How do we decarbonise the world’s shipping industry?

HOW will the global maritime industry achieve net zero? Our international maritime group is made up of RSM member firms as far flung as Norway, Greece, Cyprus, and Singapore. The group’s purpose is to offer a powerful network of expertise, insight and resource to our maritime clients, writes Phil Withers, of RSM Hull.

Surprisingly, 3% of the world’s total carbon dioxide emissions are created by the shipping industry. That’s 940 million tonnes of carbon dioxide emitted every year. Yet over half (59%) of shipping companies are still not completing any Environmental, Social and Governance (ESG) reporting. This is no real surprise, given the EU, US and China are not yet setting any decarbonisation goals for international shipping. So, the question is, how do we decarbonise shipping?

Fuel oil is the mainstay for ship propulsion with bunkering facilities in every port around the world. There isn’t a simple option to replace this and, while there are prototype alternatively fuelled vessels in operation, there isn’t one immediate alternative fuel for ships to use. Several future fuel options are being considered, such as solid oxide fuel cells, hydrogen, liquid natural gas, batteries, ethanol, natural gas derived methanol, e-methanol and e-ammonia, but some of these are not zero carbon.

The problem with many of these alternatives is the increased fuel storage provision required on board. Future fuels aren’t as energy dense as existing fossil fuels, so they take up more space, and some need to be cryogenically stored. This is just one of the Quantitative Risk Assessments for the plethora of fuel alternatives.

All around the world the race is on to determine the future fuel for ships. The front runners are batteries for short sea and methanol, e-methanol, and e-ammonia for deep sea vessels. This is almost a VHS and Betamax moment for the shipping industry, as whichever loses the race will quickly become outmoded, but with the working life cycle of the average bulk cargo vessel being 30 to 50 years, choosing the wrong fuel format could be commercially fatal for many companies. Retrofitting, or even scrapping an entire fleet well before the end of a normal operational life, is simply not viable.

It is impractical to convert all existing vessels to run on alternative fuels. Methanol could be a transitional solution for many aged fleets, by lowering current emissions to see out their serviceable lives. Methanol can be blended into existing fossil fuels or used as 100% in modified internal combustion engines. This is certainly ‘greener’ but is not carbon free.

Without being too technical, for shipping to achieve net zero the keystone is green hydrogen. Green hydrogen is produced using water electrolysis to generate hydrogen and oxygen, using cheap renewable energy, such as offshore wind and solar. Currently, less than 0.1% of global hydrogen production is made this way. This type of hydrogen production is crucial to the manufacturing of both e-methanol and e-ammonia.  As a process it would be easy to duplicate close to any port on the planet, so a vessel could sail with the assurance of being refuelled.

E-ammonia production isn’t yet globally scalable. It is also more expensive and potentially more hazardous. However, the technology for methanol is available right now, while the technology for mass produced green ammonia remains further down the track.

Forgive the science lesson, but this is true alchemy using green electricity, air, and water. If you put air and water through electrolysis and remove the oxygen you get lots of hydrogen and nitrogen which is compressed, and following a series of synthesis, creates e-ammonia. This fuel can then be used to propel a large ship over long distances with no Co2 emissions. Incidentally, this fuel has ten times the energy density of lithium-ion batteries, weighs less, and takes up less precious cargo space.

Methanol or ammonia? Well, it’s back to the video tape conundrum of the 1980’s or rather beyond it, as video recorders were the transition to the digital streaming world. Likewise, methanol can get us partly towards net zero but not all the way. To get the shipping industry to its true net zero nirvana we need Green Ammonia Powered Ships or ‘GAPS’. The maritime industry cannot continue to burn oil indefinitely, and the same can be said about a blend of oil with methanol, nor can it tie all the ships up in dock and wait for future fuels. There must be transition.

Methanol, be it blue or green, must be the ‘primary’ transition fuel solution, while older ships are decommissioned over time to a ‘secondary’ transition, to the more abundant e-ammonia. In essence the deep-sea shipping world must transition twice - to ‘greener’ fuels and then to true net zero fuels. In the meantime, coastal and short sea vessels will use batteries and charging stations, which will also rely on wind and solar energy.

Ammonia capable ships are already being built. For example, a Greek shipping company took delivery of the first one in 2022. However, the cost to have a complete global fleet of green ammonia powered ships would cost over $2 trillion at today’s prices. Additionally, the world’s ports need to facilitate the change to new bunkering options. The first phase being methanol, e-methanol then to e-ammonia, and perhaps all three will coexist for a long time.

The eyewatering cost and formidable effort needed to achieve this should not be underestimated, but the upside is not only a cleaner world, but one where the fuel is made at sources close to the ports, with no import logistics and no import taxes either.

Hydrogen production on the scale required is already being developed in places like the Humber and the Tees, however, double the amount of ammonia that is being produced in traditional methods in 2023 would be needed just to power the world’s ships, and many other industries who rely on ammonia will also be transitioning to e-ammonia too.

RSM is supporting the shipping industry’s journey to net zero. We continue to advise on R & D, and are providing best practice advice on ESG programmes. Additionally, we continue to be engaged on aspects of the infrastructure surrounding shipping and renewables, and we hope to make more partnerships to help facilitate a zero-carbon world.  One last thing, we must not forget that the shipping industry has transitioned before, from sail to steam, and then to internal combustion. It’s time to do so again.