Future Fuel Talks: Mass balancing key to meet LBM bunker demand – Titan Clean Fuels

You no longer need to bring energy molecules physically to ports to supply them. Mass balancing is becoming a mainstay, Titan Clean Fuels says.

PHOTO: Illustration of Titan's biomethane liquefication plant in the Port of Amsterdam. Amsterdam Port Authority

The shipping industry is looking at liquefied biomethane (LBM), or bio-LNG, as one of the fuel alternatives to reduce its carbon footprint. Unlike fossil LNG, LBM is based on renewable bio feedstock and can be considered sustainable.

The first step to producing LBM is to produce biogas through anaerobic digestion of waste-based bio feedstock.

It must then be upgraded to biomethane by removing CO2, before it can be liquefied and used as a bunker fuel that is similar to fossil LNG.

LBM can either be used in its pure form or as a drop-in fuel in fossil LNG, which is similar to the way biofuels can be blended into MGO or VLSFO. This means that vessels capable of running on LNG will not need modifications to run on pure LBM or LBM-LNG blends.

In April, Titan Clean Fuels bunkered a Hapag-Lloyd container ship with 2,200 mt of LBM in the Port of Rotterdam.

This LBM was bunkered using a mass balance method, Caspar Gooren says in an exclusive interview with ENGINE. He is the renewable fuels director at Titan Clean Fuels.

Biomethane was transported via the natural gas grid to an LNG terminal where it was liquefied. The liquefied fuel was then delivered as bioLNG, or LBM, to Hapag-Lloyd's vessel in Rotterdam, Gooren says.

Titan produces and delivers LBM with International Sustainability & Carbon Certification-EU (ISCC-EU)-certified bio-based feedstocks such as organic waste, agricultural residue or manure, Caspar explains. He also discusses the ins and outs of the mass balance method and a price forecast for LBM as a bunker fuel.

You have mentioned that “In terms of feedstock availability, the EU is a prime example; Europe’s current combined biogas and biomethane production in 2022 amounted to 220 terawatt hours (TWh) or 21 bcm [billion cbm]. Scaling up to produce 35 bcm of biomethane in 2030 following RePowerEU plans. If all current available biogas was converted into LBM it would make about 7 million tonnes. Today, the global market for LNG as a marine fuel equals 2 million tonnes. Therefore in theory, more than enough could be supplied as LBM using EU feedstock alone.”

Considering that there is ample availability of feedstock for LBM production, why is mass balancing preferred over physical delivery of LBM? Are factors like limited LBM volumes or pricing influencing this decision?

Mass balanced and physically produced LBM both have their own use cases. Physical LBM is aimed for local transport, inland shipping and industry markets. Mass balanced LBM is necessary to reach the scale to deliver to heavy transport and sea-shipping.

The main reason for this [mass balanced bunkering] is that biogas plants are scattered across Europe and most of them are located away from water. Physical liquefication requires trucks to transport wet biomass to coastal digesters where it can be liquefied. The transportation and delivery of feedstocks with high water content by truck for 100 kilometres or more is really expensive and not so environmentally friendly.

Meanwhile, mass balance is more feasible since the gas grid within the EU is very well connected. The EU has acknowledged the gas grid and liquefaction facilities as a single logistical unit. This means that you can produce biogas anywhere in European Union, put it into the grid, ship it anywhere and liquefy it. This approach is the cheapest and least carbon-intensive way to get biomolecules to where we need them, such as ports.

It also uses existing infrastructure. There are a number of LNG import terminals, where basically liquefication also takes place. This is the most efficient way to convert biomethane to bioLNG molecules. So looking at the whole infrastructure, [mass balancing] is required to meet the scale needed to supply LBM volumes for the whole shipping sector.

In the context of mass balancing, could you clarify whether the process entails the blending of bioLNG with natural gas, or if it only involves utilising existing infrastructure without any mixing of fossil LNG?

This process entails injecting biomethane into a natural gas grid, where it is combined with natural gas using a mass balance system. And you have the certificates [of origin]. When gas exits the grid, certificates provide evidence that green characteristics are attached to physical molecules from the grid. In fact, only a very small percentage of biomethane is physically present at the exit points because the biogas share of total gas in the grid is still small.

In this case, would it be fair to say that when a vessel is bunkered with mass balanced LBM, it is actually powered by fossil LNG with some blend of biomethane?

Physically, you are correct. You can compare the physical aspect of LBM with the green electricity market where you put green electricity in grids. Corporate buyers looking for green electricity contracts buy green PPAs [power purchase agreements] but receive the physical grid mix of green and grey electrons.

Mass balancing also works like that. It’s a way to allocate the green molecules to the end customer via a similar system. It uses an existing system for allocating green molecules to end consumers, which has been well-developed and used for the last 20 years in the power sector. This method is also used in other alternative fuels, like e-fuels and biomethanol. It is the only method to be used to scale up renewable gas production in a significant way.

How much does Titan believe LBM can reduce a vessel’s well-to-wake emission by (in %) compared to conventional fuels?

It depends on how much LBM is included in the parcel delivered [to a vessel]. Just like conventional biofuels, LBM is available in a variety of "blends", and our main offerings at the moment are B25, B50 and B100 – where B25 is 25% biomethane blended with 75% LNG, and B100 is a 100% biomethane component delivered to the vessel. It is possible to achieve zero or even negative CO2 emissions depending on the feedstock used for green gas.

How many ports does Titan bunker LBM in and across how many countries?

LBM can be supplied in every port where we deliver LNG in. Most LBM demand comes from Northwest Europe right now.

How does the pricing structure of mass balanced LBM differ when compared to physically delivered biomethane? What factors influence this pricing structure?

For physical delivery of LBM, the physical liquefaction costs may be higher, but local LBM and biogenic CO2 delivery may offset higher transport costs.

In mass balancing, biomass transport costs are generally lower because biogas is produced where biomass is available. Liquefaction costs are also reduced because of the use of existing LNG terminal infrastructure. So I would say, these are the main factors influencing the business cases.

Do you anticipate that most LBM pricing will be structured through long-term contracts initially, or do you foresee the emergence of a spot market for LBM? Additionally, how do you plan to manage volume variations due to changing demand for LBM without relying solely on long-term contracts?

I do see a spot market emerging for mass balanced LBM, like the Hapag-Lloyd LBM spot delivery we did, of course besides long-term LBM contracts. From a portfolio approach, offtakers want to balance green fuel risk with short-term optimisation in combination with long-term security of LBM supply.

Biomethane can be stored in the grid and LBM can be stored in a tank to manage LBM offtake volume variations.

With increasing demand from other sectors for biomethane or biogas feedstock, do you anticipate a potential supply shortage of LBM specifically for shipping?

Yeah, that's a good question. Shipping is not the only sector using biogas; it's also used in sectors like home heating. Historically, biomolecules have been directed towards the hardest-to-abate sectors such as transportation. Those include shipping and aviation. Recent EU regulations provide significant incentives for allocating biogas to these sectors.

Additionally, only one country - the Netherlands - has a blending obligation for biogas in the built environment, particularly for households. However, alternatives like electrification and heat pumps can be used for household heating. Such alternatives are not as feasible for sectors like aviation and maritime.

Over time, I expect that biogas will increasingly be allocated to these harder-to-decarbonise sectors due to market and price drivers. For instance, comparing CO2 reduction costs over the past decade reveals that sectors like transportation and maritime have faced higher costs compared to the industrial sector under the EU ETS, indicating a shift towards allocating biomolecules to these sectors.

By Konica Bhatt

Please get in touch with comments or additional info to news@engine.online