Renewable Energy Group, GoodFuels team up to make sustainable marine biofuel

Renewable Energy Group and GoodFuels have entered into a long-term agreement to develop and supply sustainable marine biofuel to the hard-to-decarbonize shipping industry, as the shippers look to meet industry goals on reducing carbon intensity.

We're committed to supporting the shipping industry's decarbonization movement by working with GoodFuels to adopt and develop sustainable marine biofuels," said Raymond Richie, vice president and managing director of REG, in a joint statement Oct. 26.

The Netherlands-based GoodFuels already supplies green fuels to the shipping segment and is looking to increase use of advanced marine biofuels created by sustainable feedstocks. REG is the largest producer of biofuels in the US, reporting Q2 2021 biodiesel and renewable diesel production of 132 million gallons at its US and European facilities.

Production of transportation biofuels from certain type of feedstocks like used cooking oil adds incentives to make marine biofuel more economic, under the European Union's Renewable Energy Directive II. RED II also set a target to include 14% of renewables in transport fuels and to reduce by 32% greenhouse gases between 2021 and 2030.

The terms of the agreement between GoodFuels and REG were not disclosed and a REG representative was not immediately available for comment.

IMO carbon intensity targets

Maritime shipping is the most efficient and least emission-intensive mode of transporting goods over large distances, with 2021 shipping fuel combustion emissions accounting for 2.8% of global CO2 combustion emissions, according to S&P Global Platts Analytics.

But use of biofuels will be necessary for the International Maritime Organization to meet carbon reduction goals, Platts Analytics added

The IMO has targeted a 40% reduction in shipping carbon emission intensity by 2030 from 2008 levels and a 50% reduction in overall emissions during that time period. The IMO has also mandated an average annual efficiency improvement in carbon intensity of 1.5% from the year 2015 to 2030.

Recent reductions in maritime carbon intensity were partly a result of IMO 2020 which mandated a cut sulfur content in bunker fuel from 3.5% to 0.5% beginning on Jan. 1, 2020. Shippers who did not want to buy lower sulfur bunker have added scrubbers onto their vessels to reduce sulfur emissions. Longer term, ship owners turned to vessels powered by LNG to reduce emissions.

"However, the ambitious long-term targets are unattainable with higher efficiency improvements alone (2%-2.5%) and would require cleaner fuels and a major technological shift in the sector," according to Platts Analytics.

Platts Analytics expects emissions to grow 25% by 2040 from the current 2021 levels, accounting for 3.5% of total CO2 combustion emissions.

"The increased contribution from shipping is primarily due to the growth in trade along with the challenges to decarbonizing the sector," Platts Analytics said.

Large vessels account for around 85% of world shipping, and decarbonization is difficult using electrification and because of their use of high energy density fuel oil.

While the current trend to cut emissions is by shifting to LNG vessels – which account for 242 vessels from 2021 to 2025 compared to about 30 biofuel vessels -- the "fuller emissions of this switching is less clear if the upstream emissions are not kept in check," Platts Analytics said.

Currently, the IMO is holding discussions on the methodology used to account for greenhouse gas emissions, including a well-to-wake approach, which would impact LNG vessels.