TotalEnergies Marine Fuels positions for a transformed maritime landscape

Frédéric Meyer, Director of Strategy & Projects for TotalEnergies Marine Fuels, shared details about TotalEnergies’ product development strategy in response to developments in the marine fuels market.

Meyer has a unique vantage point, as he oversees a team that focuses on low-carbon alternative marine fuel projects, R&D programs and industry initiatives at TotalEnergies’ dedicated business in charge of worldwide bunkering activities.

Meyer noted that since the IMO 2020 global Sulphur cap regulation came into force, TotalEnergies Marine Fuels has been introducing changes to its product portfolio on a near term (1-3 year), medium term (3-7 year) and longer term (10-15 year) basis, with a strategic focus on providing cleaner marine fuels. Its goal is to be a leading clean marine fuels supplier to support its shipping customers’ decarbonization strategies.

Sustainable Marine Fuel

In the near term, Meyer noted that TotalEnergies is exploring the introduction of biofuels, or a future Sustainable Marine Fuel (SMF), which the company can produce from its bio-refineries. The resulting product will be blended with existing fuels, such as VLSFO, to produce SMF, a fuel that can be used on existing vessels without any modification.

“We plan to begin trials with biofuels later this year,” Meyer noted, adding that TotalEnergies has plans to introduce the product at major bunkering hubs in Europe and Asia. Announcements about this commercial biofuels offer can be expected later in 2021, Meyer confirmed.

However, SMF is likely to face competition from other markets for similar fuels: in the transportation sector, HEFA-based sustainable fuels are already consumed commercially, while government-mandated targets are already creating demand from the aviation market.

Ramping up LNG supply

Over the medium term, TotalEnergies will continue to expand its supply of LNG to cover the main bunkering hubs worldwide. Meyer highlighted that LNG is an immediate and pragmatic fuel solution to lower greenhouse gas emissions.

Leaving aside LNG’s undisputed environmental advantages, which compare well against the other commercially available alternatives, TotalEnergies will continue to innovate to improve the emissions profile of LNG.

Apart from carbon capture and storage (CCS) solutions and using renewable power at the production stage, one of the means by which TotalEnergies will lower the GHG emissions from LNG will be supplying parcels in which bio-methane is blended with conventional LNG.

The multi-energy major has recently expanded its bio-methane production capacity in Europe while becoming the leader in the French market, but Meyer noted that TotalEnergies’ plans to supply bio-methane will likely be aligned with the development of demand for the energy sector as well as for transport.

While TotalEnergies Marine Fuels’ goal is to be able to provide physical supply of liquefied biomethane bunkers to its shipping customers, the high costs of liquefying and transporting this fuel makes it uneconomical as an immediate standalone solution.

One associated development that may create demand for greener LNG blends is consumer demand for green fuel certification such as the Guarantees of Origin (GO) mechanism.

“The first trial of LNG with bio-methane for container shipping was concluded end of 2020 via the GO certificates mechanism,” Meyer said, adding that, “we are looking forward to ramp up this offer to our customers and steer them towards these lower-carbon marine fuel solutions.”

Commenting on which vessel-type is anticipated to jump on this certification bandwagon, Meyer said, “Containerships are likely to lead the shift, because operators already have a mechanism to transfer the higher cost of lower carbon fuels to customers, followed probably by the cruise industry where ticket surcharges can be applied.”

Meyer noted that the industry will work for now on a product certification solution in response to customer demands for greater supply chain transparency and GHG emissions associated to a fuel. This solution will also allow customers to have greater certainty and traceability about the embedded greenhouse gas emissions in fuel supplied along its life cycle.

Electrolysers and e-fuels

Meyer noted that TotalEnergies has plans to be one of the world’s top five renewable energy producers while investing US$60 billion to reach a gross capacity of 100 GW by 2030. These plans are part of the Company’s climate ambition to get to Net Zero emissions by 2050, together with society, as announced last September (see A Decade of Change). On May 28 this year, it announced the Company’s name from Total to TotalEnergies to anchor its identity in this strategic transformation into a broad energy company.

As part of this strategic development, Meyer confirmed that TotalEnergies Marine Fuel will leverage the Company’s new business units dedicated to Hydrogen and Biofuels that are looking at the development of renewable fuels and e-fuels from renewable energy. Meyer noted that the demand for such e-fuels is likely to grow in the power generation and transport sectors, in line with decarbonisation targets.

However, TotalEnergies Marine Fuels has also identified emerging demand for e-fuels, by which Meyer meant hydrogen-based vectors generated from renewable energy, including synthetic LNG, as well as green methanol and hydrogen, as long-term solutions to the challenge of decarbonising the shipping industry supply chain.

“All hydrogen derived e-fuels will be a solution for different industries, including marine transportation,” Meyer confirmed.

Wider perspective

After discussing TotalEnergies’ product development plans, he offered his own perspective of the evolving global bunker market that shipowners will have to navigate.

Meyer noted that the market will become increasingly complex and fragmented over the medium term, with the potential emergence of different fuel preferences in different regions, and in different vessel types.

“Ship operators should accept that the days of a simple market with a fuel almost dedicated for maritime needs will end in the future, as there will be competition with other transport and industries for different fuels we are looking at,” Meyer said.

“The emergence of regional markets for some fuels may also create price pressures for niche fuels – particularly where the alternative fuels in question have expensive bunkering infrastructure costs,” Meyer commented.

That said, looking further ahead at the market for fuels towards the end of the decade, different end-user markets are likely to have specific preferences for different fuels – or as Meyer termed it, a situation in which “the molecules are in competition”.

Meyer sees the potential for ammonia as an alternative marine fuel especially for deep-sea vessels.

For shipping, one of the key advantages of ammonia is that competition from other segments such as transportation or aviation is likely to be limited. The Motorship notes that countries like Japan, Australia and Korea have significant interest in ammonia for energy generation applications.

Meyer notes too that the industry’s experience with developing LNG bunkering will also help to inform the development process of ammonia as a marine fuel. He sees potential for LNG-fuelled vessels to be ammonia-compatible and there is now several ongoing R&D work and efforts to prove this LNG-ammonia compatibility.

Satellite bunkering hubs

The shifts in the fuels offered to customers are also likely to have an effect on the main bunkering ports. In some cases, new regional bunkering hubs may emerge, located close to emerging regional suppliers of green e-fuels. This is likely to be a function of the availability of low-cost renewable energy. In addition, the introduction of some alternative fuels may alter vessel bunkering patterns, as different alternative fuels have different energy densities which are likely to lower operational ranges.

A Decade of Change

The decade 2020-2030 will be a decade of change for TotalEnergies as it becomes a broad energy company.

TotalEnergies plans to increase the proportion of gas in its sales mix from 40% in 2019 to 50% in 2030, and triple the proportion of electricity sold over the same period to 15% (most of which will come from renewable sources).

By 2030, oil will account for about one third of TotalEnergies’ energy production and sales, down from 55% in 2019, while including a growing proportion of biofuels. Looking further ahead, TotalEnergies expects that liquids will occupy a smaller share of its energy production and sales mix. By 2050, the mix could be 40% renewable power, 40% gas (primarily carbon-free) and 20% liquid products (including biofuels).

Increasing energy in gases

With sales of 34 Mt of LNG in 2019 and global market share of about 10%, TotalEnergies is the world’s second largest private-sector LNG player, and aims to continue expanding its LNG portfolio to reach about 50 Mt/y by 2025. Decarbonising natural gas with biogas and hydrogen, as well as continuing to reduce methane emissions will contribute to TotalEnergies’ efforts towards its Net Zero climate ambition.

In September 2020, TotalEnergies created a Biogas business unit within its Gas, Renewables and Power (GRP)’s Gas Division. The Biogas business unit plans to produce 1,500 GWh of biomethane annually by 2025 and 4,000 to 6,000 GWh a year by 2030.

It will draw on the Company’s existing operations in the biogas industry and its sale and purchase agreements for more than 50 GWh/year through its affiliates, including: Quadran-Methanergy, which builds methanation and waste gas recovery units, Clean Energy in the US, and its affiliates in the Netherlands, Belgium and Germany that maintain a network of bio-natural gas vehicle fuel and bio-LNG stations.

Additionally, in January this year, TotalEnergies acquired Fonroche Biogaz, the largest producer of biogas in France which holds an installed capacity of 500 GWh, thereby further strengthening the Company’s presence in the market.

Renewable energy

TotalEnergies has ambitious plans to increase the proportion of renewable energy generation in its renewable power business, with plans to increase the capacity of its wind generation and solar power generation business from 7GW in 2020 to 35GW in 2025 and 100GW by 2030.

This growth reflects an acceleration in new projects in 2020 with, for example, more than 5GW of wind power of sanctioned projects to be developed in France, the United Kingdom and South Korea; more than 2GW of solar assets in operation in India; more than 5GW of solar projects in Spain and one of the world largest solar farm with 800MW in Qatar.

Biofuels

TotalEnergies has also announced plans to increase its biofuels production capacity as part of its new strategy. It plans to increase its biofuels production capacity from 0.3mt/year in 2020 to 2mt/year by 2025 and 5mt/year by 2030.

While TotalEnergies anticipates demand emerging from the transportation and energy generation sectors, initial investments have been dedicated to the aviation sector, where the French government has established a first target for sustainable aviation fuel (SAF) adoption from 2022, with the European Union expected to follow soon.

To make that ambition a reality, TotalEnergies is seeking to develop synergies with existing assets, such as its La Mede biorefinery, which was converted from a conventional refinery in 2019 and has the capacity to produce 500 KT of biofuels annually.

In September 2020, the Company also announced a project to convert its Grandpuits refinery into a zero-crude complex including biofuels and bioplastics units, which are expected to be commissioned by 2024, with an annual production capacity of 170 KT of sustainable aviation fuel, 120 KT of road biofuel and 50 KT of bionaphtha for producing bioplastics.