Lignocellulosic biofuels use in the international shipping: The case of soybean trade from Brazil and the U.S. to China

Abstract

The International Maritime Organization (IMO) committed to reduce by 50% the annual greenhouse gas (GHG) emissions from international shipping by 2050 compared to 2008 levels. Future low-carbon fuels use in the maritime transport to curb GHG emissions can increase freight rates and affect trade, especially for commodities transported over long distances. This study performed a case study to evaluate lignocellulosic marine biofuels use in soybean trade routes from Brazil and U.S. to China, in terms of supply volumes, GHG emissions and potential increase on freight costs. This is the first attempt to assess biofuel use in a specific product trade. To this end, two scenarios and three technologies were developed for biofuels availability from 2020 to 2050. Findings reveal that Brazil benefits from higher biofuel supply and four Brazilian biofuel pathways meet total bunker fuel demand in 2050, while U.S. pathways supplied up to 24%. However, emission reduction come at significant cost increase with abatement costs reaching more than US$ 300/tCO2e for some of the Brazilian and U.S. pathways. To reduce this cost gap, market instruments, such as carbon price of at least US$ 100/tCO2e would be required. Nevertheless, fuel cost increase has not resulted in significant cost variation between Brazilian and U.S. vessel routes. Hence, Brazilian trade routes could keep lower freight costs than U.S. even with higher biofuel shares. This indicates that regions capable of supplying low-carbon fuels can become more competitive in their exports in a decarbonized maritime trade.