Doubling down on IMO emissions targets, ICS proposes carbon levy and US$5Bn R&D fund to develop zero-emissions ships, while DNV tries to provide a decarbonisation roadmap for shipowners
International shipping is doubling down on IMO’s emissions reduction ambitions by pushing for net-zero CO2 emissions by 2050 – but it says governments need to step up by implementing a carbon levy and the establishment of a US$5Bn R&D fund.
“Talk is cheap and action is difficult,” says International Chamber of Shipping (ICS) president Esben Poulsson. “So, our net-zero offering sets out the ‘how’ as well as the ‘what’ for decarbonising shipping by 2050. We’re saying to governments that if they really want to reach net zero, they need to move from empty commitments to tangible action.”
ICS submitted the proposal on 5 October to IMO in the run-up to “Shaping the Future of Shipping,” shipping’s flagship COP26 decarbonisation conference. The shipping organisation, which represents about 80% of global shipping, proposes a compulsory US$5Bn R&D fund – the IMO Maritime Research Fund (IMRF) – to develop zero-carbon technologies, which would be created by the imposition of a US$2 carbon levy on shipping fuel to speed the transition to more expensive zero-carbon fuels. Funded by shipowners, the IMRF would underpin the development of zero-emission ships by helping “close the price gap between zero-carbon and conventional fuels and could be used to provide the billions of dollars needed to deploy essential new bunkering infrastructure required in ports,” says ICS.
Mission Innovation – which includes 22 countries and the EC, focused on promoting clean energy innovation to advance the goals of the Paris Agreement – says thousands of zero-carbon ships, about 5% of the global deep-sea fleet, will have to be in service by 2030 if the current IMO targets for 2050 are to be met.
“Governments need to move from empty commitments to tangible action”
Based on data published by Equasis, there are about 64,000 vessels of 500 gross tons or more in the world fleet. This would mean about 3,200 vessels would have to be a capable of burning net-zero fuels by 2030.
“Technology readiness levels with respect to zero-carbon technologies and fuels suitable for marine application are currently inadequate to achieve this by 2030,” says the ICS in its proposal. Development of these technologies would have to accelerate even more to meet ICS’s net-zero carbon goal by 2050.
The UN’s Climate Change Conference, known as COP26, will take place from 31 October to 12 November 2021 in Glasgow, Scotland. ICS wants its proposal taken up at the IMO meeting in November, following COP26. ICS proposes to have the IMRF in place by 2023.
“A net-zero carbon ambition is achievable by 2050,” says Mr Poulsson. “But only provided governments take the unglamorous but urgent decisions needed to manage this process within a global regulatory framework.”
Avoiding fuel missteps
Decarbonisation presents a perilous path for shipowners. “[One] misstep today in newbuild fuel strategies can have damaging consequences for businesses and assets in the future,” said DNV Maritime chief executive Knut Ørbeck-Nilssen. “Choosing the right fuel today for operations tomorrow is a daunting task that all owners must face up to,” said Mr Ørbeck-Nilssen, calling it, “the grand challenge of our time.”
Through its Maritime Forecast 2050, DNV helps shipowners plot a pragmatic course towards decarbonisation, assessing the environmental benefits and the commercial viability of technologies and alternative fuels.
Charting the greenhouse gas emissions pathway for shipping is no small task; last year, DNV’s Maritime Forecast to 2050 modelled 16 different fuel types and 10 fuel technologies. This year, the forecast was updated with a carbon risk-management framework, including a new ‘decarbonisation stairway’ model to help owners map a path to sustainability.
Making the decisions even more difficult for shipowners is the fact that the development of future fuels, propulsion technologies, and the supply and related infrastructure required to achieve shipping’s net-zero future are not in their hands.
“Decarbonisation presents a perilous path for shipowners”
Take for example the future availability and price of zero-carbon shipping fuels such as ammonia, hydrogen or green versions of LNG and methanol. The supply and availability of these will depend on the availability of enough renewable energy to produce them – and right now there is not nearly enough to meet those needs.
According to Angelo-Eastern Univan chief executive Bjørn Højgaard, to produce enough green methanol for Maersk’s eight methanol-powered container ships (360,000 tonnes) would require more green power than Denmark produces on an annual basis – 80 TWh.
To power the entire global shipping fleet would be about 1,000 times that, or 80,000 TWh.
The total global output of renewable energy generation is about 7,000 TWh, according to University of Oxford data.
In the release of this year’s Maritime Forecast 2050, lead author of the study and DNV principal consultant advisory, Linda Sigrid Hammer, said: “Correctly assessing the technology, fuel and energy production/infrastructure landscape can enable owners to comply with prescribed or even more ambitious carbon-reduction trajectories.”
To find the most cost-efficient fuel-ready and fuel-flexible choices for vessels, DNV developed a two-step framework. The first step was a techno-economic model, the FuelPath Model, to investigate the financial performance of different fuel and energy-efficiency strategies open to a specified ship. The second step is a structured review of those design choices to identify crucial implications for ship design at both newbuilding and (possible) conversion stages.
In applying this framework for a case study of a Newcastle bulk carrier, the findings suggested that a conventional mono-fuel (MF) ship had the highest total discounted cost beyond 2030; it incurs the lowest capex, but the highest fuel expenditure over its lifetime. “This is because the study assumes a high price for carbon-neutral marine gas oil (MGO), which would be the only fuel option available for meeting the chosen GHG target trajectory,” says DNV.
A second takeaway was that ammonia-ready design solutions would have a higher capex but comparatively lower fuel expenditure than the conventional option during their service lifetimes.
A third takeaway was that the two design options with lowest discounted costs are MF Fuel Ready (ammonia) and dual-fuel (DF) LNG Fuel Ready (ammonia). The study also identifies DF LPG Fuel Ready (ammonia) as a low-cost option but does not investigate it further.
“With between 1,000 and 2,000 ships expected to be ordered annually through 2030, there’s a real need for informed decisions that consider a diverse array of factors; from cost, to fuel storage and propulsion, through to flexibility in design, strategic approach, and fuel-ready solutions. And of course, all of this is underpinned by the need for safety,” added Ms Hammer.
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