Op-Ed: Market barriers as Sweden’s alternative fuel development ramps up

Nils Igelström, Managing Director at GAC Sweden

By Nils Igelström, Managing Director at GAC Sweden

Sweden’s rapid development of alternative fuels has the potential to help shipping’s maritime sector. But the challenges of accessing markets beyond northern Europe could hinder real progress.

Sweden is at the forefront in the production of renewable marine fuels in Europe. The recent launch of new facilities in Örnsköldsvik and Östersund capable of producing more than 150,000 tonnes of eMethanol annually present the country with a real opportunity to offer shipping a viable way to its energy transition.

However, the maritime sector faces a “Catch-22” scenario when it comes to the adoption of alternative fuels. Due to low adoption rates by shipping companies, the necessary infrastructure at ports beyond a handful of northern European countries is limited, resulting in an inadequate supply chain for vessels venturing beyond the region. Meanwhile, many shipping players are waiting for that infrastructure to be developed and come online before committing to suitable vessels.

That paradox could threaten to stall the sector’s progress towards decarbonization and Sweden’s potential role as a major alternative fuel exporter.

No going back

Right now, Sweden is sitting on a major surplus of renewables due to low adoption rates. And as new facilities reach maximum capacity, this oversupply problem will only get worse. But there is no going back. The nation has already invested heavily in refineries and fuel development so they are going to be produced regardless of the demand. The mission now is to get these fuels to the wider European market.

Currently, if a vessel needs green fuel and is passing by Gothenburg every few days, there are no supply issues whatsoever. But if that same vessel is plying waters in other areas that lack the necessary infrastructure, then accessing Sweden’s abundant supplies is a problem.

As thing currently stand, you can get green shipping fuels in Sweden or Finland or Germany with no problem. But what if that’s not where you’re calling?

These products are available in so few places at the moment. For shipping companies to invest in cleaner fuels and more sustainable vessels, they need to be confident that the supplies are going to be available to them.

Shipping companies need certainty. They operate on tight margins and cannot afford the risk not being able to access fuel in regions where alternative fuels delivery points are scarce. That’s why it is vital for the industry to work with partners elsewhere in Europe—and beyond—to develop a more uniform infrastructure and supply chain. Only then can we ensure that ships powered by renewables can operate efficiently around the globe.

Policymakers, industry leaders and international organizations need to come together. Only through joint efforts can we create the conditions necessary for renewable fuels to thrive in the marine sector.

Cross-border partnership

Sweden is once again taking a leading role in helping to build a wider, more robust supply chain for alternative fuels. The recently announced STORM project from the Nordic Maritime Transport and Energy Research Programme will see Sweden partner with Finland, Iceland and the Faroe Islands to help scrutinize areas that are impeding the supply of alternative fuels to wider markets. This includes fuel supply, distribution and fueling processes to understand the impact of various fuel options.

The project will also look to develop a framework for assessing the suitability of fuels for various shipping segments, identify barriers and opportunities within the shipping industry, formulate tailored solutions, and propose policy options to accelerate shipping’s transition to renewable marine fuels.

Sweden is doing its part in shipping’s fuel transition, from the development of fuels to more suitable regulatory frameworks. But it cannot do it alone. Europe is making great strides in its decarbonization efforts but it needs to work closely together to get surplus renewable fuels across the continent.