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

2023-02-23 15:10By： Breakwave Advisors

Today, shipping companies should look at carbon strategies – compulsory and voluntary – as impactful legislation is fast approaching. That was the message from a joint Baltic Exchange-Institute of Chartered Shipbrokers webinar, where expert speakers examined the carbon markets and their impact on freight.

James Blunt, head of voluntary carbon, shipping, and aviation, at Redshaw Advisors, outlined the two main current carbon compliance markets that shipping needs to be aware of: the European Union Emissions Trading Scheme (EU ETS) and the UK ETS, which he described as an “upshot of Brexit”.

The EU ETS is a cap-and-trade system that sets an annual cap on a sector which then filters down to organizations within that sector. Over time, that cap tightens. “It’s designed to encourage companies to implement emission reduction strategies,” Blunt explained. The trade element of it allows companies that come under the cap to control their emissions by buying and selling allowances related to the EU ETS. “The trading element gives you more flexibility as a business and in many cases, it’s seen by companies as more attractive than a tax system – which would be the alternative to cap and trade.”

But shipping firms need to pay equal attention to voluntary carbon markets as well, Blunt said. “The voluntary market is a very different animal. You have no obligation to act in the voluntary space but there is pressure,” he said, adding that there is a degree of evidence now that is compelling companies to get more involved in decarbonization strategies. “I would encourage companies to consider it. It’s relevant, and it does have impacts that a lot of companies perhaps haven’t thought about, particularly from a reputational standpoint.”

Alliances for Decarbonization

CMA CGM, La Poste team up on sustainable logistics: La Poste’s subsidiary GeoPost and a subsidiary of French shipping giant CMA CGM Group, CEVA Logistics, have inked a Memorandum of Understanding (MoU) to establish a closer business relationship and work on sustainable logistics. In order to improve the quality and competitiveness of services, the agreement includes looking to develop new circular economy and urban logistics services in France and Europe. The two companies will investigate ways of reducing the carbon impact of their customers’ deliveries, including low-carbon urban deliveries.

Energean and Shell join forces to investigate decarbonization solution: According to Energean, the MoU is designed to support the decarbonization and the energy transition of the Arab Republic of Egypt, contributing to global efforts against climate change. Energean said it will build on its experience in designing a carbon capture and storage (CCS) solution in a depleted hydrocarbons field that it has operated for many years, mirroring the process ongoing in Prinos, Greece. Under the MoU, the companies will conduct a study that will focus on the decarbonization of the LNG terminal in IDKU operated by Shell through capturing and storing the carbon dioxide in a depleted reservoir in the Abu Qir offshore concession operated by Energean.

Industry Actions

COSCO forms the China Electric Ship Innovation Alliance: China’s largest shipping entity, COSCO, has formed the China Electric Ship Innovation Alliance. Top national authorities and more than 80 companies have joined the alliance, helping cement the country’s position as one of the world’s leaders when it comes to the electrification of shipping. The Yangtze has served as the petri-dish for much of China’s electric vessel developments, but over the past year, coastal ships have started operating too, with COSCO now keen to take matters more deepsea. A study in the Nature Energy Journal last year exploring the economic and environmental benefits of direct electrification of containerships showed that dramatic improvements in batteries have unlocked the potential to electrify big containerships today on voyages of up to 5,000 km.

ICS details fund and reward green proposal: The International Chamber of Shipping (ICS) has sent a submission to the International Maritime Organization (IMO) fleshing out its fund and reward proposal to get the industry on a green track after previous decarbonization plans from the lobby group had failed to garner interest in recent years. The revamped proposal calls for shipowners to make mandatory contributions per tonne of CO2 emitted to create a new IMO fund to be established by 2024. The fund will reward uptake by shipowners of low and zero-carbon fuels, and provide funding for alternative fuel production and bunkering infrastructure in developing countries. ICS is keen to get some form of a levy-based global economic measure prioritized for rapid finalization by the IMO Marine Environment Protection Committee (MEPC) at its next meeting in July.

Euronav teams up with Toqua to save fuel and cut emissions: Belgian tanker shipping major Euronav has teamed up with Toqua, a compatriot tech startup focusing on decarbonizing shipping using AI to reduce emissions and improve fuel efficiency. The collaboration began in 2020 when Euronav and Toqua explored how sensor data could improve ship performance models. After two trial projects, Euronav decided to roll out Toqua’s ship performance models named Ship Kernels to its entire fleet, with a fleetwide roll-out scheduled for completion in 2023. Toqua said thatEuronav compared the optimization results using simple ship performance models with the optimization results using Toqua’s Ship Kernels. This methodology was applied to a VLCC over 16 voyages, spanning 4 trades, in both directions, for different seasons.

Next Generation of Vessels

CONTAINER

CIMC confirms MSC’s order for 10 LNG-fuelled boxships: The ten 11,500 teu containerships, designed by CIMC Ocean Engineering Design and Research Institute (CIMC ORIC), a subsidiary of CIMC which is dedicated to research on ship design and marine equipment, are due for delivery between 2025 and 2026.

Having a length of 335 meters and a width of 45.6 meters, the vessels will be equipped with type C LNG fuel tank, enabling the vessels to complete single round trip between China and Europe or America. The vessels are adopting LNG and traditional fuel propulsion system with ammonia-ready design, which can realize zero-carbon emission in the near future, said Yin Xunbin, general manager of CIMC ORIC.

CRUISE

YSA Design jumps onboard Northern Xplorer’s zero-emission cruise ship project: Norwegian company YSA Design has become the latest member of a consortium led by Northern Xplorer, a recently established Norwegian cruise venture, that aims to build the world’s first zero-emission cruise ship. As disclosed, after receiving a formal invitation to join the project, the Oslo-based design company will take oversight of key aspects of project development, helping to convert the visionary concept into reality. NX has already signed a Letter of Intent (LoI) with Portugal’s West Sea shipyard to build a 140-meter long, 250-guest capacity ship with 125 cabins for the 2026 cruise season, powered by hydrogen fuel cells and batteries.

Meyer Turku starts building Royal Caribbean’s second LNG-fuelled cruise ship: Construction of the second LNG-fueled Icon-class cruise ship for Royal Caribbean has started at the Meyer Turku shipyard. The shipbuilder confirmed this in a social media update stating that the construction began on 15 February with the traditional steel-cutting ceremony. This will be Royal Caribbean’s second ship that runs on LNG and utilizes fuel cell technology. Its name will be revealed at a later date. The construction of the ship is expected to take two years, ending in 2025. Meyer Turku and Royal Caribbean Group also have a construction contract for the third Icon-class ship, which will be completed in 2026.

RO-RO

Fujian Mawei starts construction on COSCO Shipping’s LNG-fueled RoRo ship: China’s shipbuilder Fujian Mawei Shipbuilding has held a steel-cutting ceremony for the first roll-on/roll-off (RoRo) ship powered by liquefied natural gas (LNG) that is being built for COSCO Shipping. As informed, the ceremony, which marked the beginning of the construction of the 7,500-cbm ship, was held at the company’s yard on 9 February. The total length of the ship will be 199.9 meters, the molded width is 38 meters, the molded depth is 14.8 meters, the design draft is 8.65 meters, and the maximum draft is 10 meters. The ship’s propulsion system is designed as a single engine and single propeller, using LNG dual-fuel main engine, single bow thruster, and electric RoRo system.

FERRIES

Angel Island Ferry to operate California’s 1st electric short-run ferry: Angel Island-Tiburon Ferry Company (Angel Island Ferry) has partnered with Pacific Gas and Electric Company (PG&E) to convert and operate California’s first zero-emission electric short-run ferry. As informed, California-based Green Yachts have been selected to transform The Angel Island to an electric propulsion vessel. The electrification project represents an important milestone for PG&E’s Electric Vehicle (EV) Fleet Program, expanding the program’s support of transportation electrification to include the marine sector. Through the collaboration with Angel Island Ferry, PG&E plans to bolster electricity transmission to the ferry terminal and support the installation of charging infrastructure to help power the 59-foot, 400-passenger vessel for its ferry service, sunset cruises, and chartered events.

Technology

WISAMO wing sail system wins DNV approval: Classification society DNV has awarded an Approval in Principle (AiP) to Michelin for their WISAMO wing sail system. DNV said that this was the first AiP to have been awarded to an inflatable wing sail design. The wing prototype with a surface area of 100 sqm is being installed on Compagnie Maritime Nantaise – MN’s container ship MN Pélican. The prototype features an inflatable, retractable, automated wing sail that can be fixed on commercial vessels and pleasure boats. By harnessing wind power, the company estimates that the system can save up to 20% of fuel per ship.

Eastern Pacific installs first-of-its-kind carbon capture solution onboard MR tanker: Eastern Pacific Shipping (EPS) has announced the successful installation of Value Maritime’s Filtree system onboard its managed vessel Pacific Cobalt in Rotterdam. The Filtree system filters sulphur and 99% of particulate matter and includes Value Maritime’s carbon capture and storage (CCS) module that can capture up to 40% of CO2 emissions from the vessel’s main and auxiliary engines.

Eco Marine Power to launch Eco Ship Technical study with UAE shipowner: Japan-based technology company Eco Marine Power (EMP) has been hired by an unnamed shipping company based in the United Arab Emirates (UAE) to undertake a joint Eco Ship technical study related to renewable energy solutions for ships. EMP said that the study will also include investigating innovative methods to improve energy efficiency onboard ships via the use of energy-saving devices including propeller modifications and the use of more energy-efficient electrical devices.

Additionally, these companies will jointly evaluate the performance of an Aquarius Marine Solar Power system that will be supplied by EMP and is currently being installed onboard a ship in their fleet. Several maritime technology providers will also support the study including Furukawa Battery & KEI System. Namely, this would underly potential installation of solar panels on hatch covers of the bulker.

Shipyards

Tsuneishi taps MAN ES to provide a methanol-fuelled engine for the bulk carrier: MAN Energy Solutions (MAN ES), through its licensee Mitsui E&S Machinery, has signed a contract with Chinese shipbuilder Tsuneishi Shipbuilding to provide a methanol-powered engine for a 65,700 dwt bulk carrier. As informed, the company will provide its MAN B&W 6G50ME-LGIM engine. The vessel represents the latest methanol-fuelled engine ordered by the bulk-carrier segment in recent weeks. MAN Energy Solutions developed the ME-LGIM dual-fuel engine for operation on methanol, as well as conventional fuel. The engine is based on the company’s ME-series, with its approximately 8,500 engines in service, and works according to the diesel principle. When operating on green methanol, the engine offers carbon-neutral propulsion for large merchant-marine vessels.

Classification

RINA, ABB to collaborate on decarbonization projects: Classification society RINA has signed a Memorandum of Understanding (MoU) with Swiss-based technology developer ABB with the aim to develop new concepts to reduce emissions in shipping for various vessel types. The collaboration will include the development of commercially viable solutions, including fuel cell systems with carbon capture, to move the shipping industry forward with decarbonization. It further focuses on promoting the use of hydrogen, and the introduction of modern approaches to ship propulsion. As the classification society and third-party certification provider, RINA’s role within the agreement will be to work on providing Approval in Principle (AiP) of design concepts that match the technologies available from ABB and the applicable rules and regulations, along with project and type approvals.

ABS to class UC San Diego’s hydrogen-powered research ship: American classification society ABS has revealed that it will class a hydrogen-fueled research vessel commissioned by the University of California San Diego’s Scripps Institution of Oceanography. Designed by Glosten, the vessel will feature a new hydrogen-hybrid propulsion system that integrates hydrogen fuel cells alongside a conventional diesel-electric power plant, enabling zero-emission operations. The design is scaled so the ship will be able to operate 75 percent of its missions entirely using hydrogen. For longer missions, extra power will be provided by diesel generators. The 45.7-meter-long vessel will be equipped with advanced instruments and sensing systems, along with new laboratories, enabling multidisciplinary research, and advancing understanding of the physical and biological processes active in California’s coastal oceans.

Fuels

PBBM supports AboitizPower and JERA push for greener fuels in the Philippines: Aboitiz Power Corporation (AboitizPower), the holding company of power-related investments of the Aboitiz Group, signed a memorandum of understanding (MOU) with JERA Co., Inc. (JERA), Japan’s largest power generation company, to jointly assess the potential for greener fuels in power generation. The MOU signing was done in the presence of President Ferdinand “Bongbong” R. Marcos Jr. together with key officials from the Philippine Government. Under the MOU, AboitizPower, and JERA outlined collaborative efforts in assessing the feasibility of ammonia co-fired power generation and further development of the ammonia and hydrogen value chains in the Philippines. This will support the decarbonization efforts of AboitizPower and the Philippines.

Methanol

Costa Group, Proman to drive adoption of methanol as a marine fuel for the cruise industry: Carnival Corporation’s Costa Group and Proman, a top methanol producer, have signed a Memorandum of Understanding (MoU) to advance the use of methanol as a marine fuel for the cruise industry. The partnership aims to accelerate the energy transition and decarbonization of the existing fleet by improving the supply of sustainable methanol and retrofitting existing vessels, as well as investing in the construction of new methanol-powered vessels. Through this partnership, Costa Group aims to reduce the fleet’s carbon footprint in port and at sea and achieve their goal of greenhouse gas-neutral operation of their fleet by 2050. The Costa Group has already introduced the use of liquefied natural gas (LNG) onboard its ships to reduce emissions, and most ships of the Costa Group are equipped with a shore power connection to operate with almost zero emissions in ports.

Biofuels

PRIO, Norwegian Cruise Line wraps up 1st biofuel tests in Portugal: Portugal’s biofuel producer PRIO has joined forces with Norwegian Cruise Line to complete the first test with advanced biofuels produced and supplied in Portugal. As part of this new partnership with the cruise line Norwegian Cruise Line, PRIO has carried out the first supply in Portugal with ECO Bunkers B30, a fuel with a higher percentage of biofuel incorporation, which thus is expected to achieve a greater reduction in emissions of CO2. This new fuel, ECO Bunkers B30, is a 30% blend of advanced biofuel from waste feedstocks, produced at PRIO’s biodiesel plant and blended at a tank terminal in Aveiro. The flexibility of this blending process makes it possible to scale production according to demand and adjust the percentage of Biodiesel mixtures (up to a 100% renewable product, which allows up to 86% GHG reduction), according to the company.

Cost and availability main barriers to biofuel adoption in maritime: Speaking to Seatrade Maritime News ahead of his presentation at CMA Shipping 2023, Michael D. Kass, PhD, of the Energy Science & Technology Directorate at Oak Ridge National Laboratory said that the US Department of Energy (DoE) has been evaluating biofuels against four main criteria: potential for greenhouse gas reduction, economic feasibility, technical feasibility, and the availability of feedstock resources. While recent biofuel demonstration studies and trials have used biofuels blended with fuel oil in different ratios, Kass said that depending on the biofuel type-any barriers to using 100% biofuel as bunkers are more about cost and availability than technical limitations.

MSC and DB Schenker sign biofuel shipping deal: The two companies have signed an agreement for the use of 12,000 metric tonnes of biofuel components for all of DB Schenker’s consolidated cargo, less-than-container load (LCL), full-container-load (FCL) and refrigerated containers (reefer containers). The 12,000 metric tons of biofuel component will be blended between 20% and 30%, resulting in approximately 50,000 metric tonnes of blended biofuel to be used in MSC’s containerships. The amount of biofuel purchased is enough to save an additional 35,000 metric tons of CO2 equivalents (CO2e) along the entire production chain (well-to-wake) in the market. The equivalent of around 30,000 TEU may be shipped with net-zero CO2 emissions, depending on voyage length.

Ports

AmmPower, and PCCA join hands on green hydrogen solutions: US clean energy company AmmPower has entered into a Memorandum of Understanding (MoU) with the Port of Corpus Christi Authority (PCCA) to explore the development of green hydrogen used as feedstock for green fuel and green derivatives production, storage and distribution facility. AmmPower is evaluating the feasibility of working with PCCA to explore the development of a large green hydrogen feedstock for green fuel facility, to produce, store, and distribute these derivatives for use as a carbon-free fuel and a carrier of hydrogen energy. The facility will produce green hydrogen-rich derivatives for domestic and export markets.

Governments

Green maritime tech of the future to become reality: Companies across the UK to benefit from £60 million funding to supercharge the development of clean maritime solutions. The UK’s race to decarbonize the maritime sector has been given another vital boost, with £60 million in government funding distributed to innovative companies nationwide developing futuristic green technology. For the first time, the UK government is funding the development of new clean maritime technology across a 2-year period. Companies in 12 regions around the UK will benefit from the cash, generating highly skilled jobs across the nation and positioning the UK as a world leader in green solutions. The funding comes from the third round of the government’s Clean Maritime Demonstration Competition (CMDC3), which focuses on developing a range of clean maritime technologies including hydrogen, ammonia, electric and wind power.

During the 2-year investment period, successful companies will be required to demonstrate that their projects will work in the real world, helping them to progress towards becoming an everyday reality. Today’s funding comes from the wider £206 million UK Shipping Office for Reducing Emissions (UK SHORE) scheme, announced in March 2022. The CMDC is one of the many initiatives from UK SHORE to fund green technology.

Africa could be green jobs leader: Africa has the potential to become a leading force in seafarer training and could secure many of the new green jobs being created as the global shipping industry moves towards low- and zero-carbon fuels, according to delegates at the Green Shipping Conference held in Accra. The conference is being hosted by the Ghana Maritime Authority in partnership with the Danish Maritime Authority and the UN’s International Maritime Organization (IMO). As explained, a future global center of maritime excellence for seafarer training could be based in Africa, bringing with it more jobs and wider benefits for the region.

Regulations

European Commission sets out rules on renewable hydrogen: The Commission has proposed detailed rules to define what constitutes renewable hydrogen in the EU, with the adoption of two Delegated Acts required under the Renewable Energy Directive. These Acts are part of a broad EU regulatory framework for hydrogen which includes energy infrastructure investments and state aid rules, and legislative targets for renewable hydrogen for the industry and transport sectors. The two Acts are interrelated and both are necessary for the fuels to be counted toward Member States' renewable energy target. They will provide regulatory certainty to investors as the EU aims to reach 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imported renewable hydrogen in line with the REPowerEU Plan.

ECSA calls for the inclusion of fuel suppliers under the scope of FuelEU Maritime: The European Community Shipowners’ Associations (ECSA) calls on the European Parliament and the Council to support the mandatory inclusion of fuel suppliers under the scope of FuelEU Maritime as proposed by the European Parliament in Amendment 129. The amendment approved on October 19th says that if a company makes a contract with a fuel supplier for specific fuels, the contract should include provisions that hold the fuel supplier responsible for compensating the company if they don’t deliver the fuels as agreed and the company incurs penalties. The FuelEU Maritime Regulation has been described as crucial for promoting the uptake of sustainable and scalable fuels in shipping. The demand for clean fuels from shipping is growing, but at the same time, the industry is calling on the legislative bodies to ensure that fuel suppliers make clean fuels available in sufficient quantities.

By Maria Bertzeletou

The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.

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