Liquefied renewable natural gas ( bioLNG) is one of the keys to fossil-free shipping – but lack of supply is a major issue. To address this, the Swedish shipping company Furetank Rederi AB (Furetank) has signed a Letter of Intent (LoI) with compatriot special purpose entity (SPE) Eskilstuna Biogas AB that plans to build a 5 000 tonnes per annum bioLNG facility.
With a shipping heritage that dates back to the 1700’s, privately held Furetank Rederi is focused on product and chemical tankers under 20 000 dwt and has been active in the North European refined petroleum products trade since the early 1950’s.
The company is a founding partner of the commercial joint venture Gothia Tankers Alliance with a total fleet of 32 vessels ranging from 6 000 to 37 000 dwt.
Best in class
Furetank strives to be a leader in climate and environmentally efficient shipping and developed a new series of vessels that are best in class globally, according to the climate standards for shipping set by the International Maritime Organization (IMO).
Currently, these vessels operate mainly on liquefied natural gas, LNG, but the ambition from the start has been to switch over to bioLNG as soon as possible.
The Letter of Intent (LoI) with Eskilstuna Biogas will be the first big step towards making the shift. Furetank commits to buying at least 75 percent of the anticipated 5 000 tonnes per annum bioLNG production, over a ten-year term.
It feels fantastic to access liquefied biogas in Sweden. With LBG produced in the right way, we can run our vessels completely without emitting CO2 or harmful particles. This is a strategic move. We developed the new efficient vessels, chose gas as a fuel, and offset the remaining emissions. Now we move on to securing our own supply of LBG, said Furetank’s CEO Lars Höglund.
The planned plant will use livestock manure and as well as food waste from the municipalities of Eskilstuna and Strängnäs. The biogas will be upgraded to biomethane (aka renewable natural gas -RNG) and then liquefied (bioLNG).
According to Kaj Wågdahl, Chairman of the Board of Eskilstuna Biogas, the biogas plant will be the single largest environmental investment in Eskilstuna in 20 years and corresponds to almost 10 percent of the municipality’s total greenhouse gas (GHG) emissions.
The project will receive approximately SEK 140 million (≈ EUR 13.2 million) in grants from the Swedish Environmental Protection Agency’s support for climate investments.
An offtake agreement with a large customer was a requirement for obtaining financing.
In addition to these grants and public production support for biogas, a long-term agreement with a strong partner is required to make this big investment and achieve the large-scale biogas production that we are planning. It is also very gratifying to find a partner who sees business opportunities in leading the way towards climate neutrality, said Kaj Wågdahl.
One step ahead of the ETS
Before giving the new plant the final go-ahead, the production support for biogas recently decided by the Swedish government needs to come into force and all relevant permits need to be in place.
Production is planned to start in the last quarter of 2023, likely to be well-timed with the launch of the EU Emissions Trading System (ETS) for shipping.
When all shipping companies need to start paying for their carbon dioxide (CO2) emissions, Furetank will be one step ahead.
We became the first shipping company in Sweden and second in the world to bunker LBG in 2018. For us it was a statement; we want to head in this direction. Now we have a clear plan for the transition and are negotiating more contracts in Sweden and other European locations. It feels incredibly good. The whole organization enjoys being involved in pushing this development forward and showing that it is possible, ended Lars Höglund.