Proving Bunker Fuel Provenance of Growing Importance

Monday February 11, 2019

Proving the provenance of bunker fuel is emerging as a factor of growing importance for buyers in order to satisfy an array of operational, environmental, and political needs.

From an operational perspective, the upcoming IMO 2020 sulfur cap for marine fuel is expected to introduce a raft of new bunker quality and handling issues.

"If people are going to be buying a product now, which is desulfurized product, they're going to need a quality assurance and they're going to need provenance of origin," Euronav CEO, Paddy Rodgers, said last month during his firm's latest earnings call.

Scorpio Tankers made a similar point during a December investor presentation: "Knowing the source of the bunkers will be important in having confidence in their performance," it said.

But with the IMO2030 and IMO2050 GHG targets now also firmly in the mind of shipowners, understanding the origins of fuels will become increasingly important to verify their carbon impact.

Indeed, this point was stressed last week by biofuel manufacturer GoodFuels following a delivery of its carbon neutral bunkers in Rotterdam to an NYK vessel chartered by global mining company BHP.

"BHP has worked with GoodFuels to explore the use of sustainable, advanced, second generation biofuels for shipping," Goodfuels said.

"A vital part of this is the inclusion of solutions to verify chains of custody, that only sustainably produced biofuels are used in the process and that the origin, emission reductions and fuel quality metrics are traceable and transparent."

Tightening emissions regulations are also driving the uptake of other alternative bunker fuels, such as LNG.

While the exact CO2 savings from burning natural gas bunkers is the subject of ongoing debate, what is clear is that the source and production process for LNG can have a significant impact on the fuel's resulting lifecycle emissions.

For example, a recent environmental report for an LNG bunkering terminal in Tacoma, Washington stated emissions from U.S. gas production are "five times higher" than gas from its neighbour, Canada, raising the prospect of LNG-powered vessels needing to prove the source of their LNG to verify they have met any stated emissions targets.

Political drivers may also play a part in needing to verifying custody chains, such as firms wanting to show they avoid using fuels from socially sensitive sources such as fracking, or proving sanctions or other compliance requirements have been met.

To meet these verification needs will no doubt require the uptake of new technologies as part of the bunker buying process.

Blockchain, as used in the case of Goodfuels' delivery, is one such promising technology as it allows the transaction chain the be recorded as part of a cryptographically linked public ledger that is near impossible to forge.