Embracing Green Shipping
Conventional Shipping Sustainability from Carbon Emissions Perspective
Sustainability is an integral component of the Maritime sector. Statistically the shipping industry contributes 3% of global CO2 emissions which is meagre when compared to road transportation at 17% where the transition towards a cleaner and green mode of road transportation has been relatively smooth with plethora of Hybrid Electronic Vehicles (EVs) being manufactured on large scale. This is not the time for complacency as Co2 emissions are inflicting damage on precious ecosystems and environments. Universally stakeholders recognise that it is imperative to aim “Green” in the Maritime sector.Already the anticipated cost of decarbonisation in shipping is sending shock waves across the maritime value chain especially with IMO and EU regulations being activated.
Green Shipping Target
The idea behind Green Shipping is to reduce shipping’s carbon footprint and contribute towards making the functionality of shipping traffic and port systems efficient. The vision of going “Green” is endorsed by the International Maritime Organization (IMO) aiming to cut the shipping sector overall greenhouse gas emissions by 50% by the year 2050. Fundamentals of Green Shipping vary from reduction in carbon emissions, air and water pollution and lastly encourage ecological balance. Ships contribution to global emissions stands at around 2% however ships burn heavy marine fuel oil which produces massive amounts of carbon dioxide .Being somewhat complacent the shipping industry seems unprepared to reach carbon neutral goals by 2030 and net zero position by 2050. The IMO rules for vessels to measure and report a carbon intensity index and grading of vessels may cause resorting to technical invasive actions to modify engine and hull in order to reach desired ratings.
Lowest-cost Biogenic CO2 Streams
Whereas the share of fossil fuel usage in the global energy mix has reduced the level of fossil fuel consumption is increasing and compliance to 2030 Carbon interim targets entails shipping to uptake 10% green fuels accompanied with an additional 30% efficiency gain in ship engines. Singapore is the largest bunkering hub in the world boasting of almost 50 MTPA and a combined bunkering volume larger then the next nine largest hubs .Despite shipping depicting an efficiency index of around 30% since the year 2008 it is startling to discover that the level of emissions has remained the same because of concurrent increase in trade volumes. Capturing fossil CO2 from industrial emissions entails only reduction in processes of industrial emissions, either from the plant where the CO2 is captured, or through displacing an emissions-intensive fuel. The emphasis remains that emissions associated with capture, transport and conversion of the gas must also be lower then what is emitted during production of the displaced fuel. Whereas Methanol (CH3OH) ,a low carbon fuel is relatively expensive to produce Ammonia (NH3) is expensive to handle .The European Union (EU) defines renewable and recycled-carbon fuels as resulting in a 70% reduction in CO2 equivalent emissions between the nearest comparable fuel although it is agnostic to the source of carbon feedstock. While the International Energy Agency (IEA) doesn’t share estimated costs for carbon from industrial sources it indicated that the lowest-cost biogenic CO2 streams would come from high-concentration sources such as fermentation (critical process in bioethanol production) where the gas is available at a nearly 100% pure stream that only requires drying and compression prior to it being utilized. However, while biomass-fired power plants could also provide a source of CO2 concentration in flue gases is only 10-20% by volume.
Decarbonization Cost Dynamics
Capturing CO2 from fermentation costs around $20-30 per tonne or adding 25% to cost of production per gigajoule compared to renewable ammonia capturing the gas post-combustion raises cost up to $60-80 per tonne making it 40% more costly than green NH3. The specific source of CO2 could also limit the size of e-methanol plants and thus prevent economies of scale leading to cost reduction. While large corn ethanol production facilities generate around a million tonnes of by-product CO2 annually being sufficient for a gigawatt-scale e-fuels project IEA estimates indicate that large-scale biomethane plants emit less than 5% of this CO2 a year enough feedstock for a 50MW project
Electrofuel or “e-fuel” is termed as synthetic fuel produced from renewable energy sources such as solar or wind power. E-fuels are considered as carbon-neutral alternative to traditional fossil fuels on the premise that Co2 emissions during combustion of e-fuel are balanced by the carbon dioxide absorbed during production .
Environmental Impact from Maritime Operations & Geopolitics
The term environmental impact is a buzzword as putting into practice is a daunting task. Minimizing environmental impact from maritime operations requires modern vessels to eye alternative modes of voyaging by either opting for Liquefied Natural Gas (LNG) or Hybrid or Electric Systems which has been successful in the automobile industry. Relying on LNG as a mode of sea transport can prove to be tricky since availability is conditional on geopolitical tensions as in the case of Qatar being the largest LNG producer already affected by conflicts arising between the Strait of Hormuz and Red Sea. Switching from burning heavy fuels to going hybrid/electric is easier said than done bearing in mind given the enormous tonnage of modern ships unlike automobiles just getting their conventional systems swapped with various battery packs. The transition to cleaner modes of voyaging require hulls of existing and future ships to be redesigned which entail huge investments to contend with.
China Torchbearer of Green Shipping
Despite the challenges that lie ahead shipping giants like China has commenced working towards IMO’s goal of achieving net zero emissions with respect to the shipping industry by 2050. China is emerging as the leader in Green Shipping since it produces more than half of global shipping tonnage.
European Union Matches China in Subsidies
The EU sanctioned Euros € 900m in French subsidies for green hydrogen and biofuels production for industry and transport. Perhaps taking a leaf from China’s penchant for subsidizing its industry the French government is in the process of allocating direct grants to cover a portion of investment costs associated with producing these fuels by the end of the year 2025. This subsidy of Euros 900 m may represent a single scheme or different auctions although EU rules under the Temporary Crisis and Transition Framework state that the maximum amount of aid granted to an individual project cannot exceed 10% of the total budget available which in this case is € 90m. Hydrogen will comprise up to 26% of EU’s final energy demand in 2050 but is unlikely to be used in cars or heating.
A €2-per-kg subsidies times EU’s 2030 target of 20 million tonnes of hydrogen for 10 years amounts to €400bn of subsidies which exceeds by 130 times the EU €3bn budget for the European Hydrogen Bank. Green hydrogen in Europe is economically viable if derived from Chinese electrolysers. Such a financial model would make Europe dependent on green technology imports from China.
German Priorities
A peer-reviewed scientific study by Germany’s Potsdam Institute for Climate Impact Research suggests focusing on direct electrification and prioritising H2 for only a handful of hard-to-electrify sectors. Electricity-based hydrogen will play a vital role in decarbonising Europe but policymakers should focus on using it only in sectors where direct electrification is an unlikely option . The report highlights out that although battery-electric solutions in transport have high efficiencies there are inherent limitations for any long haul scenario. Passenger cars are likely to convert to battery-electric in all scenarios with the exceptions of the two scenarios where the EU-wide ban on new ICE internal combustion vehicles (ICE) by 2035 is not enacted allowing some ICE’s to operate by 2050. Reliance on electricity based hydrogen would mean that vessels would be running on a pre-fixed algorithm system of battery packs which is still yet to be figured out in the shipping industry while it is a much touted success in the automobile industry. Presently, vessels equipped with H2 systems would only be built and designed for short voyages because algorithms run systems completely rely on connectivity of onshore/offshore grids vulnerable to unforeseen break down hence the need of standby teams keeping track on ships running on H2. Alarms are sounding that H2 is a greenhouse gas as it apparently has an indirect influence on atmospheric warming.
Seaborne Transport of Liquid CO2
Japan is working on Carbon Capture and Storage (CCS) to reduce GHG emissions in its hard-to-abate industries such as cement and steel production. The CCS deployment is encountering issues as Japan’s geology has limited storage potential and is vulnerable to high seismic activity. Australia similarly has ambitions to utilize CCS techniques in Asia-Pacific. Both Japan and Australia are encountering challenges of economic viability ,legislation ,rules and regulations for seaborne transport of liquid CO2.
Bunkering Facilities for Methanol & Ammonia Fuels
In long-distance aviation and shipping batteries will not be feasible, leaving liquid fossil fuels , bio-based or synthetic fuels made from hydrogen as the only options. The German peer reviewed scientific study proposes a combination of residual oil-based fuels and carbon-neutral fuels (synthetic or biofuels) as providing the supply of the remaining liquid transport fuel in 2050 in order to ensure that emissions from residual fossil fuels are compensated by CO2 removal to achieve GHG neutrality targets. The report presents scenarios wherein the 2050 share of electricity in final energy (in transport sector including international aviation and shipping) ranges between 28 % and 41% and the share of hydrogen-based carriers between 13% and 32%.
Dutch multinational Fugro is in the process of converting a geophysical survey vessels Fugro Pioneer , a 170-foot vessel , that operates on diesel electric propulsion .The vessel is undergoing retrofitting in dry dock in order to allow two of its four original engines to be replaced by two methanol engines. The reason for replacing two engines is that of bunkering. This retrofitting is a component of the Emission Free Dutch Shipping project funded by the Netherlands Enterprise Agency which has marked $27 million for the project.
Green Shipping Concept & Ports Digitalization
Whether shipping companies opt for LNG or Hybrid/Electric systems the entire gauntlet of port operations would eventually be revolutionized. Structurally “ Green Shipping “ requires considerable collaboration since this initiative would create avenues for both employment opportunities and diversity. Potentially Green Shipping require ships to be connected to onshore electricity grids on the presumption that the entire port system is digitized. Green Shipping would never get the green signal without incorporation of cloud computing, data analytics and digitization hence it is imperative that maritime workers appreciate Green Shipping concept. Connectedness to grid systems require departments to be on standby in particular regions where power outages are common. Having teams on standby is truly important from the perspective that there is always a skilled workforce tracking the amount of kilowatts consumed by a ship and most importantly ensuring the docking of ships to onshore electricity especially if it is hybrid or entirely electric.
Demand & Supply Gaps Across Green Fuels
In 2050 the direct use of hydrogen is estimated in a wide band of 500 and 1,800 TWh a year or 15 million to 54 million tonnes across all scenarios contingent on the amount needed for seasonal electricity storage (ie converting solar power to H2 in the summer and storing it for electricity production in the winter). On top of this at least 500TWh of synthetic fuels (including ammonia and methanol) will also be required by 2050 for long-distance shipping and aviation and chemicals production ( non-energy). The enormity of technological scale is manifested in the startling information that for synthetic fuels 500 TWh of ammonia is the equivalent to 96.7 million tonnes of NH3 which would require about 17.2 million tonnes of hydrogen to produce. A million tonnes of hydrogen a year requires about 10 GW of electrolysers and 20 GW of renewable power, with an investment cost of about $30bn at prevailing prices. The German scientific study cautions that the climate impact from hydrogen leakage is likely to impact on net-zero targets.
Role of E Fuels in Decarbonizing – Sea Transport
Fuels obtained from electrolytic hydrogen or e-fuels may lead to a significant massive expansion of cheaper renewable electricity and anticipated cost reductions of electrolysers. Low-emission e-fuels can add to the diversification of decarbonisation options that are available for aviation and shipping and there exists a big potential synergy with biofuels production especially in the form of biogenic CO2 utilization. While green methanol has had a headstart over ammonia in maritime over the past year, with major orders for dual-fuel engine vessels placed by Maersk, the International Energy Agency (IEA) warns in a recent report, titled “The Role of E Fuels in Decarbonising”, that this fuel could be 25-100% more expensive than NH3. This is largely due to the need to ensure captured CO2 is derived from biogenic sources or direct air capture so that green CH3OH produced is carbon-neutral over its lifetime. The IEA calculates that equivalently optimised plants, located on sites with high-quality renewable resources and low-cost biogenic CO2, would produce low-emission e-methanol today at a cost of $47/GJ, compared to e-ammonia at $40/GJ, with these costs respectively falling to $35/GJ and $30/GJ by 2030.
Green Shipping Trial Runs
The Green Pioneer, a former offshore supply vessel built in 2010, has been retrofitted by Fortescue engineering experts from metals and energy company Fortescue, with two of its four diesel engines now able to run on ammonia utilizing a century-old Haber-Bosch process. What is comforting from a safety if the ship is pushed aginst a pier by a 300,000-tonne bulk carrier laden with ore the ammonia fuel tank would remain intact and safe. Despite this the ship sailed to Dubai from Singapore under conventional marine fuels for the COP28 summit although Fortescue aims to fuel it with ammonia in Singapore.
Toxic or Lethal Ammonia & Regulatory Regime
As the regulatory landscape at ports is not conducive for ammonia ships to operate progress of the decarbonisation of shipping is impeded. The pumping of ammonia onto the Green Pioneer has come under intense regulatory scrutiny from regulators and human presence during green fuel bunkering is minimized. Refuge areas inside the accommodation with independent air supplies are made in the Green Pioneer. As a precaution the engine room has a double-door airlock system and is sealed off to seafarers while the ship is running on ammonia. After the bunker hose from an onshore terminal is connected to the onboard bunker station and safety checks are carried out, the crew heads to the bridge where they open and close valves using a remote touch panel. Gauges and sensors monitor pressure, temperature and flow rates to check for any leaks through 30km of onboard wiring. The purging process involves flushing pipes with nitrogen. A citric acid solution reacts with the residue to neutralise the ammonia converting it into a non-toxic by-product to be disposed of safely ashore. What emerges from the scrubber system through vent mast is air with less than 30 parts per million of ammonia.
Corrosion effects of Ammonia
Shipping companies are opting for vessels capable of running on methanol rather than ammonia in the short term attributable to the increased cost of managing safety. While both ammonia and methanol are hazardous chemicals, NH3 is toxic at much lower concentrations, necessitating extra costs for corrosion-resistant tanks and on-board safety measures such as spacing out storage, double piping, leak detectors and dedicated ventilation systems.
Varying Safety Standards for Methanol & Ammonia
The same safety precautions that are needed for ammonia handling make it also more costly to bunker.Methanol is currently covered in the IMO Interim Guidelines for the Safety of Ships Using Methyl/Ethyl Alcohol as Fuel and engines capable of running on fuel commercially available.The UN agency has yet to update its guidance for ships using low-flash-point fuels or those carrying liquefied gases in bulk to allow for ammonia to be used as a fuel. As Methanol is more expensive to produce, but ammonia is more expensive to handle, vessels running on either fuel would have roughly the same 75% increase in total cost of ownership compared to ships using traditional fossil-based heavy fuel oil (HFO).
Low Cost Biogenic Sources of CO2
There is no authentic data available as to how much biogenic CO2 is currently available and how much demand is expected from shipping . Around 2.5 million tonnes of biogenic CO2 is currently captured annually, more than 90% of which comes from bioethanol plants, with a project pipeline capable of capturing close to 40 million tonnes a year by 2030. The IEA sensitises that current policies could increase the potential availability of biogenic CO2 feedstock to 120 million tonnes a year by 2030 yet 150 million tonnes of CO2 would be needed to produce enough methanol to fuel 10% of marine transport with another 200 million tonnes of the gas needed to produce enough e-kerosene to fuel 10% of aviation. The IEA cautions that “if CO2 would need to be sourced directly from air, it would make low-emission e-methanol more than twice as expensive to produce as e-ammonia”. The report cautions that if direct air capture is used instead the total cost of ownership for methanol-fuelled ships would be almost triple that of conventional vessels.
Passing on Conversion Costs to Shippers
The IEA anticipates that while both ammonia and methanol will have a significant impact on total cost of ownership for container vessels yet the impact on the final cost of transported goods will be minor as the ability to pass the costs along the value chain is contingent on the terms of the shipping contracts as well on the existence of split incentives. If the additional costs of green ammonia fuel and infrastructure are fully passed on to customers the resultant increase in shipping costs of one twenty-foot-equivalent unit (TEU) would be $250 which is less than 1% of the $30,000-60,000/TEU value of transported goods. In simple words is equivalent to adding less than $0.01 to the cost of an avocado or an iPhone or $1.50 to a two-by-one-metre solar panel. The IAE sensitises that in order for the maritime sector to use 10% e-fuels this would necessitate half the currently containership fleet to be converted to running on ammonia or methanol, or 12 million TEU of shipping capacity to be built or retrofitted. While methanol dual-fuel engines are currently commercially available at a slightly higher cost compared to HFO engines, large two-stroke engines running on ammonia are only expected to reach the market in 2025 being prohibitively 30% expensive.
Retrofitting – Comparative Conversion Costs
As such, the IEA estimates that the investment needed to convert an HFO ship to ammonia is roughly double the investment of converting it to methanol. Since the cost of retrofitting would be recovered in the remaining years a vessels is in operation this favours relatively new containerships up to five years old for ammonia and up to ten years old for methanol , as suitable for retrofitting. Keeping thus objective in mind shipping capacity that would need to be newly built in the six years up to 2030 would total 9.5 million TEU if ammonia-fuelled and six million TEU if running on methanol.
Conversion Price Tag
The IEA calculates a total $75 bn price tag for converting half of all containerships to only ammonia and $30bn for methanol yet a final decarbonised fleet would likely be a mix of both. The agency attempts to dilute the shocking investment costs by consoling that these costs represent less than a 5% share of the cumulative shipbuilding market over the period of 2023-2030.
Environmental Concerns of Decarbonization
The IMO has consistently been advocating the use of ammonia, methanol and hydrogen as alternative to conventional fuels for shipping however the impact of these components on the marine environment is undesirable and alternative green energy sources need to be constantly explored. Much more scientific research is needed in the area of transition from fossil fuels in maritime transport to green fuels rather then churning out populist and unsubstantiated theories .
Co-authored by Razeen Ahmed & Nadir Mumtaz
Credit : Sources
https://www.iea.org/reports/the-role-of-e-fuels-in-decarbonising-transport
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https://www.sdgmonitor.co/post/green-shipping-what-it-is-why-is-it-important
https://news.cgtn.com/news/2023-12-08/VHJhbnNjcmlwdDc2MzQ5/index.html
https://maritime-executive.com/article/china-now-produces-more-than-half-of-all-new-tonnage
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https://www.matfoundrygroup.com/blog/what-is-e-fuel
Very well written 👏