The international shipping sector’s emission levels are comparable to Germany’s. Like aviation and heavy transport, reaching net-zero will need renewable fuels – direct electrification won’t be sufficient. Existing fossil fuel engines allow for biofuel blends of up to 20% without any modifications, and 100% methanol engines are a proven technology. Making sufficient quantities of clean fuels – without consuming food crops – is the challenge. Gabriel Castellanos and Roland Roesch at IRENA summarise their report “A pathway to decarbonise the shipping sector by 2050” on what needs to be done. In the short term, efficiency (including optimising shipping routes) and advanced biofuels play are role but have limitations. The medium/long term goal should be based on ammonia and methanol, sourced from green hydrogen. That means building capacity for each. The 2050 cost target is $107/MWh to $145/MWh for e-methanol and $67/MWh to $114/MWh for e-ammonia. Cost-competitive scale-up is the main challenge, not least the deployment of renewable energies for the production of green hydrogen.
Between 80% and 90% of international trade by volume is enabled through maritime means, i.e., bulk and container carriers, as well as oil and chemical tankers. Together, these types of vessels account for 20% of the global fleet, but they are responsible for 85% of the net GHG emissions associated with the shipping sector. The international shipping sector is characterised by its high dependency on fossil fuels. If the international shipping sector was a country, it would be the sixth- to seventh-largest CO2 emitter, comparable to Germany’s current CO2 emission levels.
If the global warming is to be limited by 1.5°C, it is critical to decarbonise the shipping sector, the new report – “A pathway to decarbonise the shipping sector by 2050” from the International Renewable Energy Agency (IRENA) finds that renewable fuels can contribute at least 70% of the sector’s energy mix in 2050; where green hydrogen is set to be the backbone for the sector’s decarbonisation.
Energy efficiency has potential, but it’s limited
During low oil price periods, the shipping sector pays less attention to its energy usage. However, during high oil price periods, the shipping sector adapts, increasing its activity while using energy resources more efficiently, without the need for external market regulations. This finding reveals the dormant energy efficiency (EE) potential in the shipping sector.
Further considerations need to be made in regard to bunkering and strategic port locations to optimise route efficiency and ramping up of alternative fuel use in the shipping sector. In the near term, it will be critical to deploy monitoring and enforcing mechanisms to ensure compliance with the IMO mandates focused on improving EE across vessels, i.e., EEDI (Energy Efficiency Design Index), SEEMP (Ship Energy Efficiency Management Plan), EEXI (Energy Efficiency Existing Ship Index), EEOI (Energy Efficiency Operational Indicator) and CII (Carbon Intensity indicator).
However, given the pivotal role of international shipping in the global economy, the role of EE has limitations in terms of carbon reduction potential; hence the key role renewable energies will play in decarbonising this sector by mid-century.
Renewable fuels are pivotal in decarbonising the sector
Existing engines using fossil fuels allow for biofuel blends of up to 20% without any modifications, although tests have been conducted using a maximum blend of 30%. In addition, it’s important to note that 100% methanol engines are a proven technology; hence, new ships can easily rely 100% on biofuels. Production cost ranges for advanced biofuels are similar among the various alternatives, i.e., USD 72/MWh to USD 238/MWh.
Avoiding the use of food crops for biofuels is critical. Therefore, the use of waste fats, oils and greases is essential to produce fatty acid methyl ester (FAME) biodiesel and hydrotreated vegetable oils (HVOs) that do not hinder food security or land availability. Bio-methanol from lignocellulosic biomass is another potential option.
Renewable e-fuels methanol and ammonia are the most promising fuels for decarbonising the sector. Of these, ammonia is more attractive due to the null carbon content on its molecular structure. This exempts ammonia from the cost of carbon capture and storage (CCS) technologies, which add to the final cost of e-methanol. The falling costs of green hydrogen coupled with the cost reduction of carbon capture and removal technology will result in the achievement of 2050 production costs around USD 107/MWh to USD 145/MWh for renewable e-methanol.
Renewable ammonia appears to be the backbone for decarbonising international shipping in the long term. By 2050, production costs for e-ammonia are expected to be between USD 67/MWh and USD 114/MWh. The ammonia engine to be ready in 2023 will be a key milestone in unlocking the use of renewable ammonia. Ammonia is corrosive and highly hazardous if inhaled in high concentrations, but it has been handled for over a century and its hazardous nature and safe handling are manageable challenges.
On the other hand, from an economic perspective, if compared against LNG; this latter fossil fuel is subjected to very high market price volatility. A clear example is the very high price of natural gas that is currently troubling many countries across the world. While ammonia production costs are currently high, in the next decades renewable ammonia will become competitive, therefore, this renewable fuel is an option to shield the shipping sector from the volatility that characterises the fossil fuels market.
Ammonia production cost projections
Green Hydrogen-based fuels
Starting now, the active adoption of energy efficiency (EE) measures will be critical to reduce energy demand and thus CO2 emissions in the immediate term. Final demand associated with a 1.5°C Scenario (1.5°C-S) would result in a final energy demand 1.5 times lower in comparison to a Base Energy Scenario.
In the short term, advanced biofuels will play a key role in the reduction of CO2 emissions. IRENA 1.5-S implies that demand for advanced biofuels in international shipping needs to grow at an average annual grow rate of about 9%, eventually reaching a participation of nearly 10% of the total mix in 2050.
In the medium and long-term green hydrogen-based fuels will be pivotal, making up 60% of the energy mix in 2050. Accordingly, the overall requirement for green hydrogen for 2050 stands at 46 Mt.
Of this amount, 74% would be required for the production of ammonia, 16% for methanol and the remaining 10% would be directly employed as green hydrogen. Particularly in the case of ammonia, the IRENA report flags that e-ammonia could represent 43% of the sector’s energy needs in 2050, which would imply the use of about 183 million tonnes of renewable ammonia for international shipping alone – a comparable amount to today’s ammonia global production. The estimated requirements of e-fuels shed light on the scalability challenge that the shipping sector needs to overcome in coming years. The rapid and systemic deployment of renewable energies for the production of green hydrogen will be critical.
IRENA 1.5-Scenario for shipping
As shown in the above chart, IRENA 1.5-S comprises a 70% share of renewable fuels. This would result in a decarbonisation of 80% in reference to 2018 levels, thus, 144 million tonnes of CO2 by 2050.
Overall, the decarbonisation pathway analysed in this report would be achieved by four key measures:
i) indirect electrification by employing powerfuels;
ii) employment of advanced biofuels;
iii) improvement of vessels’ EE performance; and
iv) reduction of sectoral demand due to systemic changes in global trade dynamics.
The figure below displays the estimated roles of these four emission reduction measures.
IRENA 1.5-S represents a mitigation pathway to limit global temperature rise to 1.5°C and bring CO2 emissions closer to net zero by 2050. Moving from nearly zero CO2 emissions to net zero requires a 100% renewable energy mix by 2050. Achieving such a condition is uncertain due to scalability issues including the ability to deploy sufficient renewable infrastructure such as renewable power plants, biorefineries and e-fuel production plants (i.e., ammonia and methanol).
Furthermore, end-use sectors besides shipping also have ambitious CO2 reduction targets. Accordingly, end-use sectors risk competing with each other as they try to meet their increasing demand for renewable fuels. For instance, the shipping, aviation and road freight transport sectors are likely to compete with each other on the task of acquiring green hydrogen-based fuels, but the aviation and road transport sectors have a higher payment capacity than the shipping sector.
Further cost declines are needed
Uncertainty around the shipping sector’s ability to reach zero CO2 emissions by 2050 can be reduced. From a technological perspective, renewable energies are competitive. Indeed, renewable energy costs have been falling at an accelerated rate. For renewable energy-derived fuels to become the prime choice of propulsion, further cost declines are needed, particularly in renewable energy supportive technologies (e.g., electrolysers and hydrogen storage).
In this context, sectoral decarbonisation can be accelerated and ambition can be raised beyond the climate goals by fostering investment in the production of renewable fuels. For this purpose, adopting relevant and timely co-ordinated international policy measures is greatly needed.
In addition, stakeholders need to be fully mapped out and engaged, the various players need to work towards a common goal. Accordingly, governing bodies regulating the international shipping sector need to develop integral and participative planning exercises, establishing step-by- actions for reaching zero GHG emissions by 2050.
The private sector is moving forward: a clear example is Maersk which has backed a plan to build Europe’s largest green ammonia facility in the Danish west coast. This key player has also announced the development of eight large methanol dual fuel ocean going vessels, with the first starting operation in 2024.
Although 2050 is the target year for a decarbonised shipping sector, it is necessarily to take action now. Since 2019, IRENA has been collaborating with numerous partners including the Global Maritime Forum; where in early 2020, the agency officially joined the Getting to Zero (GtZ) Coalition as knowledge partner. In addition, IRENA is a key collaborator of Mission Innovation and supports its initiative on Zero-Emission Shipping. More recently, the agency has been working closely with the International Chamber of Shipping by holding technical exchanges on how best to accelerate the decarbonisation of the international shipping sector.
Gabriel Castellanos is an Associate Programme Officer at IRENA