INTERVIEW: KPI OceanConnect Sees Global Biofuel Bunker Demand Doubling in 2025

Jesper Sørensen is global head of alternative fuels and carbon markets at KPI OceanConnect

European regulations and the wider energy transition agenda can be expected to drive growth of 100% or more in biofuel bunker demand in 2025, according to global marine fuels firm KPI OceanConnect.

The company expects to see an additional 600,000-700,000 mt of global biofuel demand in B100 terms this year, Jesper Sørensen, global head of alternative fuels and carbon markets at KPI OceanConnect, said in an interview with Ship & Bunker.

Singapore saw 876,200 mt of biofuel blend sales in 2024, while Rotterdam saw 752,103 mt, and KPI estimates around another 200,000 mt were sold elsewhere in the world. The port authorities do not yet publish details on the biofuel content of these blends, but KPI estimates global volumes in B100 terms were about 600,000 mt last year.

Growing Demand

KPI and the wider Bunker Holding group are seeking to position themselves at the centre of this new market, Sørensen said.

"I'm talking specifically about KPI, but actually if you're looking at the wider group as well, the investment Bunker Holding as a whole have done in green is, I think, unmatched by any of our competitors," he said.

"We want to be really leading our customers through this green transition, assisting where we can.

"But it's not just on the customer side, it's also on the supply side.

"We hope to be an absolutely key partner in this."

New Feedstocks

Growing biofuel bunker demand will mean shipping companies eventually need to become comfortable with using less familiar bio components in their engines, Sørensen said.

The firm is taking a proactive approach to these more novel blends, conducting its own investigations into which will be suitable for marine engines.

"There's a heavy dialogue with the OEMs on this - we work with them on service letters and what they can accept," he said.

"I think there are four or five different types of cashew nutshell oil, but only one of them as been looked at as acceptable for marine use, and this is part of the dialogue with the OEMs to understand what it is that we can use.

"Where have there been problems, and how do we avoid that.

"Again, there we have the key role where we speak to our suppliers, to understand what are you using and what is your proof of using this so we don't get bad product in the tanks.

"We have one European supplier confirming, not with cashew nutshell oil but with FAME residue blends, that they have supplied more than 200,000 mt of this, and they've not had a single problem.

"Gathering that data so we are able to translate it into easing concerns is something that we spend a lot of time doing."

Supply Challenge on the Horizon

KPI OceanConnect does not foresee any problem making biofuel supply meet new demand levels this year, but it may become a struggle a few years from now.

"The challenge is not what we are facing in 2024-25; it's going to be what happens post-2029-30, because if we look at a FuelEU Maritime perspective there, the reduction increases and demand will go even higher," Sørensen said.

The FuelEU Maritime regulation came into force at the start of this year, mandating carbon intensity reductions for ships on voyages including EU ports.

The mandated reduction has been set at 2% for 2025, but will be increased to 6% from 2030.

Geographical Challenges

While biofuel supply is being rapidly ramped up at the major bunkering hubs, some parts of the world may still find meeting demand a challenge.

"A year ago, I think we were approaching 100 ports where we could offer biofuels, and when we had our SIBCON conference we had reached 120 ports," Sørensen said.

"Liner companies don't have it easy, but they have it easier than spot trading bulk carriers, because they will, in one way or another, pass a major flow port.

"But if you're spot trading in Southeast Asia, and you don't necessarily call at Singapore, where do you then get your product?

"If you're trading along along the African coastline, where do you get your product?

"What we are trying to do is look at how we can develop these areas, if there are specific demands there."

Watching Prices

As new demand emerges for biofuel blends this year, prices may also go up relative to conventional fuels, depending on a range of other factors.

"That depends on what happens on the conventional side; there's a lot of geopolitical things that could affect this, and there's been a change of government in certain locations that definitely could affect the market," Sørensen said.

"We do expect that premiums will rise as a result.

"I would prefer not to put numbers on it, simply because they tend to age badly, but it's a logical conclusion that when demand goes up and supply remains stable, then there would be an effect of prices going up."