Dutch shippers willing to pay more for biofuel

Convinced of the urgency to take action against climate change, a group of Dutch multinational shippers initiated and sponsored a biofuel project.  One highly significant outcome is the clear signal that shippers are interested in more sustainable ocean transport options.  They are willing to consider paying a higher price per container temporarily to encourage the development of innovations for greener transport.  

The shippers, FrieslandCampina, Heineken, Philips, DSM, Shell, and Unilever, are members of the Dutch Sustainable Growth Coalition (DSGC).  Maersk is the partner carrier and Shell acts as biofuel supplier. 

An initial market exploration shows that customers of Maersk are willing to pay for goods by individual container if these containers are transported in a greener, more sustainable manner.  For this reason, Maersk has launched the commercial product ‘ECO Delivery’ in the market.  The fashion retail group H&M has already agreed to procure this product. 

While a higher percentage of biofuel would further reduce shipping’s ecological footprint, biofuel is currently still significantly more expensive than regular shipping fuel.  However, Shell identified possible supply chain improvements to increase cost efficiency.  These include optimizing upstream processes (for example through larger volumes, different grades of refinery, lower logistics costs, seasonal trading or improved annual planning) and using lower- quality (biomass) waste or biocrude as input.

The reduced emissions were allocated to 2000 containers, allowing the shippers potentially to credit the emissions reduction to their own sustainability program.  This business model provided insight into the extra costs involved, including the higher price of biofuel and the costs of second-generation fuel certification.  Benefits are the CO2 savings, which can be registered in the international carbon credits scheme or set off in the company’s carbon accounting system.  All participating DSGC members have an internal CO2 cost accounting system.

From Rotterdam to Shanghai and back

The pilot project ran from 24 March 2019 until 20 June 2019 and entailed the use of up to 20% sustainable, second-generation biofuels in a large, triple E-class ocean vessel called the Mette Maersk, which sailed 25,000 nautical miles from Rotterdam to Shanghai and back.  The Mette Maersk used two mixtures, one consisting of 20% biofuel and one with 7% biofuel.  In total, this led to an emissions reduction of 1500 tonnes of CO2 and 20 tonnes of sulphur.  This is equal to the annual CO2 emissions of over 200 households or 12 million car kilometres (300 times around the world). 

Initial tests showed that the fuel mixture would work well in the engine of the Mette Maersk, with just some minor modifications to the engine settings.  Interestingly, the technicians didn’t expect to encounter so few problems.  The virtual absence of technical difficulties has convinced Maersk that decarbonized solutions for shipping can already be implemented today, both from a technical and operational point of view. Maersk had even set aside a substantial financial reserve beforehand to cover possible repair costs, but these funds have not been used. 

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