Torghatten Nord sets example for ropax fleet

Picture this: it is 2035, and expectations for the ropax market for revenue-generating passengers and cargo owners have changed. As cars and haulage become predominantly electric – will motorists and cargo owners choose to use a polluting ferry?

Using alternatives to conventional fuels is no longer a future dream – it is a reality today. PowerCell recently signed an agreement to fit hydrogen fuel cells on two ferries owned and operated by the Norwegian transport group Torghatten Nord. The vessels will be mostly powered by green hydrogen, and the fuel cells are expected to reduce their combined CO2 emissions by 26,500 tonnes per year, which corresponds to the CO2 emissions from 13,000 diesel cars per year being removed from the roads. 

The fuel cells will also enable the vessels, which will operate on Norway’s longest ferry route, – a four-hour journey, with challenging weather conditions – to produce approximately 6 MW of power each. The order has a value of €19.2M (US$20.2M) – representing the largest non-combustion fuel propulsion project to date in the global marine industry, and the project is financed by Statens vegvesen.

Blueprint for the ropax fleet 

This project is a case of a sustainability front-runner recognising the broader direction of travel for the ferry industry. The European ropax fleet currently has an average age of 38 years, according to PowerCell’s analysis. This age profile means there is a significant need for newbuilds or to retrofit the existing fleet.

Companies need capital for both endeavours, and fleets with strong sustainability credentials will be better placed to secure financing.

Receiving superior Poseidon Principles-aligned green financing will rely on shipowners and operators providing a viable plan for a 30-year lifespan; but not all solutions are viable in the long run. The risk of investing in assets that become stranded is real. A drop-in fuel, for example, will not be for life, is costly, and will require a plan for ultra-low/zero-carbon alternatives in the future, where hydrogen fuel cells have a clear zero-carbon, long-term advantage. 

A low IMO Carbon Intensity Indicator (CII) rating or high cost of carbon through the EU Emission Trading System (ETS) is sure to also impact earning capacity and by default asset values – posing a balance sheet risk. It is therefore vital for ferry owners and operators to visualise the future, and the transition to electrification and emissions-free energy, when planning for the energy transition. 

Tightening regulations

Maritime environmental regulations are becoming incrementally more impactful. In January 2024, CO2 emissions from ships above 5,000 gt and transporting cargo or passengers for commercial purposes will be included in the EU ETS, which will increase the demand for net-zero or zero-carbon solutions.

Looking at CII, an analysis by class society DNV of EU MRV data revealed a significant portion of the existing ropax fleet will have challenges meeting IMO requirements within the next two to five years – 47% have CII ratings of D and E. This is not just the case for old ships, but also vessels as young as 10 years, which are already rated E.

Additionally, IMO has focused many of its greenhouse gas regulations on the bigger ships in the merchant fleet that make up 85% of the industry’s carbon footprint. But it is the other 15% that is ready for decarbonisation now – and where we can demonstrate the impact of new, zero-carbon solutions.

Shipowners and operators also need to consider upcoming changes to how emissions are calculated by IMO and other regulators. Well-to-wake, lifecycle analysis is critical to avoid favouring fuels that have attractive tank-to-wake figures but produce high lifecycle emissions. The expectation is that regulators will conform to well-to-wake analysis as the rationale is so clear. Strong performance within regulations not only offers commercial and financing advantages, but also helps shipowners meet the demands of increasingly environmentally conscious customers.