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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Shipping Is The Next Big Industry To Go Net-Zero

When the International Maritime Organisation announced plans to significantly reduce the amount of sulfur ships were allowed to emit, the industry adjusted relatively quickly. After all, it was all about the fuel. Now, the EU has set its sights on adding shipping to its Emissions Trading System. Meanwhile, a new kind of ship may be coming to the oceans of the world: zero-emission ships.

According to the European Commission, the shipping industry generates some 2.5 percent of the world’s greenhouse gas emissions or 940 million tons of carbon dioxide annually. As such, it is a ripe target for more emission regulation, especially as it falls in the category of hard-to-decarbonize industries. Alternatives to vessels fueled by diesel or liquefied natural gas have only had limited success so far, which means that for the observable future, shipping will continue to rely on fossil fuels.

The EU first unveiled plans to make shippers pay for their emissions last year, and the industry understandably took a stand against these plans. It argued that extending the ETS to the shipping sector went against international law. Unfortunately for the industry, the EU Court of Justice ruled against it.

This means that shipping will likely become more expensive once the process of extending the ETS to cover the industry is completed. It also means that chaos could ensue amid rivaling emission-reduction schemes—the IMO also has an emission-reduction scheme for the industry—different industry interests, and heightened political tensions.

This is what BIMCO, the world’s largest shipping association, warned earlier this month, ahead of the EU’s deadline for proposals on how to most effectively extend the ETS to the shipping industry.

“If the EU implements a regional ETS, shipping risks getting hit by multiple emission trading systems which will make a global market-based measure much more difficult to achieve,” said BIMCO’s Secretary General, David Loosley, as quoted by Seatrade Maritime News.

Related Video: Is The Future Really Green? Oil Majors Struggle To Find Direction

What’s more, Loosley doubted if the extension of the ETS to the shipping segment would motivate ship owners to invest in low-carbon technology. He noted that when a company orders a ship to be built, it has no idea how many times this ship will call at EU ports. This means the company cannot calculate in advance how much it would have to pay for the gases it emits under the ETS.

Another worry related to the EU’s plans is that it would make maritime cargo transport more expensive and lead to shifts to cheaper but more polluting alternatives such as trucks. Cargo shipping is currently the cheapest way of transporting massive amounts of goods and commodities internationally. If it stops being the cheapest, many traders would go to the next cheapest form of transport, even if it is not the cleanest.

What about developing cleaner ships? It can be done, the industry has said, but it will take a lot of time and money. There is already research going on in this direction, and it has produced some early results: solar and wind are being used to power vessels, and hydrogen is on the agenda, too.

Last year, for instance, a company called Eco Marine Power showcased a ship powered by a system that combines solar and wind power, complete with a storage installation. The system was referred to as a supplementary energy source for ships, which suggests it would be used on diesel-powered vessels, perhaps in a way similar to plug-in hybrid passenger cars.

This year, a British company, Windship Technology, unveiled a ship design called True Zero Emission that incorporates wind and solar power, as well as carbon capture technology for the emissions from the ship’s fuel engine. According to Windship Technology, its design is the only one that is viable for bulk carriers and oil tankers.

And there is the battery-powered tanker dubbed e5, which Japanese Asahi Tanker will own and operate in Tokyo Bay, where the vessel will, somewhat ironically, deliver diesel fuel to other vessels. The tanker will be powered by a 3.5-MWh battery system that, according to the battery supplier, Corvus Energy, could last “for many hours” before it needs charging.

Hydrogen, especially green hydrogen, is also being considered as a shipping fuel, in fuel cell technology similar to the one deployed in hydrogen cars. ABB, for example, is working on a fuel cell-based propulsion system for passenger and cargo vessels. According to the company, the technology is most viable for short-haul vessels. Related: Hundreds Of Fuel Tanker Trucks Explode At Iran-Afghanistan Border

The one thing most of these news reports about zero-emission vessels don’t mention is the cost. This is perhaps because it is likely to be high, as is the cost of all new technology before it scales. Scalability would be a key consideration for any new energy system for ships, again, just as it is in any other sector.

How many of the alternative ships currently in development will prove viable remains to be seen. One thing is for sure, though. The pressure on the shipping industry is just beginning. The IMO has set a target for reducing emissions from the industry by half by 2050. The EU is just one of the regulatory bodies pressing the industry to reduce its carbon footprint. And this footprint is increasingly turning into the difference between a competitive advantage and a competitive disadvantage.

“This represents a whole new ball game for the industry. Optimisation of ship operations has traditionally been dictated by the efficiency of delivery around the globe that has typically meant being able to sail at full speed, thereby burning more fuel, to minimise costs for the charterer. It has been driven by money, not emissions,” said the Performance Advisory head of Norwegian DNV, Bjorn Berger, as quoted by Hellenic Shipping News.

“But the new green regime dictates that shipowners must minimise emissions from their operations and efficiency will be defined by their ability to reduce their environmental footprint, which will be a key differentiating factor in future competition for charter contracts,” Berger said.

The game is changing for the shipping industry, and it is changing fast. One report even suggested maritime transport should be phased out by 2050 because of its carbon footprint. While this is too radical, the pressure on ship owners and operators to reduce emissions as much as possible is only going to continue rising in the coming years.

By Irina Slav for Oilprice.com

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