- Tankers, containers will need infrastructure across more ports
- Passenger, specialist vessels operating on linear routes likely first movers
- Early adoption implies 2.5%/year of bunker demand switching to renewable
- Alternative fuels around twice as expensive or more compared to fuel oil
Different sectors within the shipping sector are likely to shift to renewable fuels at different paces, with tankers and containers wide geographical footprint and their flexibility in destination likely to count against them, an official at marine engineering firm Wartsila said, reports Platts.
Fuel availability, a major factor!
On the face of it, these two sectors are quite different as tankers operate at low speeds and with little need for extra electricity on-board while containers move much faster and often with the need for extra power, for example for refrigerated cargoes, Diego Pauluzzi, a fuels expert at Wartsila, told S&P Global Platts Dec. 22.
However, they share sensitivity to availability of fuels. These types of vessel tend not to have fixed routes and therefore require a wider dispersal of infrastructure for renewable fuels. “The overriding factor for these vessels will be availability of fuel,” Pauluzzi said.
“Given the time that it will take for future-fuel infrastructure to develop, for the foreseeable future, vessels in this category looking to reduce emissions will have to opt for LNG,” he said.
Costs across different fuels remain varied. S&P Global Platts assessed methanol as a bunker fuel at Singapore at $480/mt Dec. 23 ($22.36/gigajoule), delivered 0.5% sulfur fuel oil at Singapore at $596/mt ($13.66/gj) and LNG as bunker fuel at Singapore at $1,628.841/mt ($31.87/gj).
LNG reduces emissions in the short-term, potentially enough to meet climate targets up to 2030, as mandated by the International Maritime Organization, and leaves the door open to bio or synthetic LNG as well as hydrogen as it becomes more widely available, in order to meet more stringent targets beyond 2030, he said.
The IMO is targeting a 40% cut in carbon intensity in the global fleet by 2030 compared to 2008 levels and a 50% cut in greenhouse gas emissions by 2050, although several companies, industry groups and governments are pushing for this 2050 target to be doubled to a 100% cut in GHG emissions.
First out of the block
“Passenger vessels are generally designed to operate between two or more fixed points, and as such, are well placed to take advantage of zero carbon fuels infrastructure,” Pauluzzi said.
Ammonia might see delayed uptake in this sector as perceived risks from its toxicity might delay its adoption in favor of LNG, hydrogen, and methanol, where there has already been some uptake, he said.
Also, offshore and specialized vessels operating mainly in defined areas will be the first to adopt fuels such as methanol and ammonia, and to test them while the sustainable versions of these fuels scale up, Pauluzzi said.
What maritime decarbonization means
The existing IMO target of a 50% cut in GHG emissions compared to 2008, which is due to be reviewed in 2023 and could be toughened then, translates into around 60% of total bunker demand being met by non-fossil fuels by 2050, according to S&P Global Platts Analytics.
Platts Analytics estimates that with early adoption, starting in 2025, clean fuels should replace existing fossil at an average of 2.5% of existing fossil fuel demand, whereas with delayed adoption, by 2030, the annual growth required is more than 3% annually.
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Source: Platts
