South Korea’s SK Chemicals has started tests on blending its biodiesel with petroleum-based fuels to create low-sulphur marine oil that will comply with new green shipping fuel standards, Reuters reports.

The country’s largest biofuel maker was also considering increasing its biofuels output by 50% as it eyed what would be a new market in the shipping sector, An Jung-bum, head of the company’s energy and petrochemical business, told Reuters on 12 December.

The International Maritime Organization (IMO)’s new global sulphur emissions cap came into effect on 1 January, dropping from 3.5% to 0.5% in areas outside current emission control areas (Baltic Sea, North Sea, North America and US Caribbean), where the limit is 0.1%. Ship owners must either use low-sulphur fuel to comply, switch to alternative fuels such as liquefied natural gas, or install scrubbers on their ships to clean up emissions.

“We see there will be a great need for marine biofuels because they are sulphur-free,” An said.

SK Chemicals could produce 500M tonnes/year of biodiesel and biofuel oil, primarily using palm fatty acid distillate (PFAD) as a feedstock Reuters wrote.

Biodiesel could be blended with marine gasoil to reduce its sulphur content, but the higher costs of producing it remained a hurdle, while guidelines on specifications for biofuel oil to be blended with low-sulphur fuel oil were still under development, An said.

Under the IMO guidelines for 2020 global sulphur limits, diesel fuel could contain up to 7% biodiesel, Reuters wrote.

SK Chemicals exported about 20M tonnes of biodiesel to Europe in 2018.