The International Chamber of Shipping has published a short but powerful report to “endorse” the International Maritime Organization’s Initial Strategy on Reduction of GHG Emissions from Ships, adopted in April 2018. The ICS report calls the IMO’s Initial GHG Strategy “a historic agreement which the global industry, as represented by ICS, fully supports,” and discusses four fuel technologies that could deliver the IMO’s targets: batteries, hydrogen, ammonia, and nuclear.
The ICS report also demonstrates four realities, which apply, perhaps uniquely, to the maritime sector. First, corporations are driving change, in advance of government legislation. Second, these corporations are looking for more than incremental reductions in emissions and instead targeting total sectoral decarbonization with the ambition “to achieve zero CO2 emissions as soon as the development of new fuels and propulsion systems will allow.” Third, they realize that LNG and other low-carbon fuels cannot meet these targets: “the ultimate goal of zero emissions can only be delivered with genuine zero CO2 fuels that are both environmentally sustainable and economically viable.” Fourth, they recognize that, because ships are long-lived assets, the need to invest in zero CO2 fuel technologies is urgent and immediate.
The ICS report is a call for investment in developing, demonstrating, and deploying ammonia fuel technologies, as well as other zero CO2 fuels. As the ICS describes it, the impact of the IMO’s Initial GHG Strategy has been to “give all industry stakeholders the clear signal they need to get on with the job of developing zero CO2 fuels.”
Industry leadership in the maritime sector
In previous years, these words could only have come from an environmental advocacy group. This year, they come from the commercial heart of the shipping industry. Established in 1921, the ICS is “the global trade association representing national shipowners’ associations from Asia, the Americas and Europe and more than 80% of the world merchant fleet.” Its voice and actions are crucial for guiding corporate R&D decisions throughout the sector, as well as for influencing global legislation through its “consultative status with the International Maritime Organization.”
The ICS report, Reducing CO2 Emissions to Zero: The “Paris Agreement for Shipping”, was launched in early July. The Paris Agreement was a pledge by countries to set national targets for reducing emissions within their borders. By definition, the shipping sector was not included because its emissions occur primarily in international waters. As the ICS report’s title makes clear, the IMO’s Initial GHG Strategy serves to bring the shipping industry in line with the rest of the world.
According to the ICS press release announcing the report:
“Reducing CO2 Emissions to Zero” explains what the high levels of ambition agreed by IMO Member States could mean for international shipping. These targets include an efficiency improvement of least 40% as an average across the fleet compared to 2008, and a 50% cut of the sector’s total greenhouse emissions by 2050, regardless of future trade growth.
The publication also explores possibilities for the development of zero CO2 fuels that will almost certainly be required if a 50% total cut in GHG emissions is going to be delivered before 2050, as well as investigating policy options for short and medium term regulatory measures.
International Chamber of Shipping, Reducing CO2 Emissions to Zero: ICS Publishes New Insight into the ‘Paris Agreement for Shipping’, 07/02/2018
The potential for ammonia as a zero carbon fuel
The ICS report describes two ways for ammonia to be used as a fuel.
First, ammonia can be used as a hydrogen carrier. In this configuration, ammonia stored in the fuel tank can be cracked and purified on demand, generating high-purity hydrogen fuel with emissions of atmospheric nitrogen. The hydrogen then feeds a fuel cell, generating power with emissions of pure water. This could be economically advantageous because of ammonia’s high energy density: decreasing capex investments and increasing profits by “avoiding the cryogenic systems necessary for the carriage of liquid hydrogen or the limited voyage length required if using compressed hydrogen gas.”
Second, “ammonia could be used as a fuel itself.” The report does not specify technologies for this, but it does note that, compared to conventional engines, “fuel cells are more efficient and avoid NOx emissions.”
[Ammonia can be used as a direct fuel in internal combustion engines, turbines, and fuel cells. For those interested in the technology readiness of ammonia fuel cells, please refer to my article last week describing GenCell’s commercial roll-out of ammonia-fed alkaline fuel cells providing off-grid power for cell phone towers in Kenya, beating diesel generators for total cost of ownership.]
Huge investments over decades, with huge rewards
The report acknowledges the sizable effort that will be required to scale up zero CO2 technologies, but it also emphasizes the ICS’s active role as an agent of change. The “huge technical challenges and research required should not be underestimated … However, ICS is now engaged in a number of initiatives with various industry stakeholders, including engine manufacturers and academics, to explore what the path to a zero CO2 future might be.”
This work has begun, and industry-led research has already been published. In December 2017, Lloyd’s Register published Zero-Emission Vessels 2030, a techno-economic analysis of various alternative maritime fuels that could be deployed within the next decade, which concluded that ammonia would be “the most competitive” fuel for zero-emission maritime vessels.
One additional point in the ICS report addresses the disappointment, felt by some, that the IMO’s Initial GHG Strategy didn’t go further.
While some governments would have preferred to see the adoption of even more aggressive targets, it should be remembered that a 50% total cut by 2050 can realistically only be achieved with the development and widespread use, by a large proportion of the fleet, of zero CO2 fuels. If this goal is successfully met, the wholesale switch by the industry to zero CO2 fuels should therefore follow very swiftly afterwards.
International Chamber of Shipping, Reducing CO2 Emissions to Zero, July 2018
In other words, there is an immense commercial opportunity here.
And in this instance, the momentum of product development is such that even the niche adoption of a new zero carbon fuel, like ammonia, will have a massive impact on its technology commercialization, leading to cost reduction, leading to further market adoption and product optimization, leading to further cost reduction. This is a virtuous cycle, which will result in zero carbon fuels capturing ever-increasing market share.
The role for low-carbon fuels in reducing shipping’s GHG emissions
As the ICS report states, “greater use of LNG and biofuels may well form part of the interim solution … but the ultimate goal of zero emissions can only be delivered with genuine zero CO2 fuels.”
The problem that LNG faces is not just that it cannot deliver the long-term goal of zero emissions. LNG cannot even deliver the IMO’s 2050 target of a 50% reduction in GHG emissions. According to the LNG industry group SEA\LNG, “LNG’s greenhouse gas (GHG) performance represents a major step forward when compared with traditional marine fuels … Utilising best practices and appropriate technologies to minimise methane leakage, realistic reductions of GHG by 10-20% are achievable, with a potential for up to 25% compared with conventional oil-based fuels.” Even in the best case scenario, therefore, LNG falls far short of the IMO’s 50% target for 2050.
2050 is 32 years away, but this is not a long time. A newly-built ship has an average economic life of around 30 years and, therefore, investors commissioning new ships today need them to be future-proof, now.
Call for investment: get on with the job of developing zero CO2 fuels
The day after the ICS published its report, SEA\LNG put out a press release that, after repeating its standard complaints against ammonia and other alternative fuels, voiced support for the drive to invest in zero carbon fuels (perhaps grudgingly).
Alternative fuels such as hydrogen and ammonia are not economic, not available at scale, and unproven for shipping operations. They are called future fuels for a reason!
… These future fuels will require huge investments by industry and governments over decades to realise their potential. SEA\LNG encourages and supports industry and government initiatives which would assist with the development of future technologies.
SEA\LNG press release, 07/03/2018
The fact that “future fuels” are needed today, for ships being built now, demonstrates the urgency of the situation.
Another organization that calls for immediate investment in zero carbon fuels is Transport & Environment, an EU-based non-profit that has “observer status” at the IMO. In the words of its shipping director, Bill Hemmings:
Decarbonisation ultimately means using new renewable fuels and propulsion technologies. That’s a future prospect that the industry is starting to latch onto, possibly in the belief that it gets them off the hook from doing much in the meantime.
The not-so-good news is that there is far too little acceptance of the need for immediate action …
Time to dump the obsession with LNG, which is a decarbonisation dead-end. Time to properly focus EU research and innovation resources on new zero emission fuels and get moving with stakeholders to discuss them in detail. Focus some time on the European Innovation Fund and support projects to prove whether fuels such as hydrogen and ammonia work.
Bill Hemmings, shipping director at Transport & Environment, What the UN deal on shipping emissions means, 04/18/2018
Hopefully, the ICS report represents a shift in attitude within the industry, from future inaction to immediate action. As the ICS report clearly states in its introduction, the impact of the IMO’s Initial GHG Strategy has been to “give all industry stakeholders the clear signal they need to get on with the job of developing zero CO2 fuels.”
Next week, I’ll be writing with news about a project that does exactly that: a Dutch industry consortium’s research into Ammonia as a Renewable Fuel for the Maritime Industry, which includes a pilot project “to demonstrate the technical feasibility and cost effectiveness of an ammonia tanker fueled by its own cargo.”