In this thought-provoking exploration of Sweden’s alternative fuel surplus: A challenge or opportunity? Nils Igelström draws upon his extensive maritime expertise to unpack one of the most pressing issues in the energy transition. As Managing Director of GAC Sweden, Nils brings a unique perspective, blending operational insight with strategic foresight. His analysis delves into the complexities of Sweden’s surplus of alternative fuels, framing the discussion around its potential to transform challenges into opportunities for the shipping industry. With his wealth of experience in global logistics and maritime operations, Nils offers a nuanced, solutions-driven perspective that charts a course toward sustainability and innovation in the sector.
Sweden’s alternative fuel surplus: A challenge or opportunity?
Sweden faces the irony of having a surplus of renewable marine fuels but insufficient access to the broader European market. GAC Sweden’s Nils Igelström says further development and greater clarity are essential to ensure the momentum of shipping’s energy transition is maintained.
Sweden has established itself as a leading European developer of alternative fuels. Driven by the national goal of achieving net-zero emissions by 2045 and the IMO’s target to eliminate net greenhouse gas emissions from international shipping by 2050, the country has already taken decisive steps to advance renewable fuel solutions for commercial shipping. That includes significant investments in infrastructure to support the development of biofuels, liquefied biogas and natural gas, and synthetic fuels like e-Methanol. Although many of these initiatives are still in their early stages, they demonstrate Sweden’s ambitious vision to remain at the forefront of alternative fuel development.
Pioneering projects
In May 2023, Sweden initiated construction on the FlagshipONE facility in Örnsköldsvik, set to produce e-Methanol—a carbon-neutral fuel created by combining captured carbon dioxide with green hydrogen—on a scale suitable for commercial shipping. Once operational, the facility aims to produce up to 50,000 tonnes of e-Methanol annually, making a direct contribution to decarbonising the maritime sector.
Meanwhile, in February 2024, Swedish energy company Jämtkraft AB launched NorthStarH2, a new facility that aims to produce up to 100,000 tonnes of eMethanol per year. This initiative supports Sweden’s green electricity supply while providing eMethanol for commercial distribution, particularly within the maritime sector.
Sweden’s alternative fuel development extends beyond e-Methanol. In August 2024, ScanOcean partnered with Vegoil to introduce an innovative marine fuel derived from locally produced hydrotreated vegetable oil. The partnership’s initial success came with the commercial bunkering of the tanker vessel Key Fjord at the Port of Oskarshamn, laying the groundwork for further biofuel deliveries and paving the way for the fuel to become commercially viable.
Such projects highlight Sweden’s growing prominence in the development of greener maritime fuels. But, supply chain challenges limit their market reach, potentially slowing the industry’s progress toward sustainability.
The production-adoption disconnect
The shipping industry faces a ‘Catch-22’ when it comes to adopting alternative fuels. Low adoption rates among shipping companies have slowed the development of the infrastructure and supply chains needed to make alternative fuel available at ports. At the same time, many shipping companies are hesitant to invest in newbuilds or retrofit projects until the infrastructure is more widespread and accessible. The result is a cycle that stalls progress toward sustainable energy solutions.
This disconnect between production and market adoption is a critical challenge for Sweden’s growing alternative fuel sector. As the country ramps up the development of green fuel options, it risks creating an oversupply that struggles to reach the broader European market.
“Sweden is producing some of the most advanced renewable marine fuels, but cargo owners are unwilling to pay higher freight charges,” explains Nils Igelström, Managing Director of GAC Sweden, part of the global GAC Group which also has its own bunker fuels trading arm. “Without customers willing to buy and use these fuels, the environmental benefits remain unrealised. It’s a pressing issue that threatens to stall the maritime sector’s progress towards decarbonisation.”
This concern is especially pertinent as Sweden experiences significant interest from ship owners and operators for their alternative fuel options. Companies like Preem are already producing commercially viable biofuel alternatives that are readily available across the country. However, low adoption rates have resulted in a big surplus of renewable fuels. More needs to be done to get these fuels to the customers.
Sweden has invested heavily in refineries and fuel development to become a net exporter of renewable fuels with new facilities coming online or set to launch.
“These fuels will continue to be produced regardless of demand,” Igelström adds. “The mission now is to get these fuels to the market.”
Expanding access
Supply chain bottlenecks present significant concerns ranging from logistical challenges in ensuring the safe, efficient transportation and storage of fuels to a lack of supporting infrastructure at or near ports. Consequently, exporting Sweden’s surplus alternative fuels often comes with higher costs and regulatory complications.
“If your vessel passes Gothenburg once every third, fourth or fifth day, fuel availability isn’t an issue,” says Igelström. “But for vessels operating in regions lacking the necessary infrastructure, accessing Sweden’s alternative fuel supplies becomes more challenging. While it’s great that these products are available in Sweden, Finland, and Germany, what happens when vessels don’t call at these ports?”
Limited accessibility creates uncertainty for shipping companies, discouraging investments in vessels or retrofits to use alternative fuels.
“As an industry, we need to ensure Sweden’s alternative fuel supply is more easily accessible across Europe,” he adds. “Only then will ship owners make confident investments to aid their energy transition.”
By addressing these supply chain challenges and improving fuel accessibility throughout Europe, Sweden could extend the reach of its renewable fuels, driving adoption and accelerating the maritime sector’s path toward decarbonisation.
Bridging the cost gap
The logistical challenges of alternative fuel distribution will inevitably lead to higher costs. With bunkering costs already representing up to 50% of a vessel’s daily operating expenses, adopting greener alternatives imposes a significant financial burden on ship owners. According to the World Economic Forum, sustainable fuels can be up to four times more expensive than traditional heavy fuel oil. For an industry that runs on tight margins and fluctuating freight rates, the effects of zero-emission shipping can severely impact the cost of goods.
A study by Drewry estimated that switching to green methanol would increase fuel costs by 350%, equivalent to an additional of over US$1,000 per 40-foot container shipped from Asia to Europe. This price disparity makes the widespread adoption of renewables challenging.
“There is a big price gap between renewables and fossil fuels,” notes Igelström. “Exporting Sweden’s alternative fuels to the continent or even further will incur higher costs. But this is a price we have to pay if shipping is to realise its green potential.”
Transitioning to sustainable shipping fuels presents undeniable cost challenges, but bridging that cost gap is essential to achieving the industry’s decarbonisation goals.
Collaboration and clarity
The shipping industry thrives on clarity, yet it currently lacks a cohesive framework when it comes to regulatory goals, infrastructure development and investments, and environmental objectives. This lack of alignment presents a major hurdle in creating an effective green fuel supply chain.
“Shipping companies need certainty,” Igelström emphasises. “They operate on tight margins and cannot afford the risk of fuel not being available, especially in regions with limited alternative fuel delivery points. The industry must collaborate with partners across Europe—and beyond—to develop a uniform infrastructure and supply chain. Only then can ships powered by renewables operate efficiently on a global scale.”
Collaboration is vital, not just among shipping companies but also between policymakers, industry leaders and international organisations.
“Only through joint efforts can we create the conditions necessary for renewable fuels to thrive in the maritime sector,” he adds.
Sweden is working with partners in Finland, Iceland and the Faroe Islands to spearhead the development of a green fuel supply chain.
In May 2024, the Nordic Maritime Transport and Energy Research Programme launched the STORM project to address critical challenges that hinder the broader adoption of alternative fuels. The project focuses on key areas such as fuel supply chains, distribution networks, and fuelling processes to better understand the feasibility and impact of various fuel options. The initiative also aims to develop and implement a framework to evaluate the suitability of different fuels for specific shipping segments. It will identify barriers and opportunities within the shipping industry, propose tailored solutions to overcome these obstacles, and recommend policy options to accelerate the sector’s transition to renewable marine fuels.
By leading efforts such as the STORM project, Sweden continues to position itself as a pioneer in Europe’s maritime transition. The country is not only driving innovation in fuel development but also working to ensure that these fuels become accessible to the broader market.
“Sweden is doing its part in shipping’s fuel transition. Not only in developing green fuels but also regulatory frameworks. However, it cannot do it alone,” Igelström says.
While Europe is making great strides in its decarbonisation efforts, stronger collaboration is needed to ensure surplus renewable fuels reach markets across the continents.
About Nils Igelström, Managing Director, GAC Sweden
Nils Igelström brings a wealth of experience and maritime expertise to his role as Managing Director at GAC Sweden AB. Since May 2024, he has been leading the company from its base in the Greater Gothenburg Metropolitan Area. With a career spanning over a decade in the shipping and logistics industries, Nils has held pivotal roles in operations, commercial management, and strategic leadership at renowned organizations such as Stena Bulk, Einride, and Dalaro Shipping.
His academic credentials include a Bachelor’s degree in Nautical Science from Linnaeus University and specialized certifications in maritime studies and charterparty management from Lloyd’s Maritime Academy. His journey from seafaring roles as a sailor to senior management underscores his deep-rooted understanding of the maritime sector.
Passionate about innovation and operational excellence, Nils has built a reputation for driving growth, fostering collaboration, and delivering results in both local and global contexts. His leadership at GAC Sweden reflects his commitment to advancing maritime solutions and strengthening industry partnerships.
Source GAC Sweden – Nils Igelström, Managing Director, GAC Sweden