Hydrogen and biofuels to power cleaner skies and seas: BP report – S&P.
Aviation and marine transportation are increasingly decarbonized through a combination of hydrogen-derived fuels and biofuels, BP said in its 2024 Energy Outlook published July 10.
The energy conglomerate pointed out that in the aviation sector, this greater switch is mainly into bio- and hydrogen-based sustainable aviation fuel.
However, the company noted that in the marine bunkering sector, lower emissions will reflect greater use of bio- and hydrogen-based methanol and ammonia.
The report estimated road transport decarbonization would largely be led by electrification. The report said the single biggest driver of the reduction in oil consumption ahead is the declining use of oil in road transport, as the efficiency of the vehicle fleet improves and alternative fuels are increasingly used, led by the electrification of cars and trucks.
Moreover, the share of electric vehicles in the global light vehicle fleet is expected to increase from less than 2% in 2022 to between 20-30% by 2035 in current trajectory and net zero, growing to between 50 and 85% respectively by 2050, the report said.
BP energy outlook 2024 uses two scenarios — current trajectory and net zero — to explore a range of possible outcomes for the global energy system out to 2050.
The report said the dominance of liquid fuels in aviation, driven by incumbent fleet and long-haul requirements, is shifting towards SAF to achieve decarbonization.
In the current trajectory, SAF primarily sourced from bio-feedstocks accounts for 5%-10% of aviation fuel by 2035 and for nearly 20% by 2050.
Bio-derived SAF initially dominates the first half of the net-zero outlook. However, due to increased SAF demand and constraints on bio-feedstocks, hydrogen-derived SAF is expected to play an increasingly significant role by 2050 in achieving net-zero goals.
Also, the expansion of SAF’s role is supported by a substantial increase in production capacity, with 15 to 30 large-scale facilities expected to start operations annually from the 2030s to the mid-2040s.
The report highlights diverging air travel projections that are expected to rise 75% by 2050 under the current trajectory scenario, but could be potentially constrained to a 40% increase in the net-zero scenario due to conservation measures and changing consumer behavior.
Despite higher demand, ongoing efficiency increases mean energy demand increases by 35% in the current trajectory scenario and only 10% in the net zero scenario from 2025 to 2050.
Bunkering decarbonization
The report said decarbonizing the marine sector involves shifting the fleet from oil-based fuels to lower carbon alternatives. In the initial period of the outlook, this transition includes LNG, biofuels such as bio-methanol and biodiesel, and hydrogen-derived fuels like ammonia and methanol.
The transition in the marine sector accelerates in both scenarios as new ships enter service and existing vessels undergo retrofitting, facilitating a faster adoption of alternative fuels.
Until 2050 in the net zero scenario, oil products’ share decreases to approximately 10%, with hydrogen-derived fuels making up 40% of marine energy and biofuels contributing another 30%.
Growing use of alternative marine fuels is supported by significant development of bunkering facilities, including fuel storage and refueling barges.
Moreover, seaborne travel rises by 70% in the current trajectory and 30% in the net zero scenario over the outlook period. Despite this increase, total energy consumption grows modestly due to substantial efficiency improvements, remaining largely unchanged in the current trajectory and decreasing by 20% in the net zero scenario.
Overall biofuels
Biofuel and biomethane utilization is poised for substantial growth over the next 25 years until 2050, according to the report.
The pace of expansion in key sectors such as aviation is highly dependent on the extent of government policies and mandates supporting their usage.
Demand for biofuels expands rapidly over the first half of the outlook, increasing by around 60% in current trajectory and almost tripling in the net zero scenario. This growth is driven by increasing use in transport in China and emerging economies in the EU and US, supported by government policies to boost biofuel use.
The pace of growth slows in the second half of the outlook, as increasing electrification of road transport reduces the role of biofuels, with much of the additional growth in the second half of the outlook coming from use in aviation and bunkering.
The refining sector faces increasing pressure from rising use of natural gas liquids and biofuels, especially in net-zero scenarios where these non-refined products could make up nearly 30% of total liquids consumption, up from 15% in 2022.
Refineries are adapting by enhancing yield flexibility, integrating bio feedstocks and reducing carbon intensity in their operations depending on geographical exposure, infrastructure and local policies.
Platts, part of S&P Global Commodity Insights, assessed biodiesel FOB Southeast Asia at $1,039/mt on July 11, up $6 from July 10. The sustainable aviation fuel cost of production Southeast Asia was assessed at $1580.23/mt on the same day, down $2.15 on the day.
Platts assessed B24 bio-bunkers Singapore at $760.8/mt on July 11, down 8 cents on the day. Platts first began assessing B24 bio-bunkers in Singapore in May 2023.
READ the latest news shaping the hydrogen market at Hydrogen Central
Hydrogen and biofuels to power cleaner skies and seas: BP report – S&P. source
