The Week in Alternative Fuels
Here are some key developments in alternative bunker fuels from the past week.
PHOTO: Model of a liquid hydrogen-powered vessel. Getty Images
The International Energy Agency (IEA) believes the world is in the middle of an extreme energy crisis. The silver lining is that it could give nations a push to accelerate their green transitions, and positive supply-side green developments this week support that prediction.
OPEC member Oman aims to become one of the world's major suppliers of green hydrogen by ramping up its production to 1 million mt/year by 2030.
Danish shipping company A.P. Moller – Maersk inked a deal with Egyptian authorities to accelerate green fuel production in Egypt. Maersk and its partners will conduct a feasibility study by the end of the year, where they will assess whether Egypt can produce renewable bunker fuels.
A "unique" pilot test has been successfully carried out by Dutch biofuel supplier GoodFuels to validate the use of isotopic tracers in biofuels. Isotopic tracers can be used to determine whether the fuel is entirely biofuel or a blend of biofuel and conventional marine fuel. Bigger biofuel components in these blends will of course mean a greater step towards carbon neutrality.
On the flip side, Europe's energy crisis could also have helped deal a blow to more stringent emission regulations. A revised European Taxation Directive (ETD) which would have taxed heavy fuel oil and gasoil sales to ships in EU ports from 1 January 2023 has been put on hold, a European Parliament official told Engine this week. The tax file was frozen by EU member states citing concerns over the ongoing energy crisis.
By Konica Bhatt
Here is our selection of five top alternative fuels stories from this week:
Global energy crisis a ‘historic turning point' towards green energy transition – IEA
Global carbon dioxide emissions will peak in 2025 as a result of massive government spending onclean fuels in response to Russia's invasion of Ukraine, according to the International Energy Agency (IEA).
The IEA answers its own rhetorical question of "whether the crisis will hamper clean energy transitions or will catalyse faster action" by stating that Russia's invasion of Ukraine has altered energy markets and policies for "decades to come", in its latest world energy outlook.
This view was recently also shared by Trafigura's global head of fuel decarbonisation Rasmus Bach Nielsen, who told a conference: “I think Putin has pushed it at least five years forward, if not ten," according to Tradewinds.
Global investments in low-carbon energy such as solar, wind, and nuclear power are set to rise by more than 50% to $2 trillion/year by 2030 on a current trajectory.
But twice that investment in clean energy is needed for the world to get on a path towards meeting a net zero carbon emissions target by 2050, the IEA has calculated. That illustrates the magnitude of the challenge.
In the IEA's net zero emissions scenario, for every dollar spent on fossil fuels, $5 will have to be spent on clean energy supply, and another $4 on efficiency by 2030.
Europe has taken it upon itself to speed up the transition to renewable energy as a result of the energy spat between the continent and Russia.
Governments across Europe are not only developing new carbon-reduction policies but also seeking faster deployment of renewables - involving a wide variety of public and private stakeholders.
The IEA projects that European oil and gas demand will have fallen by 20% from today to 2032, and coal demand by 50%.
The UK is working to develop nuclear technology as a renewable energy source to reduce its energy dependence. Earlier this year, it committed to delivering 24 gigawatts of nuclear energy by 2050.
The IEA predicts that the world's top three biggest oil-consuming nations - the US, China, and India - will speed up their transitions to renewables amid warnings of eroding global spare capacity to produce crude oil and tightening supplies.
China has set out to build out massive amounts of clean energy production capacity by the end of this decade. India will use renewable energy to generate nearly two-thirds of its electric power demand. The US will add 2.5 times more solar and wind power than it has today by 2030, and electric car sales are set to grow sevenfold.
Japan and South Korea will pump funding into low-emission hydrogen and ammonia technologies, as well as a nuclear power.
EU’s revised bunker tax could be delayed indefinitely
The revised European Taxation Directive (ETD) that was meant to tax heavy fuel oil (HFO) and gasoil sales to ships in EU ports has been put on hold, the European Parliament tells Engine.
The ETD has not been revised since it first came into force in 2003. The EU has been working to revise the ETD to make it more in sync with its Fit for 55 package that aims to reduce the block's greenhouse gas emissions by 55% by the end of the decade.
The proposal for a revised ETD sets out minimum excise duty rates for the taxation of energy products including bunkers. Under the proposal, all bunkers sold in the EU and used on voyages within the EU would be taxed. It was supposed to be implemented in January next year but has now been delayed.
“The ETD file is put on hold (frozen) in the light of the ongoing energy crisis and the file will be reassessed in March 2023,” a European Parliament representative told Engine.
The ETD proposal was put forward by the European Commission in July 2021 but was later stalled by EU member states citing concerns over the ongoing energy crisis.
As ETD is a tax file it has to undergo special legislative procedures. A final legal text needs unanimous approval from all the 27 member states of the EU Council, while the European Parliament "has no significant say in the final text", sustainable shipping officer Jacob Armstrong of clean transport NGO Transport & Environment (T&E) says.
"Negotiations have already been delayed until next year and given strong political differences on the topic, it is possible that the shipping parts of the ETD are delayed even later," Armstrong says.
Certain EU member states are against taxes on bunker fuels and are blocking the procedures.
If an ETD proposal is eventually made into law, then it could lead to added costs for bunker purchases in the EU ports. About $38-40/mt for MGO and HFO bunkers, and nearly $25/mt for LNG, according to estimates from ro-ro shipowner United European Car Carriers (UECC) and consulting firm CE Delft.
CE Delft thinks that if a revised ETD for shipping is introduced in EU ports it could force shipowners to bunker elsewhere and avoid taxes. A tax might dent demand by erasing bunker price advantages in the ARA hub against bunker hubs in other regions.
Oman aims to produce 1 million mt of green hydrogen by 2030
Oman intends “to become one of the world’s leading green hydrogen hubs," said Abdulaziz Al Shidhani of Oman’s Renewable Energy and Hydrogen.
Oman made the announcement at “The Future of Green Energy” press conference on Sunday. The sultanate has created a state-owned hydrogen-focused energy company, Hydrogen Oman (HYDROM), to oversee its hydrogen project, saying these moves are in sync with its plans to have net zero emissions by 2050.
“Oman is committed to decarbonise and help the world decarbonise,” Oman’s Energy Minister Salim Al Aufi said at the event.
HYDROM, which will be regulated by the Ministry of Energy and Minerals, will allocate government land to developers and aid them in planning green hydrogen production projects. It will also work closely with Oman’s Public Authority for Special Economic Zones and Free Zones (OPAZ) to develop public infrastructure to connect these hubs.
First of these land blocks for the hydrogen hubs will be up for public bidding on 6 November this year. The land blocks will be awarded as early as 2023, as the country intends to reach an inter-2030 production target. The process will be overseen by HYDROM.
The announcements come just before the COP27 climate change conference in Egypt in November.
Although markets for hydrogen as an alternative fuel are in their infancy, shipping and other industries have been becoming increasingly aware of its potential as a clean source of energy. Especially green hydrogen, which is produced using renewable energy.
This heightened focus on hydrogen has been evident in a host of recent shipping announcements.
This month, Corvus Energy said it is developing a large-scale proton exchange membrane (PEM) hydrogen fuel cell system for ships and will test them in Norway's Bergen. And French container shipping company CMA CGM became the latest investor in Hy24 – a clean hydrogen infrastructure fund.
In September, Dutch crew vessel maker Windcat Workboats announced its intention to add six more hydrogen-fuelled crew transfer vessels by 2024 after a successful pilot run earlier this year. And French hydrogen producer Lhyfe commissioned an offshore green hydrogen production plant with a 1 MW electrolyser capacity and a production capacity of 400 kg/day.
Maersk seeks to accelerate green bunker fuel production in Egypt
Danish shipping company A.P. Moller – Maersk has inked a deal with Egyptian authorities to accelerate the supply of green fuels in Egypt towards the global transformation to net-zero shipping
As part of its commitment to offtake green fuel, Maersk and its partners will conduct a feasibility study by year-end to produce hydrogen and bunker fuel in Egypt based on renewable energy.
Earlier this year Maersk entered into green fuel sourcing partnerships with the Chinese gas equipment maker CIMC Enric and the Green Technology Bank, with the Danish renewable energy players Orsted and European Energy, with the Swiss methanol producer Proman, and with the US-based low-carbon bunker supplier WasteFuel.
Under these partnerships, Maersk aims to source 730,000 mt/year of green methanol by 2025.
Maersk's chief executive of Fleet & Strategic Brands, Henriette Hallberg Thygesen, believes that having access to affordable green energy and fuel is the single biggest challenge to global shipping decarbonisation.
In order to get shipping aligned with global decarbonisation efforts this decade, Thygesen argues that "even more scale is needed."
Ayman Soliman, chief executive of The Sovereign Fund of Egypt, says Maersk's move to supply green fuels and contribute to transform shipping to net zero globally will only enhance the Suez Canal's position as a future green bunkering hub.
Maersk's Egyptian partners in the deal were the General Authority for Suez Canal Economic Zone, the Egyptian New and Renewable Energy Authority, the Egyptian Electricity Transmission Company, and the Sovereign Fund for Egypt for Investment and Development.
GoodFuels successfully adds isotopic tracer to biofuels as a unique "verification tool”
Dutch biofuel supplier GoodFuels has successfully completed the pilot test for use of isotopic tracer in biofuels to track, trace and ascertain the quality of biofuels.
An isotopic tracer is a radioactive atom that can be applied at any stage of the fuel supply chain to trace, study and observe its journey through the system.
GoodFuels claims that the isotopic tracer does not impact “the physical properties, quality and stability of the biofuel”.
The study was conducted during the delivery of 500 mt of biofuel to Danish shipping company Norden’s tanker, Nord Gardenia.
Global certification organisation Control Union and French traceability technology company IDS Group were also part of the study.
The isotopic tracer remains in the fuel throughout its downstream journey. Hence, it can be utilised to verify if the fuel has been diluted or tampered with during any stage of the supply chain. It can be further used to ascertain if the fuel is completely composed of biofuel or blended with conventional marine fuels.
Bunkering activity and sustainability of the fuel is not impacted by the isotopic tracer.
Following the success of the isotopic tracer project, GoodFuels, Control Union and IDS Group intend to create a “standard label for biofuels that would be recognised worldwide as a sign of quality by the fuel market.”
