Successful decarbonization of the shipping industry will depend on the maturation and adoption of a range of alternative maritime fuels. To support this goal, this series of reports presents a deep dive into the potential of biogas as a source of biofuels for shipping. Biogas, generated by anaerobic digestion of biogenic waste, is a mixture of methane (CH4) and carbon dioxide (CO2) that can be easily converted into various biofuels. In this series of publications, we explore details of the production of two specific biofuels from biogas: liquified bio-methane (LBM) and bio-methanol.

Each report in the series focuses on a different aspect of these fuel pathways to build a detailed picture of how biofuels from biogas can contribute to sustainable decarbonization of shipping. The reports can either be read individually as deep dives into a specific topic, or together as a comprehensive investigation into biofuels from biogas.

Learn more about each report and download below.

This report reviews the main characteristics of biogas-based manufacturing chains for LBM and bio-methanol. We use real-world commercial information to understand the status and potential of the three main steps in these value chains: biogenic feedstocks, biogas manufacture, and biofuel manufacture.

We find that biogas-based biofuels can provide strong support for decarbonization of shipping, especially in the early stages of the transition. Biogas-based biofuels can extract value from diverse feedstocks, including waste, and can be produced at scale via technologies and supporting infrastructure that are either already commercially available or will likely become so in the near future. Emerging virtual infrastructure, such as green certificates trading or book and claim systems, could further enhance the sustainability and business cases for these biofuels. However, control of methane emissions throughout the value chain emerges as an important challenge for this sector’s environmental sustainability.

This report provides comprehensive background reading for all stakeholders with an interest in better understanding these value chains and how the resulting biofuels can support shipping’s decarbonization ambitions.

Overview of the biogas-based biofuels value chain – by the numbers

Emissions of methane, a potent greenhouse gas, can emerge across the entire value chain for biofuels from biogas. As a result, we have identified methane emissions as a major barrier to these biofuels’ ability to sustainably decarbonize the shipping industry. In this report, we review when and where most methane emissions occur, and how the emissions can be measured and mitigated.

We find that most methane emissions occur during biogas production, followed by LBM combustion on board vessels. Depending on the type of biofuel, we estimate that methane losses across the value chain typically range from 2% to 6%. To put this in context, we calculate that methane emissions from bio-methane production in Europe alone could reach 1-1.5 million tonnes* per year by 2030, assuming methane losses of 5-6%.

However, based on the existing technological solutions for monitoring and controlling methane emissions, we believe that these losses could be reduced to below 1%, especially for new biofuel plants and vessels. If methane emissions can be controlled to this level, biogas-based biofuels can offer very attractive emissions intensities and act as a powerful tool for decarbonization. Therefore, effective regulation, a certification program specifically dedicated to methane emissions, and enforcement are crucial to limit methane emissions and deliver on these biofuels’ decarbonization potential.

This report provides insights into methane emissions relevant to stakeholders including regulators, biofuel certifiers, methane emissions certifiers, and shipping operators considering investment in biogas-based biofuels.

*Approximately 40 million tonnes CO2 equivalent based on methane’s 100-year global warming potential, or 110 million tonnes CO2 equivalent based on methane’s 20-year global warming potential.

Estimated methane losses through the value chain for various LBM and bio-methanol production pathways

Converting biomass into a biofuel consumes both fuel and electricity. The resulting biofuel can have a higher or lower decarbonization efficiency, depending on factors including the type of biomass used, electricity source and consumption, fugitive greenhouse gas emissions, and the conversion efficiency of the manufacturing process. This report investigates different production pathways for LBM and bio-methanol from biogas to understand which pathways can offer attractive decarbonization efficiencies. We also considered how these characteristics affect the potential to comply with emissions reduction regulations, such as FuelEU Maritime, using biogas-based biofuels.

A key insight from this study is that the standard commercial manufacturing process for LBM can offer both high energy conversion efficiency and meaningful emissions reductions – especially if carbon capture and storage can be added to the process. More novel manufacturing processes can use green hydrogen to maximize conversion of biomass into fuel, but at the cost of high electricity consumption. Therefore, these processes are attractive in contexts where renewable electricity is readily available and biomass availability is low.

Generally speaking, we find that the type of biofuel matters less than the optimization level of the production pathway, with optimized value chains able to deliver both LBM and bio-methanol with strongly negative emissions. Appropriate optimization can also significantly reduce the quantity of biofuel required for compliance with, for example, FuelEU Maritime in 2030. Importantly, optimization measures must be supported by rigorous and independent certification schemes that can ensure traceability and combat fraud.

The findings shared in this report are especially relevant to regulatory stakeholders and flag states in shipping.

How much biofuel is required to reduce well-to-wake emissions by 6% for a shipping fleet using 1.06 PJ/year of energy, depending on the emissions intensity of the biofuel

This report applies a life-cycle analysis (LCA) approach to evaluating the environmental impact of biogas-based biofuels. Our analysis covers displacement analysis, sustainability criteria, and well-to-wake greenhouse gas emissions associated with various biofuel production pathways. In the latter analysis, we also investigate how variations in electricity source, feedstock displacement, methane emissions, and avoided landfill emissions affect the emissions intensity of the biofuels. The analysis offers valuable input into understanding how these biofuels can be most effective in supporting maritime decarbonization.

We find that feedstocks vary in their displacement risk, and that further research is important to optimize feedstock selection for sustainable biofuel production. We also recommend that sustainability criteria should be strengthened and harmonized across jurisdictions to enable consistent assessment and certification of sustainable biofuels. Methane emissions, feedstocks with high displacement risk, and grid electricity mix had the greatest impact on biofuels’ emissions intensity in our analysis. We identified improved manure management, mitigation of methane emissions, renewable energy use, excess heat recovery, and use of carbon capture and storage as key strategies that can boost the emissions reductions associated with the biofuels.

This report will be of interest to a range of stakeholders, but especially to inform and guide regulators using LCA insights, as well as technology suppliers and biofuel producers. The findings from our greenhouse gas emissions assessment are also used as input to analyses in several other reports in this series.

System boundary for our life cycle analysis of well-to-wake greenhouse gas emissions from biogas-based biofuels

Producing biogas-based biofuels at a scale relevant to deep-sea shipping will require a shift in practices compared to what has been common in the past. Across the biogas industry, we are already starting to see some movement towards larger production capacities, technological improvements, and new physical and virtual infrastructure – collectively creating new opportunities for sustainable biofuels from biogas. From a shipping perspective, it is important to understand how these ongoing and future developments will affect the cost of biofuels available to the maritime industry.

To this end, this report shares the results of our detailed techno-economic analysis of several pathways for production of LBM and bio-methanol from biogas. We set out to identify the ‘hotspots’ that contribute the most to the cost of biogas-based biofuels, and to understand how these costs can be reduced. Biofuel production from biogas is affected by both economies of scale (e.g., for capital expenditure and fixed costs) and diseconomies of scale (e.g. for transport of feedstocks). Therefore, there is likely an optimum production capacity for biofuel plants, and selection of a favorable location with reference to sources of feedstock and products is also important for the plant’s business case. The biofuels industry may be able to meaningfully reduce costs by leveraging existing pipeline infrastructure for natural gas, provided that mass balancing and virtual infrastructure for green certificates trading are in place.

We also used our results to calculate the cost of decarbonization using various biofuel production pathways. We found that standard LBM production paired with carbon capture and storage generally offers the least expensive unit cost of decarbonization (that is, the cost of reducing greenhouse gas emissions by 1 tonne CO2 equivalent when the biofuel replaces a fossil fuel). Depending on the electricity source and costs, the more technologically complex biofuel production routes can be much more expensive, due to their high electricity consumption.

The analysis contained in this report is of particular interest to regulators and potential investors, especially in the European Union.

Summary of production costs for LBM and bio-methanol from biogas

Among decarbonization options, biofuels from biogas represent a comparatively technologically mature and affordable possibility. However, the decarbonization credentials of biofuels largely depend on their production pathway, including the source of biomass feedstock. For example, biofuels produced from biomass grown purely for fuel production where food crops could have been grown instead can be considered less sustainable than biofuels produced from waste biomass that would have otherwise gone to landfill.

Shipping is not the only industry seeking to decarbonize in the coming decades. Therefore, the question arises: how much sustainable biomass feedstock is available globally to produce these biofuels? Is there enough supply for all industries that want to use biofuels for decarbonization – and if not, how far can the shipping industry’s share take us along the path to zero-carbon shipping?

To help answer these questions, this report draws on a range of sources to develop a global estimate of sustainable biomass availability. This number is approximately 100 EJ/year, assuming a limited availability of energy crops and unconventional biomass sources. We calculate that this biomass could be used to produce around 50-120 EJ/year of LBM or around 50-90 EJ/year of bio-methanol, using a variety of biogas-based production pathways. This is well above the approximately 11 EJ/year of fuel currently consumed by global shipping, according to the International Energy Agency. We also found that LBM and bio-methanol from biogas could be used to meet the Paris Agreement’s 2030 target of 40% reduction in greenhouse gas emissions using only 5-10% of our estimated total sustainable biomass. However, in light of the anticipated heavy competition for access to sustainable biofuels, we recommend that shipping operators pursue vertical supply chain integration to improve access to, and potentially manage prices for, biogas-based biofuels.

This report will be of interest to varied stakeholders across shipping and other industries, but especially to shipping operators considering biofuels from biogas as part of their decarbonization strategy. We also include some recommendations for further independent research, including more local analysis of biomass availability and harmonization of sustainability criteria.

Estimated biomass energy required for shipping to comply with various regulatory targets via biogas-based biofuels (various production pathways)