Gasum to use LBM to generate FuelEU Maritime pooling surplus
Finnish state-owned energy firm Gasum will power one of its chartered vessels with liquefied biomethane (LBM) to generate overcompliance under the company’s FuelEU pooling scheme.
IMAGE: The Gasum-operated dual-fuel LNG bunker vessel, Kairos, bunkering a vessel in La Havre port in France. Gasum
The EU’s FuelEU Maritime regulation includes a pooling mechanism that allows shipowners to collectively balance compliance across a group of vessels.
Under this arrangement, ships that are overcompliant towards GHG reduction targets can sell their compliance surpluses to underperforming vessels within the same pool to offset compliance shortfalls and avoid penalties.
The Gasum-operated dual-fuel LNG bunker vessel Kairos will run on waste-based bio-LNG to generate overcompliance.
The company claims it can “guarantee bio-LNG [LBM] with a maximum greenhouse gas emission of -15g/MJ,” according to its website. “This means that the emissions are net-negative.”
Gasum plans to sell the resulting compliance surplus to third-party vessels within the pool, though it has not disclosed how many vessels could benefit.
“Gasum's own commercial pool is made of customers LNG vessels that uses LBG [liquefied biogas],” according to the company website.
Economics in favour
We don't know what the pooling value of Gasum's LBM is, but according to ENGINE calculations using default FuelEU emission factors, a single vessel running on LBM could potentially offset the compliance of around 36–45 LNG-powered vessels within a pooling arrangement, depending on the engine’s methane slip.
We have taken a conservative view and assume that the compliance surplus generated from using LBM on a vessel can be sold or transferred in a FuelEU pool for a value equivalent to be just compliant with the cheapest LNG compliance option.
That value is then multiplied by the number of undercompliant vessels it can bring to a neutral compliance balance, in addition to retaining a neutral compliance balance for itself.
The theoretical overcompliance pooling benefits for LBM under FuelEU range from $469-584/mt, depending on the dual-fuel engine type and its methane slip. LBM also counts as zero-carbon in the EU Emissions Trading System (EU ETS), which means you don't have to pay to burn it.
These two EU regulations, in combination with a Dutch HBE rebate for LBM sold in the Netherlands, brings the VLSFO-equivalent price of LBM in Rotterdam down to $495-611/mt. That makes it the most cost-effective compliant fuel for intra-EU voyages.
Norway’s United European Car Carriers (UECC) has announced that it will not pass on FuelEU compliance costs to its customers. The pooling value from the compliance surplus it generates by burning biofuels and LBM across its fleet enables it to offset the higher bunker prices it pays for biofuels and LBM.
By Konica Bhatt
Please get in touch with comments or additional info to news@engine.online
