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Capturing the market opportunity of low and zero-carbon marine fuels

To meet the Paris Agreement climate targets there needs to be a significant reduction in emissions from all sectors of the global economy and the underlying supply chain. Currently, the shipping industry contributes between 3% and 4.5% of worldwide emissions: approximately 1.1 billion tonnes of CO2 per year. By comparison, the aviation industry, (which is under a huge amount of pressure to reduce emissions) is responsible for approximately 650 million tonnes of CO2 emissions per year - just over half that of the maritime industry. Alongside these CO2 emissions, the UN’s IPCC report showed that other pollutants from shipping, including sulphur compounds and soot, are rising even faster than CO2 emissions.

The International Maritime Organization have set the goal of reducing the shipping industry’s emissions by at least 50% by 2050 (which equates to approximately 85% CO2 emission reduction per vessel), evolving to zero carbon emissions as soon as possible after this, but within this century. These targets have meant that many shipping companies are actively considering switching to low/zero carbon fuels.


The industry is currently almost entirely based on fossil fuels as the energy source, making it a tough sector to decarbonise. In addition, port operations consume energy, which is mainly fuelled by diesel today.


This is the second article of our two-part series that sets out some of the possible approaches to:

1. Decarbonise port operations, and

2. Enable the switch to low/zero carbon shipping fuels to reduce the total emissions arising from the maritime industry.


Therefore, the second area of the shipping industry that needs to be decarbonised is the fuel used for the ships. Shipping is often classed as a ‘harder-to-abate’ sector, however, stakeholders are expressing optimism around the challenge and believe it is possible to turn most barriers into an opportunity in order to achieve decarbonisation. To decarbonise this area, the fossil-fuel derived fuels that are currently being used need to be switched out for alternative lower or zero emission fuels.


Figure 1: Global shipping movements [Shipmap.org]


There are many possible options of alternative fuels to replace the current fuels being used, with options listed in the table below:

​Measures/energy type

CO2 Emission reductions

Advanced biofuels

25-100%

LNG

0-20%

Hydrogen

0-100%

Ammonia

0-100%

Fuel Cells

2-20%

Electricity

0-100%

Wind

1-32%

Solar

0-12%

Nuclear

0-100%


The following section covers a range of the most promising alternative fuel and energy options and assesses their costs and the potential for emission reductions. It is worthy of note that not all of these options have reached market maturity yet.



Advanced Biofuels

The first possible option for an alternative fuel is Advanced Biofuels. Biofuels are produced from organic material, such as plant materials and animal waste. Traditional biofuels include unprocessed biomass, whereas advanced biofuels are produced by extracting biofuels from materials such as wood, crops and waste material.


Advantages and disadvantages of advanced biofuels:

​Advantages

Disadvantages

​Reduction in CO2 emissions between 25-100%

​Requires the conversion of agricultural land or forests – potentially reducing food supplies and incentivising deforestation.

​Considerable reduction in sulphur emissions

​Some specific biofuels tend to oxidise and degrade when stored more than 6 months.

Little adaptation of the marine engines is needed as it is possible to produce marine biofuels that are compatible with existing engines.

The supply of biofuels might be insufficient to power the whole shipping fleet - current supply can only cover about 15% of the total demand.

​Possible to blend biofuels with other ship fuels such as marine distillates.

Encouragement of uptake may be hard but, governments have leverage to create demand stability that could help secure uptake and influence biofuel availability.

Huge economic opportunity for emerging economies e.g.- Argentina and Brazil.

​More knowledge on their performance and physical properties through more testing and standardisation might be required.


The Dutch company GoodFuels has initiated the application of advanced biofuels (from waste/residue feedstock) for various shipping clients including Heineken and the Dutch Coast Guard.



Liquefied Natural Gas (LNG)

Another alternative marine fuel option is LNG. LNG is formed when natural gas is cooled to -162 degrees C, shrinking the volume of the gas 600 times.


Advantages and disadvantages of LNG:

Advantages

​Disadvantages

​Not explosive and does not ignite

The handling and combustion of LNG involves the release of unburnt methane (methane slip). Methane has a global warming potential 28 times higher than CO2 over a period of 100 years.

Huge reduction in air pollution including SOx emissions and particulate matter by almost 100%.

As it does not reduce CO2 emissions more than 30%, this fuel will only be able to be used in the short/medium term.

Substantial CO2 reduction between 5-30% compared to heavy fuel oil.

Increase in government backed initiatives to encourage LNG.




Green Hydrogen

The third possible option for reducing emissions in this sector, is through utilising green hydrogen (ie.- hydrogen that is produced by water electrolysis, powered by 100% renewables) which could reduce emissions by up to 100%. This is one of the more feasible options and trials are already being run worldwide.


Advantages and disadvantages of Green Hydrogen:

Advantages

​Disadvantages

Emits zero CO2, sulphur oxides and only negligible amount of nitrogen oxides.

More research and development needed for the use of hydrogen as a replacement for conventional diesel fuel to make it commercially viable.

It is flexible: it can be used as a fuel in several different ways: in fuel cells, in a dual fuel mixture with conventional diesel fuels and lastly as a replacement for HFO for use in combustion machinery.

No standardised design and fuelling procedure for hydrogen powered ships and its bunkering infrastructure.

Can be mixed with HFO fuel (in a dual fuel mode) or completely replace HFO as a shipping fuel.

More research needs to be done into methods of sustainable hydrogen production.


Green Ammonia

Another possible option is using Ammonia as a fuel to decarbonise the marine fuel sector. Ammonia is a hydrogen carrier that can be used in fuel cells or as a fuel for direct combustion. Green ammonia has emerged as the green shipping fuel for the future, however, forecasts suggest that it will not be the sole answer to decarbonising shipping. It has a relatively high energy density of around 3kWh/litre and with existing global transportation and storage infrastructure, ammonia could form the basis of a new, integrated worldwide renewable energy storage and distribution solution.


Advantages and Disadvantages of Green Ammonia:

Advantages

Disadvantages

​Has a high hydrogen content containing no carbon atom- emits zero CO2, SOx and close to zero nitrogen oxide.

​Unlike hydrogen, the deployment of ammonia as a marine fuel is still in a research/development phase. No ammonia powered ships are yet operational, but several projects are under development.

Stored at a higher/easier temperature (33.4°C) than hydrogen (-252.9°C), reducing operating costs.

​To become economically viable, sustainable ammonia must become more cost competitive compared to conventional ammonia, production of which still heavily relies on fossil fuels such as natural gas.

Further developments of ammonia as a complement or replacement for HFO can also offer a promising alternative to reduce CO2 emissions in the long term.

​Cost of producing green ammonia is still about twice as high as natural gas-based ammonia.

​Offers an attractive short-term solution in dual fuel configurations with reasonable commercial viability. In 50/50 HFO/ammonia scenarios there is a reduction in total CO2 life cycle emissions of up to 35% per tonne-kilometre.

Ammonia is already a widely traded and transported commodity around the world, as it is used as a fertiliser. There is existing significant port loading infrastructure, handling experience and safety know-how.

Ammonia is already a widely traded and transported commodity around the world, as it is used as a fertiliser. There is existing significant port loading infrastructure, handling experience and safety know-how.




Green Methanol

Another option for an alternative fuel is methanol. Methanol is another potentially highly viable future marine fuels. Currently, methanol is being produced from natural gas, which reduces CO2 emissions by 25% compared to HFO, has an emission reduction potential of 99% for SOx, 60% for NOx and 95% for particulate matter.


Advantages and Disadvantages of Green Methanol:

Advantages

​Disadvantages

Methanol can be produced from renewable energy resources, such as CO2 capture, industrial waste, municipal waste or biomass which significantly reduces its greenhouse impact.

​The technology is not widely tested or in use yet.

​Methanol is available in large quantities and can be made from a wide number of resources.

In current projects, most of the methanol is produced using natural gas, so it does not achieve the full potential of CO2 emissions reduction it could achieve.

Methanol has a long history already of being transported, and therefore experience in handling and operation already exists.

Typical conversion cost for a ship is EUR 22 million.

Requires only minimal modifications to ships and bunkering infrastructure as already close to current fuels.

​Regulation is less constraining, as methanol is safer to handle than LNG and (even) conventional fuels.

​Already being used as a road vehicle fuel in China: engine technology is already available.


Methanol Case study

Sweden has been at the forefront of the development of methanol-powered ships. A pilot project was launched, with support from the EU “Motorways of the Seas” programme, to convert a RoPax vessel into a methanol-powered vessel and provide bunkering as well as other necessary facilities in ports. This project has led to the development of the Stena Germanica, a large passenger and car ferry operating between Gothenburg and Kiel. This is the first ship operating on methanol. Methanex are the suppliers for this methanol: currently produced from natural gas, so therefore not achieving the full potential of CO2 emissions that it could achieve, but a valuable proof-of-concept for methanol fuel (and in the future, for green methanol fuel). Going forward, Stena expects conversion costs to decrease greatly if applied to several ships at the same time and are exploring ways to develop production based on biomass to fully achieve the greenhouse gas emissions reduction potential.



Fuel Cells

Another option for fuel alternatives is fuel cells. The fuel cell directly converts electrochemical energy by transforming the chemical energy from certain compounds into electric power without combustion involved, releasing both electrical and thermal energy in the process. Hydrogen is most frequently used in fuel cells today, but other fuels can be used too depending on the application. The hydrogen can be produced conventionally from methane steam reforming, fossil fuel or biomass gasification, or water electrolysis. The most promising technologies are the Proton Exchange Membrane (PEMFC) fuel cell with hydrogen, the high temperature PEMFC and the solid oxide fuel cell (SOFC). For larger vessels such as cruise ships and container ships, the high temperature fuel cells are appearing to be the most suitable sources of on-board energy. Existing fuel cell solutions favour smaller vessels of short range where onboard storage of compressed hydrogen is more viable.


Advantages and Disadvantages of Fuel Cells:

​Advantages

​Disadvantages

Green hydrogen can be used in the fuel cells.

The technology is not widely tested spread yet.

​PEMFCs maturity is the highest among the 3 fuel cell types and therefore least costly.

High temperature PEMFC has a high cost and is more space-demanding than other fuel cells.

The only exhaust product is water.

SOFCs have a very high cost, and if a hydrocarbon fuel is used then CO2 and NOx emissions are created. SOFCs also pose a safety risk because of the high operating temperatures.

​Fuel efficiency is 50-60% for PEMFCs and 60% for SOFCs.

CO2 can still be released in the fuel manufacturing process even if hydrogen is being burnt.

PEMFCs are sensitive to the impurities in the feed hydrogen.

Overall whilst fuel cells have such strong positives, they are still at a low maturity level, they are presently expensive as well as space demanding. At their current stage of development, fuel cells are viable mainly in auxiliary, hybrid and low power machinery. Until the technology matures further, the CO2 reduction potential will be in the range of 2 to 20%.



Conclusions

There is an emerging and significant market opportunity and growing commercial/statutory incentive for shipping companies to switch to more green fuels. By utilising renewables and hydrogen as a storage fuel, it will be possible to reduce emissions produced by ships by up to 100%. But to achieve this, it will be necessary to combine several different fuel methods. As we move forward and technologies continue to mature, the energy transition for ports will become easier (standardised, modular solutions, etc.) and there will be a reduction in costs from mass production of the more developed, widely used technologies. The most promising technologies enabling complete decarbonisation are looking to be hydrogen and fuel cells, green ammonia and green methanol.


Ship owners and operators

If you are considering your options for future fuelling of marine vessels, FCW/CREAS can support you with conceptual studies, technical analysis and commercial modelling of:

· Conversion of existing vessels to utilise low/zero-carbon fuels

· Installation of hydrogen fuel cells to enable complete decarbonisation of in-port powerplant operations

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