INTERVIEW: Peninsula Seeks to Develop Biofuel Market in Yacht Segment

Warde has served as head of Peninsula Yacht Services since April 2021. Image Credit: Chris Warde / LinkedIn

Global marine fuel supplier and trading firm Peninsula is seeking to develop a market for HVO in the yacht segment, marketing it as a premium product.

Peninsula will be seeking to sell HVO in blends and potentially on its own under the name 'BFuture', Chris Warde, head of Peninsula Yacht Services, said in an interview with Ship & Bunker. Pure HVO currently costs around 80% more than the 10 PPM sulfur gasoil that makes up the majority of current demand from this segment.

"What we've done with BFuture is recognise that HVO isn't a defined product; there are variations on HVO, whether it's first- or second-generation, and then within the specifications, within the upper and lower limits of paraffinic fuels," Warde said.

"So what we've done is to say, ok, we'll define what we think is the best possible HVO for yachts, and then we will ensure that any HVO that we are sourcing and supplying to our yachting customers falls within those parameters."

Availability

The company expects the product to be available at most of the locations where it is likely to be sought.

"We are finding that HVO is prevalent across the Mediterranean, and that is mainly due to the shore-side logistics markets," Warde said.

"A lot of the petrol stations, for example, will be running their own trucks on HVO, and that shoreside demand has made availability fairly widespread across the more common places in the Mediterranean that the yachts are sailing to.

"I think the availability problem is misunderstood; it is readily available, it's just that there may not be the suppliers that have got the infrastructure there to supply it to the yachts.

"That's where the chicken and egg comes in; if the demand increases, then more truck operators will think, maybe I need to keep one of my trucks cleaned out and only using HVO because we've got the demand for it."

Overcoming Hesitancy

To market the fuel the company will need to overcome a degree of wariness in the yacht segment about taking on new products, Warde argued.

"I think the reality is probably that we will see yachts take a blend first," he said.

"The perception of yachting has been that yachts have been whiter than white, they tend to burn a 10 PPM gasoil -- the sulfur content is lower than marine gasoil.

"They're not really used to having to consider a new fuel, because up until now, when people have been talking about fuel, the focus has been on the heavy fuels.

"I think one of the biggest challenges that the yacht captains and the engineers are faced with is, their primary concern is to make sure that the yacht is available at all times, for whatever the owner or guests want to do, and they work very hard to insure that nothing interrupts that concept.

"So when something new comes along, there's a general hesitancy about being a trailblazer, because if they were to take on a new fuel, and that fuel led to issues that led to maybe a charter starting a day late because they had some unexpected issues in their filters, or it meant the owner couldn't go to the location he wants to, that is their absolute worst nightmare.

"So when you think about the logical roll-out of something like HVO, if you blend it at, say, 30% with gasoil, then the chances of that causing you problems is less."

Demand Drivers and Blockers

Unlike in other parts of the shipping industry, there is no urgent regulatory driver for yachts to take on biofuels. Yachts over 5,000 GT in size may be brought into the EU emissions trading system at some unspecified point in the future, but in any case relatively few yachts of that size exist.

"What we've done with BFuture is tried to shift the focus away from the sustainability credentials or the environmental impact of the fuel -- not because it's not important, that's absolutely the reason that the fuel has become at the forefront of everybody's mind," Warde said.

"But I take the lead from our experts internally, and talking to them about HVO, it became apparent that actually HVO is just better than conventional diesel.

"It has a higher cetane index, which means it has a more complete burn at the point of combustion, and because it has a lower sulfur and carbon content, the black soot is reduced.

"There's physical, visible improvements to guest experience; quite a lot of yachts will have a generator exhaust outlet on the hull side, and their beautiful, pristine hulls can have a rather unsightly shadow next to the generator exhaust because of the sooty emissions.

"All of that makes it a better fuel than gasoil. And on top of that, if you use second-generation {product} it's also reducing your carbon emissions by 80%."

But the higher price for biofuels is also not likely to put many buyers in this segment off, if they can be persuaded that the product is superior, Warde said.

"Recently I've had conversations with captains who've said price isn't actually a blocker," he said.

"If the owner turned around and said, I want this, then there would be no question.

"They run their boats very sensibly, they're all run on a budget and they're not particularly frugal.

"They spend their money carefully, but their potential available budgets are large.

"The approach we've taken with BFuture is to justify that if you think about it as a premium fuel, then you would expect to pay a premium for that, because it's the best available option."