Shipping’s GHG Challenge – New Mindset Required
Katharine Palmer is the global head of sustainability, Marine & Offshore at Lloyd’s Register (LR). Despite scepticism in some quarters over shipping’s ability to meet the challenging 2050 greenhouse gas (GHG) ambition agreed in April by the International Maritime Organization (IMO), she believes that a collaborative approach combining the development of new sources of power ashore and afloat with innovation in ship design and equipment manufacture will make this ambition achievable. This article highlights the urgency and insists that new zero-emission ships will need to be designed and built between now and 2030 if there is to be any chance of being on track to meet this.
Shipping is the world’s most conservative transport mode for a variety of reasons. Although well over 90% of the world’s trade is shipped by sea, commercial vessels – for most people – are usually out of sight and out of mind. There is little incentive, therefore, for ship operators to initiate change when existing systems work pretty well and there is no pressing need to do so.
But rising greenhouse gas emissions (GHG) and their contribution to climate change have recently cast shipping into the limelight. Exempted from the 2015 Paris Agreement, shipping has discovered that it can no longer be seen to be doing nothing. Many now believe that industrial activities, including marine transportation, requiring power generated from hydrocarbon fuels are not sustainable.
We have already seen regulatory measures which some ship operators view with dismay because there is no financial return. But non-compliance is not an option: shipping’s customers require the assets they hire to be seaworthy, fit for purpose, in class, insured, capable of undertaking the voyage or voyages on the agreed terms, and in compliance with all relevant flag and port state regulations.
So whether shipowners think decarbonisation and new zero carbon fuel and technologies are a good idea or not, they have little choice. Rather like ballast water treatment systems, new marine fuels will become another license to trade. I believe that for a shipowner or operator not to become involved in the next phase of maritime propulsion development risks his or her business model.
In April this year, the global shipping industry had a sharp shock when the IMO agreed to slash carbon emissions by 2050 by at least 50% of the levels prevailing in 2008, although this is not legally binding. With expected growth in global shipping and trade over the next three decades, this is equivalent to a carbon intensity reduction of about 85%.
The at least 50% carbon reduction ambition was the outcome of complex negotiations between those who wanted to go further – cutting carbon emissions by more than 70% – and those who would have been happy to do nothing. Now that the compromise has been agreed, we have the challenge of achieving this reduction. There is no time to lose.
Global shipping accounts for about 2.3% of global CO2 emissions, according to International Maritime Organization estimates. And despite the development of energy-saving technologies, the limited introduction of new fuels, and measures to improve both the design and operation of ships, the industry’s emissions profile continues to deteriorate.
The compromise achieved at the IMO was politically important for shipping because a 50% cut in carbon emissions brings the industry broadly in line with the Paris Agreement which aims to limit the rise in global temperature to less than 2°C by 2050, whilst aiming for 1.5°C.
However, the question is whether or not it is possible for an industry with many thousands of assets that depend almost entirely on hydrocarbons in one form or another to transform its fuel supply within the next two generations of ships? And furthermore, are there any benefits for a traditional shipowner and why should he or she embrace new fuel technologies?
From the work that I have done, I believe the answers to these questions are ‘yes, yes and yes’. This ambitious target is achievable but we must establish a far more collaborative approach if we are to succeed.
In 2016, Lloyd’s Register set out to understand what shipping’s trajectory would be in line with the Paris Agreement in its Low Carbon Pathways 2050 report which resulted in a carbon-emissions trajectory broadly similar to that agreed by the IMO in April.
As an aside, I feel bound to mention liquefied natural gas (LNG) here because this marine fuel is something of a distraction. Many herald the adoption of LNG as a key step forward in terms of sustainability. However, LNG is a hydrocarbon fuel, albeit one that has a favourable emissions profile in terms of SOx and NOx.
Therefore, ship operators should not view it as any more than an ‘interim’ fuel and ideally, if they choose LNG for fuel today, they should have a strategy of moving on or converting from LNG to a zero - carbon fuel during a ship’s lifetime, possibly biogas, for example. Biogas or e-methane can use the same infrastructure as LNG, but liquid fuels are easier to store and handle and may therefore be more suitable for the marine transition.
In the two years since we published the Low Carbon Pathways report, there have been significant efficiency improvements in many areas of ship design and operation. Improvements have been successfully measured both in terms of the Energy Efficiency Design Index (EEDI), for example, although it is important to note that these efficiency improvements will not meet the level of ambition.
Performance monitoring, voyage optimisation and new approaches to ship maintenance are making a notable difference. And the pace of new fuel technology development in niche areas of the sectors is increasing.
We must now establish collaborative joint ventures if we are to have any chance of meeting the 2050 target. These should involve not only our own industry participants but also fuel technology companies, equipment manufacturers and energy developers from other industrial sectors outside of shipping. These could include renewable energy experts, battery makers and energy storage companies, fuel cells developers, gas transport technologists and so on. Since April, the need for new collaborative ventures has become pressing.
Ship operators can only buy the fuels and adopt the new fuel technologies that are available to them. This is not their mainstream business. In fact, the whole fuel transition business, although it is necessary, is a major operational inconvenience. The point is – shipping cannot make this fundamental change to its operation on its own and has a role to play in developing supply chains.
The next waypoint is 2023 when the IMO will agree to the final strategy. My concern is that by the time of that review, it will have become only too clear that mainstream shipping companies have barely begun to embrace new fuel technologies. In five years’ time, I fear that it may still be business as usual and the investment needed to address the long-term has not been made.
This is one of the reasons why I am working on a project at the moment to continue our earlier work in Low Carbon Pathways. The fuels we have identified include electricity generated from renewable sources, biofuels, ammonia, and hydrogen, which can be used in new machinery options such as fuel cells. All of these could achieve the IMO’s target singly or in combination (see Figure 1). And by the way, there is potentially enough renewable energy in the world to provide fuel for the entire shipping industry many times over (see Figure 2).
The key point is that any future shipping fuel must have zero or close-to-zero carbon content. And to be fair, all of the possible zero-carbon options have drawbacks and challenges. Batteries, for example, are unlikely to have deepsea applications on board very large crude carriers, bulkers or big container ships although they could provide an extra source of carbon-free energy in ports and terminals. However, they are already proving useful on board a range of coastal vessels, ferries and workboats where frequent re-charging facilities are available.
Liquid hydrogen will present challenges. But it is not deterring the Japanese who plan to have 40,000 hydrogen-powered cars by 2020, including a fleet of taxis running on hydrogen in time for the Tokyo Olympics in 2020. Toyota and Honda are cooperating on the vehicles and Kawasaki Heavy Industries has a liquid hydrogen ship design. Ammonia is a dangerous cargo but is already shipped in liquid form on board LPG carriers.
Safety, of course, will be paramount in all future fuel developments. However, since safety is a key design parameter, risks associated with new fuels can be ‘designed out’ as naval architects and marine engineers, supported by class, have done successfully for many years.
Although 2023 is the next waypoint, 2030 is the next target. By then, the IMO aims for global shipping to have reduced the average of its emissions of carbon dioxide per transport work undertaken by at least 40%. This may seem even more daunting than the 2050 target but there are many ways in which ship operation can be made more efficient incrementally. Fuel, however, is still the single most important factor.
I also believe that carbon pricing could have a role to play but this is politically complicated and much depends on the price of carbon and abatement costs. A well-structured carbon pricing mechanism could provide the incentive to assist in meeting the 2050 target as well as providing a basis for further carbon-reduction strategies after that date.
In conclusion, I believe that we require the first generation of zero-emission ship designs as a matter of urgency. With this in mind, we published a paper on zero emission vessels and the drivers necessary for their development at the end of last year. These designs must be developed through the collaboration initiatives already mentioned and we must have these vessels on the water within the next decade.
Technologically I know that we, as an industry, can meet the targets. But there may need to be some carrots and sticks if progress proves too slow. These could come in the form of policy, regulations, financial incentives and the engagement of shipping’s end users – the all-important charterers, shipping’s customers – possibly in the form of some incentive-sharing arrangement.
Is the IMO’s ambition achievable? Yes … I believe so. But shipowners, operators and the global shipping industry as a whole will have to adopt a new mindset if we are to have any chance of achieving it.