S7 Ep5: Lara Naqushbandi, CEO of ETFuels

 We unveil how some e-fuel producers are progressing their projects despite the uncertainty around the fate of a global pricing mechanism for shipping’s GHG emissions. Podcast highlightsIn this episode, Lara explains how the FuelEU Maritime regulation, with its requirements on the GHG intensity of the energy used on ships to ratchet up from 2030, was instrumental in sealing a 10-year binding offtake agreement under which ETFuels will supply e-methanol to shipping company RFOcean. The agreement, she says, demonstrates that the EU regulation, with its clear penalties for non-compliance and incentives for e-fuels, is strong enough to incentivise a fuel switch and make e-fuel production projects viable. She warns that companies that opt to do nothing and end up being hit by penalties are likely to see their fuel costs increase by 55% by 2030. Lara explains that the biggest challenge for ETFuels isn’t offering a mutually agreeable price for its e-methanol, but rather persuading shipping companies to commit to offtake agreements several years before they receive the fuel. While such long-term deals are essential for e-fuel producers to secure financing, she argues that locking in a long-term price for e-fuels is also a good risk management approach for shipping companies, as supplies of compliant fuels will be limited throughout the 2030s.Asked whether shipowners’ appetite for long-term agreements was dampened by the uncertainty around the IMO Net-Zero Framework, she reports that the potential global regulation was never a main driver for early transactions. She reveals that ETFuels currently has terms agreed for over 200% of its first plant’s production capacity and advanced commercial discussions with four additional companies, driven by European regulation. She also reflects on the role of public funding in making the first e-fuel production projects financially viable in the short and medium term, and on the reasons why installations in the United States and Europe can be competitive with countries like China.