Accounting for approximately 3% of global greenhouse gas (GHG) emissions, the marine shipping industry is facing increasing pressure and requirements to reduce its emissions in line with the Paris Climate Agreement. The industry currently uses low sulfur heavy fuel oil, which is especially carbon intensive. Cross-oceanic bulk carriers and container ships have large fuel storage requirements that would be very difficult and expensive to meet with battery-electric drivetrains. Last year, the European Union (EU) adopted a package of policies for the shipping industry, including a requirement that the GHG intensity of the energy used on board by a ship must be reduced by 80% by 2050, with gradually increasing interim targets. And last summer, the International Maritime Organization (IMO) revised its emissions goals to net-zero by “close to 2050,” up from its previous goal of a 50% cut in overall emissions by 2050. The IMO also set in motion a two-year process for adopting policies for meeting the new goals, which include interim emission reduction targets of 20-30% by 2030 and 70-80% by 2040.
In anticipation of and in response to such targets, progressive ship and engine manufacturers and cargo owners are beginning to invest in ships and services that can be fueled with alternative low- and zero-carbon fuels. Major engine manufacturers for container and cargo ships have been developing dual-fuel engines that can be run on alternative fuels, such as methanol and ammonia, in addition to conventional marine fuel (low sulfur heavy fuel oil). Orders for dual-fuel ships are on the rise, with the two largest marine engine companies, MAN and Wartsila, expecting such engines to become the standard design within a few years. The recent IMO decision will likely accelerate this trend.
The flexibility of blending in low-carbon alternative fuels will be especially critical given the 30-plus-year operating life of most commercial ships, even if that capacity is retrofitted onto the ship down the line. Furthermore, alternative fuels have different levels of carbon intensity, ranging from natural gas to bio-based fuels to zero-carbon, hydrogen-based fuels, such as ammonia, made with zero-carbon electricity.
To look at how the marine shipping sector could transition to low-carbon fuels, CATF has developed a tool for comparing fuel costs and carbon emissions over the operational life of a cross-oceanic ship. Our initial analysis, Managing the Transition to Zero-Carbon Marine Fuels, looks at ships designed to run on ammonia entirely or in a variety of dual-fuel retrofit scenarios compared with a standard ship fueled with low sulfur heavy fuel oil. The biggest take away is that dual-fuel engines will enable shipping companies to pivot quickly toward alternative fuels if and when supplies are available. Under a policy that puts a price on carbon emissions (e.g. EU Emissions Trading System) we found that ammonia-fueled ships could nearly fully decarbonize, depending substantially on lifecycle emissions of fuel supplies, at a lower overall lifetime fuel cost than conventional heavy fuel oil.
The IMO has charged itself with developing a carbon-intensity standard and economic incentive policies over the next two years to deliver on its new “net zero by or around” 2050 and interim targets. This is a critical opportunity to create a global shift to low- and zero-emission shipping over the next two decades, especially if effectively scaled in tandem between ship and port investments and fuel supplies.
Critical factors in making real and rapid progress:
Minimal upstream emissions
To ensure zero- or near zero lifecycle emissions, the clean marine fuel standard should require minimal upstream emissions for the alternative fuel selected. For hydrogen and ammonia produced from natural gas, fuel suppliers should be required to minimize and verify upstream methane leaks and capture and sequester carbon dioxide (CO2) to the fullest extent possible. Fuels utilizing biomass feedstocks, the net carbon impacts of which either vary significantly or are entirely uncertain, should not be considered a “green” shipping fuel until the fuel’s feedstock and production pathway has been demonstrated to have zero or near zero lifecycle emissions, including minimal indirect land use change impacts. Fuels or fuel feedstocks produced with electricity must use zero-emission electricity that is both additional to the existing supply and hourly and geographically matched to demand to minimize the consequential emissions associated with fuel production.
Safe bunkering of alternative fuels
Alternative fuels can have substantially different risks, with regard to human and environmental exposures, that must be addressed in and around fuel bunkering facilities. For example, existing safety measures for carriers of liquified gas such as ammonia include protection against leakage, firefighting procedures, tank cleaning protocols, emergency procedures, and training of personnel. These and other existing regulations should be assessed to identify appropriateness for fuel bunkering operations of alternative fuels.
On-board pollution controls
As noted above, shipping fuel, including alternative fuels, can emit a variety of pollutants when burned. With regard to global warming pollutants, in addition to CO2, nitrous oxide (N2O) is also a potent greenhouse gas that can result from burning any fuel in ambient air. The IMO should require the use and monitoring of pollution control systems on ships to minimize the release of nitrogen oxides and other pollutants.
Zero- and near-zero emission marine fuels will likely exceed the cost of conventional fossil marine fuels over the next decade. A well-designed marine fuel standard, based on the full carbon intensity of conventional and alternative fuels, can help level the economics, transition the industry, and meet the IMO net-zero-by-mid-century goal. One approach, known as a low carbon fuel standard, would be to set an average carbon intensity standard for fuels that would get more stringent over time. Fuel providers that exceed the standard will be required to buy credits generated by fuel providers that are below the standard.
The varying carbon intensity and costs of these fuels will give dual-fuel ship operators additional flexibility in the mix of fuels they use to meet carbon reduction targets and manage their fuel costs. Fuel costs and emissions can further be managed and reduced operationally with slower shipping speeds. Reducing speeds by 10-30%, for example, can result in 20-50% reduced fuel use, regardless of fuel type.
While faster reductions are needed, the IMO decision is a welcome move in the direction the marine sector needs to go — zero emissions by midcentury. Whether the shipping industry will meet those targets will depend on smart investments and, critically, the availability of low- and zero-carbon fuels in major ports of call. The IMO now has the task of creating clear rules and incentives for transitioning to this zero-emission shipping future.