The International Maritime Organization’s (IMO) has set a new and more ambitious target to decarbonize shipping and achieve net zero by or around 2050. As the clock ticks, ship owners are more aware than ever that change is required, but the pathway to adopting renewable and low-carbon fuels is more of a long and winding road.
WHAT’S DRIVING MARITIME DECARBONIZATION?
The pressure to decarbonize is hitting the maritime industry from all sides. Public scrutiny of industrial pollution and greenhouse gas emissions grow daily. At the same time, governments and regulatory bodies the world over are setting increasingly strict targets for decarbonization. On top of this, shipping companies are under pressure from their clients – charterers and cargo owners – to contribute towards a drastic reduction in their scope 3 emissions in turn.
Already in force is the IMO’s Carbon Intensity Indicator (CII), which aims to gradually reduce carbon emissions from ships. As part of its short-term measures package, IMO has also newly implemented the Energy Efficiency Existing Ship Index (EEXI) to improve existing ships energy efficiency and reduce fuel consumption.
The EU, meanwhile, has adopted FuelEU Maritime, which imposes greenhouse gas (GHG) intensity limits on fuels used onboard and mandates onshore power supply in ports for container and passenger ships. FuelEU Maritime will apply from January 2025. From 2024, the EU Emissions Trading System (ETS), a cap-and-trade mechanism designed to reduce GHG emissions over time will also apply to ships travelling to, from and within EU waters. China has also set carbon-neutral targets for all industries by 2060, established domestic emission control areas and may soon extend its own ETS to include shipping.
Many of these regulations set stricter emissions targets over time with financial sanction systems, meaning that ship owners must act to keep their fleet economically operational in coming years. Carbon capture and wind-assisted propulsion are options that could be implemented in the short-term to provide some reduction in carbon intensity. However, ship owners will at some point be compelled to rethink their fuel choices if they want to truly decarbonize their fleet.
WHAT ARE SHIPPING’S OPTIONS FOR LOW-CARBON FUELS?
Fuel contenders could broadly be split in two main categories:
- Carbon-based, which includes MGO, liquefied natural gas (LNG), liquefied petroleum gas (LPG) and methanol/ethanol
- Hydrogen-based, principally hydrogen and ammonia
The environmental footprint of each of these fuels could be significantly reduced if they are produced from biomass or from renewable sources.
As shown in the infographic below, each of these fuels comes with its own advantages and challenges.
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While all of these fuels are an improvement on fossil fuels, their low-carbon credentials also depend on how they are produced. The entire production process for each fuel, as well as distribution and use onboard, needs to considered from well to wake (W-t-W).