KPI OceanConnect targets more ports for marine biofuel sales
Marine fuel trading house KPI OceanConnect is looking to offer biofuel for bunkering at more ports, in view of higher demand as FuelEU regulations kick in next year, a senior executive said on the sidelines of SIBCON 2024 this week.
The company is expanding its marine biofuel trade to 120 ports, up from about 70 ports previously, said Jesper Sorensen, global head of alternative fuels and carbon markets.
The company has delivered more than 300 biofuel stems to over 80 clients to date, according to Sorensen.
"The most developed region is Europe where biofuels are available. In many locations, Asia is catching up," he said, adding that the FuelEU regulation is a game-changer for demand.
FuelEU standards start from Jan. 1, 2025, requiring the greenhouse gas intensity in shipping fuels to be cut by 2% next year and an 80% reduction by 2050.
"While there are many ways of complying with FuelEU maritime, it is the first regulation in place that puts a demand on what is burned," Sorensen said.
Biofuels of B24 blend with International Sustainability & Carbon Certification (ISCC) can provide greenhouse gas emission reductions of up to 20% compared to conventional fuel oil, while a pure biofuel can potentially reduce emissions up to 85%-95%.
Despite the potential for reducing emissions, growth of demand is gradual because of the price premium commanded by marine biofuels.
It is also cheaper to buy emissions allowances over the European emission trading system (ETS) that started up this year than it is to buy biofuels, Sorensen said.
"The EU ETS does not encourage the uptake of alternative fuels," he said.
"If you look at the price gap between taking a biofuel, say a full biofuel (B100) for instance, which will exempt you from the ETS ... that is so much more expensive than buying the equivalent EUAs," he said.
EU Allowances, or EUAs, allow companies operating in the ETS zone a certain amount of carbon dioxide emissions.
(Reuters - Reporting by Jeslyn Lerh; Editing by Tom Hogue)