INSIGHT: RFNBOs as a Long-Term Compliance Option

What all the RFNBOs have in common is a need for hydrogen made using renewable power as their key component.

Within the shipping industry's decarbonization discussions, the focus for now is firmly on short-term solutions like a switch to using biofuel blends.

However, more attention should also be paid to the longer-term options, as these will be the solutions that ultimately put a zero-carbon future on a sure footing. Sooner or later, the shipping industry, in large part, will need to be using synthetic LNG, synthetic methanol or synthetic ammonia as its primary energy source.

These e-fuels are referred to by the European Union as renewable fuels of non-biological origin (RFNBOs), referring to a lack of biomass used in their production.

Biomass availability is unlikely to scale up to a level where it can meet the needs of all the industries that might use energy sources derived from it, so a global net-zero target will eventually require fuels derived from different sources.

What all the RFNBOs have in common is a need for hydrogen made using renewable power as their key component.

The European Union has made promoting the use of RFNBOs in shipping a priority. Its regulations have set a target of at least 2% of shipping's energy use coming from RFNBOs from 2034. It has also allowed the use of RFNBOs to count double towards ships' carbon intensity reduction requirements under the FuelEU Maritime regulation up to 2034, further encouraging the uptake of these fuels.

The challenge for shipping companies seeking to take on these fuels is the cost, both up-front in terms of capital expenditure and in terms of running costs. Shipowners, for the most part, will need to order new, more expensive dual-fuelled ships capable of running on these fuels, although those running on LNG today will also be able to use synthetic LNG.

The cost of buying these fuels will then also be much higher – currently estimated at several multiples of conventional bunker prices, although it is hoped that these prices will come down in time as renewable power capacity is scaled up and cheaper green hydrogen can be produced.

Regulators are also keen to narrow the price gap between these fuels and conventional bunkers, and the IMO is expected to have a plan in place within the next few years to add a carbon cost to the emissions. That is why it is more crucial than ever to work with a partner that can ensure compliance with environmental regulations and assist in managing operations al risks related to fuel procurement and delivery logistics.

Our New Fuels Advisors can also provide insights into port supply availability, pricing dynamics and fuel quality specifications for synthetic fuels. Our clients can rely on us for the latest developments in synthetic fuels, including e-ammonia, e-methanol and e-LNG, including new projects, pricing, availability, supply and demand. Find out more by booking a meeting with our New Fuel Advisors here.