Latest market news

Carbon intensity reg pivotal to biobunkers in 2025

  • Market: Biofuels, Oil products
  • 08/11/24

The International Maritime Organization's (IMO) carbon intensity indicator (CII) regulation will propel biofuel bunker demand in 2025 as its restrictions tighten.

The CII regulation came into force in January 2023 and thus far has had a muted effect on shipowners' biofuel bunker demand. But 2025 could be a pivotal year.

CII requires vessels over 5,000 gross tonnes (gt) to report their carbon intensity, which is then scored from A to E. A and B vessel scores are regarded as superior energy efficiency, while C, D and E are considered moderate to inferior scores. The scoring levels are lowered yearly by about 2pc, so a vessel with no change in CII could drop from from C to D in one year. If a vessel receives a D score three years in a row or E score the previous year, the vessel owner must submit a corrective action plan.

The IMO has not established penalties or restrictions for vessels scoring D. Thus, theoretically a ship owner could have scored D in 2023 and 2024 with no consequences.

Year 2025 will mark CII's third year, when ship owners whose vessels were scoring D in 2023 and 2024 will need to rethink their sustainability approach or risk getting D again and having to produce corrective actions plans in 2026. That is in addition to the ship owners whose vessels will score E in 2024.

To improve its CII score, a ship owner could reduce its speed and burn low-carbon fuels, among other solutions. Biofuel is the only plug-and-play low-carbon fuel option that does not require a costly vessel retrofitting.

in 2023 of the vessels 5,000 gt and over, 3,931 scored D, 1,541 scored E and 3,967 did not report scores, according to the latest IMO data (see chart). Assuming that the non-responders refrained from reporting to avoid sharing their low D and E scores, then the total number of D and E scoring vessels could be as high as 9,439, or 33pc of the total vessel count.

The bulk of the vessels reporting D and E were dry bulk carriers at 1,853 and 641, respectively, followed by oil tankers at 743 and 349, respectively, according to IMO data. The dry bulk carrier category also had the highest number of non-responders at 1,015 vessels.

The vessel classification society American Bureau of Shipping concluded that a reference case container vessel with 154,000t deadweight could see its rating improve from D to C in 2025 if it switched from burning conventional marine fuel to B25 biofuel.

FuelEU, EU ETS: All bark, no bite

Separately from the CII regulation, ship owners traveling in, out and within EU territorial waters will see the implementation of a new FuelEU marine regulation on 1 January and the tightening of the existing EU ETS regulation. But neither would be major driving forces behind biofuel for bunkering demand in 2025.

The EU ETS will require that vessel operators pay for 70pc of their CO2 emissions next year. But even with the added cost of CO2, a B30 biofuel blend is more expensive than conventional marine fuel. In Rotterdam in October, B30 — comprised of 30pc used cooking oil methyl ester (Ucome) and 70pc very low-sulphur fuel oil (VLSFO) — with a 70pc CO2 cost added would have averaged $924/t, compared with VLSFO with added 70pc CO2 cost at $682/t, according to Argus data. In order for the EU ETS to entice ship owners to burn biofuels, at current VLSFO and Ucome prices, the price of CO2 has to rise up to $300/t. And CO2 has fluctuated from $55-$102.5/t from January 2023 to October 2024.

Starting on 1 January 2025, the EU's FuelEU regulation will require that vessel fleets' lifecycle greenhouse gas intensity is capped at 89.34 grams of CO2-equivalent per megajoule (gCO2e/MJ) through 2029. For vessels which do not meet this cap, a low biofuel blend can meet the requirement. A B5 blend, comprised of 5pc Ucome and 95pc VLSFO, emits less than 89 gCO2/MJ. At this rate, albeit higher, demand for biofuels would not spike dramatically.

Unlike the CII scores which apply to individual vessels, FuelEU applies to vessel pools. Different shipping companies are allowed to pool their vessels together to share compliance and meet the EU ETS emissions limits. Thus several biofuel or LNG burning vessels can compensate for the emissions generated by the majority of the older, less fuel efficient vessels burning conventional marine fuel in the pool.

CII vessels rating Number of vessels (5,000 GT and over)

Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
20/11/24

Mexico to keep some energy regulator independence

Mexico to keep some energy regulator independence

Mexico City, 20 November (Argus) — Mexico's lower house constitutional affairs commission changed its draft bill on eliminating independent regulators to keep the energy regulatory commission (CRE) independent on technical issues even after the energy ministry absorbs it. In an earlier draft, respective ministries would take over the functions of previously independent regulators. With the change, CRE will become a "decentralized body," said President Claudia Sheinbaum. It will retain technical independence but will no longer be an autonomous regulator able to set its budget, the president added. Sheinbaum did not mention hydrocarbons regulator CNH, which could take up a similar position as CRE. Antitrust watchdog Cofece and telecommunications regulator IFT would become similarly decentralized bodies with technical independence from the economy ministry. Transparency watchdog Inai will disappear but a new anticorruption ministry will take over its functions. Inai in recent years has forced state-owned oil company Pemex to release more detailed data about harmful emissions and fuel theft, among other issues. Mexico's independent regulators and watchdogs still formed part of the 2025 budget proposal the government revealed this week. The actual independence of Mexico's energy regulators has been questioned since the previous government, as the number of permits granted by CRE to private companies has dropped in favor of state-owned companies . Critics have raised concerns regarding the bill, arguing it will destabilize Mexico's balance of power and undermine investor confidence. The proposal also fueled concerns that this change could weaken Mexico's standing in the 2026 review of the US-Mexico-Canada free trade agreement (USMCA), as the US and Canada may see the exit of independent regulators as a risk to their business interests in Mexico. Sheinbaum said she met with US president Joe Biden and Canadian president Justin Trudeau during the G20 summit and discussed the importance of the USMCA. She did not mention any concerns the trade partners had regarding the bill. Morena previously tried to absorb the independent regulators early on during the previous administration. The ruling party saw its efforts strained because it lacked the two-thirds supermajority required to pass constitutional changes. Morena and its allies are now expected to secure the votes swiftly, as they have passed other constitutional reforms in the previous weeks. By Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Tupras agrees more than 500kt 2025 bitumen tender sales


20/11/24
News
20/11/24

Tupras agrees more than 500kt 2025 bitumen tender sales

London, 20 November (Argus) — Turkish refiner Tupras has agreed 2025 annual tender sales totalling well over 500,000t of bitumen from its Izmit and Izmir refineries to leading international trading and supply firms. Market participants involved in the process said Rubis Asphalt and Continental Bitumen — the bitumen trading and supply unit of French construction firm Colas — had each won undisclosed volumes, with Colas taking fob and delivered (CFR) supplies. Vitol was also understood but not confirmed to have won fob volumes, with the firm a regular lifter of large cargoes at Izmit and/or Izmir for supply mainly into its Antwerp bitumen terminal in Belgium, including a cargo moved on Vitol's 36,962dwt tanker Asphalt Splendor last month. While in excess of 500,000t of fob volumes are understood to have been agreed for Tupras supply to lifters next year, tender process participants said a further seven to eight cargoes — each around 12,000t — had also been agreed for supply to Continental Bitumen on a CFR basis. The 14,786dwt Tupras bitumen tanker T Adalyn is to move those cargoes, as it has done in a similar arrangement with Continental Bitumen under the Turkish firm's 2024 tender arrangements, with the tanker delivering Tupras cargoes this year into Colas import terminals in France, Ireland and the UK, and on some occasions into other northwest European locations. Tupras tender participants said that at least some of the 2025 fob volumes had been awarded at double-digit fob discounts to fob Mediterranean high-sulphur fuel oil (HSFO) cargoes following similar indications from some tender buyers late last year regarding the 2024 Tupras tender. Such values had rarely been seen under Turkish term supply deals before this year, with the persistently weak outlook for European bitumen supply-demand fundamentals lasting into 2025 under current projections. Tupras could benefit next year from any shortfall in bitumen availability from its nearest competitor Motor Oil Hellas (MOH), which said last month that repair work on one of two crude distillation units (CDU) at its 180,000 b/d Agioi Theodoroi refinery in Corinth, Greece, will take until the third quarter of 2025 to complete after damage caused by a fire on 17 September. While the bitumen market impact of the CDU halt has been limited thus far, there could be a greater effect on Mediterranean availability next year, especially during the peak road paving and bitumen consuming season from spring to autumn. That could in turn help push up Mediterranean fob spot cargo values well above those agreed under Tupras' 2025 tender. By Keyvan Hedvat Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Baghdad clamps down on 'illegal' oil smuggling to Iran


20/11/24
News
20/11/24

Baghdad clamps down on 'illegal' oil smuggling to Iran

Singapore, 20 November (Argus) — The Iraqi government is clamping down on the "illegal smuggling" of crude, bitumen and other oil products to Iran. Iraq's foreign affairs ministry has asked Iranian authorities to stop trucks carrying "oil, black oil and other petroleum products" from entering Iran through border crossing areas in Iraq's semi-autonomous Kurdistan region unless the exports are licensed by state-owned Somo, according to a 12 November letter seen by Argus . The movement of bitumen and other oil products across the Haj Omran-Piranshahr border point have already halted because of the new directive, market sources said. "The Parwiz Khan and Bashmakh borders are still exporting bitumen, but if this letter is implemented fully, Iraq's bitumen exports will be disrupted since none of these producers possess a Somo licence," an Iraqi bitumen market participant told Argus . The restrictions are expected to remain in place until further notice, although some market participants expressed doubt about how effective the crackdown will be. The directive will also have a bearing on crude producers in Iraq's Kurdistan region, which have been relying on local sales since a key export pipeline to Turkey was shut last year. Foreign operators operating in Kurdistan said they have been trucking crude to local refineries since the closure, but Argus understands that Kurdish crude is also being smuggled — by truck — across the border to Turkey, Iran and Syria. Iraq's oil ministry said this month that it has secured a commitment from the Kurdistan Regional Government (KRG) to scale back its crude production to "agreed levels" to help bring overall Iraqi output back below its Opec+ production target. Tight supply Participants in Iraq's bitumen market note that the smuggling directive coincides with already tight domestic supply, caused by limited availability of vacuum residue feedstock. Not only are higher margins encouraging Iraqi refineries to blend vacuum residue to produce high-sulphur fuel oil (HSFO), but a prolonged roadblock between Erbil and Sulaymaniyah, which started before the Kurdish election in October, has made it difficult for bitumen producers to transport vacuum residue from refineries to their production units, market participants said. Manifest charges were decreased to $10/t last week to encourage bitumen producers to transport vacuum residue, down from $35/t when the roadblock started. But most Kurdish suppliers have refrained from offering fresh cargoes for export in the past three weeks. A few Indian importers told Argus that it has become increasingly difficult to secure Iraqi bitumen drums because of a lack of offers. Some bitumen suppliers took to the sidelines in the expectation that export values will increase in line with rising Iranian seaborne prices. The limited availability of vacuum residue has boosted production costs for Iraqi bitumen suppliers. Iraqi drums will be offered higher than $340/t fob Bandar Abbas in the coming days, compared with around $322-325/t last week, producers said. One major southern Iraq-based producer has not been offering drummed cargoes since the end of October as the higher production costs have made export prices less competitive for major consumers like India, market participants said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Cop: EU warns on fossil fuel ambition backsliding


20/11/24
News
20/11/24

Cop: EU warns on fossil fuel ambition backsliding

Baku, 20 November (Argus) — The EU has warned parties at the UN Cop 29 climate summit in Baku, Azerbaijan, against going back on pledges made last year in Dubai to transition away from fossil fuels. Language on transitioning away from all fossil fuels was included in the outcome of Cop 28 in Dubai last year in a historic first, with almost 200 countries including major fossil fuel producers agreeing to the text. And the EU is pushing for the same commitment to be included in this year's outcomes. "No one should pretend that the previous Cop didn't happen," European commissioner for energy Wopke Hoekstra said today. "There is the clear expectation that once you've signed up to do something, you actually do it," he said, adding that "the last Cop was very specific about transitioning away from fossil fuels". The EU views the declaration of G20 leaders, released on Tuesday morning, as an endorsement "in its entirety" of the outcomes of Cop 28, Hoekstra said. Further enhancing mitigation — reducing emissions — policies will be a "crystal clear element" that the bloc will focus on in the coming days, he said. Failing to include language on transitioning away from fossil fuels would mean last year's Cop should be considered a failure, according to Lidia Pereira, head of the European parliament delegation in Baku. But she trusts delegates from the UAE to be strong advocates for the wording on transitioning away from fossil fuels, she said. The UAE is part of the Arab States negotiating group, which also includes Saudi Arabia, Egypt, Iraq and Libya. Work on a mitigation outcome was rescued from the brink of collapse at the start of last week but is progressing slowly. As of last night negotiators did not have a draft text on mitigation, but must deliver one to the Cop presidency for publication around midnight. If parties fail to come to a conclusion in mitigation talks, the text for a new finance goal may become the main space in which fossil fuel language could land. Its most recent draft, released on 16 November, includes references to transitioning away from fossil fuels. Negotiations on climate financing — the so-called new collective quantified goal (NCQG) — to help developing countries adapt to and address climate change are central to this year's Cop. Thorny issues have included the amount of financing, which countries should contribute, the form that the financing will take and the broadening of the contributor base. The next draft is scheduled to released around midnight on Wednesday, after negotiators have spent days working to bring parties' initial positions closer together. Hoekstra refused to be drawn on reports, raised by Bolivia's representative , that the EU is eyeing a number of $200bn/yr for the NCQG, well below the expectations of likely recipient countries. The EU prefers to focus on other elements, including progress on Article 6 and mitigation, before having a "meaningful conversation about the exact amount", Hoekstra said. Talks on finalising the details of an international carbon market under the Article 6 of the Paris Agreement continue to inch forward at Cop 29, but with key sticking points yet to be resolved. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Denmark tops 'climate change performance index'


20/11/24
News
20/11/24

Denmark tops 'climate change performance index'

Berlin, 20 November (Argus) — Denmark tops the latest "climate change performance index" (CCPI 2025) published on Wednesday by German non-governmental organisations (NGO) Germanwatch and NewClimate Institute. But the country only manages fourth place, with no nations doing enough to meet its climate targets under the Paris Agreement, the NGOs said. The CCPI, published annually, monitors the climate action performance of 63 countries and the European Union (EU), which collectively account for more than 90pc of global greenhouse gas (GHG) emissions. "No country deserves to be on the podium, but some countries are doing better than others," co-author Jan Burck from Germanwatch said at the presentation of the index at the UN Cop 29 climate summit in Baku, Azerbaijan. Denmark tops the league for the fourth year running, thanks to its steady and comprehensive climate policy, its strong targets and renewables deployment. Other "high performers" include the UK, which is "back on track" after having seen its ranking plummet: the UK moved up to 6th position from 20th, thanks to the new government's strong climate policy framework, and the country's successful coal phase-out. But the UK's transition away from oil and gas is progressing too slowly, the NGOs warned. India, another high performer, managed to climb the ranks to 10th place thanks to strong renewables deployment. Medium-performing countries include Germany, which has fallen two ranks to 16th despite strong renewables deployment, as the country's buildings and transport sectors struggle to reduce their emissions, and as the country plans to expand its gas consumption, and faces budgetary constraints. Medium-ranking Brazil, while improving its CCPI ranking since president Luiz Inacio Lula da Silva took office last year, fell five ranks on the year to 28th, given the country's continuously strong reliance on fossil fuels, and despite lower deforestation rates. Unlike previous editions, no EU country received an overall "very low" rating. Bulgaria, at 50th, is the worst performing EU country. The four last-placed countries in the CCPI — Iran (67th) at the bottom, Saudi Arabia, the UAE and Russia — number among the world's largest oil and gas producers.These countries not only emit high volumes of GHG, but also – largely – lack emissions policies or climate regulation, with no discernible shift away from the fossil fuel business model and a proportion of renewables in their respective energy mix that is below 3pc, according to the NGOs. Co-author Niklas Hoehne from NewClimate said that there are many signs that the world is at a turning point, and that the peak in global emissions is "within reach", though US president-elect Donald Trump could act as a "brake" on the now necessary rapid cuts in emissions. The US occupy an unchanged 57th position. Burck said that China, falling to 55th from 51st position, faces a "huge" opportunity to gain international recognition, as the country's GHG emissions appear to have almost peaked, and as it experiences an unprecedented boom in renewable energies. What is now needed is a "clear move away from fossil fuels", Burck said. This clear move is not yet apparent, but this could change with the country's upcoming new five-year plan. In this case, China could "quickly" climb up the index, Burck said. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more