Should industry be prepared for biofuel?
Thursday, 08 May 2008
OVER the years, the cargoes carried by the shipping industry have changed and ship designs have evolved to meet market design. One of the most striking developments at present is the rapid expansion of the liquefied natural gas (LNG) carrier fleet which will soon only be a bit smaller, in terms of numbers, than the very large crude carrier (VLCC) fleet. Another ongoing development is the big increase in the carriage of vegetable oils, something accentuated in the shipping industry by the new requirement to carry this cargo in International Maritme Organisation (IMO) designated chemical tankers.
Vegetable oil transportation has increased greatly in the past few years but could be set for another boost as demand for biofuels increases.
Figures quoted in a presentation late last year by shipping analyst and specialist in the chemical tanker trades, Fred Doll, showed that seaborne vegoil trade grew from 33 million tonnes in 2000 to a forecast 56 million tonnes in 2007. Until 2005, vegetable oils were primarily used for foodstuffs or chemical production. Since then, the driver has been demand for biofuels.
It is against this background that the CEO of UK-based classification society Lloyd's Register (LR), Richard Sadler, has called on the shipping industry to be prepared for the global drive towards biofuels.
He argued that if second and third-generation technologies are successful, then current projections of demand would see the world fleet unable to cope with the logistic demands.
Speaking at the recent IMarEST's annual Stanley Gray lecture in London, Mr Sadler predicted that the increase in demand for biocargoes would require an additional fleet size of 400 handy-size equivalents by 2030.
Moreover, with additional environmental pressures, these vessel requirements could well increase.
Before shipowners rush off to find a shipyard with an early building slot for half a dozen chemical tankers, it might be worth having a good look at this biofuel revolution.
Mr Sadler himself sounded a note of caution. He warned that the International Energy Agency (IEA) World Energy Outlook projections for biofuel demand may well be inflated by political pressures to find alternative bio-energy in shortening timescales.
The implications for the shipping industry are significant according to the LR boss. Whether first or third generation, whether biodiesel or bioethanol, shipping will be at the heart of the supply chain and anticipatory investment will have to be made by the industry.
Mr Sadler did make a practical suggestion. He said that contradictory information makes the risk in that investment uncertain and, therefore, it is vital to look at ways to hedge the future - through flexible initial oil tanker design for vessels to be constructed now, and converted in the future to take advantage of growing biotrade.
According to Mr Sadler, the biofuels industry is in the early stages of low carbon impact second and third-generation biofuel development.
Companies investing time and money in developing technology into economically viable and socially acceptable solutions are naturally keeping quiet about the technology or products being developed. Whether as a cargo or for use in the engine room, these new solutions will have to be incorporated into marine systems. Current ship designs are constrained by current legislation, creating poor designs if biofuel becomes a large scale global energy source. New standards may be required to meet essential safety and environmental needs and an early start is essential to meet these challenges.
There is also a political dimension to the uncertainty over the future of biofuels. The idea of using 'carbon neutral' fuels derived from crops has been seen, by and large, as environmentally friendly policy.
From the early days of biofuels in Brazil, however, some conservationists have pointed to habitat destruction that is often caused by expanding plantations of, for example, sugar cane or oil palm, to produce fuel.
Such worries have grown and have recently been compounded by a realisation that there are growing shortages of basic foodstuffs worldwide. This has been demonstrated dramatically by recent sharp increases in the prices of rice and other grains.
So what should the shipping industry do? Probably the best advice is to be cautious and wait and see. Mr Sadler argued that shipping is unprepared but, in fact, this industry is very good at responding to the market. If there is demand for a certain type of vessel, the rates they command will go up and more ships of that type will be built.
Let's wait and see just how green and socially acceptable biofuels really are.
Source: Business Times Singapore
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