If the global shipping industry were a country, it would be the world’s sixth-highest CO2 emitter, ahead of Germany. As an international industry, shipping was not covered by the 2015 Paris climate change agreement that focused on individual nations’ responsibility for critical emissions. But as unprecedented heatwaves, forest fires and flooding raise global awareness of climate change, the shipping industry is starting to make up for lost time.
How significant is their response? And was Maersk’s recent announcement of investing over US$1.4bn in eight post-Panamax containerships that can run on methanol or bunker fuel just a drop in the proverbial ocean? Let’s take a closer look at how shipping is responding to the climate crisis.
CO2 and black carbon
The global shipping industry is responsible for around 3.1% of global CO2 emissions. But that figure does not include black carbon emissions, i.e. soot and unburned hydrocarbons that also cause global warming by absorbing sunrays and the associated heat rather than reflecting them off the ice. With the Arctic warming up much faster than the global average, the Clean Arctic Alliance recently called for black carbon cuts from shipping. “One fifth of shipping’s climate-forcing emissions come from black carbon and four fifths from CO2,” says Clean Arctic Alliance Lead Advisor Sian Prior.
The International Maritime Organisation (IMO) is targeting at least a 50% reduction in emissions by 2050 relative to 2008 levels. In August 2021, the European Commission proposed gradually adding shipping to the EU Emissions Trading Scheme (ETS) from 2023, phasing it in over a three-year period. Shipowners will then have to purchase ETS permits when their vessels cause pollution or face possible bans from ports within the EU. This will not only affect ships sailing within the EU but also cover half the emissions from international voyages starting and ending there. The international shipping community’s response has not been entirely enthusiastic.
Possible decarbonisation routes
What possibilities are there for reducing the shipping industry’s carbon footprint? A report published in 2020 by the classification society ABS foresees three potential fuel pathways to meet the IMO’s decarbonisation goal:
- 1) light gas, e.g. liquefied natural gas (LNG) and synthetic natural gas (SNG)
- 2) heavy gas and alcohol fuels, e.g. liquefied petroleum gas (LPG), methanol and ammonia
- 3) bio/synthetic fuels, e.g. made from biomass
Low- and zero-carbon fuels that have a low volumetric energy content, e.g. methanol, ammonia or hydrogen, will most likely require vessels to be redesigned. Newer power generation systems such as hybrid diesel-electric or fuel cells can potentially reduce emissions significantly. However, the transition to low- and zero-carbon fuels is likely to increase the CAPEX and OPEX of vessels in the medium term until the required infrastructure is in place and cost-effective. The ABS study concludes that shipping will not meet IMO’s 50% reduction target if it continues on its present course. A more radical one is needed.
Alternatives to bunker fuel
Whereas electric-powered vessels are feasible in short-sea shipping, other clean fuel solutions are required for the long haul. The on-going debate on which fuel has the greatest potential is both lively and unlikely to reach a conclusion in the near future. The worldwide network of LNG bunkering facilities is growing. Green ammonia is seen by many as the green fuel of the future. Hydrogen is increasingly viewed as the preferred option by shipping organisations such as China Maritime Safety Administration, which is compiling the first national set of technical rules for hydrogen fuel, and Uniper, a Germany-based energy provider that recently abandoned plans for an LNG import terminal in Wilhelmshaven in favour of hydrogen. Wind power, one of the most ancient propulsion technologies, may also be making a comeback, for example with SGS’s FastRig featuring retractable steel and aluminium sails. The wide range of the clean fuels on offer is a problem in itself.
“The real challenge with those fuels is that it’s very difficult for a whole industry to decide on one flavour,” says Diane Gilpin, CEO of Smart Green Shipping. “It can’t happen fast enough because of the vast infrastructure … and I think that’s a real worry in terms of emissions, because they’re still rising.”
One current handicap to the implementation of alternative power sources in long-haul shipping is the lack of fuelling facilities. It’s a bit like the situation with e-cars, where any breakthrough to widespread ownership is dependent on the existence of nationwide networks of charging stations. One initiative taken by maritime industry leaders including Maersk has been to launch a feasibility study for green ammonia ship-to-ship bunkering at the Port of Singapore. “Alongside methanol, we see green ammonia as an important future fuel,” says Morten Bo Christiansen, Vice-President and Head of Decarbonisation at Maersk. “But for green ammonia to fuel our vessels in the future, we have supply, infrastructure and safety-related challenges to solve, not least when it comes to bunkering operations.” Conventionally produced ammonia is already stored and handled in 120 ports around the world, says a report by the Danish catalyst company Haldor Topsoe. It could be easily made available for green ammonia, the report concludes.
Unfortunately, the infrastructure issue is rather like the chicken-and-egg conundrum: Why should infrastructure providers invest if there are not enough alternative-fuelled vessels to create sufficient demand for a global network? And will shipping lines risk investing in such ships if the infrastructure isn’t available?
Maersk and methanol
Maersk hit the headlines in August 2021 with the announcement of its methanol ships’ purchase. The market leader in container shipping claims the eight new 16,000-container ships will save more than 1 million tonnes of carbon emissions a year when they replace older fossil-fuel-powered ships from 2024. As Soren Skou, Maersk’s CEO, says, “The time to act is now if we are to solve shipping’s climate challenge.” He is right, and this purchase is a step in the right direction.
But how significant is it in overall terms? Michael Barnard, Chief Strategist, TFIE Strategy Inc., is critical. Maersk runs over 700 ships, he points out, so these eight methanol-powered ships add up to around 1% of the fleet. As a fuel, methanol is not necessarily clean. About a tonne of CO2 is emitted in producing a tonne of methanol. Currently, 0% of that is carbon-captured. Burn a ton of methanol and another 0.6 t of CO2 is emitted. Maersk’s press release talks about “carbon-neutral methanol”. This will only be true if flue carbon capture equipment is installed on the eight ships and sequestration of the CO2 generated in the methanol production process is ensured.
Increased running costs
Another important consideration is the significant increase in running costs for a methanol-powered vessel. As methanol has a much lower energy density than bunker fuel, its on-board space and weight requirements are much higher. According to Barnard’s calculations, a methanol-powered journey by sea will cost four times as much as a traditionally fuelled voyage. If the cheapest bunker fuel is burnt, fuel costs are currently 50-60% of operational costs, Barnard says. The respective figures are around 80% for methanol from natural gas without and nearly 90% with carbon capture, and for green methanol well over 90%. With such a surcharge for green methanol, one wonders which fuel these dual-fuel containerships will mainly run on.
The fact is that long-haul shipping will continue to impact our climate for years to come. Maersk’s purchase may be good PR but doesn’t significantly address the problem. For the IMO’s decarbonisation target to be achievable much more regulatory pressure will have to be applied to the shipping industry.
The EmissionSEA research project FleetMon has been involved in for the past three years will enable the MRV data on CO2 emissions of the European Maritime Safety Agency (EMSA), which vessels sailing in European waters are required to report, to be independently verified with precisely calculated data. Such independent checks on long-haul shipping’s climate-harming emissions can only help to put more pressure on the industry to clean up its act.