Shipping Decarbonization Weekly Insights -- How shipping moves ahead to run on zero-carbon fuels

2022-12-13 10:25By： Breakwave Advisors

Environmental Defense Fund (EDF) was granted consultative status by the International Maritime Organization (IMO) to support the shipping industry and countries to move in the right direction on climate. This makes EDF one of few environmental non-governmental organizations able to contribute with its expertise to the United Nation’s specialized agency for shipping. With consultative status, EDF will observe and provide expert input to IMO discussions to tackle shipping decarbonization.

International nonprofit organization EDF creates transformational solutions to the most serious environmental problems. To do so, EDF links science, economics, law, and innovative private-sector partnerships. The organization encompasses more than 3 million members and offices in the United States, China, Mexico, Indonesia, India, and Europe. The partners will now be able to join and offer expert input on discussions at IMO. Additionally, EDF aims to use its consultative status to work more closely with countries on measures to reduce emissions from international shipping. Furthermore, the organization wants to improve air quality in ports, establish robust regulatory frameworks for low and zero-carbon shipping fuels, and ensure environmental justice and equity principles are emphasized during the sector’s green transition.

IMO recently noted that the industry needs “all hands on deck” to achieve the zero-emission goals. This year’s topic of IMO’s Symposium was “Ensuring a just and inclusive transition towards low-carbon shipping”.

Research Studies

Mærsk Mc-Kinney Møller Center outlines 4 key actions to fast-track decarbonization: The maritime industry must take immediate collective action on an unprecedented scale to bring the decarbonization of the industry closer to the Paris 1.5°C trajectory, according to Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping. To leverage this opportunity, shipowners and operators must take immediate action to increase energy efficiency in operation as well as by installing energy efficiency technologies in existing or new vessels. An array of energy efficiency measures and technologies and solutions are ready for use today such as voyage planning, weather routing, hull and propeller fouling management, air lubrication, propulsion-improving devices, engine technology, electrification, waste heat recovery as well as alternative power systems such as wind-assisted propulsion. However, they are lacking commercial incentives and imperfect regulation means their uptake is limited.

The uptake of operational and technical energy efficiency measures varies across vessel categories and segments. There are some areas of growing application, particularly in the passenger, cruise, and container segments. In the fragmented bulk and tanker segments, although leading operators are applying energy efficiency measures, overall adoption remains low, the report said. As a result, the industry still has substantial potential to save onboard power, reduce energy consumption, and limit emissions.

Alliances for Decarbonization

ICS, Emirates Shipping Association to pursue COP28 goals under new MoU: The International Chamber of Shipping (ICS) has signed a Memorandum of Understanding (MoU) with the Emirates Shipping Association for collaboration towards the UNFCCC Climate Conference COP28 and beyond. This landmark signing took place at the International Maritime Organization’s (IMO) headquarters in London on 1 December. Following the success of the Shaping the Future of Shipping conference at COP26 in Glasgow, United Kingdom, and the increased profile of shipping at COP27 in Sharm El-Sheik, Egypt, ICS and the Emirates Shipping Association recognized the importance of COP28 and the role of shipping in the global energy transition. COP28 will be hosted in the UAE next year and the two organizations formed this milestone agreement to work with the government of the UAE collaboratively in the lead-up to the UNFCCC Climate Conference.

Industry Actions

GCMD invites proposals for the world’s 1st shipboard carbon capture project: The Global Centre for Maritime Decarbonization (GCMD)has issued an invitation-for-proposal (IFP) to evaluate the safety, technical and operational requirements for offloading shipboard-captured CO2 during port calls. In early October, the GCMD, the Oil and Gas Climate Initiative (OGCI), and Stena Bulk launched Project REMARCCABLE (Realizing Maritime Carbon Capture to demonstrate the ability to Lower Emissions) — the world’s first project aimed at demonstrating end-to-end shipboard carbon capture at scale. Together with Alfa Laval, ABS, Deltamarin, and TNO, the 7-member consortium initiated the first stage of a three-phase project to investigate onboard capture and storage, as well as offloading of captured CO2. The partners want to address the challenges and opportunities of deploying carbon capture technologies on ships.

K Line earmarks $740 million for environmental initiatives: Japanese shipping major Kawasaki Kisen Kaisha Ltd (K Line) has laid out its short-term investment plans in a newly released report, earmarking a significant portion for environmental initiatives. Out of the said investments, K Line plans to assign ¥25 billion in environmental technology development, including research and development for alternative fuel technologies as well as other new low-carbon and zero-carbon technologies and fuel efficiency. Around ¥10 billion would be assigned for scrubbers, ballast water treatment, and wind propulsion systems such as Seawings. The same amount is intended for new businesses in the low-carbon sector such as LNG bunkering and renewable-energy-related activities. Finally, between ¥50 and 70 billion is planned for vessels using alternative fuels such as LNG.

INTERCARGO: CII cannot be used to achieve desired decarbonization goals: INTERCARGO said that its members expressed their belief that CII cannot be used to achieve the desired decarbonization goals under real-life operating conditions as it would not deliver equitable, transparent, and non-distorting emissions reductions.

Under the CII rating scheme, set to enter into force in 2023, ships will be designated with different ratings based on their efficiency ratio, which measures distance traveled, speed as well as the intensity of the use of the vessel. This will highly depend on how a ship is traded, which is largely dictated by a ship’s charterer. As a result, the rating scheme has been under massive fire as factors that are out of shipowners’ and vessels’ control will have a significant adverse impact on a vessel’s CII rating. They can include adverse weather, voyage distance, port waiting times, port infrastructure, and charterers’ orders.

Next Generation of Vessels

BULKER

Seaworks’ LNG-powered self-unloading bulker hits the water: China’s Wuhu Shipyard has launched a self-unloading bulk carrier powered by liquefied natural gas (LNG) for Norway’s shipping company Seaworks AS. The vessel Vigdis H was launched in the Yangtze River in China on 29 November. The ship’s engine can run on LNG to reduce CO2 emissions. The unit is also equipped with shaft generator, gearbox, power storage battery, DC-LINK system, and the generator is equipped with LCR denitrification device. During operation, it can reduce the emission of nitrogen oxides by more than 90 percent, sulfur oxides by 99 percent, and more than 20% of carbon dioxide. Vigdis H is 80 meters long and features 3,900 tons. The ship is the first bulk carrier in its class under 5,000 tons that is completely carbon neutral, according to the company. The shipyard held the keel laying ceremony for the vessel in November last year. The delivery date is set for February 2023.

TANKER

TotalEnergies comes onboard ammonia-powered tanker project: French energy major TotalEnergies has become the eighth member of the Castor Initiative, a multinational coalition of shipping industry players committed to the development and construction of ammonia-powered tankers.

The coalition, founded in 2020 by Malaysia’s top shipping line MISC, South Korean shipbuilder Samsung Heavy Industries, and class society Lloyd’s Register, also includes German engine manufacturer MAN Energy Solutions (MAN), the Maritime and Port Authority of Singapore (MPA), green ammonia producer Yara Clean Ammonia (Yara) and Jurong Port.

CONTAINER

Eco-friendly containership Maersk Acadia delivered: Jiangsu New Yangzi Shipbuilding Co., a subsidiary of Chinese Yangzijiang Shipbuilding, has delivered a new eco-friendly 3,500 TEU boxship Maersk Acadia. The ship is the first in the series of 10 newbuilds being built for Japanese shipowner Lepta Shipping, a joint venture between Japanese Nissen Kaiun and trading house Mitsui & Co. The company signed charter deal with Danish shipping giant A.P. Moller Maersk for the new environmentally friendly feeder. According to the shipbuilder, this type of vessel can meet the latest International Maritime Organisation’s (IMO) requirements for zero-emission shipping. The design incorporates technologies that are expected to meet IMO’s Energy Efficiency Design Index (EEDI) III.

CAR CARRIER

CMES inks LoI for the construction of methanol-powered car carriers: State-run shipping giant China Merchants Energy Shipping (CMES) revealed earlier today that it has signed a Letter of Intent (LoI) for the construction of up to six dual-fuel methanol-powered Pure Car and Truck Carriers (PCTC). The deal, signed with China Merchants Industry Holdings, stipulates the construction of two firm plus four optional 9,000 CEU vessels. Under the terms of the agreement, the first two newbuilds are expected for delivery no later than 2025, while the optional ships, if ordered, are slated for delivery in 2026. The LoI will serve as the basis for the two sides to figure out further details of the cooperation as CMES looks to accelerate the expansion of its RORO business on the global market. The shipping major said that the total contract price for the ships should not exceed $597 million.

RO PAX FERRY

Corsica Linea’s first LNG-powered RoPax ferry delivered: On 25 July 2019, Corsica Linea announced the signing of the construction contract for its first vessel powered by LNG. The announcement came in line with the company’s energy transition strategy to enter sustainable maritime transport and speed up zero-emission goals. LNG as a marine fuel was chosen by the company due to its environmentally friendly features. By using LNG, the French shipping company expects to reduce NOx by 85 per cent and CO2 by 25 per cent, and achieve zero sulfur emission and fine particles.

OTHER

Ocean Infinity’s first two high-tech ammonia-ready Armada ships head for Norway: Marine robotics company Ocean Infinity has taken delivery of the first two robotic vessels that will form part of the high-tech Armada fleet. The two ships have left Vard Vung Tau shipyard in Vietnam and are headed to Norway and Vard Søviknes. Vard won the contract to design and build the eight highly advanced, 78-meter vessels in November 2020. The construction of the first five vessels from the batch is under different stages of development at Vard Vung Tau in Vietnam. All eight vessels ordered in 2020 are scheduled for deliveries from mid-2022 to end-2023. The fuel-efficient, onshore-controlled vessels will initially only utilize a skeleton crew onboard. In due course, they are planning to work with no personnel offshore. The vessels are prepared for green ammonia as a fuel with fuel cell and battery technology and are designed for an ultra-low carbon footprint.

Technology

Anemoi to continue testing its rotor sails in Port of Blyth: Wind-assisted propulsion provider Anemoi Marine Technologies has extended the lease for their land-based Rotor Sail test facility at the Port of Blyth, the UK. The port, which is a major offshore energy support base, has hosted Anemoi’s test facility for 10 years. The location obtains similar wind conditions to those experienced at sea, which allows Anemoi to test and research the performance of its rotor sails in a safe and controlled environment. The company described the collaboration as ‘instrumental’ in bringing its rotor sail technology to the market, and that it remains important in the development of its technology.

Shell, Alfa Laval to develop GCU for liquefied hydrogen carriers: Under the MOU, Alfa Laval will develop a system to safely combust hydrogen boil-off gas (BOG) from a vessel’s storage tank, as part of a new liquid hydrogen carrier. Alfa Laval will design and engineer the new GCU for hydrogen with the aim of receiving approval in principle (AIP) from an IACS classification society. Once the AIP is achieved, a GCU prototype will be built for testing and type approval. The design of the new GCU system for hydrogen will be based on the existing Alfa Laval’s GCU for liquefied natural gas (LNG). More than 200 of these units have been installed in just over a decade, and an additional 100 units have been ordered during 2022, according to the company. However, the challenges in hydrogen combustion are significantly greater than those involved with LNG. Therefore, the adoption of hydrogen as marine fuel for deep sea-going vessels seems to be lagging behind its counterparts such as methanol and ammonia.

Shipyards

New green project aims to boost zero-emission shipbuilding in Scotland: Marine engineers Ecomar Propulsion, and the National Manufacturing Institute Scotland (NMIS), operated by the University of Strathclyde, have kicked off a research and development (R&D) project to manufacture key parts used in zero-emissions electric boats in the UK. Funded by the Scottish Inward Investment Catalyst Fund, the project seeks to bring production to Scotland to overcome a global supply chain shortage of electric outboard motors currently made in Japan. Ecomar Propulsion works on the research, development, and production of high-performance electric and hybrid hydrogen marine propulsion systems and has set an ambitious goal to reduce maritime greenhouse gas emissions by 10 million tons within 10 years.

ExxonMobil acquires Mitsubishi Heavy Industries’ CO2 capture technology: ExxonMobil has deployed Mitsubishi Heavy Industries’ (MHI) CO2 capture technology as part of its end-to-end carbon capture and storage (CCS) solution for industrial customers. With support from The Kansai Electric Power Co., Inc. (KEPCO), the companies have agreed to work together to advance carbon capture technologies that could reduce the cost of CO2 capture for heavy-emitting industrial customers. According to the companies, the joint effort will build upon KM CDR Process® and Advanced KM CDR Process®, developed by MHI and KEPCO. ExxonMobil Low Carbon Solutions is focusing its carbon capture and storage efforts on point-source emissions, the process of capturing CO2 from industrial activity.

Fuels

Maersk to study the feasibility of green fuel bunkering in Oman: Danish container shipping major Maersk is resuming its partnership-building strategy aimed at securing the supply of green fuels for its new ships. Namely, the company has signed a Memorandum of Cooperation (MoC) with the Alternative Energy (AE) business unit of OQ, a global integrated energy company based in Oman, Asyad Group, and Japan’s Sumitomo. According to Oman News Agency, the agreement was signed on the sidelines of the Oman Green Hydrogen Summit 2022, and it underlies a feasibility study on the supply and bunkering of green fuels in Oman’s ports of Duqm and Salalah, most notably green ammonia and green methanol. The signing of the deal has been confirmed to Offshore Energy by sources familiar with the matter. The feasibility study is expected to be divided into two stages, focusing on the exploitation of existing port infrastructure and the selection of the best type of fuel based on its commerciality.

Hyundai Heavy to develop ammonia FSRU: Focusing on ammonia as one of the next-generation eco-friendly energy sources, South Korean shipbuilder Hyundai Heavy Industries Group (HHI) has joined forces with Korea National Oil Corporation (KNOC) to develop an ammonia floating storage and regasification unit (FSRU). Ammonia FSRU is a ship that stores liquefied ammonia transported from the production area, regasifies it, and supplies it to customers on land. Expecting ammonia FSRU construction to occupy the market amid growing demand for this resource, HHI recently signed a joint development agreement with Korea Shipbuilding & Offshore Engineering (KSOE), Korea National Oil Corporation, and Lloyd’s Register. Under the agreement, HHI will develop a regasification system and carry out a basic design of ammonia FSRU. Lloyd’s Register will review and approve the design. In addition, HHI said it received the domestic clean ammonia acquisition and storage infrastructure project promoted by Korea National Oil Corporation.

BP delves into large-scale green hydrogen production in Egypt: The MoU was signed by BP, Egypt’s New and Renewable Energy Authority (NREA), the Egyptian Electricity Transmission Company (EETC), the General Authority for Suez Canal Economic Zone (SCZONE), and the Sovereign Fund of Egypt for Investment and Development (TSFE). Under the MoU, BP is set to carry out several studies to evaluate the technical and commercial feasibility of developing a multi-phase, large-scale green hydrogen (gH2) export hub in Egypt. High-potential locations across Egypt will be considered as part of the study. In November, BP signed MoU with the Government of Mauritania to explore the potential for large-scale production of green hydrogen in the country.

Financing

North Star lands $170m boost for offshore wind fleet: UK offshore support vessel owner and operator North Star has secured a £140m ($170.5m) financing package to support the next phase of its offshore wind fleet growth plan. The investment includes a £50m commitment from the Scottish National Investment Bank, as well as IFM Investors, Edmond de Rothschild’s BRIDGE, and RBC Capital Markets.

Ports

Hutchison Ports installs solar panels on Barcelona container terminal: Hutchison Ports BEST (Barcelona Europe South Terminal) terminal, located in the Port of Barcelona, Spain has installed 1,832 solar panels on almost 5,000 m² of its buildings. The company has already contracted electricity with a 100% renewable origin guarantee at the beginning of 2022, to maintain its commitment to the sector's decarbonization. This is an auto-supply installation capable of generating 1.18 GWh of electricity, equivalent to the annual electricity consumption of about 200 homes. The installed power is almost 1 MWh (833.56 kWh). The company in charge of installing the panels is Solar Profit.

Valenciaport to inject $1.5bln into the new low-emission terminal: The Port Authority of Valencia (PAV) has approved the construction project for the container quay of the north extension of the Port of Valencia worth around €1.56 billion ($1.58 billion). As explained, the new container terminal will be in the inland waters of the breakwater of the northern extension of the Port of Valencia. PAV is preparing to launch a tender for the works, which will involve a public investment of €542.7 million by Valenciaport. Valenciaport technicians are already working to comply with each, and every one of the 21 observations and conditions made by the Directorate General for Coasts in its favorable report on Compatibility with the Marine Strategy on the construction project.

Singapore invites proposals for low or zero-carbon power generation and bunkering solutions: The Energy Market Authority (EMA) and the Maritime and Port Authority of Singapore (MPA) have opened a call for expression of interest (EOI) to develop low or zero-carbon power generation and bunkering solutions. Following the launch of the National Hydrogen Strategy at Singapore International Energy Week 2022, Singapore is now inviting interested parties to submit proposals under the EOI to build, own and operate low or zero-carbon power generation and bunkering solutions in Jurong Island, Singapore.

Low or zero-carbon hydrogen is said to have the potential to support Singapore’s decarbonization efforts and achieve net-zero emissions by 2050. EOI aims to explore the use of low or zero-carbon fuels such as hydrogen and ammonia for power generation, alongside other low-carbon alternatives such as electricity imports and domestic renewable energy sources. According to MPA, ammonia is currently one of the most technologically ready hydrogen carriers with an established international supply chain for industrial use and this EOI will enable Singapore to assess the viability of such projects, and support the development of the safety standards, regulations and ecosystem needed. Interested parties can submit their proposals by 30 April 2023.

Port of Rotterdam ups the green transition tempo with a new initiative: The Port of Rotterdam has launched ‘Switch to Zero’ campaign to promote the usage of sustainable fuels and encourage the industry to make a concrete contribution to reducing carbon emissions. For this purpose, the port authority has joined forces with GoodShipping, which empowers corporations to decarbonize ocean freight and accelerate sustainable shipping. The partners are now conducting a joint campaign to inform companies of this concept so they can have part, or all of their sea freight transported via sustainable fuel.

Ports of Belledune and Hamburg join forces on clean fuels and sustainable energy: The Belledune Port Authority (BPA) has signed a Memorandum of Understanding (MOU) with Germany’s largest seaport, the Port of Hamburg, to collaborate on clean fuels and green products. As ifoinformedhe partners will work on the movement of dry and liquid bulk commodities, and manufactured products, between Canada and Germany. Furthermore, the ports will form a relationship that will foster collaboration to support the emerging needs of Canada and Germany’s energy and manufacturing sectors, with a focus on the production, storage, shipment of cleaner fuels such as green ammonia, hydrogen, biomass, and renewable natural gas. In August, the Belledune Port Authority (BPA) also signed an MoU with Niedersachsen Ports, Wilhelmshaven, Germany.