Sustainability in Shipping Industry, ESG Performance Reporting

As we’ve seen in this series on electrifying everything everywhere all at once, bulk shipping will plummet with peak fossil fuel demand and batteries will power all inland and most short sea shipping. We’ve covered most of the bases that are seriously being considered, and some that are more romantic than practical. Now it’s time to knock a couple of fringe options off the seas.

About a year ago I created a series of sexy vs meh quadrants charts for different aspects of decarbonization, covering ground transportation, aviation & aerospace, electricity & grid storage, carbon drawdown, heat and most pertinently, the maritime industry.

Sexy vs Meh quadrant chart of maritime [+]

MICHAEL BARNARD, CHIEF STRATEGIST, TFIE STRATEGY INC.

When I first created the visual, it didn’t occur to me to add nuclear-powered ships to it. Having gone deep and wide on nuclear generation’s past and present, I knew that nuclear-powered ships were fit for purpose for a handful of affluent countries with big militaries, a subset of the ones with nuclear weapons.

There are still many nuclear-powered submarines and aircraft carriers on and under the seas. Unsurprisingly, the USA has eleven of the twelve aircraft carriers, with France’s Charles de Gaulle being the sole non-American example of the class. There are over a hundred nuclear-powered submarines, with the USA again having the most, but China, France, Russia and the United Kingdom all having vessels, although some are awaiting decommissioning at significant expense. Further, there are a handful of nuclear ice breakers operating in Arctic waters, all Russian.

I knew that the first commercial nuclear reactors were repurposed military vessel reactors and that they had proven deeply uneconomic, requiring scaling the small reactors up to gigawatt sizes to achieve thermal efficiencies for cheaper electricity. That’s part of the problem with the current hype around small modular nuclear reactors, that they forego that scaling for efficiency and hence are proving uneconomic, mostly recently with the cancellation of the NuScale deployment in Utah.

I knew that nuclear cargo ships had been tried 70 years ago, and failed miserably. Most ports wouldn’t accept them and New Zealand passed a law banning them that’s still on their books. And I knew that nuclear decommissioning was very expensive, for example with the UK nuclear submarine effort costing almost US$100 million per vessel.

So I was surprised when I was invited by Elisabet Liljeblad, Head of Climate & Energy Transition with Stena Teknik, to debate maritime decarbonization at a Stena technical leaders offsite to find that there was a proponent of nuclear-powered shipping participating, along with a methanol-industry representative and a battery electrification firm’s sales director.

Is it technically feasible to build a nuclear-powered container or bulk ship? Of course. But there are major headwinds facing it. The first is that the current interest is aligned with small modular nuclear reactors being commercialized and being able to be repurposed at relatively low cost for ships. As those reactors are almost entirely on the drawing board, with exactly one 200 MW version in commercial operation in China as of late 2023 and design progressing for a deployment in Ontario, it’s going to be a long wait with little likelihood of success.

One of the major problems that small modular reactors face is that they virtually all depend on high assay low enrichment uranium or HALEU. Over the past decades, the supply chain has devolved to the point where only Russia is a supplier of the material, with obvious concerns. At present the USA is attempting to develop a coalition of nations to create a new supply chain, but it’s frought.

The likelihood of small reactors being commercially viable for electricity is already low due to the thermal efficiency challenge, and there are far too many designs and technologies under development to make it possible for a single design to be built enough times to lower costs.

Every commercial nuclear reactor has seven circles of overlapping security around it, and with the exception of the Russian Arctic icebreaker fleet, where remoteness and harsh conditions provide security, those circles would have to be recreated for commercial vessels. Submarines depend on stealth, but air craft carriers travel in a fleet of escort vessels.

The cost of the reactor for a large commercial vessel is likely to be as high or higher than the rest of the ship, making current multi-million dual-fuel engine capital expenditures look like pocket change. And the owner vs operator conflict which makes any excess capital expenditures problematic would apply as well, with the operator accruing the benefits but the owner paying. That high decommissioning cost will also be prohibitive.

There is only one commercial nuclear cargo ship in operation at present, the Soviet-built Sevmorput. For context for the cost, the small 1,328 container capacity ship cost roughly US$265 million. By contrast, Maersk’s dual-fuel, 9,000 container capacity ships cost US$115 million each. The Sevmorput’s history is a cautionary tale as well. Multiple Soviet port cities refused to let it enter their ports over safety concerns. The Port of Vancouver refused entry as well as the port’s safety and emergency plans didn’t include nuclear accident preparedness. It also has a history of maintenance issues. The combination has led to it being inactive more than active since built, and mostly it has been used to transport Russian military materiel to Arctic region bases.

This isn’t stopping various organizations from undertaking designs, but the likelihood of seeing nuclear-powered commercial ships on our oceans is low. Every port they entered would have to have security, operational and emergency procedures upgrades, and so most will simply refuse entry.

Nuclear energy is a distraction, and it gets so little hype compared to foils, green hydrogen and green synthetic fuels that I’ve put it in the foolish and meh quadrant.

Also in that quadrant is something that I continue to get questions about, entirely from people who don’t seem to accept climate change, liquid natural gas — methane — powered ships. There are ships running on it now, mostly LNG carriers which have big tanks of the cryogenically refrigerated product and have to deal with boil off in any event, but also cruise ships and ferries.

It does burn more cleanly with less odor, fewer particulates and no sulfur than marine diesel, but it’s still a fossil fuel and still has carbon emissions. The advantages have led to a dominance in passenger and car ferries, with around 98% of larger ferries ordered in 2022 powered by it.

But burning fossil fuels for power is what we are moving away from with decarbonization. While we can synthesize methane from hydrogen and carbon, it’s just as expensive as synthesizing methanol or ammonia, and there are significant supply limitations for biologically sourced methane which should, in any case, be preserved for decarbonizing methanol. Finally, methane is a potent greenhouse gas, 29 times more potent than carbon dioxide over 20 years.

Using it as a fuel in the future makes little sense except for LNG tankers. Given that Fatih Birol, executive director of the International Energy Association asserted in mid-2023 that this decade would see peak coal, oil and gas demand, the coming decades will see a rapid decline in LNG ships.

While I see the reasoning for cruise ship and passenger ferry operators to like LNG as a fuel, in my projection both of those segments will be better served by batteries in the future. There are already multiple battery powered ferries and a 1,000 passenger Three Gorges cruising vessel in operation.

And then there’s the bizarre idea of putting carbon capture machinery on ships to split to carbon dioxide out of the smokestack effluvia, compress and liquify it aboard ship and pump then pump it to shore in ports. Similarly to nuclear powered commercial ships, it just hadn’t occurred to me that anyone would be foolish enough to consider this.

To give you an idea of how bad an idea this is, burning a ton of maritime diesel would generate 2.7 tons of carbon dioxide, almost three times as much. And it’s a diffuse gas, so to have the remotest chance of having it stored on ship requires liquifying it.

Pushing the flue output through capturing energy so the engine doesn’t choke requires more energy. Separating the carbon dioxide out of the flue smoke takes energy. Separating the carbon dioxide out of the mechanism used to capture the carbon dioxide takes energy. Pressurizing and chilling the carbon dioxide takes energy. The tanks for liquid carbon dioxide would have be be 2.5 times the size of the fuel tanks to hold it. The entire process is thermodynamic and economic nonsense.

Nonetheless, several maritime organizations have the bizarre idea that this sensible under some niche conditions, so much so that they have put millions into a Global Centre for Maritime Decarbonization carbon capture pilot project.

And so, the end of the also rans in my projection of maritime repowering. Batteries will be dominating inland and near shore shipping. Some oceanic shipping will be boosted a bit by wind power, mostly parafoils in my opinion. Ammonia need not apply, with the minor exception of actual ammonia tankers, which won’t be growing in numbers. Nuclear and LNG power are distractions. Up next, the real decarbonization fuel of the future.

SOURCE : https://www.forbes.com/sites/michaelbarnard/2024/01/08/nuclear–lng-are-distractions-as-shipping-goes-low-carbon/amp/

S hipping remains one of the hardest industries to decarbonize, but at the same time, it serves a critical role in facilitating global trade, moving over 80% of internationally traded goods.

It is also one of the founding sectors of the First Movers Coalition (FMC), a collective of leading industry players from seven hard-to-abate sectors working to aggregate their purchasing power, prompt more investments in zero-emission solutions, and send out a signal to scale their production. Under the FMC, 16 companies within shipping have committed to having 5% of their deep-sea shipping powered by zero-emission fuels by 2030 or to move at least 10% of the volume of their goods on such vessels by 2030, increasing to 100% by 2040. If these commitments are met, it will remove an estimated 4.2 million tonnes per year in GHG emissions by 2030.

Partnership is key to tackling climate progress. Here’s how FMC members are working together in unique ways, shedding light on how collaboration can break down barriers to scaling zero-emission solutions.

1. Scaling deployment of zero-emissions shipping fuels

The maritime transport industry is focused on the importance of sustainable and low-carbon energy, with decarbonization being a top priority. Zero-emissions ammonia, produced from low-carbon hydrogen, is emerging as one of the next-generation fuels because it does not emit CO2 when burned.

To scale its distribution, Yara Clean Ammonia, the world’s largest trader and distributor of ammonia, and Höegh Autoliners, a leading global ocean transportation provider, have agreed on a future supply deal for clean ammonia. Last spring, the two companies signed a letter of intent regarding clean ammonia supply and distribution using Höegh’s Aurora-Class PCTC vessels. The 12 vessels are equipped to operate on zero-carbon ammonia and methanol and will be some of the most environmentally-friendly car carriers ever built. They will come into operation starting from 2024 and will support Yara in its efforts to slash more than 30% of its emissions by 2030.

This effort demonstrates the potential for clean ammonia as a future maritime fuel and its significant role in addressing global maritime transportation emission challenges. Tapping the global distribution and infrastructure these companies provide are key to accelerating emerging markets and unlocking green value chains. Magnus Krogh Ankarstrand, President of Yara Clean Ammonia, said: “Building clean ammonia value chains is critical to facilitate the transition to zero-emission fuels by enabling the hydrogen economy.”

2. Research that keeps zero-emission solutions and infrastructure on track

Partnership has made research possible that can help businesses scale action. In May 2023, the Western Australia-East Asia Iron Ore Green Corridor Consortium released the results of a special study on the feasibility of deploying ships powered by clean ammonia on current iron ore trade routes between West Australia and East Asia. The consortium, a collaboration between the Global Maritime Forum, BHP, Rio Tinto, Oldendorff Carriers, and Star Bulk Carriers, and a number of value chain partners (e.g., potential clean ammonia producers), found that more than 20 vessels could sail along the corridor on zero-emission ammonia, reaching 5% adoption by 2050. An estimated 360 vessels could sail this corridor by 2050.

The study drives home that the key technologies, such as suitable engines, are on track for development, enabling the deployment by bulk carriers such as Rio Tinto (one of the largest bulk carriers in the world) in the near term.

Such research helps to keep a range of stakeholders informed and on track for what’s needed next. “While there is no silver bullet,” said Rio Tinto’s Head of Commercial Operations, Laure Baratgin, “we believe that industry collaboration and a supportive, global regulatory environment are key to unlocking shipping’s access to zero-emission solutions.”

3. Demand and collective action through procurement

Collaborative procurement can help create much-needed markets for sustainable fuels. A number of examples show how the shipping industry is making this happen.

The Zero Emission Maritime Buyers Alliance (ZEMBA), initiated by the Aspen Institute, recently partnered with world-leading cargo owners to launch an RfP with hopes of attracting bids from suppliers of zero-emission ocean transport through signalling strong demand.

Amazon, a founding member of the FMC, has been instrumental in getting the ZEMBA RfP off the ground. With a goal of reducing its scope 3 emissions, the company is supporting joint efforts under ZEMBA to ship 600,000 TEUs (twenty-foot equivalent units) on zero-emission vessels over a time-span of three years – which will result in close to 1 million metric tonnes of carbon emissions reduction.

Support of the ZEMBA zero-emission fuels tender, said Amazon’s Head of Climate, Sustainability and Environmental Policy, Teresa Christopher, will provide clean fuels in the short-term while sparking industry-wide progress on the timeline needed. “Early adoption matters.”

Powerful signals through procurement is first and foremost also evident through individual FMC member actions. Maersk ordered the world’s first dual-fuel green methanol vessel back in 2021 and the vessel recently embarked on its maiden voyage, travelling a distance of 21,500Km from South Korea to Denmark. Green methanol can be derived from biomass or green hydrogen and can reduce emissions from vessels by up to 95% in comparison to traditional bunker fuels.

Maersk has just announced an agreement to purchase 500,000 tonnes of green methanal a year to power its dual fuel vessels – with production envisioned to commence in 2026. The company has also announced orders of 26 additional dual-fuel methanol-enabled vessels to be delivered between 2026 and 2027, with the aim of cutting its GHG emissions by an estimated 450,000 tons of lifecycle CO2 equivalent per year. Expansion of its zero-emission fleet will support Maersk’s goal to decarbonize transport of 25% of its ocean cargo by 2030.

Morten Bo Christiansen, Senior Vice President, Head of Energy Transition, A.P. Møller-Maersk, said: “Maersk is demonstrating its purchasing power by ordering zero-emission vessels and fuels in order to meet our target of net-zero emissions by 2040.”

Looking ahead

To accelerate the pace of progress, FMC members are engaging in programmatic activities that enable strategic action to scale and deploy zero-emission solutions in the run up to 2030. For example, a new focus on surfacing supply through the establishment of a supplier database is set to be launched during the World Economic Forum Annual Meeting in 2024. This database will be key because it will feature vetted suppliers of near-zero-emission products and services within the FMC scope to support member procurement efforts across all seven sectors.

This effort is complemented by a series of scoping workshops held in key emerging economies at the forefront of supplying clean fuels and technologies, with the goal of bridging gaps as 2030 approaches.
Source: World Economic Forum