The decarbonized ocean freight armada needs a lot of investment and collaboration to get out of port.
That was among the key takeaways from a recent conference on reducing the carbon footprint of container ships and other vessels in the world’s marine cargo fleet.
The event, hosted by maritime industry risk-management company DNV GL, included major players in ocean shipping from B.C. and elsewhere around the world.
DNV GL Alternative Fuels Online Conference 2020 focused on the fuel options ocean carriers will need to meet tighter air emission standards today and two decades from now.
Those options range from ammonia, batteries and biofuel to liquefied natural gas (LNG), hydrogen and nuclear propulsion.
But few have practical application today, and many will not be ready for prime time for decades.
The costs and complications involved in retooling the decarbonization armada and providing the refuelling infrastructure it will need on major trade loops also require more than financial and operational commitments from ship owners.
As Harry Robertson, technical director for marine technology company Stena Teknik, emphasized during the conference’s wrap-up panel, shipping lines cannot complete the decarbonization journey by themselves.
“We need someone to share the investment and operation costs. We can not do this on our own; we – authorities, clients, their clients and other portions of society – have to share responsibility.”
Daniel Gent, energy and sustainability manager for United European Car Carriers, agreed.
“We want consumers to put their money where their mouth is, and that goes for all of our personal lives. We need to make decisions based on where the goods come from and how they are transported.… Those consumer attitudes ultimately will shape the decisions made on how we transport cargo.”
The way that cargo is transported now via ocean carriers needs to change significantly and quickly.
The International Maritime Organization’s (IMO) greenhouse gas emission reduction targets include cutting the carbon intensity of shipping by 40% compared with 2008 levels in the next decade. It has also decreed an overall 50% reduction in greenhouse gas (GHG) emissions by 2050. Operational efficiency ratings of large freighters will also soon be made public and updated annually.
This follows the institution in January of IMO 2020 regulations that cut the allowable sulphur content of freighter bunker fuel to 0.5% from 3.5%.
Even though the world’s marine shipping fleet, which moves roughly 80% of international freight, is considered the most carbon-efficient way to transport goods, it remains a major polluter. It generates an estimated 15% of the world’s nitrogen oxides, 8% of global sulphur gas and 2.6% of global carbon dioxide emissions.
Reductions in those emissions will require investment in ships that run on fuels other than low-sulphur marine oil. That investment will need to be made soon because the lifespan of a typical container ship runs between 20 and 30 years. Those built today will therefore need to comply with IMO regulations decades down the road.
Robertson noted that today’s ships are 30% more energy efficient than those they are replacing.
However, fuel efficiency alone will not move the decarbonization needle enough.
The industry needs alternatives to heavy marine oil.
Thus far less than 1% of the global shipping fleet is running on alternative fuel, and only 10% of current newbuilds have been ordered with alternative fuel systems.
Making the case for methanol as one of those alternatives was Ayça Yalcin, director of market development for Vancouver-based Methanex Corp. (TSX:MX), the world’s largest methanol producer and supplier.
Its Waterfront Shipping Co. (WFS) subsidiary operates the world’s largest methanol tanker fleet.
Yalcin noted that methanol is a clean-burning, low-emission marine fuel that biodegrades rapidly in ocean water.
While methanol is a chemical feedstock for a wide range of industrial and consumer products, Yalcin said that the energy sector now accounts for 50% of the global methanol market.
Methanol has several advantages as an alternative fuel for ocean-going vessels. For example, Yalcin pointed out that it is a widely traded commodity that is available globally, and most major ports around the world already have methanol infrastructure.
She added that methanol, which can be produced from various renewable sources, is also compatible with diesel fuel infrastructure, and its storage is far less complex and expensive than requirements for hydrogen, LNG and other alternative fuels.
Also, the cost of converting ships to run on methanol, she said, is significantly less than converting them to run on other fuel alternatives.
Methanol produced from natural gas can lower CO2 emissions by an estimated 10% compared with conventional marine fuel. However, it is currently as expensive or more expensive than conventional fuel. Methanol produced from biomass would have lower carbon emissions, but it would also be more expensive than methanol produced from fossil fuels.
In addition to financial and other support up and down the global supply chains, ocean carriers need a lower carbon fuel option now to help them reach net-carbon neutrality in the next two decades.
LNG is a leading candidate to fill that bridge-fuel role.
Krishna Achuthanandam, Shell LNG’s marine LNG business development team lead, said ocean freight decarbonization efforts face a challenge similar to those in the COVID-19 crisis.
“We can see a solution, but we don’t have it today,” he told the alternative fuels conference. “Therefore, we need to make choices that can help manage this issue until the ultimate solution is available.”
The challenge for ocean shippers is more daunting than in other sectors because, as Achuthanandam noted, its assets have long lifespans and are heavily energy dependent.
And while numerous net-zero carbon fuel options are being considered for the sector, he said there are no commercially viable zero-emission fuels available today.
Achuthanandam said the decarbonization solution for ocean shipping will likely be developed first by other sectors, then adopted by shippers. And while he said Shell (NYSE:RDS.A) sees hydrogen as the long-term solution, LNG makes the most sense now as a bridge fuel to that decarbonized shipping future.
Achuthanandam estimated that, were the ocean freight sector to continue using low-sulphur fuel oil until 2035, the cumulative CO2 emissions would be 19 billion tonnes.
“At the same time, if you assume that all new builds during this period moved to LNG, there will be a savings of 2.5 billion tonnes of GHG emissions. That is two years’ worth of emissions from the continent of South America. Think about that.”
Achuthanandam added that LNG is an affordable, flexible fuel for deep-water ships that is available worldwide now.
The release of unburned methane while using LNG as a ship fuel can significantly reduce its environmental advantage over conventional bunker fuels, but Achuthanandam said engine technology has helped slash that methane slip 75% over the past 25 years.
However, the International Transport Forum questions the environmental advantages of LNG and methanol as alternative fuels for ocean carriers.
According to its Navigating Towards Cleaner Maritime Shipping report, neither fuel delivers “significantly lower GHG emissions than conventional marine fuels” when they are produced from fossil fuels.
It says methane and upstream fuel-production emissions negate any advantages LNG has over conventional low-sulphur marine fuel in direct CO2 emissions.
Aside from hydrogen fuel cells, other candidates considered front-runners in the zero-carbon ocean shipping race include nuclear propulsion.
Among the high-profile backers wagering on the nuclear option is Bill Gates.
The Microsoft (Nasdaq:MSFT) co-founder is the chairman of TerraPower, which recently formed a partnership with the Southern Company (NYSE:SO), Orano USA and the U.K.’s Core-Power to develop molten salt reactor (MSR) technology for ocean carriers.
DNV GL has said that MSR technology has power potential for the shipping sector, but pointed out that a “marinized” reactor wouldn’t be available until 2028. It added that MSR’s commercial viability would not be known until the mid-2030s.
So the options for decarbonized shipping are many, but as Gent concluded in the conference’s panel discussion, the route to decarbonization remains unclear.
“The IMO has come up with an ambitious target and has done something that no other organization that I can think of has done on an industry-wide basis: introduce a set limit with a set date for an entire industry to adhere to. What we don’t have yet is a pathway to get there.” •
@timothyrenshaw
