DNV GL Forecasts the Energy Transition in Maritime Industry

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  • DNV GL has done sophisticated modelling about how the maritime industry may go through the energy transition, including evaluating 30 different scenarios.
  • DNV GL has been putting together forecasts / pathways which reach IMO’s emissions of 50 per cent GHG reduction by 2050.
  • Regulations and other incentives are already starting to impact shipping, said Knut Ørbeck-Nilssen, CEO of DNV GL’s maritime division.
  • It is increasing company’s costs, and also impacting the asset values and earning capacity of vessels, if less green vessels become less attractive.

A recent news article published in the Tanker Operator reveals that DNVGL shares a piece of information on how maritime will make energy transition.

Over the long term, DNV GL sees that ammonia and methanol are very promising fuels, both being zero or low carbon (NH4 / CH30H).

LNG and Marine Gas Oil (MGO)

Over the medium term, LNG and Marine Gas Oil (MGO) made using biofuel or electrolysis from renewable electricity can be used as transitional fuels, as low carbon fuels which can work with our current vessels and infrastructure.

“Installing a duel fuel (LNG / liquids) engine is a robust choice for today enabling future flexibility,” he said.

The industry is currently going through a period of big innovation and introduction of digitalisation, at the same time as the push to decarbonise.

“We are seeing the maritime community at large really challenging the old ways of working,” he said. “We have to grasp this grand challenge.”

Don’t hate gas

One of the biggest risks to maritime decarbonisation are people who think we should only change once we have the perfect solution, rather than adopt solutions which are better but not perfect, like gas power, Mr Ørbeck-Nilssen said. “Perfect is the enemy of the good.”

“Decarbonisation in shipping is a voyage,” he said. “Navigating to a carbon neutral future really starts with gas. Gas is the best fuel choice for the next 1 or 2 vessel generations.”

“We must also relentlessly explore other solutions, but waiting for the perfect choice will not really help to deal with global warming.”

We are at a stage where shipping must prepare for and start on a decarbonisation pathway.

This decade is going to be instrumental in getting that kicked off. We need a massive scale up of new technologies and better fuel alternatives.

There are sceptics about LNG fuel, saying that since if it cuts emissions by 20 per cent, it does not reach anybody’s target, whether 100 per cent or 50 per cent decarbonisation.

“I think it’s important for every ship and yard and engine manufacturer to move along – it is important that we start,” he said. “We start with something which is proven, familiar, gives 20 per cent reduction in CO2 emissions.”

Localism

Another obstacle is “localism,” he said, such as the European Union bringing shipping into its Emission Trading Scheme.

Shipping requires international regulations. We see local and regional law makers are increasingly demonstrating impatience and distrust with the IMO’s progress.

There is a danger that there will be an increasing patchwork of localised regulations – on CO2, biofouling, scrubber water discharge.

“The European parliament is debating and supporting to bring shipping into the emission trading system.”

Collaboration

Moving forward would need more collaboration. “This is at the very key of finding the solution – how can a very fragmented industry like maritime come together in bigger entities with more power to drive new solutions,” said Mr Ørbeck-Nilssen

There’s a natural collaboration space between manufacturers, yards, owners.  But also the owners of the goods to be transported (charterers), banks, financiers, and not least also some of the tech companies – that lie on the boundaries of the maritime industry.

In academia there’s a lot of interesting work going on. Class societies are a natural bridging between industry and academia.

Two main pathways

Tore Longva, maritime principal consultant regulatory affairs at DNV GL, and the lead author of the study, sees two main pathway options for the energy transition.

The first pathway is the set out by IMO for a 50 per cent reduction by 2050. The second is a more ambitious pathway, to decarbonise shipping by 2040, which takes onboard shipping being included in the EU Emissions Trading Scheme from 2022, and having its CO2 targets increased from 2030, along with pressure from other areas to decarbonise.

For example, if we follow the IMO’s pathway, and see low renewable energy prices, this would make “electro fuels” favourable, and probably ammonia, which is easier to store than hydrogen.

Under this pathway, there would be a lot of conventional engines through the 2020s, “quite a lot” with scrubbers, and steady uptake of LNG. During 2030, the use of LNG would increase, and then more ammonia being used on newbuilds. Some LNG vessels would convert to electro methane. The biggest transition would take place in 2040, with quite a big move of engines to ammonia. Engines which can only use diesel might switch to electro diesel.

If we follow the EU’s preferred pathway, to decarbonise shipping by 2040, and imagine we low prices for sustainable biomass. In this scenario the picture would look similar in the 2020a, but in the 2030s bio-methanol would be the fuel of choice.

It is relatively easy to make – has a fairly good energy density.  Engines could be retrofitted to run on bio-methanol. Most shipping would be decarbonised by 2040.

These are just 2 out of 30 different scenarios DNV GL evaluated.

Uncertainty

But there is still a great deal of uncertainty. Mr Longva groups the uncertainties into 3 “dimensions”. Regulatory measures such as carbon pricing, and operational / technical requirements, such as fuel / energy prices.

“Fuel and energy prices are very critical to understand in order to predict where we are going,” he said.

There are three possible zero carbon energy sources – sustainable biomass, renewable electricity, and fossil fuels with carbon capture and storage.

A further dimension is the demand for seaborne trade. The study had a high growth and a low growth scenario.

It wanted to understand which drivers are most important on what happens in the future, their sensitivity, and how they impact on the choice of technology and fuel.

To keep the analysis simpler, it just looked at the maritime specific aspect, or tank to wake.

So emissions made in extracting or producing the fuels, such as to run pumps and compressors, refining equipment, or from methane leaked along the way, is not included. But “tank to wake” collects 90 per cent of the total, he said.

Current picture

According to data from DNV GL’s Alternative Fuel Insight Platform, only 0.39 per cent of the current shipping fleet is using alternative fuels – breaking down to batteries 0.22, LNG, 0.16, and methanol, 0.01%.

But 9.7 per cent of newbuilds are – including 3.99% battery powered, 4.52% LNG, 0.67% LPG, 0.47% methanol, 0.06% hydrogen, 0.02% ammonia.

Many of these are of course smaller vessels. “A lot of the innovation starts on smaller vessels first,” he says. Smaller vessels can stick to areas where there are reliable sources of whatever fuel they are testing.

Fuel systems

The study explored fuel flexibility further, the idea that the transition will go easier if ships can switch from one fuel to another without changing any equipment.

10 different fuel “systems” were studied, including:

– An internal combustion engine on low sulphur fuel oil or diesel; a

– A ICE running on conventional fuel with a scrubber,

– An ICE running on conventional fuel,

– A duel fuel LNG + fuel oil internal combustion engine

– A duel fuel ammonia + fuel oil internal combustion engine

– Fuel cells running on ammonia and hydrogen

16 different fuels were looked at, including various biofuels, various electro fuels (from renewable electricity), and “GLU”.

The fuels can be made with different production methods and different prices.

Some methods are very mature – and costs of equipment and fuels are well known.

Some are more expensive, like hydrogen and LNG, needing heavier and larger tanks.

“Ammonia is a little bit more uncertain – but we have a good idea how much that costs,” he said.

The study looked at the potential for going from a LNG engine to ammonia, and from a diesel engine to a methanol engine.

“Ammonia and methanol are the most promising fuels – depending on primary availability of energy sources,” he said.

“If there’s enough sustainable and reasonably priced biomass, bio methanol is the fuel. If you have cheap electricity, renewable, electro ammonia is the best fuel.”

Another plausible zero carbon fuel could be “blue ammonia”, made from methane using carbon capture.

Ammonia is likely to be preferred to hydrogen onboard a ship, because it is easier to handle. It boils at -33 degrees C at a 1 atmosphere pressure,  so the liquid must be stored under pressure or at low temperature.

Bio and electro methane, and electro-methane, may have some permanent applications in niches which cannot use ammonia or methanol, but “mostly they have very important roles as a transitional fuel,” he said.

Alternative fuels can impact the ships’ earning potential if the ship needs more cargo space to store the fuels, it impacts your range it will impact where you can go for fuel availability. “It is very important to manage these risks,” he says.

Fuel assumptions

The study assumed that biofuels, electro fuels and fossil fuels with ccs are completely carbon neutral. This may not be the case in reality, for example depending on what the biofuel replaces, or how much CO2 is captured in the CCS.

Although methanol contains carbon, it can be made using CO2 which would otherwise be emitted.

For a biofuel to be ‘sustainable’, it needs to take CO2 out of the atmosphere when it is growing – but you also need to consider what might otherwise have been happening with the land.

But renewable electricity is not completely zero carbon either, since some carbon is emitted making the wind turbines.

“So it is a gradual reduction to a fully carbon neutral fuel.”

Carbon capture and storage also has a lot of uncertainty – of how much of the CO2 gets captured and stored.

But all of these uncertainties are unlikely to impact the final conclusion, that the best long term zero carbon fuels are ammonia or methanol, he said.

Options for a Panamax

DNV GL looked at the options for a Panamax new build, if it was built today, and “stress tested” them.

There are 3 engine / propulsion options available today – the conventional diesel engine, a scrubber with heavy fuel oil, and a dual fuel LNG engine.

“All these come with different possibilities for the future, for what fuel you can use as drop in, and cost of retrofitting,” he said.

Over the 20 year period, the researchers found that a dual fuel engine would be the most robust choice.

“In most of these scenarios LNG is cheaper than diesel – so it is cost effective,” he said.

LNG would have a 20-25 per cent bonus in reduced greenhouse gas emissions, if the regulations focus (as expected) on tank to wake CO2 emissions (so not including emissions from methane if its leaked during the production process).

If widespread LNG availability means you no longer need to carry liquid fuel, the liquid fuel tanks can be re-purposed to carry cargo.

The business case

The most important work for this decade is to “enable the business case for shipowners to use carbon neutral fuels,” he said.

A business case can’t be made just with research and piloting – because currently the zero carbon fuels are much more expensive – there needs to be some regulatory method to make them cheaper.

There could be schemes to make it easier for “green” ships to obtain financing, and ways for multiple companies to share the risks and costs of testing out new engines.

Public procurement could be very helpful in driving new technologies in very early phases, as we saw in Norway with the government supporting electric and hydrogen ferries.

For charterers to have green procurement policies would be very helpful, he said.

Regulations such as carbon pricing, performance requirements and technical / operational requirements, such as mandatary use of carbon neutral fuels, could incentivise uptake.

“For shipowners – managing all this risk is also critical,” he said.

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Source: Tanker Operator

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