Keen Pricing Bodes Well for Advanced Biofuel

XFuel's Nicholas Ball: small-scale, less risk.  Image Credit / XFuel.

Advanced biofuel producer XFuel is looking at a second round of funding in the next 12 months having completed its first round earlier this year and netting the company EUR 8.2 million ($8.2m).

One reason why the sums going into the company are not massive (compared to some new marine fuel propositions) is because they don't need to be.

"We see being small-scale as a benefit," XFuel's chief executive Nicholas Ball told Ship & Bunker. Small-scale translates into less risk which, in the company's case, means not having to rely on large amounts of cash for capital expenditure.

But small-scale does not apply to the scale of the company's ambition. Ball wants the "biggest impact in the shortest time" because he says, decarbonising industry is paramount.

Given the range of alternative bunker fuels in the market, none of which are even close to knocking conventional fuel oil from its most favoured spot, how does he rate XFuel's chances?

Ball, who combines academic and commerical experience, knows that without a watertight business case, any alternative marine fuel is bound to fail when faced with the demands of the market.

XFuel is made from waste biomass, which loosely termed is waste generated by the agricultural, forestry and building sectors. The use of waste biomass is an important distinguishing feature between first and second generation biofuel producers, Ball said.

With the supply of raw material guaranteed, XFuel will then turn that waste biomass using its specific production process in a modular set up into a fully usable, low-carbon marine fuel in both fuel oil
and distillate forms.

"Our advanced biofuel is fully blendable and can be stored as conventional fuel," Ball said. 

But there must be something about the fuel that marks it out from the rest. "There is," said Ball emphatically. "Its price."

Ball said that XFuel's products can be produced at levels close to pre-pandemic prices depending on the project.  By way of illustration and using Ship & Bunker prices, the current Rotterdam price of conventional low sulfur fuel oil comes in at around $200 per metric tonne above the price seen in December 2019.

And even with the inevitable changes in variable costs -- such as feedstock, labour costs -- Ball said that "our low temperature, low pressure system of production ensures that we remain competitive".

In addition to its comparably low production values, XFuel's fuel oil is efficient to make. Including energy and other inputs, the energy transfer is around 85-90% to usable products produced. 

Ball said that the company is looking for strategic partners to accelerate the project. "Biofuels tend to be lumped together under one roof. Given its strong business case, we think our product deserves its own space."

And with marine fuels a strong sectoral focus, bunker players can expect to hear a lot more from XFuel.