Quadrise Fuels International Plc [AIM:QFI] the London-headquartered synthetic emulsion fuels developer published an update on the progress of tests it is doing on its bioMSAR transportation biofuel today (3rd March).
The testing is quite a big deal for the AIM-listed company. As previously reported Quadrise is working with a number of third parties to develop more sustainable fuel technology, including Vetoro, the Dutch chemical company developing biofuels from woody residues and Mediterranean Shipping Company (MSC), the world’s largest container shipping company.
Quadrise specializes in the development and commercialization of low-cost, environmentally-friendly fuel technologies. One of their most innovative products is bioMSAR, a synthetic fuel made from biomass.
Renewable bulk transport fuel
BioMSAR is Quadrise’s MSAR (multiphase superfine atomised residue fuel) with renewable biofuel elements like glycerin, and it is created by converting vegetable oils, animal fats, or other types of biomass into a stable, water-in-oil emulsion. The emulsion is then treated with a proprietary catalyst to create microspheres, which can be burned in existing diesel engines.
The fuel technology firm, as previously reported, has been testing bioMSAR in partnership with Wärtsilä Corporation [NASDAQ Helsinki:WRT1V], a Finnish company which manufactures and services power sources and other equipment in the marine and energy markets.
The BioMSAR technology can, arguably be a game-changer in the transition-to-net-zero story, as marine transport is responsible for a significant portion of global transportation emissions, although the exact contribution can vary depending on the time period and the methodology used to calculate emissions.
A large industrialised country
According to the International Maritime Organization (IMO), international shipping was responsible for about 2.89% of global CO2 emissions in 2018. This represents a total of approximately 970 million tonnes of CO2 emissions, which is equivalent to the annual emissions of a large, industrialised country.
However, some experts believe that the actual emissions from marine transport may be higher than these figures suggest, due to the challenges of accurately measuring and tracking emissions from ships. For example, some studies have suggested that the emissions from shipping could be as much as double the current estimates.
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It’s also worth noting that while CO2 is the most significant greenhouse gas emitted by marine transport, ships also emit other pollutants such as nitrogen oxides and sulfur oxides, which can have significant impacts on local air quality and human health.
Road and rail remain the big polluters in terms of transportation, but marine shipping is still a significant polluter, and taking the emissions from sea-bound freight out of the mix would make a significant contribution to reducing overall global emissions.
An important step for Quadrise
So, Quadrise’s recent update is quite exciting for the company and the sector. Jason Miles, Quadrise’s chief executive said in a statement this morning: “The extensive tests undertaken by Wärtsilä clearly demonstrate the suitability of bioMSAR for use in both marine and power plant applications. This is an important step in clearing the fuel for commercial supply and we look forward to progressing our final round of tests ahead of planned vessel trials with MSC for both MSAR and bioMSAR later this year.”
The company said that as part of Quadrise’s ongoing framework agreement with MSC to carry out trials of its bioMSAR and MSAR product lines with a view to the commercial supply of one or both fuels to MSC’s global fleet, optical combustion and engine wear tests of bioMSAR were conducted as a necessary precursor to commercial-scale vessel trials.
The company said that its optical combustion test, against MSAR and diesel fuels, has confirmed bioMSAR to have similar injection and combustion properties as MSAR and that bioMSAR is therefore expected to behave similarly to MSAR when utilised in medium and slow-speed diesel engines. The company added that extended wear tests over a 250 hour period were also completed successfully.
Hazard identification
The successful test will allow Quadrise to the next phase of assessment, with hazard identification and operability studies now scheduled ahead of commercial vessel testing on the MSC Leandra.
BioMSAR fuel offers a number of key advantages over standard HFO (Heavy Fuel Oil) and diesel, not least lower emissions, as bioMSAR emits fewer pollutants than conventional diesel fuel, including particulate matter, nitrogen oxides, and sulfur oxides.
Quadrise also claims that bioMSAR also offers users increased efficiency, because bioMSAR is a microsphere emulsion, it has a much smaller particle size than conventional diesel fuel. This means it can burn more efficiently and with less waste.
Lower costs
This leads to the renewable fuel having overall lower costs than conventional fuels, argues Quadrise. The company says that bioMSAR is typically less expensive to produce than conventional diesel fuel, which means it can help reduce fuel costs for businesses and consumers. And as it is made from biomass, it is a renewable fuel source that can help reduce reliance on fossil fuels.
Some of the applications of bioMSAR fuel include power generation, as bioMSAR can be used to generate electricity in a variety of settings, including large-scale power plants, remote off-grid locations, and backup generators.
The key use, that Quadrise is targeting its testing programme at is use in marine transportation as a fuel for marine vessels, including cargo ships, tankers, and ferries. Quadrise also sees applications in land-based transportation, in trucks, buses and trains. The fuel also has industrial applications where it can be used in a range of burners including boilers, furnaces, and kilns.
Tom Fraine, an analyst for Shore Capital, the broker said: “We remain optimistic regarding the potential scale of Quadrise’s projects. The company’s proprietary fuels have the ability to significantly reduce both fuel costs and emissions. bioMSAR and MSAR also make the transportation and handling of fuel easier versus conventional HFO and no significant adaptions to equipment are required for their usage.”
Fraine continued: “The opportunity with MSC could be worth more than double Quadrise’s current enterprise value in potential annual revenues if only a small percentage of the shipping company’s overall fuel demand was switched to MSAR or bioMSAR. MSC currently consumes close to 10m tonnes of fuel oil annually and we believe Quadrise could charge around USD50/tonne for licensing its technology.”
Quadrise opened trading at 1.66p today. The company has offered a year-to-date return of -19.8% and a one-year return of -4.8%, with its shares ranging between 1.1p and 2.85p over a 52-week period, giving the company a market capitalisation of GBP21.1m.
Deshe Analytics seems to be cooling on Quadrise, moving the firm from a ‘Hold’ on 16th January to an ‘Underperform’ today, dropping its score from a ‘61’ to a ‘59’. The analyst said: “When Quadrise Fuels released its 2Q22 data on 3rd October 2022, the results seemed positive but underwhelming. Their growth and income factors look healthy individually, but the holistic financial picture was less impressive.”
However, we believe this stock is still ‘one to watch’.
