Should the oil industry see threat or opportunity in the International Energy Agency’s (IEA) recent report, Net Zero by 2050, A Roadmap for the Global Energy Sector?
The report calls for an immediate halt to investments in oil and gas projects in an effort to meet zero carbon emissions by 2050. IEA said meeting the Paris Agreement’s goals of limiting global warming to 1.5°C above preindustrial levels will require “an unprecedented clean technology push by 2030.”
Ironically, the IEA itself was born out of the oil crisis of 1973-1974, perpetuated by the oil embargo imposed by the Organisation of Arab Petroleum Exporting Countries. The embargo created an oil price shock and gasoline shortages that caused long-lines at petrol stations.
In 1974, the agency was set up as a forum to discuss security of supply and energy policy and respond to disruptions in oil supply. While it is still focused on energy security today, IEA has broadened its scope beyond oil to include natural gas, electricity, clean energy technology and efficiency to remain relevant in a rapidly changing global energy market.
To inform policymakers and prompt action at the 26th Conference of Parties (COP26) of the UN Framework Convention on Climate Change in November, IEA created a roadmap to transform the global economy from one dominated by fossil fuels into one based on renewables – solar, wind, and hydropower – and new fuels such as hydrogen, ammonia and biofuels.
It’s an incredibly complex analysis by IEA, containing 400 milestones that must be achieved along the path to attain zero emissions by 2050, which would have significant impacts on the maritime industry. These include the gradual reduction in offshore oil and gas activity and decarbonisation of shipping.
“IEA expects ammonia to play a major role in shipping’s decarbonisation, accounting for 45% of global bunker demand by 2050”
IEA’s report expects ammonia to play a major role in shipping’s decarbonisation, accounting for 45% of global bunker demand by 2050. This will require a major increase in the availability of green ammonia produced through renewables, or blue ammonia produced from hydrogen made from hydrocarbons in combination with carbon capture. While there are a host of challenges around ammonia – there are currently no engines available, bunkering infrastructure is very limited, and it is highly toxic – energy suppliers, engine manufacturers, and owners are taking them on. During Riviera Maritime Media’s Ammonia as a marine fuel webinar, part of Asia Maritime & Offshore Webinar Week, NYK Line senior general manager of the Green Business Group Tsutomu Yokoyama highlighted the Japanese owner’s three ammonia-as-a-marine-fuel projects.
One is A-Tug, an ammonia-fuelled tug, in development with IHI Power Systems, N/GATA and ClassNK.
The second is an ammonia-fuelled ammonia gas carrier, and the third is an ammonia floating storage and regasification barge for power generation.
An ammonia fuel cell is to be tested on the platform supply vessel Viking Energy, owned by Eidesvik. The PSV will be equipped with a 2-MW ammonia fuel cell by 2023, allowing it to operate for at least 3,000 hours annually on clean fuel.
While I’m still digesting the 224-page report, some of the key takeaways are that oil and gas companies can lead the charge in the transition to clean alternative fuels through targeted investment and R&D.
Governments, too, in the form of policy and funding, must increase investment in electrification, hydrogen, bioenergy and carbon capture, utilisation and storage.
OSV owners have a role to play, too, supporting a major ramp up in offshore wind, which is already underway and driving the emerging clean-energy markets.