3 pathways for shipping to achieve decarbonization

More specifically, Stamatis Bourboulis, General Manager of Euronav Ship Management and Co-chair, Getting to Zero Fuels & Technologies Workstream, Randall Krantz, Senior Project Advisor on Shipping Decarbonization, Global Maritime Forum / Getting to Zero Coalition, and Lara Mouftier, Interim Project Lead Shipping Emissions and Ocean Agenda, World Economic Forum / Getting to Zero Coalition, analyze three pathways that shipping can follow in order to achieve decarbonization.

#1 Tracking the hydrogen economy

As the shipping industry explores he zero emission fuels of the future, there is acknowledgement that hydrogen-based fuels will play a critical role in the medium and long term. This because:

• While hydrogen’s low energy density does not allow it to be a fuel for deep sea shipping, it can be part of a flexible pathway to fully decarbonize the maritime industry, as it is a feedstock for zero-emission ammonia and methanol.
• Around 500-800 million tons of zero-emission hydrogen is needed to produce green or blue ammonia and methanol by mid-century. While 70% will be provided by direct electricity, hydrogen will account for 15-20% of world final energy demand.
• About 95% of the world’s hydrogen comes from fossil fuels. In the near to medium-term, the cheapest green hydrogen will come from countries like Chile, which has cheap solar production costs.
• Supply chain costs will vary depending on the form in which hydrogen will be transported by pipeline, truck, or ship. Transporting hydrogen by sea requires conversion into a more energy dense carrier such as ammonia, though efficiency losses must be accounted for.

#2 Total cost of operation

The total cost of operation (TCO) is the purchase price of an asset plus the costs associated with its operation, use, and disposal over its lifetime. To calculate it, a techno economic model is the best tool. This is a simplified depiction of reality, designed to aid decision making and, eventually, investments:

• In order to calculate TCO, modeling is used as a tool. The input, outputs, assumptions, and sensitivity analysis when modeling aim at reducing uncertainties to identify key drivers and test hypotheses.
• Model outcomes advance decision making on the transition pathway, provide evidence for research, development and deployment (RD&D) investments, and support pilots that contribute to scaled solutions.
• As renewable energy costs are falling, zero-emissions fuel competitiveness will improve over time because of decreasing production costs.
• Policy and regulation will play a major role in addressing high costs of scaleable zero emission fuels, while 87% of the estimated $1.4-1.9 trillion investment needed for future shipping fuels will be onshore.

#3 Optionality and flexibility

To mitigate business risks associated with fuel-related uncertainties, it is the authors note that it is important to invest in fuel flexible solutions. In the near future, dual fuel two-stroke engines can respond to the needs of new design and retrofitting.

• Dual fuels engines, optionality for onboard fuel storage, flexibility in technologies, and retrofit readiness are key factors to successfully transition.
• Booking the first orders and aligning supply and demand are key drivers to accelerate the commercialization and deployment of next generation engines.
• Retrofitting offers the possibility to remain flexible on the transition pathway.
• Due to differences in energy density between fuels, bunkering, onboard systems, and storage must be considered in the design stage. Ammonia, methanol and methane are viable deep sea shipping fuels, while compressed and liquid hydrogen are not.
• To accelerate the retrofitting process, there is a need to develop a common understanding on retrofit readiness and engage stakeholders across the value chain, including shipowners, shipyards and shipping banks.