Low carbon - Fueling the decarbonization of shipping

Large cargo ship in the ocean with three small boats nearby, with orange sky and sun setting.

Ammonia. Liquid hydrogen. Biodiesel. Methanol. Just a few of the options to decarbonize shipping. But any of them could be the future marine fuel of choice. What will it be?

It’s the question on every shipping operator’s mind. And for good reason. The shipping sector relies heavily on petroleum-based bunker fuels to power its ships around the world, consuming roughly 300 Mtonne per year. The sector contributes around three percent of global greenhouse gas (GHG) emissions. It needs to find a low-carbon alternative.

“There’s no way around it,” says Bill Keesom, Group Manager for Advisian’s Market Services team. “The industry needs to find a low-carbon marine fuel soon. We’re seeing regulatory and pressure groups taking hardlines, introducing measures to reduce emissions by 75 percent by 2050. They’re trying to avoid the industry increasing its emissions by 150 percent by 2050.”

This has left the sector with no other choice but to either decarbonize its fuel or face a bleak future. The latter of which might grind investment and access to markets to a halt.

So, what are the shipping sector’s low-carbon fuel options, and are any of them promising?

LNG – the touted transitionary fuel of the future

Even before the EU and International Maritime Organization (IMO) called for decarbonization, ships have been using LNG as a fuel. Right now, it accounts for 13 percent of new builds. Several ports around the world have even installed LNG bunkering in anticipation of its growth.

What’s the appeal?

Keesom says it’s, “56 g CO2/MJ in emissions intensity. Compared to petroleum-based bunker fuel, which emits 80.6 g CO2/MJ, it’s 31 percent less intense.”

But there’s a catch. When you factor in LNG’s entire supply chain, emissions increase.

Keesom goes on to explain that, “either through flaring, fugitive emissions, and from liquefaction, LNG’s total emissions can increase to as much as 70 g CO2/MJ. This means LNG will not meet the EU’s or IMO’s decarbonization targets of a 75 percent decrease in emissions by 2050.”

And then there’s LNG’s energy density. Compared to petroleum-based bunker fuel’s 39.1 MJ/l, it’s 19.9 MJ/l. That’s about half. This means ships using LNG will have to carry more of it. All while storing it at -163°C.

Biodiesel – zero-emission, higher energy density

Bio-based fuel, mainly biodiesel, might help solve the low energy density challenges that fuels like LNG present. It offers 33.1 MJ/l, just 6 MJ/l short of petroleum bunker fuel. Considering it does so without any emissions, should the shipping sector be vying to make it the fuel of choice?

“It’s not that simple,” says Keesom. “Biodiesel production requires fats and oils. These can be in the form of waste fats and oils, but biodiesel production usually relies on oil crops like soybeans and rapeseed. These are vital to food security. In other words, diverting them to produce biodiesel could create a food crisis.”

And waste oils and fats aren’t enough to produce adequate biodiesel the shipping sector needs.

Liquid hydrogen – low density, high demands

Like biodiesel, green liquid hydrogen (LH2) produces zero emissions. This should make it a contender for shipping, but it has the lowest energy density of all the candidate future fuels of shipping. As a result, it’s a tough sell for long-distance, large ships.

Even if its energy density wasn’t of concern, green hydrogen production and liquefaction have high renewable energy and water demands.

“To put it into context, every 200 m3/h of green hydrogen needs a 1 MW electrolyzer. And to keep a 1 MW electrolyzer running, you need 5 tonnes of water per day (tpd),” explains Keesom. “What’s more, the thermodynamics of electrolysis are not favorable. It takes 1.8 megajoules of renewable electricity to make 1 megajoule of green hydrogen.”

The high energy demands are challenges the energy sector needs to address if hydrogen is to become viable. Or else production is going to be expensive, and the cost benefit won’t add up.

As green hydrogen and renewable energy mature, their high costs of production will likely come down. But ship operators still need to consider storing liquid hydrogen at temperatures -253oC away from air. The presence of heat will result in liquid hydrogen evaporating, causing boil-off and leakage. This already happens throughout its supply chain.

Ammonia – multipurpose and abundant

With a higher energy density than hydrogen, and virtually no emissions, ammonia is also a potential future fuel. It’s abundant. But its sustainable GHG-free production relies on its competitor – green hydrogen. This alone makes its production energy intensive.

“Just like hydrogen, these production costs will likely come down as the technology matures,” says Keesom. “However, like hydrogen, ship operators will still need to handle ammonia with plenty of care. As little as 0.25 percent of it in the air can cause fatalities. They also need to store it at -33oC.”

Methanol – no special handling required

Thanks to having a low flash point, methanol is arguably one of the safest future fuels to handle. As a product of biogenic sources, methanol emits zero GHG – a decline from 68.4 g CO2/MJ. Regardless, it has an energy density of 16.8 MJ/l, 43 percent of petroleum-based bunker fuel. And existing marine engines can use methanol with very little modification.

“The challenge at the moment,” says Keesom, “is finding enough sources of green methanol. Whether through anaerobic digestion, gasification or power-to-gas, green methanol production is in its infancy. There is, however, a Danish project in Foulum looking to upscale.

It’s aiming to produce 10 kg of green methanol an hour from 2022 onwards. If it’s a success, green methanol will be able to compete with gray methanol.”

Betting on low-carbon fuels in the dark

Even though there are plenty of options it’s not an easy decision for operators.

“Low-carbon fuels are promising. But they all have their drawbacks, which makes it hard for the sector to zone in on a future fuel of choice,” says Keesom.

The sector’s dilemma is happening against a backdrop of increasing regulations such as the Fit for 55 package of proposals that demand a 75 percent reduction in emissions. The figure below shows the schedule for emission reduction of shipping under the Fit for 55 package of proposals.

So, the shipping industry needs to make tough choices now – even though building ships with a particular fuel in mind could turn an asset into a liability if that fuel is too high in GHG emissions or not available.

Bar chart showing reduction in marine energy greenhouse gas intensity.
Proposed reduction in marine energy GHG intensity

So, what are they to do?

Retrofit or future-proof new builds

“Retrofitting is an option,” says Keesom. “Ships have lifespan of up to 30 years, and anything can happen in between. That’s why their engines are built with a level of adaptability. If, say, methanol becomes the fuel of choice, operators can modify their bunker fueled ships to adapt.”

Dual-fuel engines might also be an alternative.

”The technology is nothing new. In the 1940s, diesel shortages inspired ammonia-powered combustion engines. They could run on both ammonia and coal gas. Today, Compagnie Maritime Belge (CMB) is making a big play on ammonia dual-fuel ships. It’s set to use ammonia for its large new builds from 2024 onwards,” says Keesom.

And A.P. Moller – Maersk A/S is making a USD 1.4 billion bet on eight new vessels that will run on renewable methanol or low-sulphur marine fuel. With an expected delivery of 2024, the ships will either use bio-based methanol or e-methanol. To make sure it has ample supply, Maersk is investing in California-based WasteFuel. It will produce e-methanol from agricultural and municipal waste.

But what is the future low-carbon fuel for shipping?

“It’s still up in the air,” admits Keesom. “The low-carbon marine fuels of tomorrow are anyone’s guess. It could be any. It could even be all of them. Right now, shipping operators are placing their bets on different options and technologies. And the fact they’re doing this is promising.”

Bill’s optimism is much needed. A lot is riding on the shipping sector finding a low-carbon fuel that’s sustainable. The sector’s survival depends on it. The future of the climate, too. As a result, ship operators are exploring a variety of options in the hopes of meeting targets. They’re aiming to mature the fuels and technology, making them more efficient and practical.

The result? Decarbonizing shipping.

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