The need for zero emission ships to enter the world fleet by 2030 has now been widely accepted. The decarbonisation drive requires collaboration and has been supported by a number of industry initiative this year, such as the Getting to Zero
Coalition and the Poseidon Principles, which sees leading names in ship finance apply climate change criteria to vessel funding.
Many see 2020 as marking the start of the decade of decarbonisation as maritime stakeholders will continue to assess what is required to achieve the International Maritime Organizations (IMO) 2050 greenhouse gas ambitions and the opportunities and challenges presented by the shift to a zero-carbon future. The transition is a long-term one and it is accepted that a variety of operational and asset investment strategies will need to be considered. Complex choices lie ahead and navigating this change will involve industry collaboration as well as access to expert advice and insight.
Our recent joint study with A.P. Moller - Maersk found that the best-positioned fuels for research and development into achieving zero net emissions for shipping are alcohol, biomethane, and ammonia. These three fuel pathways have relatively similar cost projections but different challenges and opportunities.
Alcohols (ethanol and methanol) are not a highly toxic liquid with various possible
production pathways directly from biomass and/or via renewable hydrogen combined with carbon from either biomass or carbon capture. Existing solutions for handling the low flash point and for burning alcohols are well proven. Ethanol and methanol are fully mixable in the vessel’s bunker tanks, creating bunkering flexibility.
However, the transition of the industry towards alcohol-based solutions is yet to be defined. Biomethane on the other hand has a potential smooth transition given existing technology and infrastructure. The challenge however is ‘methane slip’ – the emission of unburned methane along the entire supply chain.
Ammonia is truly carbon free and can be produced from renewable electricity. The energy conversion rate of this system is higher than that of biomaterial-based
systems, but the production pathway cannot tap into potential energy sources as waste biomass, for example. The main challenge for ammonia is that it is highly toxic and even small accidents can create major risks to the crew and the environment. The transition from current to future applications is also a huge challenge for ammonia.
The study also concluded that batteries and fuel cells are unlikely to have an immediate role in propelling commercially viable carbon neutral deep-sea vessels.
The greater challenge is on land and within the energy sector. Zero-emission vessels (ZEVs) are technologically possible in the next two years and while they may require ships and engines to be amended, this is dwarfed by the challenges of getting the right fuel ready and the necessary supporting infrastructure on land.
Another key takeaway from the study is that to develop zero carbon ready ships,
shipowners will need to invest for fuel flexibility and that the cost of transport will rise – not because ships themselves will require greater levels of investment –
but because new fuels are projected to be significantly more expensive than existing fossil solutions which will lead to increased operating costs.
Achieving net zero is therefore an operating expense (OPEX) not a capital expenditure (CAPEX) challenge. A further key conclusion of the joint exercise was the recognition that the market will not drive the transition to zero and policy interventions as well as a fundamental change to the incentives scheme for shipping are required.
Katharine Palmer, LR global head of sustainability, who led the study on behalf of LR, said: “The additional price to build a ship with new fuel tanks, modified engines and fuel supply systems is a very small element of the total cost of operation, as the additional CAPEX cost is divided over the lifetime of the ship but given the potential impact of future fuel prices on operating costs, shipowners must invest in flexibility – for example, designing a ship which can run on one fuel today and later be retrofitted to run on an alternate fuel.
“The next decade will require industry collaboration as shipping considers its decarbonisation options and looks closely at the potential of fuels like alcohol, biomethane and ammonia,” says Former LR CEO Alastair Marsh. “This joint modelling exercise between LR and Maersk indicates that shipowners must invest for fuel flexibility and it is also clear that this transition presents more of an operating expenditure challenge than a capital expenditure one.
