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S&P Global – Project Lotus to provide transparent ownership cost of bunkering biofuels

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7 June 2024

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First Featured on S&P Global


  • Trial to assess overall biofuel bunkering ownership cost
  • Project to incorporate both fuel price and potential maintenance costs
  • GCMD to assess crude algal oil impact in future

A six-month biofuel trial – Project Lotus – will help to establish the total ownership cost for using biofuels as a marine fuel, which includes engine maintenance cost, partners involved in the trial told S&P Global Commodity Insights.

Led by Singapore-headquartered Global Centre for Maritime Decarbonization (GCMD), the project marks a step forward from its previous trials as it focuses on assessing the impact of biofuel blends across the supply chain for long-term usage including engine performance and related operations of onboard fuel delivery systems.

“The intended results of [the] six-month trial will help in providing a clearer picture of the total cost of ownership for using biofuels, factoring in both fuel price and any potential biofuel-related maintenance costs,” said Sanjay C Kuttan, chief strategy officer, GCMD, over email.

GCMD, teamed up with Japanese shipping company NYK Line to assess the long-term impact of continuous biofuel use on ship operations under Project Lotus in May this year.

Meanwhile, Japanese shipping partner NYK Line’s Executive Officer Yuko Tsutsui said that the trial also aims to draw up mitigation strategies and contribute to industry guidelines on long-term marine biofuel usage.

The shipping firm aims to use greener fuels to reduce emissions for its mono-fueled ships amid the industry’s transition to zero-emission fuels, added the official.

“Our previous [biofuel] trials were short-term spot basis only,” said NYK’s Tsutsui.

NYK is the co-sponsor of the trial and contributed the ship, and manages fuel procurement for the trial.

Earlier this year, NYK initiated construction for a test engine facility in Chiba Prefecture aiming to assess biofuel safety and accelerate their practical use. The installation of the test engine will be completed by June, followed by a three-year analysis of biofuel combustion evaluating engine operation and fuel oil analysis technologies with different biofuel potentials.

The company has a goal of a 45% reduction in greenhouse gas (GHG) emissions by 2030 compared to 2021 levels.

“We see the potential of GHG (greenhouse gas) reduction and CII (Carbon Intensity Indicator) rate improvements for biofuels,” added Tsutsui.

FAME-based blends

Only Fatty Acid Methyl Esters, or FAME, will be used for the trial, as it is widely available and compatible with existing infrastructure, said GCMD’s Kuttan.

While GCMD’s past trials using FAME blends have not shown any significant degradation, the long-term impact of biofuels on overall ship performance remains undocumented.

Around 40 million mt/year of FAME is produced globally, which makes it a feasible option for reducing emissions immediately in the shipping industry to comply with international regulations and requirements, he said.

Moreover, such biodiesel has already been in use in the road transport sector for over two decades, with learnings that can be leveraged to accelerate its deployment in shipping.

The trial will use a bunker biofuel blend of 24% FAME and conventional very low sulfur fuel oil (VLSFO).

FAME can seamlessly integrate with current engines and bunkering systems as a ‘drop-in’ eco-friendly green bunker biofuel, though there have been concerns about its long-term effects on ship operations.

Although NYK has primarily been purchasing UCOME biofuel, the company added that it is open to different biofuel pathways.

“UCOME is one of the biofuels. We don’t have a particular preference for types of biofuels at the moment and we are seeking of possibilities,” said Tsutsui.

Dual-fuel strategy

Meanwhile, NYK will look at low-carbon options like LNG and LPG, as well as zero carbon options like ammonia and methanol for its dual-fueled ships, as the group aims to reduce greenhouse gas emissions by 45% in fiscal 2030 from fiscal 2021 levels and achieve net zero by 2050.

“We are replacing our fleet to LNG-powered vessels to some extent, but we think of LNG as one of transition fuels,” said Tsutsui, adding that replacing fossil LNG with bio-methane or e-methane can further reduce emissions.

The company estimates it will have 40 LNG, eight LPG, three methanol, and three ammonia-fueled ships in 2030, according to its latest management plans last year.

“Until around 2030 when we think alternative fuels’ supply chain and technology is getting ready, we focus on maximizing energy efficiency,” she said.

Such alternative marine fuels can help minimize carbon intensity to reduce the company’s scope 1 emissions, said Tsutsui, adding that even though the company is focusing on ammonia for tugboats and gas carriers, its choice of alternative fuel will depend on the trade and ship type.

“Each trade and vessel type has different situation. At this moment, we are considering multiple solutions paying attention to how global supply chains of ship’s fuel are established,” she added.

Platts, part of Commodity Insights, assessed B24 bio-bunkers Singapore at $735.84/mt June 6, down $4.56 day on day. Platts first began assessing B24 bio-bunkers in Singapore on May 8, 2023.

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