Exclusive research commissioned by Riviera Maritime Media casts light on how shipping is approaching the challenge of decarbonisation, writes The Strategy Works managing director Michael Herson
The debate on compliance choices for the 2020 sulphur cap in January may be nearly over, but major new challenges now face the shipping industry as it prepares for decarbonisation.
To assess the mood of industry experts within the shipping industry, London-based consultancy The Strategy Works carried out 53 in-depth telephone interviews in Q1 2019 with a sample comprising 16 shipping companies (representing around 1,800 vessels); 14 class societies and research institutes; eight scrubber manufacturers; eight engine designers, technology companies and shipyards; and seven lubricant manufacturers. A number of key themes emerged from the research.
Alternative fuels: the options
With opinions sharply divided on LNG – some see it as a pragmatic interim solution due to its immediate favourable impact on SOx and NOx emissions, while others are disparaging because of methane slip – more alternative fuel options are needed.
Hydrogen emerged as the most given answer by respondents, albeit with many different variations of hydrogen fuel being cited including hydrogen extracted from renewable power, liquid hydrogen, or hydrogen fuel cells. There was little consensus for an individual option, but as a generic fuel source, one Asian Class Society says: “As a potential energy source, hydrogen is a strong contender. Hydrogen is a clean and renewable energy, already used by motor vehicles”
Ole Graa Jakobsen, head of fleet technology at Maersk endorses this view, noting: “I definitely think hydrogen will be part of the pathway on board vessels.”
In fact, the world’s first zero-emission hydrogen ferry powered by fuel cells is due to come into service in 2021, backed by the EU funded ‘Flagships‘ project, with a €5M (US$5.6M) grant. Demonstrating the potential for collaboration, the consortium includes nine European partners, with two shipowners Norled and CFT, and the maritime OEM ABB, and design company LMG Marin. Ballard Europe will provide the fuel-cell technology and vessel energy monitoring and management will be provided by PersEE.
Norled CTO, Sigvald Breivik, stated in May: “Norled has taken a leading role in the development of zero-emission ferries. This innovation project will be an important next step when it comes to proving the maritime fuel-cell technology and illustrating its business viability.”
Michael Herson (The Strategy Works): Emissions control will be facilitated by digitalisation and the growth of big data
There is also a good body of support for ammonia, regarded as compatible (in its liquid form) for existing infrastructure according to James Mitchell, manager global climate finance industry programmes at US-based Rocky Mountain Institute. “Ammonia is an easier fuel to transport, as well as having the right fuel density and being more compatible with existing infrastructures than other options.”
Indeed, MAN Energy Solutions announced in Q1 it is developing an ammonia-fuelled engine with a €5M (US$5.6M) investment over the next two or three years, with the first ammonia engine planned to be in operation by early 2022, if ship owners embrace the technology. Mindful of the infrastructure issue, MAN ES is also supporting the implementation of ammonia as a fuel through industry partnerships, financing, and regulations.
“We believe that by 2030 newbuild ships, navigation ships and short sea ships should definitely be emission neutral”
Although biofuels are positively regarded as a potential solution, particularly by Class and Research Institutes, concerns have been expressed over the issue of availability, due to competition from land and aviation for a feedstock that is very likely to be in short supply.
As Dr Tristan Smith at UCL’s marine consultancy UMAS confirms: “We just won’t have the volumes at anything like the 200, 300 million tonnes of fuel that the shipping industry needs. When we look at what the availability of bioenergy is, we struggle to get close to what we’d need for shipping.”
This view is endorsed by Hannah Walker, marketing and communications manager at the Roundtable on Sustainable Biomaterials (RSB), who notes: “Where is all of this feedstock going to come from? How are we going to get it from fields into ships, or into tanks, and how are we going to do it sustainably?”
It is evident then that “no-one has the silver bullet”, as put succinctly by Andrew Stephens of SSI (Sustainable Shipping Initiative). Virtually all the collaborations on alternative fuels are taking place within the Research Institutes and Class Societies. Shipping companies and Research Institutes are also collaborating with each other, as members of organisations such as European Sustainable Shipping Forum.
But these collaborations need to be stepped up several gears as Sara Lawrence, technical manager of Shell Marine Products emphasises: “We need more collaboration and co-operation and you see that happening in some places but probably not on the scale that we need yet”
Even very large shipping companies such as Maersk recognise the sweeping changes that are required cannot be achieved by companies acting alone. Maersk Line head of fleet technology Ole Graa Jakobsen explains: “We want this first level of operation to be carbon neutral and business viable in 2030 and we can’t do that alone, so we need to invite partners from research bodies and universities to help us achieve that goal.”
Mr Stephens of SSI also recognises the need to work across transportation sectors: “We don’t solve any of these big issues unless we work across sectors and we engage all multi-stakeholder parties involved.”
It is a view held also by Katharine Palmer of Lloyd’s Register – “The shipping sector can’t do it on its own” – and echoed by ABS director containerships Jan Otto de Kat, who says: “It makes sense to bundle forces, especially if they are looking at these major challenges, like how are we going to really decarbonise in a big way.”
Jan Otto de Kat (ABS): “It makes sense to bundle forces, especially looking at major challenges like how to decarbonise"
Ms Walker of RSB cites aviation as a sector where the challenges that lie ahead for shipping are now being addressed. “It’s already happening in aviation and things are moving very quickly. Marine has longer to go to reach commercial viability, but the potential is there, 100%.”
Scarce renewable energy sources will drive collaboration, as the same pressure points to decarbonise are just as strong, if not stronger, on land as they are on the oceans. As, Benoit Loicq, director technical environment affairs SEA Europe puts it: “That is what the European Commission expect us to do… in the new R&D approach they want to force industries to be more co-operative.”
TSWs research showed that one university, UCL in London, through its UMAS division (University Marine Advisory Services) is heavily engaged in collaboration within shipping. Indeed, UMAS has been collaborating closely with Lloyd’s Register for a number of years to understand the decarbonisation pathway options, both technically and commercially, culminating in the production of its ‘Zero-Emission Vessels Transition Pathways’ study in Q1 this year. But it is clear more needs to be done globally to extend collaboration between shipping and universities.
Globally there needs to be more universities willing to collaborate with shipping. In Norway for example, a network of shipping companies collaborates with MAN Tech University with support from manufacturers and the Norwegian government.
Of course, the alternative fuels themselves will need to be produced from renewable sources, as UCL’s Mr Smith succinctly reminds us: “It doesn’t matter whether we’re talking about batteries, ammonia or hydrogen, or even e-methanol, you will still need to have massive quantities of renewable energy.”
Incentivise or regulate?
Regional regulation to protect the environment in port areas is widely expected to increase. But pressure to reduce emissions can also come from port incentives or other forms of ‘soft power’.
Interestingly, China is leading the way with port incentives to protect its major port and coastal river areas. From January 2020 seagoing vessels will be encouraged to use 0.1% sulphur fuel when entering the inland river control areas in two major provinces: Guangzhou and Shenzhen. By January 2025 this will extend to the Chinese eastern coastal waters.
The Guangzhou subsidy offers shipping companies the opportunity to recover the cost difference between using 0.1% fuel and 0.5% low sulphur fuel during the time that the vessel is within the ECA Pearl River zone. The subsidy is calculated on the net tonnage of the ship. Ships using shore power facilities during berthing can also benefit from preferential electricity prices, as well as achieve priority when entering and leaving the port.
The subsidies are even more generous in Shenzhen, where vessels have to pre-register under their ‘Shenzhen Port Green Convention’ to qualify and sign a letter of commitment pledging to use low sulphur fuel of 0.1% or less when entering the Pearl River Delta.
The providers of finance to shipping are likely to increase their influence and prioritise environmentally friendly vessels. “We are working quite a lot with stakeholders in the industry who want to be able to measure their carbon emissions … one of those groups are banks that make shipping investments,” comments Mr Smith.
In a statement put out in April this year central banks stated a “massive reallocation of capital” is required to reach net zero carbon emissions by 2050, indicating they would “lead by example”, by making their own operations more sustainable. This will clearly extend to investments made in shipping.
“There is no known technology today by which we could reach the 2050 target even if we had all the money to invest”
If soft power fails to work, then an increase in legislation in the densely inhabited areas around ports is likely to be extended. It has already started on land with the introduction of the ultra-low emissions zones (ULEZ) in London. The George Washington University published a paper in The Lancet in April linking four million paediatric asthma cases globally to traffic-related air pollution, citing Lima and Shanghai (both ports) as the highest per 100,000 children.
2030 not 2050
There is a growing body of evidence from this research that 2030, not 2050, must become the target, as the approximately 20-year lifetime of ships means that steps will need to be in place by then.
“We believe that by 2030 newbuild ships, navigation ships and short sea ships should definitely be emission neutral, including carbon and also other emissions,” says Shipyards' and Maritime Equipment Association of Europe (SEA Europe) director of technical and regulatory affairs Benoît Loicq.
DFDS director of environment and sustainability Poul Woodall agrees. “There is no known technology today by which we could reach the 2050 target even if we had all the money to invest, so something has to come on the table between now and 2030 or 2035,” he says.
The role of data
Emissions control will be facilitated by digitisation and the growth of big data, including internet-of-things (IoT). This will enable better ship tracking, port management and route management. An example in Europe is the collaboration between the Port of Rotterdam & IBM Watson, deploying their IoT technology to achieve more efficient traffic management, which will impact favourably on emissions reductions.
New tools, such as geospatial data gathered by mini satellites, will encourage marine vessel efficiency and improve surveillance. These satellites provide high temporal resolution imagery of shipping lanes in coastal waters and have multiple applications which will help regulators do their job.
New players who have already launched satellites include NovaSAR-1 Project, part-funded by the UK Government, which is a collaboration between SSTL (part of Airbus) and its mission partners; UK Space Agency; Indian Space Research Organisation; and CSIRO in Australia.
But the big, emerging player in the market is Planet, which has launched 150 mini satellites, the biggest such fleet in the world today, it claims. Planet’s technology provides live daily spatial information feeds based on algorithms which can detect objects and extract features: “You can’t fix what you can’t see,” according to founder Will Marshall, when interviewed for the FT’s Tectonic podcast in February this year.
Clearly this has potential to be a force for good, if Planet successfully markets its data and efficiency measurement tools to both shipping companies and organisations monitoring compliance. The technology can achieve port vessel detection feed down to three metres resolution and monitor ship traffic in open water areas. Google has invested in Planet, having sold its satellite arm (Terra Bella) to Planet in 2018 in return for a stake in the enlarged business.
Big tech is also entering the market, with Amazon trialling a shipping network from China to the US – in effect a closed ecosystem – in a step towards controlling of much of its own transportation network, according to an article published in USA Today in Q1 this year.
ABS believe these new smart technologies are imperative to reduce greenhouse gasses: “We will see smarter ships, smart technologies and maybe more robotic ways to further improve the energy consumption on board … with all of these can we reduce the emissions of greenhouse gases.”
Cruise company Royal Caribbean Lines also sees potential. In an anonymous survey response the company’s representative notes: “I think we have an opportunity today with very sophisticated sensors, to collect data, process data and conduct very advanced analytics; we have huge potential to improve efficiencies … it’s ripe for using artificial intelligence and data in a different way to optimise the use of the vessel.”
MAN Energy Solutions director of new technology promotion Kjeld Aabo agrees the technology can improve engine efficiencies and hence emissions: “It means you can check the operation of the engine; then you are in the best position to monitor performance, including fuel consumption/emissions and can foresee corrections, required time for overhaul, and enhance engine component development.”
Winterthur Gas & Diesel also endorses this view, with vice president research and development Dominik Schneiter noting: “I think digitalisation, hybridisation, creates real opportunities to think a bit differently about how a vessel can be optimised and it’s environmental footprint minimised. Digitalisation allows you to optimise your energy flows, which is ultimately what IMO is aiming to address with SEEMP.”
It is clear shipping is not an island and cannot achieve all of this on its own. As Mr Loicq of SEA Europe concludes: “There will not be a ‘one size fits all’ solution for the shipping industry; but solutions that will apply to the shipping industry will most likely be available for other modes of transport.”
This article has been prepared by Michael Herson of London-based The Strategy Works - a strategy consultancy specialising in original insight on a global basis within the shipping industry and other B2B sectors.