GoodFuels launches zero-emission heavy fuel oil. Ultra-low sulphur marine biofuels step forward.

From the Netherlands comes news of a world first:  GoodFuels Marine and the shipping company NORDEN have completed successful trials of what they bill as “the world’s first zero emission, ‘drop in’ Heavy Fuel Oil equivalent marine biofuel”, and in almost entirely reducing all carbon and sulphur emissions. 

Averting the potential crisis

Though a smaller-scale effort in itself, this story line intersects with the biggest energy story of the next 3 years. As  renowned energy analyst Phil Verleger opined n a July note to energy market observers, “The global economy likely faces an economic crash of horrible proportions in 2020, not for want of a nail but want of low-sulfur diesel fuel,” writes Verleger in “$200 Crude, the Economic Crisis of 2020, and Policies to Prevent Catastrophe”.

The root cause? A rule agreed by the  International Maritime Organization in 2008 and confirmed in 2016 to reduce sulphur content in marine fuels from 3.5 percent to 0.5 percent beginning in January 2020.

The proximate cause? Neither shipping owners nor oil refiners found a way to comply either through fuel-switching, crude-switching to bring in less sulphur-laden “sour” crudes, or to add enough refinery or on-board equipment to remove sulphur. It was a crisis of inaction.

The scramble for alternatives

Now, the action has begun in earnest. Shipowners and operators are (now, urgently) seeking an alternative to both distillates and Ultra Low Sulphur Fuel Oil in order to comply with 2020 0.5% sulphur cap requirements, as well as impending International Maritime Organization Greenhouse Gas reduction requirements. These requirements include an objective to reduce average carbon intensity from shipping – the amount of carbon emitted for each unit of transport – by at least 40% by 2030, and 70% by 2050. 

Marine biofuels viability points

In the UK, a recent report by Lloyd’s Register and UMAS, ‘Zero Emission Vessels 2030’, aimed to assess the viability of these low/zero-emission fuels and technologies. In the scenario with a low renewable price (e.g. in the case of hydrogen, where hydrogen production is cheap), the Marginal Abatement Cost Curve shows that by 2050 a carbon price of $100/t of CO2 leads to almost 75%-85% reduction in CO2 emissions. This estimate is not too dissimilar to the findings of an international team led by the well-known economists Stiglitz and Lord Stern. This study suggested that the carbon price for the economy as a whole required to achieve the Paris Agreement temperature goals and using a carbon price to create the economic incentive for change, would need to be between $50-100/t of CO2 in 2030, with expectations that it would continue to rise thereafter.

We profiled the sector opportunities in The Digest’s 2018 Multi-Slide Guide to Biofuels for the Marine Sector, here.

The Goodfuels backstory

In 2016 GoodFuels founded The GoodShipping Program to further engage cargo owners in the challenge of combatting shipping’s carbon emissions. In September 2018 the Program announced that five shippers had completely offset the carbon emissions of their cargo by refuelling a vessel with marine biofuels. 

The culmination of three years extensive research and development with partners including Royal Dutch Boskalis and engine manufacturer Wärtsilä, GoodFuels’ Bio-Fuel Oil (BFO) delivers near-zero carbon and Sulphur Oxide (SOx) emissions without any requirement for engine modifications. The trials – which saw hundreds of tonnes of ‘drop in’ BFO taken onboard in the Amsterdam-Rotterdam-Antwerp region – were conducted on the 37,000 deadweight tonne (dwt) Handysize product tanker vessel NORD HIGHLANDER as she ran in typical commercial operation in the North and Baltic Seas. 

Founded in 1871 Dampskibsselskabet NORDEN A/S is an independent shipping company incorporated in Denmark and listed on Nasdaq Copenhagen. NORDEN operates a mix of owned and chartered tonnage. In dry cargo, NORDEN is active in a number of vessel types and one of the world’s largest operators of Supramax and Panamax vessels. In tankers, NORDEN is active in the Handysize and MR product tanker vessel types operated through the 50% owned Norient Product Pool. 

We profiled the company in One if by land, two if by sea: The Digest’s 2018 Multi-Slide Guide to Good Fuels Marine, here.

Next steps

NORDEN A/S and GoodFuels Marine will continue working with each other to gain more experience and scale usage of the fuel as an alternative to HFO, ensuring the realisation of the opportunity to offer commercially attractive carbon-neutral transport to meet customers’ demands. 

Reaction from the stakeholders

Dirk Kronemeijer, CEO, GoodFuels Marine

“For over three years we have been working day and night to develop our BFO solution. The importance of its arrival in the market is further underlined by the dual prospect of impending lower sulphur and carbon legislation. Bringing this to market now offers shipping a near-zero carbon and SOx alternative to HFO, and VLSFO – 0.5% blended fossil fuel – both of which will be prevalent in the market post-2020. From this point onwards we want to scale supply as fast as we can in order to actively contribute to the world’s 1.5 degree challenge.” 

Jan Rindbo, CEO, NORDEN

“NORDEN has come a long way in increasing fuel efficiency and has reduced CO2 emissions per tonne cargo transported on owned tanker vessels by 25% between 2007 to 2017. With the newly introduced IMO targets on CO2 reductions, however, it is evident that increased fuel efficiency alone is not enough. We need alternative solutions and with this test, NORDEN has shown a viable method towards reaching these targets. “Now that we have proven CO2 neutral transport as a viable alternative, I am convinced many carbon-conscious customers will demand this type of transport within a foreseeable future.” 

More on the story
GoodFuels web site is here.