Shipping is the backbone of global trade, with over 100,000 large cargo vessels transporting 80-90% of all internationally traded goods globally. The vast majority of these ships use engines that burn the leftovers of refined crude oil – heavy fuel oil, marine gas oil (MGO) and marine diesel oil (MDO) etc. – releasing roughly 940 million tons of CO2 into the earth’s atmosphere from well-to-wake – accounting for roughly 3% of the world’s total greenhouse gas (GHG) emissions.
With these immense emissions in mind, the impetus for change has grown significantly in recent years and the sector’s leading multinational and political organizations, such as the International Maritime Organization (IMO) and EU Commission, have pledged to reduce shipping emissions by 50% in the coming years. One of the immediate solutions to address this task is through the adoption of alternative fuels, including e-methanol and ammonia.
As we turn into 2024, the route to adopt alternative fuels has propelled forward. The IMO’s Marine Environment Protection Committee (MEPC-80) session, held between 3-7 July 2023, adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, with enhanced targets to tackle harmful emissions.
Importantly, the revised IMO GHG Strategy includes an enhanced common ambition to reach net-zero GHG emissions from international shipping close to 2050, a commitment to ensure an uptake of alternative GHG fuels by 2030, as well as indicative checkpoints for 2030 and 2040.
Charting the next steps to enact change
Following MEPC-80, the IMO set out next steps to further facilitate the implementation of alternative fuels.
The MEPC agreed on the terms of reference for a future ISWG-GHG meeting as well as the next steps for a comprehensive impact assessment of candidate GHG reduction measures. The sixteenth session of the Intersessional Working Group on the Reduction of GHG Emissions from Ships (ISWG-GHG 16) is set to meet in April 2024, ahead of the MEPC 81 session.
Additional interim guidance was published by the MEPC on the use of biofuels in shipping, and the meeting of ISWG-GHG 16 will also look to consider proposals put forward related to the onboard capture of carbon dioxide, with a view to advising the Committee on next steps, in line with the IMO’s regulatory framework, ahead of MEPC-81.
These policies implemented by the IMO are critical to ensure a smooth transition from incumbent and new technologies, in turn providing certainty and clarity for investors in the sector.
However, there are still significant challenges to adoption. Emissions from shipping are not included in the Paris agreement and will therefore likely be placed lower down in the priority list for member states. Additionally, numerous chicken-and-egg scenarios have delayed the timeline for adopting new decarbonization technologies.
Even though the regulatory groundwork has been prepared through the IMO, significant investment is also required to ensure these challenges are overcome at pace. The Norwegian international registrar and classification society, DNV, estimated in 2022 that the maritime industry will need to invest between USD $8 to 28 billion every year (2022 to 2050) in technology to reach net zero goals by 2050.
Those investments will not be made without a strong and clear market signal from policymakers in the form of binding targets. For stakeholders down the value chain throughout energy intensive sectors and long-distance transportation, what we see is the need for a consistent long-term market signal from government commitments and subsidies to support the energy transition.
Stakeholders across the value chain need to continue to work together to ensure governments can make these commitments to help drive investment decisions in clean energy technologies. We are seeing this already in the U.S. through the Inflation Reduction Act (IRA), and in the EU through the EU Green Deal - both of which have served to incentivize more commitments from governments globally.
In February this year, positive steps have been taken by the EU Commission, publishing a proposal that would give shipping priority access to low and zero-emissions fuels to meet the bloc’s decarbonization targets. While a strong commitment, it is imperative that the proposal is processed quickly by co-legislators and without legislation being watered down to ensure it makes a tangible impact to the update of low-carbon fuels.
What will fuel this change?
As it stands, there is no silver bullet that can solve this problem alone, and the industry is considering a range of alternative fuels to ensure this transition is effective near-term. Initial drop-in solutions have included biofuels derived from waste and solid waste, but in the longer term, the industry is considering options including e-methanol, ammonia, hydrogen and carbon capture technologies.
Both of these fuels are commodities and therefore readily available, but in order to reduce GHG emissions we need to change the way these are produced. Several solutions exist. One pathway is Power-to-X, i.e. using green hydrogen produced using renewable energy to power an electrolyzer, but scaling up capacity will take a few years due to current limitations on green electrons and allowing time for infrastructure build-out.
Both e-methanol and ammonia have the potential to play a significant role in decarbonizing the energy-intensive sectors and the shipping sector. They are green alternatives when produced using renewable energy, and due to their high energy densities (the ability to store a lot of energy in a small volume), they can be easily stored and used today with existing infrastructure. Experts indicate that 15Mtonnes of fossil fuels must be replaced by clean fuels to pave the way for success. Currently, e-methanol presents the most viable option, owing to the advancement of ship engine technology availability, with ammonia engine technology expected to develop and expand next year.[1]
The global demand for ammonia is growing, and production is expected to increase by over 600 Mt by 2050, according to the most recent UMAS report. This is due to the growing demand for ammonia in the energy transport, thermal power generation, and maritime shipping sectors. The Getting to Zero Coalition is working towards commercially viable zero-emissions vessels along deep-sea trade routes by 2030.
Another fuel source can be taken from the production of low-carbon hydrogen through capturing produced CO2 and converting hydrocarbon feedstocks with natural gas, as seen with Topsoe’s autothermal reformer technology. This way, GHG emissions can be significantly reduced, and low-carbon hydrogen and ammonia can be produced and deployed at scale for a reasonable cost.
Beginning our research in innovating low-carbon fuel solutions over 20 years ago, Topsoe possesses both the expertise and the technologies needed to transform renewable electricity, biomass, and waste into green hydrogen and green ammonia, eMethanol, eFuels, and biofuels that will power a sustainable future.
We are one of a few companies that has the full Power-to-X value proposition, underpinned by our proprietary SOEC (Solid Oxide Electrolyzer Cell) technology. Power-to-X is the conversion of renewable energy sources, generated from wind, sun, or water, to green hydrogen or different energy carriers such as green ammonia or methanol that can be used in energy-intensive sectors, including shipping. We are one of the few companies capable of facilitating the production and large-scale availability of next-generation fuels and chemicals. We are already engaged in several projects aimed at proving the viability of SOEC, including the NEOM project, announced in July 2020, for which we will deliver the world's largest green ammonia plant.
We are proud to be involved in The Liquid Wind Consortium to build an e-methanol production facility – named FlagshipONE – in Sweden. Topsoe provides engineering, procurement and fabrication capabilities for the facility’s e-methanol technology, a so-called e-methanol Loop, as well as pre-assembled modules for the facility and free-standing equipment such as the methanol reactor and distillation columns.
FlagshipONE was developed by the Liquid Wind-consortium, which consists of developers, energy and technology companies that develop, finance, and build commercial-scale facilities to produce green e-fuels.
FlagshipONE has been acquired by Ørsted and is the first of the Liquid Wind-projects to be built. Operation is expected in 2025 with an estimated output of 50,000 tons per year of e-methanol from renewable energy and biogenic CO2, which can fuel one large ocean-going vessel or several ferries.
[1] Global Maritime Forum, “Five percent zero emission fuels by 2030 needed for Paris-aligned shipping decarbonization”, by Peder Osterkamp and Dr. Tristan Smith, March 2021.
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