Shipping companies must now adopt advanced biofuels to be Paris aligned as an intermediate step to decarbonising, while the sector invests in green hydrogen-based fuels for the long term.
Around 90% of worldwide traded goods are transported by sea. This represents almost 3% of global GHG emissions – more than global aviation or total emissions in Japan. The sector is growing at a rapid pace, as do its emissions. If nothing is done, the International Transport Forum (ITF) projects that shipping emissions could triple by 2050.
Perhaps it is the long lifespan of ships, perhaps it’s because the sector is not covered by the NDCs, or maybe it’s simply because the sector goes largely unnoticed in public daily life. Whatever the reason, the shipping industry has escaped being in the eye of the decarbonisation storm, until now.
In 2018, the International Maritime Organisation (IMO) set a sector-wide target to reduce the carbon intensity of all ships by only 50% (compared to 2008) by 2050. This target does not align with the Paris Agreement, and as such many companies have reacted by making their own commitments. pledging to go above and beyond and reach Net Zero by 2040. And there has been progress: the EU is set to include the shipping sector in the EU Emission Trading System by early 2023 and regulate the carbon intensity of the energy used on board ships as part of the ‘fit for 55’ package of legislative proposals.
However, though worthy of praise, these initiatives fall short of aligning the sector with the Paris Agreement, lacking international policy-driven action, together with major investments in technology and infrastructure.
Finding a viable, zero-carbon energy source for the sector is a major challenge. So far, no one has found a silver bullet for low-carbon shipping, but there is plenty of ammunition for consideration. Energy efficiency measures and renewable fuels can make a difference in the short term – focusing purely on long-term solutions risks overlooking the decarbonisation options available today. Nonetheless, when the technology is ready, it can give way to hydrogen-based fuels such as Green Ammonia or Green Methanol in future ships.
Immediate and short-term solutions
Energy efficiency measures can help shipping companies reduce their energy needs and thus carbon emissions in the immediate term. As demanded by the IMO’ MARPOL Annex VI: up to 30% of GHG emissions must be cut by 2025 in the implementation of its mandatory energy efficiency plans. Different measures such as speed optimisation, weather routing, hull maintenance, retrofitting of energy efficiency devices, and use of alternative fuels can be applied depending on each ship and its operating conditions.
Biofuels are available for use today given they are often compatible with existing engines. Currently, most biofuels used in shipping are types of biodiesels: fatty acid methyl esters (FAME), or hydro-treated vegetable oils (HVO). However, the source of the biomass is crucial to assessing the decarbonisation potential. In order for the biomass used to be sustainable, it should not lead to any additional emissions or displace other uses such as agriculture, which could lead to further land use change elsewhere.
As stated in the “Future biofuels for shipping” webinar from the Global Maritime Forum, biofuels are not the sole solution, but “can play a role in the long-term transition pathway, offering the flexibility of an interim drop-in solution or as a zero-emission pilot fuel for e-ammonia or e-methanol”. Meeting the growing demand for these biofuels poses a significant challenge, and competition across several sectors is creating conflict with the agricultural sector for land use and water. This pushes up prices and risks creating further indirect land use change (ILUC) emissions.
In the long term, hydrogen could be a viable solution in the form of ammonia or green methanol carriers, but these solutions need considerable investment to achieve the IMO’s carbon reduction ambition – an estimated USD $1-1.4 trillion.
Ammonia is estimated by the International Energy Agency (IEA) to account for around 45% of global energy demand for shipping in 2050, in the Net Zero Emissions Scenario.
Despite this, liquid ammonia is not currently viable at the required scale. It requires temperatures under -33ºC to be stored in liquid form which is energy intensive, and there are also concerns about ammonia’s toxicity and the need to remove nitrous oxide from the exhaust stream. To make ammonia a viable shipping solution, the whole supply chain of the fuel must be considered. Safety issues and the CO2 emissions from its production (the current supply is “Grey Ammonia” produced using natural gas) would need to be addressed. Furthermore, investment is required to develop the infrastructure for production and transportation.
Methanol is another hydrogen derivative that contains four parts hydrogen, one part oxygen and one part carbon. There are two zero-carbon forms: Blue Methanol, produced using CO2 that comes from Carbon Capture and Storage (CCS), and Green Methanol, produced from a biogenic or renewable source.
While there are ships already running on methanol, it tends to be sourced from natural gas which can generate more GHG emissions than conventional marine gas oil. However, generating green methanol requires a large amount of renewable energy. This poses challenges to scaling given the competition with the other renewable electricity-consuming sectors. The technologies needed to capture carbon and generate blue methanol are not currently available at the scale the sector needs. Furthermore, it is estimated that the capability to extract hydrogen molecules from methanol and run them through a fuel cell, will not be ready until 2030.
Shipping emissions must be addressed if we are to meet the targets set out in the Paris Agreement and so forth limit global warming. To do so will require a mixture of both short-term actions and investment in long-term solutions. There is the potential for dual-fuel engines in newbuilds to allow operators to choose the most price-competitive fuel at the time. These can operate both on conventional and alternative fuels, such as biofuels.
Solving the decarbonisation challenge in the shipping industry is a task that requires businesses, institutions, and governments to step up, work together and act now. As Michael Parker, Citibank’s Global Head of Shipping, Logistics and Offshore, said at the recent Global Maritime Forum (GMF) Summit in New York: “Nobody can do it alone”.