The maritime industry is at a pivotal juncture. As shipping giants scramble to meet increasingly stringent decarbonisation targets, a fresh challenge has emerged—soaring costs for liquefied bio methane (LBM), which has long been considered the natural successor to LNG (liquefied natural gas). Lloyd’s Register (LR), a leading UK ship classification organisation, has sounded the alarm: shipowners and their eco-conscious customers need to brace themselves as the price of LBM continues to rise compared to other biofuels.
Shipping companies have been looking to biofuels as a critical solution to meet the upcoming FuelEU guidelines. These regulations, kicking off in January 2024, impose increasingly aggressive CO2 emissions reductions, culminating in an 80% reduction by 2050. Yet, while many biofuels are expected to become cheaper between 2020 and 2030, LBM bucks this trend.
Maersk’s Shift and the Industry’s Growing Dilemma
Major players like Maersk, which had originally hoped to spearhead an e-methanol bunkering industry, have begun pivoting towards LNG, with a transition to LBM as a second step. However, LR cautions that the supply of biofuel feedstock is limited and must be shared across multiple transport sectors. This constraint, combined with the discrepancies in carbon emissions reduction between different biofuels, could lead to misinformed decisions by shipowners and customers alike.
For example, used cooking oil biodiesel (UCO) can reduce CO2 emissions by an impressive 84%, making it compliant with the EU’s toughest upcoming environmental regulations. On the other hand, palm oil biodiesel, produced with an open effluent pond (where methane is not captured), only delivers a 20% reduction in emissions. Meanwhile, hydrotreated vegetable oil (HVO), which can replace conventional heavy bunker fuel, offers a modest 22% reduction.
Environmental concerns compound the issue, with reports of deforestation for palm oil production potentially resulting in a higher carbon footprint than conventional fossil fuels. LR’s report concludes that, although biofuels are produced in many countries, their scale is better suited to percentage blending in marine fuel rather than a full replacement for fossil fuels.
The Need for Supply Chain Visibility Tools
In this complex and shifting landscape, shipowners and customers cannot afford to be in the dark. Real-time supply chain visibility tools are becoming essential for Beneficial Cargo Owners (BCOs) and Logistics Service Providers (LSPs) to make business-critical decisions. These tools can provide detailed insights into carbon emissions, fuel costs, and operational efficiencies, empowering companies to adapt to market changes rapidly and minimise their environmental impact.
Visibility tools not only help manage rising costs and carbon reporting requirements but also assist in aligning with the evolving regulatory framework, ensuring that businesses remain competitive and sustainable. With biofuel price fluctuations and environmental complexities on the rise, having access to real-time data is no longer a luxury—it’s a necessity.
By embracing advanced visibility software, shipping companies and LSPs can stay ahead of the curve, optimise their supply chains, and, most importantly, contribute meaningfully to global decarbonisation efforts. As the race to a cleaner shipping future intensifies, those equipped with real-time insights will be best positioned to navigate these challenging waters.