There was plenty of activity and perhaps even more discussion, as has become standard, surrounding the development and application of different fuel types for shipping. There are two main drivers pushing this:
- The imposition of sulphur emissions control areas in North Europe and North America, and a worldwide albeit less stringent equivalent (IMO 2020)
- Commitments from the International Maritime Organization (IMO) to reduce greenhouse gas carbon emissions from shipping by half come 2050, with 2008 set as the comparative
Further motivation could well come after the twenty-two countries bordering the Mediterranean Basin agreed, at the end of 2021, to establish their own sulphur emission control area (SECA). Following the earlier examples, this would require burning fuel with a maximum sulphur content of 0.1% instead of the global level of 0.5%. The SECA would be set up under the Marpol convention, which concerns marine pollution, and could come into force as soon as 2025.
Noises and initiatives from within shipping
Whilst shipping is often considered too conservative and slow to adopt change, and not without justification, in 2021, certain liner shipping figures became particularly animated on the wider subject of sustainability. Maerk’s supremo Mr. Soren Skou suggested a carbon tax should be placed on marine fuels. The argument put forward was that the energy transition needed to be promoted by market mechanisms and was necessary to stop fossil fuels from being cheaper than greener equivalents.
Mr. Skou’s intervention was quickly echoed by MSC’s CEO Soren Toft, formerly Maersk’s Chief Operating Officer. Both were also signatories to an open letter co-authored by seventeen members of the twenty-strong World Shipping Council (WSC). The signatories operated at the time more than half of all containerships and three-quarters of shipboard capacity.
Addressed to the member state governments of the International Maritime Organization, the letter asked for regulatory support in establishing a USD 5 billion “industry funded research and development” fund to “catalyse” the introduction of carbon free shipping fuels and technologies. It proposed that this International Maritime Research and Development Board (IMRB) be governed by the IMO and built upon an idea already mooted in 2021 by the WSC and other representative bodies as BIMCO, INTERCARGO and INTERTANKO.
Maersk was also associated with a multi-agency research initiative that was launched in 2021. Here, the Danish, Norwegian and United States governments, together with the Global Maritime Forum and the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, came together to lead a new Zero-Emission Shipping Mission. Supported by a further seven governments, the aim is to promote the development and deployment of zero-emission ships so that by 2030, at least 200 vessels and five percent of the global shipping fleet (all sectors) run on zero-emission fuels as green ammonia, …hydrogen, …methanol or advanced biofuel.
However, pressure is also and still needed from outside the industry, probably more so if change has to be forced. The most potent influencers in this regard are the shippers themselves. They are the clients of the shipping industry and listen themselves to the wishes of their customers, the ultimate consumers.
In 2021, a group of shippers came together to establish coZEV (cargo owners for Zero Emissions Vessels). They have, as an ambition, to only use zero carbon emission ocean freight come 2040. Nine of their number have signed up to this and include amongst their number, Amazon, IKEA, Michelin, Tchibo and Unilever.
Interestingly, at the start of 2022, the Maersk group announced it had brought its initial target of zero carbon forward from 2050 to 2040. In reaching that, it set an interim target in 2030 of reducing its absolute carbon emissions by between thirty-five and fifty percent. As an absolute reduction measured in tons, this takes into account trade growth so that Maersk will be moving more cargoes – the target includes APM Terminals – but still generating less carbon dioxide.
In trying to meet the various goals, shipping companies of whatever sector have three main options to choose from, albeit not exclusively. There can, of course, be a mixture of approaches:
- Burn marine fuel that complies with the emissions regulations be it higher-grade yet conventional fuel oil or specially developed (very) low sulphur fuel oil
- Continue to burn conventional high sulphur fuel but use exhaust scrubbers (newbuild or retrofit)
- Move to a new non-oil based but still compliant fuel type (such as LNG)
Developments surrounding these and other options have been summarised below.
In the run up to and immediately after the implementation of the IMO 2020 sulphur regulations, the take up of scrubber equipped vessels grew very quickly. At the end of 2019, around 210 containerships had been (retro)fitted with scrubbers. Twelve months later, this had increased to 700 ships able to carry around 5.8 million TEU, equivalent to a quarter of the global fleet by capacity. Come the end of 2021, the figure had grown, albeit not as explosively as the year beforehand, to 850 ships and 7.5 million TEU, around thirty percent of the fleet.
One reason for the slowdown could be the perception problem scrubbers have. This arises from concerns about the open-loop scrubber system whereby seawater is brought in, used as the scrubbing element, and passed out back into the sea. The alternative is a closed loop, which is more expensive and uses treated seawater that stays within the circuit. Even so, the used wash water still needs to be disposed of somewhere and somehow. Given the concerns, a significant number of ports and/or jurisdictions have banned the operation of open loop scrubbers within their waters.
Notwithstanding this, there were still some substantial orders for scrubber installed newbuilds in 2021. For example, Evergreen ordered two 24,000 TEU ships (June) and MSC seven of 16,000 TEU (April) Still, the momentum – and coverage – does seem to be moving towards other options.
LNG – arrival of the big ships
The initial uptake of LNG-fuelled containerships was limited to shortsea and regional carriers active within the pre-existing emission control areas of North Europe or North America. In 2020, this changed with the delivery of the 23,100 TEU and LNG/dual fuelled “CMA CGM Jacques Saadé”. As a result, LNG as a fuel entered the deepsea container routes.
In the course of 2021, there were many reports of new vessel series ordered with LNG/dual fuel options. By mid-2021, LNG’s increasing popularity was already evident as such ships were said to be responsible for over a fifth of the contemporary orderbook at that point in time.
The big-ship pioneer of LNG as a fuel, CMA CGM, had at least two major orders for ten ships of 2,000 TEU and six at 7,600 TEU. ZIM went for seven ships of 7,100 TEU; Zodiac ordered four of 15,000 TEU; Hapag-Lloyd six of 23,500 TEU and Maersk, eight 16,000 TEU ships, this virtually its entire ordering activity in 2021.
There was also an interesting corporate conversion of sorts. Although originally concentrating on HFO and using scrubbers – and notwithstanding its above mentioned order for scrubber fitted ships – MSC agreed in 2021 to charter in a newbuild series of eleven LNG/dual fuelled ships already ordered by Eastern Pacific. It was also reported that MSC would convert a number of existing orders to LNG/dual fuel, this said to include ships of 24,000 TEU.
Confirming the change of direction for MSC, there came a collaboration agreement with oil major Shell to look at reducing existing emissions working towards zero. LNG would form a central plank of that with the two looking at ways to reduce the harmful methane slip that does (can) result from its usage. Methane has a Global Warning Potential (GWP) of 28-36 over one hundred years; the GWP of carbon dioxide is one.
The methane slip is a risk involved with burning “fossil” LNG, so attention is also being paid to alternative forms of LNG. In that regard, in 2021, CMA CGM joined with EveRé (part of China Tianying Inc) and Elengy (part of Engie) to study the viability of producing liquefied biomethane, or BioLNG, from biodegradable household waste.
Opinions on LNG’s viability as a long-term solution are nuanced. A study commissioned by Sea-LNG and the Society for Gas as a Marine Fuel came to the conclusion that the use of LNG can result in up to twenty-three percent savings in the emission of C02, depending upon the engine configuration, and that there are obvious air quality benefits from it as a maritime fuel.
In contrast to the Sea-LNG report, the World Bank saw only a limited role for LNG if shipping wants to decarbonise by the mid-21st century. In its report, it went so far as to suggest demand would actually begin to tail off, quickly so, after 2030. It also suggested that the combination of widespread and long-term use ran counter to the aims of reducing greenhouse gas emissions by half as of 2050.
In some ways, the World Bank report reinforces the belief of many, including in shipping, that LNG is a bridging technology between high emissions and low emissions. Indeed, this is the role that Hapag-Lloyd foresees for LNG, describing “fossil-LNG” as a step [only] on the path towards zero emissions. In the mid-term it hopes to run ships on synthetic natural gas (SNG).
Certainly, LNG fuelled ships can help reduce harmful emissions. Hapag-Lloyd estimates carbon dioxide is reduced by fifteen to twenty-five percent with sulphur and related emissions reduced by as much as ninety percent. But reduction is not removal, and just because a vessel can run on LNG does not necessarily mean it always will.
From the World Bank hypothesis of LNG demand reducing from the start of the next decade, there is also a fundamental to be answered. With all these LNG/dual fuelled ships already active and ordered, and with ships having a normal useful lifespan of twenty to twenty-five years, how will owners and operators feel with having assets that are obsolescent and not even ten years old?
Whilst pointing to a potential problem, the World Bank offered possible solutions. It identified ammonia and hydrogen as the most promising “zero-carbon” bunker fuels, although these also face challenges in being truly sustainable.
BFO – Biofuel Oils
Having seen earlier announcements and/or trials involving Hapag-Lloyd, Maersk, CMA CGM and MSC, biofuel seems to have taken something of a back seat when considering all the other options that are being looked at. However, in 2021, intra-North Europe carrier Samskip concluded an agreement with GoodShipping to use biofuels on part of its fleet. An 800 TEU vessel was selected to start the initiative having already trialled biofuels in 2019. Samskip claims that the use of biofuels could reduce voyage emissions by around forty-five percent at the start, building up to as much as eighty percent later.
As with all fuel types, traditional or alternative, there are upsides and downsides. The big environmental positive with ammonia (NH3) is that burning it does not produce carbon dioxide (CO2). Cost wise, it is also cheaper than methanol and hydrogen, and it has a lower flammability than other fuels. However, it is very toxic and has a low energy density, this latter meaning that it would need a tank four times the size of one that stores traditional heavy fuel oil. Further, a lot of energy is required to produce ammonia, and therefore also produces carbon dioxide if not done in a renewable way.
Ammonia developments in 2021 saw Asiatic Lloyd order a total of four so-called “ammonia ready” ships of 7,100 TEU that can be modified to run on that fuel. Deliveries should be completed in 2023. Compagnie Maritime Belge (CMB), whose group includes containership owner Delphis, has moved toward ammonia pointing claiming the capital expenditure is much less than for an LNG-powered ship. This multi-sector group will receive ammonia ready newbuilds over 2023 and 2024 by which time it intends to also start seeing fully capable ammonia/dual fuel ships.
The adoption of methanol gained traction in 2021. It has a number of advantages such as being easy to handle with no operational safety implications. It is also readily available and can be supported by the existing (fuel) supply infrastructure as bunker storage facilities and delivery systems can be converted to it. Shipping is already experienced in handling it and conversion costs for ships are much lower than with other options. And although methanol requires larger tanks than those currently used for conventional fuel oils or their derivatives, it does not emit methane like LNG and conventional fuels.
The prime pusher behind methanol at the moment is the Maersk group. Late in 2021, it declared options on four methanol/dual fuel units of 16,000 TEU, bringing the total up to twelve. It already has a series of smaller ships on order and is looking at deploying its first methanol-powered ship, a 2,100 TEU unit, in 2023.
Despite the infrastructural advantages, methanol will face similar start-up challenges as LNG as a marine fuel, in particular obtaining sufficient supplies and, most importantly, in a sustainable way. The use of methanol alone does not make the project sustainable or carbon free. Currently, it is produced on an industrial scale from natural gas by reforming it with steam and then converting and distilling the resulting synthesised gas mixture to create pure methanol.
In order to be truly sustainable, a synthetic or renewable methanol will be needed. In addressing that, Maersk has entered into a collaboration with REIntegrate to design and develop a manufacturing plant in Denmark for e-methanol.
Producing sustainable methanol, though, requires substantial amounts of renewable energy and involves mixing with carbon dioxide, which itself needs to be sourced renewably. Whilst Maersk has secured sufficient supplies for its first ships, in order to produce the 360,000 tonnes of sustainable methanol it needs, it has been suggested that it would require more renewable energy than is generated by the country of Denmark in one year.
As a group, Compagnie Maritime Belge (CMB) has also been looking at hydrogen as a possible alternative through its subsidiary CMB Technologies. This company has been behind the development of hydrogen powered harbour/bay area ferries in Antwerp and Japan. However, CMB doesn’t see hydrogen as a viable alternative at the moment and will wait for the fuel cell technology to develop and costs to reduce.
Indeed, supporting the CMB experience, Finnish engine manufacturer Wärtsilä has also concluded that hydrogen is not a credible option for shipping. It thinks the gas will only play a niche role because the energy intensity is low by volume and, considering it needs to be kept at a very low temperature, its storage is very complex. According to CMB, hydrogen is better on fixed routes where the refuelling points are always in the same place. For its part, Wärtsilä thinks methanol and ammonia are more likely candidates for wider adoption.