The Daily View: Fuel for thought

A FUEL supply deal isn’t usually news, but today’s is different.

RFOcean, a UK-based owner of chemical tankers, has agreed to buy e-methanol from ETFuels, a start-up making the green fuel from wind power in Texas, from 2030.

Nearly all of the green fuel deals you see are MOUs with no money committed.

This, by contrast, is a 10-year binding offtake. RFOcean will receive its methanol, while ETFuels can take the deal to its bankers and use it to raise finance.

This is good news for shipping companies looking for hope that the greenest of alternative fuel options could one day be available at scale. Green hydrogen hopefuls will take heart that projects can find real customers, after the bursting of several hype bubbles last year.

There have been e-fuel offtakes in the past, with the Kasso methanol plant in Denmark, and Goldwind in China. Hapag-Lloyd is locking in e-methanol with the help of the Zemba green fuel buyers’ club.

But the high cost of e-fuels, and political backlash against green regulation in the US and Europe, has led many to wonder whether e-fuels can (or should) ever happen at scale.

ETFuels and RFOcean say this deal is all about FuelEU compliance: avoiding the €2,400 penalty per tonne of VLSFO-equivalent and selling overcompliance to companies that can’t source green fuels themselves.

It was made possible by very low power costs in the US, and very high regulatory ambition in the EU. Whether others can copy the feat — especially European fuel producers — is open to question.

RFOcean is taking a position on regulatory risk post-2030 and locking in supply at a relatively high, but evidently acceptable, price (it wouldn’t disclose a number or total volume).

Other companies may choose volatility and take their chances finding biofuels closer to when they need them.

Let’s see if more companies follow this example.

Declan Bush
Senior reporter, Lloyd’s List

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