The third ABS Low Carbon Outlook demonstrates challenges for the industry and provides an integrated approach to strategy, writes Georgios Plevrakis, Vice President, Global Sustainability, ABS.
For the third in the series of Low Carbon Shipping Outlooks, ABS has updated the maritime sector’s progress towards reducing its emissions, analysed how it will be affected by external decarbonization trends, and presented a life-cycle or value chain perspective of GHG emissions of leading alternative marine fuels.
The maritime industry is clearly undergoing a significant transformation centred around decarbonization motivated by International Maritime Organization (IMO) regulations, the financial institutions that support new vessel construction and retrofits and market-based measures and incentives emerging from the multinational charterer community.
It is critical for shipowners and operators to understand the expect- ed changes in the global supply chains in order to plan their future fleet composition and renewal strategy.
Short Term Challenges
The short-term IMO measures, the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) create a very challenging landscape for many vessels of the global fleet. Some vessel segments may experience early vessel retirement due to their inability to comply.
Analysis of qualified ships from five key shipping categories — bulk carriers, tankers, gas carriers, LNG carriers and containerships
— revealed the following about compliance with the IMO’s EEXI regulation:
A large section of the global tanker fleet is expected to have difficulty meeting the EEXI requirements. Smaller dwt segments, such as Aframax tankers, are expected to meet the requirements more comfortably than larger tankers.
A similarly large fraction of the global bulk carrier fleet is expected to also have difficulty meeting the EEXI requirements. Again, smaller dwt segments, such as Panamax bulkers, are expected to meet the requirements more comfortably than larger vessels, such as Capesizes or very large ore carriers (VLOCs).
Gas carriers — particularly those of higher dwt capacity — have proven capable to meet the EEXI requirements.
LNG carriers with dual-fuel or trifuel diesel electric propulsion or two-stroke dual-fuel engines are expected to meet the EEXI regulations. However, those LNG carriers propelled by steam turbines will face significant challenges.
Containerships above 80,000 dwt are expected to meet the EEXI requirements. However, smaller dwt segments are expected to face
some challenges with EEXI compliance.
Fuel life-cycle analysis
The current regulatory framework focuses on vessel emissions (tank-to-wake) rather than the life-cycle emissions of a fuel (well- to-wake), though recent discussions at IMO have included whether to change this assessment to a life-cycle basis as this provides a more accurate assessment of total carbon footprint.
The required scale up of technology for green fuel production is significant - by an order of magnitude - before they can be widely adopted by the global fleet.
The life-cycle analysis clearly identifies the need for green ammonia and hydrogen production in order to achieve meaningful GHG emissions reduction from these zero-carbon fuels.
LNG can provide almost 25 percent reduction in carbon emissions on a tank-to-wake basis; however, the reduction will fall depending on combustion principles if a life cycle approach is adopted. Methanol can be made carbon neutral on a well-to-wake basis. Ammonia offers very low well-to-wake emissions, but the use of pilot oil contributes to carbon emissions from the vessel.
Biofuels do not offer any tank-to-wake emissions reduction, but they can offer benefits on the well-to-tank component. However, the feedstock and production pathway greatly affect their well-to-tank emissions.
The advent of modern dual-fuel engine technology makes the transition to low and zero-carbon fuels easier to achieve than the recent past. The transition to alternative fuels can be made much more at- tractive if it is planned at the newbuilding design stage. In particular, the design of the propulsion system should be specified based on all the fuels that could be used throughout the life of the vessel.
Towards a Low Carbon Fleet
Designing a low-carbon fleet is a continuing process. Shipowners need to be conscious of using the lessons from the transition to decarbonization to build a cycle of continuous process improvement: they can do this by getting to know the impact of decarbonization on all aspects of their business and using that information to power the cycle.
Because the technological solutions that support the decarbonization of international shipping will continue to advance over time, so should safety strategies and the ability to adapt to changes with the least possible disruption.
Shipping is an integral part of the value chain, including its carbon footprint. By using carbon-accounting principles to evaluate the contribution of each link, shipowners can gain information that helps to identify areas in need of improvement and targets for carbon reduction.
However, a harmonized decarbonization strategy is just the first step towards gaining a competitive advantage. ABS is working with clients on strategies and principles that can be used to help meet the requirements of charterers, secure access to green financing and support a company’s sustainability strategy.
The end goal is for the shipowner to use their decarbonization strategy to achieve corporate targets and meet international regulations, but the plan can be designed to go beyond compliance and form the cornerstone of a company’s business strategy.
*Vice President, Global Sustainability, ABS
Georgios Plevrakis*: ABS provides valuable perspective on the decarbonisation value chain
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