Shipping industry moves to decarbonisation

Ways in which the industry is seeking to reduce its global emissions include investment into zero-emission technology, the use of alternative fuels, and strategies aimed at speeding up the process of cutting emissions.

Investment into zero-emission technology

Shipping companies are investing in the construction of vessels that utilise technology to minimise the emissions they produce, and are also attempting to reduce emissions by engaging and collaborating with technology suppliers.

For example, offshore support vessel company North Star Renewables is building three new hybrid service operations vessels after securing £96 million in funding from Allianz Global Investors.

The company’s chief strategy officer Fraser Dobbie told industry news site Bunkerspot recently that the vessels will have less redundancy in operation as a result of using battery capacity on board, and will use shoreside power when in port whilst looking at ways to charge infield. The aim is to increase battery capacity in the future, enhancing the amount of time when the vessels can operate solely on battery power rather than using fuel.

Meanwhile shipping giant Maersk is investing £1 billion in a switch to carbon neutrality. It has ordered eight new container vessels that can be fuelled by methanol as well as traditional fuel, in an example of a company investing into the construction of ships that use alternative fuels.

The production of alternative fuels

The three most common alternative fuels which could be used in the shipping industry are hydrogen, ammonia and methanol. However, green fuel production needs to be increased in order to compete economically with conventional fuels.

A report into zero emissions shipping (128 page / 2.5MB PDF) produced by the University of Oxford earlier this year in collaboration with Pinsent Masons, the law firm behind Out-Law, noted that batteries and biofuels are currently the only commercially available alternative for commercial shipping.

Biofuels are compatible with existing engines and infrastructure, making them a flexible route to decarbonisation – although with high costs. The report noted there were scalability concerns which meant the use of biofuels in shipping would be limited in the longer term.

Hydrogen has been cited as the most likely alternative fuel in the future, with Torvald Klaveness chief executive Lasse Kristoffersen telling the Financial Times there was “no question whether hydrogen will be the energy carrier of shipping in 2050”.

The University of Oxford report said the main obstacle to the growth of hydrogen, particularly ‘green hydrogen’ produced from water, was storage and transportation.

There are, however, plans underway in various locations to build new sites to enable the growth of hydrogen as a fuel. For example, the Western Isles Council has proposed the construction of a new deep-water port in Stornoway to transport hydrogen that would also be produced in the Hebrides.

But energy and fuel advancements on shore are needed to scale up production and push down the costs for alternative fuels.

In its Industry Transition Strategy Report (69 page / 1.35MB PDF) published in late October 2021, the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping said the industry’s current path could in fact lead to increased greenhouse gas emissions in 2050, and without a carbon levy fossil fuels would remain cheaper than alternative fuels.

The centre proposed five ‘critical levers’ to activate zero-carbon shipping: energy and fuel advancements on shore; advancements on ship technologies; customer demand; finance sector mobilisation; and policy and regulation.

Carbon dioxide is not the only pollutant that needs to be reduced. On 1 January 2020 the International Maritime Organisation put in place a new limit on the sulphur content in the fuel oil used on board ships, limiting sulphur in fuel to 0.5% mass by mass compared to 3.5% previously.

The limit is forecast to lead to a 77% drop in sulphur oxide emissions, equivalent to 8.5 million metric tonnes, helping preserve the environment and improve people’s health.

According to the Oxford report, the rule prevents shipping from using the dirtiest forms of fuel without on-board scrubber technology, but does not stop the use of other oil-based fuels.

Innovative strategies to accelerate efforts to cut emissions

There are other ways in which the shipping industry can play a part in cutting emissions. Norway introduced a nitrogen oxide (NOx) tax in 2007 which was soon replaced by the NOx Fund. Industry participants pay into the fund and the money is used to invest in technology that reduces NOx and help enterprises transition.

Since 2008 the fund has supported around 1,200 projects and reduced NOx emissions by over 42,700 tonnes – as well as helping reduce carbon emissions by 1.1 million tonnes. It has also contributed to Norway’s ability to comply with international NOx emissions commitments, and to significant development and dissemination of environmental technology.

The largest share of the fund has gone into the maritime industry, with a recognition that the nature of international shipping provides opportunities for the Norwegian supplier industry on a global level.

An increase in similar measures elsewhere in the world could prove valuable, as the shipping sector continues to grapple with the challenges of decarbonisation.