Thanks to HVO: Decarbonization with existing equipment

Posted on July 25, 2023 by Lucie Maluck

With HVO, companies can support their decarbonization goals without having to invest in new equipment. But is it really that simple? Mats Hultman, Head of OEM Partnerships at fuel manufacturer Neste, and Michael Stipa, Vice President Strategy, Business and Product Development Stationary Generation at Rolls-Royce Power Systems, explain.
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How long has Neste been producing HVO?

Mats Hultman:  We started producing HVO in Finland, Singapore and the Netherlands back in 2007. The main market at that time was in Scandinavia. In Finland and Sweden, the first city buses were already running on HVO in 2010. At that time, HVO was primarily used and known in sectors as heavy traffic and public transport, which might have been partly due to prejudice, but as the environmental awareness increased, more and more customers and industries realized the many advantages of the HVO fuel.

Michael Stipa, you have also been involved with HVO fuel at Rolls-Royce Power Systems for a long time. When did you start noticing a growing demand for HVO?

Michael Stipa: The first inquiries as to whether we could approve our engines for HVO came as early as 2019. We then tested our mtu engines intensively for three years to make sure that our customers could operate them with HVO just as safely, efficiently, and reliably as with fossil diesel. In April 2022, we then approved the first engines – at that time PowerGen engines in the Series 1600 and 4000 – for use with fuels complying with the EN 15940 standard, which includes HVO. Since then, we have released more and more engines – based on many hours of experience with HVO-powered engines on the test bench but also with our customers.  

The interest of our customers is really high and demand is continuously increasing. On the one hand, we have customers who are operating in highly regulated markets, for example in California. Here there are clear requirements to switch to sustainable fuels. But most of our customers see HVO as an opportunity to implement their own decarbonization goals. With HVO, they can continue to use their existing equipment and still be almost completely carbon neutral on the road.  

HVO, like other sustainable fuels, shows that sustainability and the internal combustion engine are not mutually exclusive. On the contrary: the internal combustion engine is currently the biggest lever for saving CO2 today.  

Mats Hultman, is Head of OEM Partnerships at fuel manufacturer Neste. He is convinced that more and more users are seeing that HVO gives them the opportunity to run their existing vehicles and stationary equipment on HVO in an almost CO2-neutral way already today and thus also to meet their emission targets, without having to make big investments.

In which countries of the world is there the greatest interest in HVO?

Mats Hultman:  We sell our HVO to in most of the Europe countries, Sweden, Finland and the Netherlands are some of the key markets. In the U.S. and especially in California, the interest has increased significantly, and the fuel is also very much in demand. And just recently, HVO and other more sustainable fuel alternatives have also become a bigger topic in Asia. More users see that HVO gives them the opportunity to run their existing vehicles and stationary equipment on HVO in an almost CO2-neutral way already today and thus also to meet their emission targets, without having to make big investments.  

What arguments do you use to convince Rolls-Royce customers to run their mtu products on HVO?

Michael Stipa: First and foremost, there is certainly the issue of sustainability. Our customers want to travel sustainably. They all have decarbonization goals, and they can support them with HVO. With HVO, you can save up to 90 percent CO2 and also reduce emissions of soot particles by 40 to 80 percent and nitrogen oxides by up to 8 percent. The performance of most of the engines we approve does not change, and the service intervals also remain the same. So HVO does not harm the engines we have approved so far in any way - on the contrary. What's more, HVO is a so-called "drop-in fuel" that I can use directly.  

Michael Stipa is Vice President Strategy, Business and Product Development Stationary Generation at Rolls-Royce Power Systems. He ensures that HVO does not harm approved mtu engines in any way - on the contrary.

With all these positive properties, it can be assumed that the demand for HVO will continue to grow. What percentage of global diesel demand could be met with HVO?  

Mats Hultman: We are expanding our production extensively and aim to produce twice as much HVO in 2026 as we did in 2022. In 2023 alone, we have expanded our production in Singapore and entered a joint venture in the USA for production locally, in 2026 our Rotterdam refinery will also be expanded. To this end, we are also experimenting with new feedstocks. We are currently producing HVO from raw materials such as used cooking oil, animal fats and residues from the fishing industry.    

We are currently investigating new potential raw materials such as algae or residues from the agricultural industry and forestry, to be able to ensure even higher production volumes in the future.

Mats Hultman, Head of OEM Partnerships at Neste

How will the price of HVO develop?

Mats Hultman: It is more expensive to produce HVO than fossil diesel. But it's also not correct to compare HVO with fossil diesel, because HVO can do more. With HVO, you can make energy and mobility possible in an almost climate-neutral way. And if you compare HVO with hydrogen or other e-fuels, HVO is a very cost efficient way to decarbonize, where you can continue with your existing engines and infrastructure.    

What role does price play for your customers?  

Michael Stipa: It plays a role, of course. Many of our customers are willing to make their contribution to sustainability and they would pay more for HVO than for fossil diesel. But there are of course limits to this "more. The price premium must be within a range that our customers can tolerate, and for that we need suitable framework conditions.

But there are cases where you can even save money with HVO. In data centers, for example, our power generators are on standby for emergencies. They always step in when the public power grid fails. How often this happens and how long the gensets then have to run cannot, of course, be planned. That's why our customers always have to stockpile a lot of diesel. And now comes the big advantage of HVO: It can be stored for far longer than fossil diesel. Our partners at Neste have found that HVO can have a much longer shelf life than conventional diesel, as conventional diesel often contains FAME or biodiesel, which contributes to a much shorter shelf life. So data center operators have to replace HVO less often. Of course, this saves them a lot of money - which makes up for the extra HVO price after a certain time.  

Rolls-Royce's Power Systems business unit has been cooperating with Neste since 2022. What exactly does this cooperation entail?

Michael Stipa: It benefits us and, above all, our customers very much. We want to work together to ensure that combustion engines run more sustainably on HVO. This cooperation brings together the world's largest producer of HVO fuel and one of the most experienced manufacturers of internal combustion engines. Together, we want to help HVO fuel achieve its major breakthrough and make the world a greener place. Our customers will also benefit from this in very practical terms, because we can often advise them together and actively support them in the switch to HVO.  

For many, HVO is the bridge fuel until electricity-based fuels are economically and widely available. How long do you plan to continue using HVO?

Mats Hultman: For us, HVO is by no means a bridge fuel. No fuel, be it HVO, hydrogen or any other electricity-based fuel, will be able to meet the demands of all industries and all usage. There will always be a need for different solutions that can complement each other. That's why we're also investigating new ways to produce renewable fuel – there's still a lot of potential there to produce much larger quantities.  

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