2025 pivotal for biobunkers thanks to CII

2025 pivotal for biobunkers thanks to CII

CII regulation came into force in January 2023 and thus far it has had a muted effect on ship owners’ biofuel bunker demand. But 2025 could be a pivotal year… If a vessel receives a CII score of D three years in a row or E the previous year, the vessel owner must submit a corrective actions plan…The IMO has not established penalties or restrictions for vessels scoring D two years in a roll. Thus, theoretically a ship owner could have scored D in 2023 and 2024 with no consequences...Year 2025, marks CII’s third year, and ship owners whose vessels were scoring D in 2023 and 2024 will need to rethink their sustainability approach in 2025...

FuelEU and EU ETS all bark and no bite in 2025

...In Rotterdam in October, B30, comprised of 30% used cooking oil methyl ester (Ucome) and 70% very low-sulphur fuel oil (VLSFO), with added 70% CO2 cost would have averaged at $924/t, compared with VLSFO with added 70% CO2 cost at $682/t, showed Argus data. In order for the EU ETS to entice ship owners to burn biofuels, at current VLSFO and Ucome prices, the price of CO2 has to rise up to $300/t. And CO2 has fluctuated from $55-$102.5/t between January 2023-October 2024...

EU's FuelEU regulation will require that vessel fleets’ lifecycle greenhouse intensity is capped at 89.34 grams of CO2-equivalent per megajoule (gCO2e/MJ) through 2029. For vessels which do not meet this cap, a low biofuel blend can meet the requirement. A B5 blend (comprised of 5% Ucome and 95% VLSFO) emits less than 89 gCO2/MJ. At this rate, albeit higher, demand for biofuels would not spike dramatically…

Unlike the CII scores which apply to individual vessels, FuelEU applies to vessel pools… Different shipping companies are allowed to pool their vessels together which allows them to share compliance.

To read the full Argus Media story, click here.