The Decarbonization jamboree

 

For a lot of old sea dogs, the word “decarbonization” can only be related to the good old “Decarb”, a term which universally referred to major overhauls of the Aux engines and Main engines on our ship of old. Now all of a sudden Decarbonization has taken on a new meaning especially with respect to shipping. For the ships it now means to turn green by moving away from fossil fuels and into the world of alternative fuels. Unfortunately, the future is still very fuzzy, and this article is only an attempt to articulate the doubts that one has on the road ahead.

To understand where we want to go, it may be useful to look at the rear-view mirror and see where we have come from - The starting point for this transition can be considered to be the Kyoto Protocol of December 1997. This protocol effectively operationalized the commitment of industrialized countries and economies in transition to limit and reduce Green House Gas (GHG) emissions. Under the  1997 Kyoto Protocol, the responsibility for the regulation of emissions arising out of the shipping industry ( broadly referred to as the maritime sector ) was assigned to the International Maritime Organization (IMO).

In December 2015 the Paris agreement was signed which is a legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015 and entered into force on 4 November 2016.The broad goal was to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. This figure of 1.5-degree temperature increase was arrived at basis the fact that all studies at that time showed that crossing the 1.5°C threshold risked unleashing far more severe climate change impacts, including more frequent and severe droughts, heatwaves and rainfall.

It must be noted that International shipping was not covered by the 2015 Paris Agreement, though discussion on the marine specific sector did take place. With emissions from shipping expected to increase both in absolute and relative terms, there was pressure on the IMO to take some concrete action to address the issue   of global warming. In 2016, a broad agreement was thus reached at the IMO to develop a strategy to limit Greenhouse gas emissions from ships. To address this issue, the IMO adopted an initial strategy in 2018 to reduce GHG emissions from ships and phase them out as soon as possible. This was seen as a first step, with a revised strategy planned in 2023, an exercise which has just been completed in July 2023. Henceforth it is expected that this emission reduction strategy will be revised every five years.

How ever the real force for change, as always, have come from the general population at large. The fact of the matter is – climate change is for real, and everyone is feeling it; look around you, and you will find that a lot of the destruction brought about by nature’s forces is being directly attributed to global warming. There is thus immense pressure on the political leadership to show real action on the ground on whatever was decided upon in 1997, more than 20 years ago. In addition, there was the constant refrain all along of too little being done too late! The only saving grace was in the acknowledgement that the shipping industry was and remains only a small part of the complete transportation value chain and some of action on emission reduction had to be taken by other much larger sectors like aviation and automobile.

In the short term, the strategy concentrated on achieving a reduction in carbon intensity of international shipping by at least 40 per cent by 2030 compared to 2008. Now that 2030 is almost upon us, it is time to think about the medium term i.e., the period between 2030 and 2050. The pressure from the public to show some action on the ground has meant that more urgency has to be shown in the search for alternative fuel.

As short-term measures like speed reduction, improving fuel efficiency and energy saving devices have only limited benefit, the focus has now shifted to looking for viable fuels of the future.

So here we are looking for the fuel of the future with only one thing as the certainty; that going forward everything will be uncertain! It has also been understood and accepted that the default alternative fuel has not been decided upon; Will it be methanol, ammonia or Hydrogen? It is also very unlikely that any single type of fuel will become the new default. It is more likely that several fuel alternatives will be considered depending on estimated future availability and a vessel’s trade pattern. An additional  problem faced is the fact that technological maturity  has not yet been fully reached for the fuels of the future and fuel availability is still a humongous challenge .Once you go into the detailing of the work to be done for the widespread use of alternative fuel, the future looks even more challenging, two of which can be easily listed out . Firstly , as the energy content of most of these alternative fuel is much lesser than the current fuel in use, it means bigger bunker tanks will have to be made to accommodate the same amount of fuel as before when compared on an energy content basis .A direct outcome of this is the fact that the per ton cost of alternative fuel becomes in most cases about double the cost of conventional fossil based fuel . Secondly because of the need for larger bunker tanks, cargo carrying space on the ships of the future may have to be sacrificed. Effectively, there is a double whammy – fuel cost for operating these ships will double and a lesser amount of cargo can be carried on the ships which are powered by this fuel. Now comes the elephant at the door - Who pays for this extra cost? The ship owners of today have seen enough in the past to be convinced that some of this extra cost will be finally passed onto them. And we have not even started talking about our seafarers on board who will man these ships of the future and their training for this task.

As things stand at present, it appears that the transition to alternative fuels for shipping is likely to be led by industry participants, rather than by regulators, and that the future is likely to be diverse; a variety of fuels may be deployed across the shipping industry with not all sectors, or even ships within  a particular segment of shipping utilizing the same fuel . There is a possibility that some of ships will use multiple fuels in addition to power supplements such as wind and solar power, on board.

The ships which are now boldly moving on to the fuel of the future are owned by shipowners who would like to secure a pole position for securing a first mover advantage. The high decibels accompanying the ordering of such ships cannot hide the fact that we are still talking of a miniscule number of ships which are moving to the fuel of the future. They also have one thing in common – these ships all belong to a segment of the maritime industry which traditionally has consumed more fuel than other ships i.e., the container shipping industry and specifically the mainline container ships. The other shipping segments like bulk carriers have traditionally been much more fragmented in terms of vessel ownership and area of operation and owners of such ships are still largely playing the waiting game. But you will still find an awful lot of coverage in the shipping press about ships running on methanol. The fact still remains that out of the fifty thousand cargo ships above 100 GT in the water worldwide, there are only about 29 ships in the water burning methanol and which are not methanol cargo carriers. Yes, a number of such ships have been contracted for delivery but how many such orders will finally be in the water two years from now?  

In the interim period, because of the immense pressure on politicians to show some concrete action and the inherent consensus building working style of the IMO, we will get to see more unilateral action from some countries and trade blocs like the EU towards GHG emission reduction. It appears that the current strategy of such countries may be to penalize ships running on fossil fuel and subsidize ships running on alternative fuels. We have also observed some national flag authorities have opened maritime decarbonization centers in their shipping Hubs. How ever the specific goals of such centers and how they will help in the transition to greener ships is still not very clear.

Finally, it is time to ask the question which we asked at the beginning - what does the future hold for the decarbonization of ships? Can the ships be free of use of fossil fuel by 2050? As of today, it looks to be a very stiff and ambitious target.