A realistic approach to the decarbonisation of maritime transport

Ammonia, hydrogen or methanol are some of the fuels in which the sector is investing, but the ‘scrubbers’ still have an important role in this way, especially due to the current prices of the VLSFO.

IMO will review its strategy for emission reductions in 2023.

The shipping sector has yet to decide on a concrete technology to meet IMO’s ambitious 2050 emissions reduction targets. Specifically, the Organization aims to reduce total greenhouse gas emissions by 50% compared to 2008 levels, with a review of the strategy planned for 2023.

Ammonia, hydrogen or methanol are some of the fuels in which the sector is investing to try to offer a more environmentally sustainable navigation, without forgetting the ships with electric motors for certain short routes, or Liquefied Natural Gas, which is still one of the great bets of shipping companies.

In any case, 8% of the world fleet continues to use ‘scrubbers’ that allow them to continue opting for heavy fuel oil when reloading ships.

The option, in fact, seems pretty steely right now, given that those with these systems are enjoying a decline of more than $500 per ton in Asia compared to cleaner fuels.

The price difference is in this sense more marked in the Singapore hub, but remains high in other refueling centers in the Middle East and Europe.

The collapse in HSFO prices is partly explained by increased flows from Russia to Asia and the Middle East, as a result of sanctions imposed by the United States and Europe.

Meanwhile, the price of low-sulfur fuel has risen because refineries are ramping up gasoline production to try to offset rising prices, to the detriment of VLSFO.

According to data provided by Drewry, around 19% of container ships are equipped with ‘scrubbers’, which is the highest proportion among different types of ships, followed by oil tankers and bulk carriers with around 13%.

In the current context, probably more shipowners will consider the installation of these purification systems, especially if they have large fleets that would consume a large amount of VLSFO, but the current uncertainty about the drift that prices will take and the forced need to find long-term solutions could stop decisions of this type.

In addition, there are countries that have banned the use of open-cycle scrubbers, which use seawater that is subsequently cleaned and returned again, although there are also other areas where only some ports have established limitations.

In any case, from Wärtsilä argue that the market of ‘scrubbers’ can adapt to future needs, as it is a modular technology whose design has been improved in recent years to occupy less space, being able to complement with other systems.

At the moment, research is focused on sulfur purification, but also on the reduction of particulates, or integration with exhaust gas recirculation systems to reduce nitrogen oxide emissions, or with systems for carbon capture.

Therefore, the objective is that the current ‘scrubbers’ for the reduction of sulfur content can evolve towards a platform for reducing emissions from maritime transport, with a modular design that will depend on financial needs and capacities, but also on future regulations.

Similarly, some systems already installed on vessels could be adapted to be combined with other reduction systems, although the age of the vessels and the price of fuel will influence any investment decision.

The Methanol Boost

Although recent years have seen investments in different types of technologies, the commitment of some of the largest shipping companies in the world to methanol is striking, which stands out for its availability, energy density and ability to significantly reduce emissions.

According to a report by Longspur Research, methanol can reduce shipping emissions by 60%. Specifically, methanol produced from natural gas offers initial CO2 savings of between 10% and 15%, which can increase to more than 90% when renewable methanol is used.

Some consider it as the best solution available today, since it is already available and has been tested, being able to be used both in new construction vessels and in existing fleets, after adaptation.

Likewise, its safety was confirmed in November 2020 by IMO with the publication of guidelines for the safe use of methanol as a fuel.

In 2024, Maersk will begin introducing its first vessels powered by carbon-neutral e-methanol or sustainable biomethanol into its fleet.

At the moment, eight ships of 16,000 TEUs capacity have been announced, plus another four that will arrive in 2025, all of them to replace old vessels, which will allow obtaining a reduction in CO2 emissions equivalent to one million tons per year.

In addition, they will have a dual-fuel engine to be able to operate with methanol or conventional low-sulfur fuel.

However, as they admit, using green fuels like this will mean a strong increase in their spending in this area, which may double, which will end up having an impact on shippers.

The Danish shipping company was joined in June 2022 by CMA-CGM, which until now had remained firm in its commitment to LNG. Specifically, it has ordered six dual-fuel vessels that can be powered by methanol with a capacity of 15,000 TEUs, which will join the fleet by the end of 2025.

Others that have already revealed their commitment to this fuel are X-Press Feeders and Danaos, while ONE has recently placed an order for 10 vessels that include units powered by methanol and ammonia, and prepared for carbon capture.

MSC also joined the Methanol Institute in 2021 to explore the use of this alternative energy, given that it is evaluating various technologies and believes that this could be one of the most relevant in the long term.

The future of LNG

For the first time, the majority of orders placed in 2022, according to figures up to May collected by Clarkson Research, correspond to ships powered by alternative fuels. Specifically, 63% of them in terms of GT, compared to 30% in the previous two years.

LNG remains the leading alternative fuel today, with 59% of orders, while last year it accounted for just 28%. 26 hybrid or battery vessels have also been ordered, in addition to four container ships that can run on methanol and several LPG/ethane-fuelled LPG vessels.

It also highlights the increase in orders for vessels that can be adapted for the use of different fuels, with more than 20 units ordered so far that can run on LNG, but are ready for the use of ammonia, or methanol if necessary.

In this sense, although at present the orders of ships powered by alternative energies are the majority, it would be necessary to assess how many of the dual-fuel LNG vessels are actually currently operating on gas, when the traditional fuel is actually much cheaper.

This year, in fact, many dual-fuel vessels have been adapted to run on very low-sulfur fuel oil, as it is considerably cheaper than LNG.

High liquefied natural gas prices are forcing some of the strongest advocates of this fuel to put aside their preferences for the time being.

Advances with hydrogen and ammonia

Green hydrogen and ammonia obtained from green hydrogen are scalable and highly versatile fuels that could play a key role in achieving IMO’s emission reduction targets, according to a study by UMAS.

Large-scale production of hydrogen and ammonia marine engines is expected to begin in the mid-2020s, while fuel cells will be ready for commercial use by 2023.

However, in this case, due to the immaturity of these technologies in the shipping sector, some rules and guidelines should be established to control the safety risks associated with the flammability and toxicity of such fuels.

DNV, for example, has already established some guidelines for the safe use of hydrogen and ammonia as fuels, but international standards will need to be set.

On the other hand, it should be noted that green hydrogen is highly dependent on the cost of renewable electricity and is usually more expensive due to the cost of electrolyzers, which is still very high due to its immaturity.

However, when the price of renewable electricity is reduced and cheaper and larger electrolysers are developed, costs are expected to be substantially reduced, and may fall by more than 50% by 2050.

As for ammonia, taking into account all the costs associated with production, these would be higher, but given the need to store hydrogen at cryogenic temperatures or at high pressure, the expenditure in energy terms is higher, so the costs of both fuels would be comparable.

With regard to efforts to make the production process sustainable, one of the options that would be evaluated in the short term would be the incorporation of carbon capture and storage technology in existing hydrogen and ammonia production plants.

Given that the transport, heavy industry and energy sectors see hydrogen as a key solution for decarbonisation, it is to be expected that a hydrogen economy will develop sooner.

The case of ammonia is different, since the current demand, if we talk about blue ammonia, could be sufficiently satisfied with the production of gray hydrogen, but it would be necessary to evaluate the potential of production facilities for carbon capture and storage.

However, if demand for ammonia increases rapidly by the 2040s, when larger ships transition to zero emissions, additional production facilities will be needed.

Source: Supply Chain