The landside challenge of decarbonisation

Halving the maritime industry’s greenhouse gas emissions by 2050 extends far beyond ships and their propulsion systems. It means getting the right zero-carbon fuel mix ready and having the necessary supporting infrastructure in place, writes Alastair Marsh, the chief executive of Lloyd’s Register.

There is no such thing as a free lunch – decarbonising shipping will come at a price. Many of the best brains in the maritime industry have been crunching the numbers for quite some time to determine the likely cost. This week we have had one answer. A new study released by University Maritime Advisory Services (UMAS) and the Energy Transitions Commission for the Getting to Zero Coalition put a $1trn figure on the challenge that lies ahead for shipping over the next three decades.

Depending on the production method of future fuels, the study’s authors estimate that the cumulative investment – including those land-based infrastructure and production facilities – needed between 2030 and 2050 to halve shipping’s emissions amounts to approximately $1-1.trn, or an average of $50bn to $70bn annually for 20 years.

The transition to zero carbon fuels will see transport costs rise – not because ships themselves will require greater levels of investment, but because new fuels are projected to be significantly more expensive than existing fossil fuel solutions.

Achieving net zero will predominantly be an operating expense (OPEX) rather than a capital expenditure (CAPEX) challenge – ships will have to adapt, potentially requiring new fuel tanks, modified engines and fuel supply systems, but this will be a very small element of the total cost of operation.

Work undertaken by Lloyd’s Register forecasts that future fuels are likely to be two to three times more expensive to produce compared with today’s cheapest marine fuels and LR’s recent joint modelling exercise with Maersk points to alcohol, biomethane, and ammonia as the best positioned candidates to focus research and development towards zero net fuels.

Making the International Maritime Organisation’s (IMO) ambitious 2050 greenhouse gas (GHG) target a reality means getting commercially viable deep-sea Zero Emission Vessels (ZEVs) into operation by 2030. ZEVs are technologically feasible in the next few years – some exciting developments are already underway including an ammonia-fuelled tanker project where LR has partnered with MISC Berhad, Samsung Heavy Industries and MAN Energy Solutions – and other players in the maritime industry will undoubtedly follow suit with their own initiatives.

But the decarbonisation challenge involves much more than ships themselves. Defining optimum zero-carbon options will rely on an assessment of investment readiness, which includes the wider energy system and the dependable production of future fuels, our technical readiness as well as community readiness level – the social impacts and understanding of other sectors.

So, while the transition ahead requires that ships and their propulsion systems are adaptable, this is dwarfed by the hurdles of getting the right zero-carbon fuel mix ready and the necessary supporting infrastructure in place. In fact, the UMAS and the Energy Transitions Commission points out that just 13% of the investments needed are related to the ships themselves.

It will be interesting to gauge the industry’s response to this number in the days to come but there is no doubt that the greater challenge is investment on land and within the energy sector to provide the fuel supply chain required to enable the operation of ZEVs in a more cost effective and reliable way. Many of us in maritime have decarbonisation questions that we want answered and the decade ahead will require intensive R&D as we consider the options and assess the potential of carbon neutral fuels.

In December, a number of leading maritime associations proposed the creation of a mandatory $5bn decarbonisation R&D fund and this could offer some support in addressing these future challenges but navigating this decade of transition must centre on us working collectively.

Industry stakeholders will need to collaborate and build consensus across the board, not only with their existing partners but with fuel and propulsion technology companies, equipment manufacturers and energy developers from different sectors, so we can develop, de-risk, scale and commercialise zero-carbon fuels and ZEVs. If we work together, it is within the industry’s hands to help shape what our decarbonised future looks like.