15 May 2024 (Lloyd's List) - ALTERNATIVE fuel demand could represent up to 4% of all bunkers globally by 2026 owing to new regulations that aim to cut shipping emissions, according to price reporting agency Argus Media.
Argus forecasts alternative fuel demand, including LNG and biofuels, to reach over 10m tonnes in 2026, from over 4m tonnes today, with the biggest increase expected from 2025 to 2026 driven by strong methanol demand.
Biofuels and LNG will make up nearly half of the 10m tonnes in 2026, Argus said.
French energy company TotalEnergies warned on Wednesday that the European Union’s strict approach against first generation biofuels, also called food and feed, could make it challenging for biofuels to help the International Maritime Organization’s 5% target for zero or near-zero emission fuels in 2030.
“It means that you need all other energies, which are bio-methane, methanol and ammonia later on and maybe some shore power and wind-assistance technology. Because if they are not ready and available by 2030 that means that most of the burden will be on the biofuels availability,” TotalEnergies strategy director Frederic Meyer said at the Argus Green Marine Fuels Conference.
“Bio supplies need to increase significantly to meet all transport demand particularly in a very competitive environment with aviation and road,” Meyer added.
Competition between different industries forced Europe to import biofuels, as local capacity fails to meet rising demand.
“Bio-diesel is the only plug and play bio component today for the marine market. In Europe we have around six million tonnes of waste-based bio-diesel capacity. But the road transport demand is around seven million already. So we are net importers from Asia,” said Aleksandar Kuzmanski, trading lead at biofuel producer Bio Oil.
The EU set strict rules for biofuels that can be used for FuelEU Maritime compliance, as biofuels used for that purpose must not be first-generation. The bloc only accept biofuels with a GHG reduction of 50%-65% over conventional bunker fuels.
Combined biofuel-blended bunkering totalled 1.25m tonnes in Rotterdam and Singapore last year, up from 932,000 tonnes in 2022, according to official figures from the two port authorities.
Despite the strict requirements, the FuelEU legislation is expected to boost biofuel bunkering demand in Europe between 2025 and 2030, as it is thought to be the most feasible compliance option.
Rising methanol demand estimates
The Methanol Institute recently revised its demand estimates, driven by the rising number of dual-fuel vessel orders and the growth of production projects.
“In 2028, we projected that in 2028 production of renewable methanol would be around 8 million tonnes. Now with a recently published database, we see that number is actually going to be more than 20 million tonnes within that same timeframe,” said Matthias Olafsson, government affairs manager at the institute.
Up to 225 dual-fuel methanol vessels are on order, while there are 26 such vessels in operation, according to DNV’s Alternative Fuel Insight.
