INTERVIEW: Biofuels could be top near-term green shipping solution if given backing : Wallenius Wilhelmsen

New York — **Shipping not included in national quotas

**Biofuels good choice for existing vessels

**Poseidon Principles may not achieve targets

Biofuels are the most realistic fuel for existing vessels to meet supranational climate goals but the focus on national quotas, which do not cover shipping or aviation, makes shipping a low priority in accessing biofuel, Roger Strevens, VP, Global Sustainability at shipping and logistics company Wallenius Wilhelmsen, told S&P Global Platts in an interview Jan. 15.

The International Maritime Organization is targeting a 40% decrease in carbon intensity, the average CO2 emissions per vessel of the international fleet, by 2030 compared with 2008 levels and a reduction in total greenhouse gas emissions from shipping of 50% by 2050.

"For biofuels there is a quirk that stems from shipping not being included in the Paris climate agreement [in 2015]," Strevens said.

The International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO) have the challenge of reducing global emissions from their respective sectors. Shipping and aviation are not directly included in the Paris Agreement, the United Nations Climate Agency said on its website.

"What countries are motivated to do is to achieve as much in their national contribution as possible and so when it comes to biofuel and subsidizing biofuel there is no incentive to make that fuel available to shipping," Strevens said.

This has led to a lack of national support for biofuel uptake by shipping, he said.

Other fuel options

Newbuilds have a range of choices before them as shipping looks to meet forthcoming emissions goals, such as hydrogen, ammonia and methanol. However, the options for fitting existing ships to meet the 2030 goal are more limited and a number of sources suggest biofuel and synthetic fuels are the answer.

The expense of equipping a ship to burn the so-called future fuels, which in the case of hydrogen and ammonia have yet to prove their usefulness in a commercial context, points to their use on newbuild ships, to maximize the duration of the investment.

Additionally, the lower energy density per molecule of these fuels means more space must be given up on board to fuel storage and this is more complicated to reconfigure on an existing ship, according to market sources.

The International Energy Agency believes that biofuels, ammonia and hydrogen could meet more than 80% of shipping fuel needs by 2070, using around 13% of the world's hydrogen production, with ammonia the outright leader.

"More than 60% of the emissions reductions in 2070 come from technologies that are not commercially available today," the Paris-based agency predicted. S&P Global Platts Analytics meanwhile notes alternative shipping fuels are in the early phase of development and that oil-based fuels could remain the dominant choice for many years to come.

"Alternative fuels are likely to be only one of a range of carbon reduction strategies employed by major shippers, with the others being improved fuel burn efficiency rates (most famously slow steaming, but also direct carbon capture, biofuels, batteries, fuel-efficient lubricants, and LNG bunkering)," Platts Analytics said.

There is currently no proven deep-sea, long haul, zero emissions solution. While there are a number of options available they are best matched to short-sea, inland waterways or coastal vessels, Strevens said. Such vessels have little storage capacity on board but can refuel frequently.

"It's an entirely different ballgame when it comes to deep-sea shipping and vessels like ours which may only be replenished three times a year," he said.

Growing regulatory, financial complexity

Shipping must face scrutiny from a number of stakeholders now, Strevens said.

"It used to be that it was sufficient just to keep an eye on what IMO was up to and you'd have a good enough indicator where the industry is going. Now it's the IMO and the European Union and private initiatives like the Poseidon Principles, coming from the financial sector, and it behoves the industry to engage," he said.

The Poseidon Principles are a self-proclaimed global framework for assessing and disclosing how closely financial institutions' shipping portfolios match international climate goals.

"The idea of the Poseidon Principles is to be welcomed by progressive shipping companies, but whether they will achieve their intended objective will be affected by whether they actually are workable from an operational and business perspective," Strevens said.

Committing the industry to a linear reduction in carbon intensity amid the vagaries of financial cycles and COVID-19-induced strain may be challenging, he said.