seeking to get access to increasingly scarce biofuel supplies, the shipping industry will need to sign long-term contracts to remain competitive. according to biofuel supplier Neutral Fuels.

Karl Feilder, the founder of Neutral Fuels, was spealing on a sustainability panel at the IBIA Annual Convention 2023 in Dubai last week.

"I'm selling at $1,400/mt for my biodiesel [in the Middle East]," Feiler said.

"And next year, IATA and the European Union have decided that the aviation industry needs to have a mandatory blend of sustainable aviation fuel, and the most common source of the raw materials for that aviation fuel is exactly the same raw materials.

"Now the aviation industry has said they want it all, but they're paying $3,000/mt for their fuel."

To compete with aviation for these products, shipping will need to get into longer supply deals, Feilder added.

"The best thing you can possibly do is to try and steal an idea from the aviation industry, which is to go into long-term purchase agreements with the suppliers," he said.

"The aviation industry is today committing to 10- and 20-year deals to the people that are supplying it.

"If you want to buy my fuels today, you need to go into a long-term purchase agreement, because there's simply not enough for all of you."

Demand for biofuel bunker blends is increasing as shipowners take them on as a drop-in replacement for conventional fuels with a lower carbon footprint, allowing them to reduce GHG emissions without investing in new ships capable of running on other alternative fuels.