Decarbonizing Shipping: Why Policy Should Let Innovation Chart the Course
8 out of 10 goods traded internationally move by sea
We live in a world connected by sea lanes. The UN estimates that over 80% of the volume of internationally traded goods moves by sea. That takes a lot of energy, about 330 million tons of fuel per year, mostly in the form of fuel oil (a product of crude oil refining). As a result, shipping is estimated to contribute 3% of total global greenhouse gas emissions, while also creating particulate emissions such as Sulfur oxides and Nitrogen Oxides that result in lower air quality near ports. Per ton of goods shipped, shipping is actually a comparatively low emissions way of transporting goods from one point to another compared to alternatives such as trucks, but the massive scale of global trade results in a large amount of total emissions. As part of the push to decarbonize society and reduce air pollution, various alternatives are under consideration to lower those emissions.
Broadly, the decarbonization of shipping can be grouped into two approaches. First, a shipowner can pursue incremental changes, such as using LNG as a fuel (which also helps reduce particulate matter emissions), relying partially on sail power, or pursuing efficiency gains via sailing slower or ship design changes. Those incremental changes may work in concert with the second approach (and our primary focus): switching fuels to a lower-carbon alternative, which may also help lower particulate emissions. To better understand that second approach, we will dig into the strengths and weaknesses of several of those fuels: ammonia, batteries, biofuels, liquid hydrogen, and methanol.
Let’s start by looking at the chart below. It compares energy density for each alternative fuel to fuel oil. Energy density is important because every cubic meter fuel occupies is a cubic meter of space that cargo cannot occupy, and every ton of fuel is a ton of cargo that cannot be carried. In the chart below, the higher the bar, the more mass or volume of fuel that must be carried to replace fuel oil. Fuel oil is attractive to shipowners because it is relatively energy-dense: for the amount of energy it provides, it does not take up that much space or weigh that much, which leaves more space and weight for cargo. Renewable diesel is similar to fuel oil in energy density, and hydrogen is actually more dense by weight (which means fewer tons of hydrogen have to be carried), but much less dense by volume (which means those tons will take up more space). In comparison, ammonia and methanol take about 2-3 times more space and weight to provide the same amount of energy. Today, batteries are far less dense than the other alternatives, though new battery chemistries may change this in the future. Choosing a lower-density fuel creates a new consideration for a shipowner. Should they build a bigger ship, accept less range, less cargo, or find a different fuel alternative? The answer is likely to vary based on the use case and preference of the individual shipowners.
While alternative fuels cannot yet compete with fuel oil’s high energy density, their potential to decarbonize shipping is driving research, testing, and new vessel orders. To think through the potential for each fuel, we will compare and contrast fuel deployment in the following areas and review how each fuel stacks up: 1) Scale, 2) Technological Maturity, 3) Infrastructure readiness, 4) Safety and Handling, and 5) Challenges to Decarbonization.
The scale of vessel fuel demand is a significant hurdle for all the alternatives. To add perspective to our estimate of 330 million tons of vessel fuel demand:
When adjusting for energy equivalency, that is roughly 4 times existing ammonia production, 8 times existing methanol demand, and over 8 times existing merchant and byproduct hydrogen production.
Existing biofuels production is constrained by the availability of feedstocks, which today are primarily crop-based (such as corn or soybeans), though there may be the potential in the future to develop waste-based bio-feedstocks, which is an initiative of the US Department of Energy.
When thinking about how that much energy compares to batteries, replacing fuel oil with batteries would require about 60% of the electricity that the entire US consumes.[1]
Given that scale, building enough quantity to replace fuel oil may take time, and it may take more than one of these alternatives to find enough fuel. In addition, most of the ammonia, methanol, and hydrogen production today is not low-carbon, which means that investment in new or revamped lower-carbon supply is required to create a decarbonized alternative.
The technological maturity of the alternatives is more mixed. Ships are using methanol and biofuels today. Battery-powered vessels are also in operation, though at a smaller scale. Ammonia engines are starting to roll out, but the regulations around operations are still in development. Today, hydrogen ferries carry tourists in Norway, but large scale vessels may be further away.
For most of these fuels, the infrastructure required to replace fuel oil, such as storage tanks and bunkering barges, is still being built out. Ammonia and methanol are shipped globally today, but the infrastructure for fueling vessels is still under development. Ammonia bunkering is in the trial phase, while methanol has been tested but still needs to scale. Because they are liquids at ambient temperatures and pressures, methanol and biofuels may be able to utilize some of the existing fuel infrastructure. However, ammonia and hydrogen require specialized storage as they are gases at ambient temperatures and pressures. For batteries, a significant infrastructure challenge will be ensuring enough electricity transmission can reach the port.
For safety and handling, methanol and biofuels are likely to be a much simpler transition for shipowners. As liquid fuels, they will handle similarly to existing fuels, though their risk profile may be slightly different. Methanol, for example, has special safety guidelines due to its lower flashpoint. Ammonia and hydrogen, given their gaseous natures, will require special handling on board, and ammonia handling requires extreme care due to its toxic nature.
Avoiding thermal runaway is a key challenge for using batteries. This is when batteries heat up faster than they can get rid of the heat, which can cause them to burst into flame. This risk can be handled both via ship design and by choice of battery chemistry. However, for batteries, the low energy density of current technologies may limit the applications that are a good fit. The marine engine designer MAN notes, for example, that for long voyages, the weight of the batteries required to power the ship could be greater than the cargo carrying capacity of the ship.
While each potential fuel alternative could help decarbonize marine shipping, each also has unique challenges that must be considered. Batteries have no exhaust, but the electricity they consume in charging may create emissions. Ammonia (NH3) and hydrogen (H2) do not have a carbon molecule, so their combustion does not create CO2, but emissions from producing them can be significant depending on the production process. Ammonia combustion must also be done properly to avoid NOx emissions, which is important for improving air quality. Biofuels can have lower carbon intensity, but competition from other transport sectors for the limited feedstock is a challenge. For a lower-carbon methanol (CH3OH), availability of CO2 sources to provide a carbon molecule may be a constraint.
Innovation can help society decarbonize maritime shipping
Where does that leave us? As society looks to decarbonize marine shipping, there are alternatives to fuel oil, but each of those alternatives will come with its own challenges, and all need substantial development to replace fuel oil in large quantities. Given the current stage of development, a solution-agnostic approach may be the most realistic approach to the decarbonization of vessel fuels.
Overly prescriptive policies that favor one solution over another may not result in productive outcomes. Allowing space for entrepreneurs and innovators to solve the challenges we highlighted above, as opposed to top-down regulations that pre-judge the best solution in the early days of innovation, are most likely to result in tangible progress towards the decarbonization of maritime transport. Given that eight out of ten goods are moved across the ocean on vessels, poor policy choices could have a negative impact on consumers around the world in higher food and goods prices.
[1] One Exajoule = ~277.778 Terawatt-hours, so 9.2 EJ of vessel fuel is ~2,556 Terawatt hours, compared to the US EIA’s estimate of ~4,070 Terawatt hours (4.07 Trillion kWh in the original).
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