Q&A: Aviation may pull feeds away from marine: BV

Spanish Market: Biofuels, Oil products
19/07/24

Biofuel feedstocks could be routed away from marine fuels to meet demand from the aviation sector if the latter is willing to pay higher prices associated with sustainable aviation fuel (SAF), Bureau Veritas (BV) Marine & Offshore's global market leader for sustainable shipping Julien Boulland told Argus. Edited highlights follow:

Marine biodiesel has been the largest alternative fuel uptake, with over 1mn t sold in Rotterdam and Singapore last year. But with Argus assessments showing premiums above $225/t to VLSFO dob ARA, how do you see marine biodiesel demand in the medium- to long-term?

Shipowners and ship operators have to run an individual cost-analysis on whether the premiums could be offset by potential savings under EU emissions trading system (ETS) and FuelEU Maritime regulations, as well as any future regulations such as the International Maritime Organisation (IMO) economic pricing mechanism.

In terms of emissions, biofuels still emit CO2 on a tank-to-wake basis, but less on a well-to-wake basis compared to their fossil equivalents. This will also vary depending on the feedstock for the biofuel as well as the production process.

Under the current IMO regulations for energy efficiency, including the Ship Energy Management Plan (SEEMP) and its requirements for fuel reporting (DCS), there might be some indirect commercial benefits for owners, too. For example, a better CII (Carbon Intensity Indicator) score may make a vessel more appealing to charterers and help its owner secure more favourable rates.

There are also other factors to consider, such as Scope 3 emissions rights, which can influence demand, as we currently see from voluntary demand from cargo owners seeking those documents.

But this will also have a geographic impact on demand, as larger container liner companies usually utilise the east-west route and they might prefer to opt for bunkering the marine biodiesel blend in Singapore due to lower prices.

What are the risks associated with bunkering marine biodiesel in relation to conventional ship engines? How significant is the recent FOBAS report that implied a correlation between the use of "unidentified" biofuels and engine pump injector damage?

We have supported our shipowner clients in numerous pilots to trial biofuels such as fatty acid methyl ester (Fame) and hydrotreated vegetable oil (HVO) in variable blends.

Overall, these trials have gone smoothly, but we have learned a few things along the way.

Firstly, engines do not need to be modified, but since biofuels have slightly different physical properties, it is necessary to find the right engine adjustments. A very good knowledge of the fuel properties is key in determining the right adjustments, and the new revision of ISO 8217 on marine fuel specifications is crucial in supporting this process. Another key finding is the importance of receiving full information on fuel characteristics from the supplier. Finally, BV plays a key role in ensuring full fuel certification on several aspects, including sustainability and physical properties.

Used cooking oil (UCO) can also feed into SAF and with potentially greater refining margins. Do you think some feedstocks will be pulled away from marine?

When it comes to methanol, we believed marine would take up more of the feedstock compared with the chemicals industry due to greater willingness to pay larger premiums.

But with biofuels, it seems to be the other way around where aviation could end up pulling biofuel feedstocks away from maritime. In terms of fuel consumption, the marine and aviation industries are comparable but if aviation are willing to pay more, then it will likely get more of the feedstocks required to produce SAF.

What are the implications of the new ISO specifications, what are the key takeaways for marine biodiesel uptake?

More has to be done, but now we have parameters for assessing biofuel blend specifications.

It was very well accepted by the industry, and now operators and shipowners have a standard to rely on. But it doesn't resolve the question around feedstock cross-industry competition. However, it does also open the door for off-spec Fame residue blends to become ISO-certified — depending on further testing.

With IMO aiming for "global regulations for a global market", how do you see conflicts between different regulations affecting the market?

We are closely following the IMO development process for a global economic pricing mechanism.

IMO has assigned a working group of technical experts to look at this mechanism from an apolitical perspective.

In terms of potential regulatory conflicts, we have the example of the Netherlands, where the Dutch emission authority requires the delivery of Proof of Sustainability (PoS) certificates for applying to the scheme of Dutch renewable tickets (HBE-G) which can be traded, but this PoS cannot be used for other purposes, such as the EU ETS. To circumvent this hiccup, we may see the development of new digital certificates, such as an accompanying ISCC-certified Proof of Compliance (PoC).

By Hussein Al-Khalisy

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16/11/24

Cop: Parties continue slow work on finance goal: Update

Updates throughout Baku, 16 November (Argus) — Parties at the UN Cop 29 climate talks in Baku have asked for more time to work on "specific proposals" for a new finance goal, working from a draft text released yesterday , but it is unlikely to yield progress on key sticking points. Country representatives are seeking to agree on a new climate finance goal for developing nations, following on from the current — broadly recognised as inadequate — $100bn/yr target. A plenary is due to take place later today in Baku. "Over the last few days some people have doubted whether collectively we can deliver. It is time for the negotiators to start proving them wrong," Cop 29 deputy lead negotiator Samir Bejanov said. The current draft text still fails to bridge the huge divide between developed and developing countries on key issues such as an amount for the goal, the contributor base and what the funds should be used for. And the new version due to come out today is unlikely to show meaningful progress on these issues, observers suggested, leaving them for ministers to tackle next week. Technical negotiators continue to try and move forward on topics such as funds' access and transparency. Developed countries have still not proposed a number for the goal, and want the contributor base broadened. Developing countries remain broadly united in calling for climate public finance of over $1 trillion/yr. Options show that developing country parties seek a new finance goal that serves mitigation — actions to reduce emissions — adaptation and loss and damage. Adaptation refers to adjustments to avoid global warming effects where possible, while loss and damage describes the unavoidable and irreversible effects of such change. Developed nations are also pushing for sub-targets of $220bn/yr for least developed countries (LDCs) and $39bn/yr for small island developing states (Sids), in which money for adaptation should come in the form of grants and highly concessional finance and funding for loss and damage "primarily in grants". Multi-layered The multi-layered approach in the draft, mostly supported by developed countries, does not mention loss and damage. On broadening the contributor base, it has options calling on "parties in a position to contribute" or "all capable parties" to "mobilise jointly $100bn/yr for mitigation and adaptation in developing countries by 2035". The UN climate body the UNFCCC works from a list of developed and developing countries from 1992 — delineating 24 countries plus the EU as developed — and many of these note that economic circumstances have changed in some countries, including China, over the past 32 years. China between 2013 and 2022 provided and mobilised $45bn in climate finance to developing countries, equivalent to 6.1pc of climate finance provided by all developed countries in the period, according to think-tank WRI. A few options in the multi-layered approach in the draft talk about "investments", language that developing countries do not support, and "investing trillions "from all sources, public, private, domestic and international". Developing nations are not against private sector financing, but they want the main figure for the new finance goal to come from public sources, observers said. Some parties on both sides are calling for an acceleration of the reforms of multilateral development banks, key to leverage billions in private sector finance, as well as for the use of taxes and levies. But these issues are largely outside of the remit of the Cop, even though they may get a boost from the upcoming G20 leaders summit on 18-19 November. UN climate body chief Simon Stiell today called on G20 to ensure the availability of more grant and concessional finance, make progress on debt relief, and push for additional multilateral development bank reforms. Brazil is looking to use its G20 presidency to advance agreement on energy transition finance, having set fighting climate change as one of its priorities. The country called for a global finance governance that includes rules for financing a "just and equitable" energy transition in developing economies and for an easier access to climate funds. Brazil has also pushing for a 2pc tax on billionaires that could generate up to $250 bn/yr in revenue. By Victoria Hatherick, Jacqueline Echevarria and Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Colombia’s climate plan to address fossil fuels

16/11/24

Cop: Colombia’s climate plan to address fossil fuels

Baku, 16 November (Argus) — Colombia will seek to address the "divisive issue" of "the proliferation of fossil fuels" in its next emissions reduction plan — nationally determined contribution (NDC), environment minister Susanna Muhammad told Argus, adding that it would prompt a "strong debate" in the country. Colombia's president Gustavo Petro seeks to end the country's dependence on fossil fuels, while promoting a transition to clean and renewable energy. "Of course this is a very divisive issue, especially for a country that is looking for a whole economy transition," Muhammad said on the sidelines of the UN Cop 29 climate summit in Baku. "And trying to get the whole of society and the whole of government behind that will be a strong debate." Petro ordered an end to new hydrocarbon exploration and production contracts soon after taking office in August 2022. Petroleum association ACP said that Colombia's crude output will begin declining in 2027 as reserves are insufficient to maintain output amid falling exploratory activity. Petro's ambition to phase out fossil fuels risks sacrificing key revenues for the country. But Muhammad highlighted the need to achieve an ambitious financial goal that supports a just transition in developing economies. "We cannot continue playing with the same financial rules of the game," she said. "What we are seeing at this Cop 29 is that we need solidarity and fairness in the process of financing this transition." "We said in Dubai that we would triple renewables by 2030. The question remains, who is going to triple renewables and for whom?" she said, pointing to the significant gap in renewables expansion between developed and developing economies. Countries at Cop 28 in Dubai, the UAE, last year agreed on a deal that included transitioning away from fossil fuels, tripling renewable energy capacity and doubling annual energy efficiency gains globally by 2030. Muhammad added that the country will be submitting its NDC to the UN climate body the UNFCCC by June next year because it will "go through a very strong consultation process" with different sectors of the economy. Cop parties are expected to publish their next NDCs to the Paris climate agreement — this time for 2035 — in November-February, as part of a cycle that requires countries to "ratchet up" their commitments every five years. "Our main source of emissions is deforestation, agriculture practices, especially cattle ranching," she said, adding that the government is seeking the participation of actors that are at the forefront of the climate crisis. Risky business Talking about the possibility of the US pulling out of the the Paris Agreement and Argentina's delegation exiting negotiations in Baku, she warned that by not putting the people first in the fight against climate change, leaders are risking that other "authoritarian" regimes or "climate deniers" take more power. Brazil's secretary for climate change Ana Toni said today that private companies like policy consistency and that businesses need to look at the countries that are showing climate commitment and consistency in their NDCs. "The climate crisis is irreversible, we need to focus on climate action and implementation," Toni said. By Jacqueline Echevarria Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Parties continue work on new finance goal

16/11/24

Cop: Parties continue work on new finance goal

Baku, 16 November (Argus) — Parties at the UN Cop 29 climate talks in Baku have asked for more time to work on "specific proposals" for a new finance goal, working from a draft text released yesterday , before convening for a plenary session later today, according to the summit's presidency. Country representatives are seeking to agree on a new climate finance goal for developing nations, following on from the current — broadly recognised as inadequate — $100bn/yr target. The draft text still fails to bridge the huge divide between developed and developing countries on key issues such as an amount for the goal, the contributor base and what the funds should be used for. A plenary is due to take place later today in Baku. "Over the last few days some people have doubted whether collectively we can deliver. It is time for the negotiators to start proving them wrong," Cop 29 deputy lead negotiator Samir Bejanov said. Parties continue to stick to their positions. Developed countries have still not come forward with a number for the goal, and want the contributor base broadened. Developing countries remain broadly united in calling for climate public finance of over $1 trillion/yr. Options show that developing country parties seek a new finance goal that serves mitigation — actions to reduce emissions — adaptation and loss and damage. Adaptation refers to adjustments to avoid global warming effects where possible, while loss and damage describes the unavoidable and irreversible effects of such change. Developed nations are also pushing for sub-targets of $220bn/yr for least developed countries (LDCs) and $39bn/yr for small island developing states (Sids), in which money for adaptation should come in the form of grants and highly concessional finance and funding for loss and damage "primarily in grants". The multi-layered approach in the draft, mostly supported by developed countries, does not mention loss and damage. On broadening the contributor base, it has options calling on "parties in a position to contribute" or "all capable parties" to "mobilise jointly $100bn/yr for mitigation and adaptation in developing countries by 2035. The UN climate body the UNFCCC works from a list of developed and developing countries from 1992 — delineating 24 countries plus the EU as developed — and many of these note that economic circumstances have changed in some countries, including China, over the past 32 years. China between 2013 and 2022 provided $45bn in climate finance to developing countries, equivalent to 6.1pc of climate finance provided by all developed countries in the period, according to think-tank WRI. A few options in the multi-layered approach in the draft talk about "investments", which developing countries do not support, and "investing trillions "from all sources, public, private, domestic and international". Some parties on both sides are calling for the reforms of multilateral development banks, key to leverage billions in private sector finance, to accelerate. But these issues are largely outside of the remit of the Cop, even though they may get a boost from the upcoming G20 leaders summit on 18-19 November. UN climate body chief Simon Stiell [today urged G20 leaders to make the climate crisis](https://direct.argusmedia.com/newsandanalysis/article/262963 "order of business number one". He called on G20 to ensure the availability of more grant and concessional finance, make progress on debt relief, and push for additional multi-lateral development bank reforms. Brazil is looking to use its G20 presidency to advance agreement on energy transition finance, having set fighting climate change as one of its G20 priorities. The country called for a global finance governance that includes rules for financing a "just and equitable" energy transition in developing economies and for an easier access to climate funds. Brazil has also pushing for a 2pc tax on billionaires that could generate up to $250 bn/yr in revenue. By Victoria Hatherick and Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: UN’s Stiell urges G20 to make climate its priority

16/11/24

Cop: UN’s Stiell urges G20 to make climate its priority

Baku, 16 November (Argus) — Leaders at next week's G20 summit should make the climate crisis "order of business number one" as negotiations on a new climate finance goal continue at the UN Cop 29 climate conference in Baku, Azerbaijan, UN climate body chief Simon Stiell said today. "Stepping it up on climate finance globally requires action both inside our Cop process and outside of it," Stiell said, and the G20's role is "mission critical". Stiell called on G20 leaders meeting in Rio de Janeiro, Brazil, on 18-19 November to ensure the availability of more grant and concessional finance, make progress on debt relief, and push for additional multi-lateral development bank reforms. Some delegates at Cop have noted that the outcome of the G20 meeting will be key for climate finance . G20 in India last year recognised the need to increase global climate investments to trillions of dollars from billions, from all sources, highlighting that $5.8 trillion-5.9 trillion is required before 2030 for developing countries to implement their climate plans. The communique had called on "parties" to set an ambitious goal from $100bn/yr floor, which developed countries committed to mobilise through 2025. Brazil this year is looking to use its G20 presidency to advance agreement on energy transition finance , having set fighting climate change as one of its G20 priorities. The country called for a global finance governance that includes rules for financing a "just and equitable" energy transition in developing economies and for an easier access to climate funds. Brazil has also pushing for a 2pc tax on billionaires that could generate up to $250 bn/yr in revenue. Stiell said today that there is a "long way to go" on talks to agree a new climate finance goal for developing nations in Baku. A round of informal consultations on a third draft text took place late yesterday , but the document was still far off striking a compromise between developed and developing countries on central aspects including the amount of funds to be given, which countries should contribute, and how the money should be used. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Adv Fame marine blend premiums to fossil hit year lows

15/11/24

Adv Fame marine blend premiums to fossil hit year lows

London, 15 November (Argus) — The premiums of advanced fatty acid methyl ester (Fame) 0 ARA marine biodiesel blends to fossil fuel counterparts were marked at 2024 lows on 14 November, according to Argus assessments. Calculated B30 Advanced Fame 0 dob ARA prices fell by $31.54/t to $623.25/t, the lowest since March 2023. Calculated B100 Advanced Fame 0 dob ARA values tumbled by $102.77/t to just over $820/t, their lowest since 22 November last year. Consequently, the outright premium held by the B30 blend against very-low sulphur fuel oil (VLSFO) dob ARA narrowed by $30.54/t on the day to $123.25/t on 14 November — its narrowest since 29 December 2023. B100 held a $158.52/t premium to marine gasoil (MGO) dob ARA, down by $106.77/t on the day and its lowest premium this year. EU emissions trading system (ETS) prices were assessed at $71.79/t on 14 November. Accounting for EU ETS costs on the same day, ETS-inclusive premiums held by Advanced Fame blends against their fossil counterparts hit their lowest since the introduction of EU ETS into maritime at the turn of the year. B30 Advanced Fame 0's ETS-incorporated premium against VLSFO narrowed by $31.27/t to $96.11/t on the day to 14 November. B100 Advanced Fame 0's premium against MGO dropped by $109.28/t to $66.45/t when ETS costs were accounted for. Advanced Fame marine biodiesel blend values declined with thin spot demand owing to a shift in voluntary demand east of Suez. As a result, containerships seeking to deliver proof of sustainability (PoS) documentation to their customers, to offset the latter's scope 3 emissions, shifted their marine biodiesel demand to Singapore when feasible. PoS can be obtained on a mass-balance system, allowing shipowners flexibility with regards to the port at which a blend can be bunkered. Lacklustre demand for the blends was complimented by soaring values for Dutch renewable tickets. The calculated Advanced Fame dob ARA range prices incorporate a deduction for HBE-Gs. These are a class of Dutch renewable fuels units, or HBEs, used by companies that bring liquid or gaseous fossil fuels into general circulation and are obligated to pay excise duty/energy tax on fuels. Dutch renewable HBE-G tickets were marked at €22/GJ on 14 November, their highest since Argus assessments began. Soaring HBE-G values were attributed](https://direct.argusmedia.com/newsandanalysis/article/2628738) to gains in European hydrotreated vegetable oil (HVO) prices, tight supply because of a decline in tickets from biofuels used in shipping and less overall biofuel blending in the fourth quarter. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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