There are many levers to be tightened in the environmentally sound transformation of the maritime industry. But where to start? We have asked classification societies. This is the answer from Panos Koutsourakis Director, Sustainability Strategy, ABS.[ds_preview]
New value chains are emerging as policy pushes the industry towards a low carbon future.
The urgency of finding solutions to the climate change problem is growing as a priority for both domestic and international policymakers. Around a quarter of the world‘s greenhouse gas (GHG) emissions are linked to international trade, according to the most recent estimates. As the lifeblood of global trade, the shipping sector faces significant challenges in decarbonizing due to its diversity, as well as the fact that clean fuels such as green hydrogen, ammonia and methanol are not yet available at scale.
Policymakers are considering ways to encourage the shipping industry to use low-carbon modes of transportation. Individual countries may include targets for shipping in their national mitigation plans, and they may be able to act more promptly than the IMO.
For example, the European Union’s (EU) proposal to extend the scope of its Emissions Trading System (ETS) to include shipping, as well as discussions of market measures at IMO will put a price on carbon for the first time.
As we evaluate what impact all this may have on our industry, it is helpful to consider how we arrived at this point. Over recent years, ABS, being close to the developments, has reported on the challenges that lie ahead, as GHG reduction targets are set and pathways are considered to meet these targets. In that context, we have explored the boundaries of existing technologies and discussed emerging future solutions identifying the barriers or obstacles that need to be overcome in order for them to present a safe, practical and feasible solution.
As we shifted from 2021 into 2022, we acknowledge that over the last four years our industry has achieved a higher maturity level with regards to the knowledge and awareness of the decarbonization challenge. We started with attempting to define the riddle of decarbonization as we unraveled the technical and operational challenges that were assumed with the introduction of the 2030 and 2050 carbon intensity reduction targets. Regulations that are meant to drive the transition towards those targets have started taking shape and form.
That allowed us to benchmark vessels and fleets in a more precise manner and to explore, with higher fidelity, technological improvement options and fuel pathways that can potentially lead to carbon neutrality. This higher fidelity allowed us to identify policy and regulatory gaps that have to be implemented beyond the maritime industry in order to support shipping on its journey to lower carbon intensity. We were then able to understand that the energy transition requires a robust value chain and we started investigating how energy carriers or fuels should be produced and more importantly what methods we should put in place in order to address carbon neutrality by implementing a life-cycle approach.
At every step of the way, through collaborative research and joint efforts we are exploring the boundaries of what is currently feasible and highlighting areas where more emphasis should be given in order to have safe and sustainable solutions for our decarbonization targets. We examined new energy efficiency technologies (EETs), advancing digitalization in order to increase operational efficiency and ultimately the implementation of new fuels and energy carriers. And through the prism of trade changes due to climate changes and the effect on global routes and associated emissions, we attempted to look ahead into the long-term and estimate the energy mix of the future based on certain scenarios.
Looking ahead through 2022 and beyond it is clear, shipping will likely require value chain adaptations and policies in support of its decarbonization journey, as we identified in the previous editions. In order to achieve net-zero emissions across the value chain by 2050, the energy system will need to be transformed using a wide range of technologies. Energy efficiency, behavioral change, electrification, renewables, hydrogen and hydrogen-based fuels, and carbon capture, utilization and storage (CCUS) are the key pillars of decarbonizing the global maritime energy system.
Hydrogen is a versatile energy carrier, the fundamental building block that is used to produce other energy carriers and supports the transition. A zero-carbon or carbon-neutral value chain will require hydrogen positive energy tokens to be produced utilizing renewable energy sources or nuclear energy. The value chain will also require storage of the hydrogen energy, transportation and possible conversion into other forms and finally distribution and energy conversion through consumption. Although hydrogen can be produced from almost any energy source, the majority of hydrogen used today in oil refining and chemical production comes from fossil fuels, with significant CO2 emissions.
To help address this, an essential component of global efforts to achieve net zero will be CCUS. Since a wide range of technologies will likely transform the way we produce and consume energy, CCUS will need to play a significant role alongside electrification, hydrogen and sustainable bioenergy. In order to achieve net-zero goals, CCUS reduces emissions in key sectors and removes CO2 to balance emissions that cannot be avoided.
Hydrogen fosters cross-value chain collaboration by bringing different stakeholders together which will also help the maritime sector achieve net-zero goals. The associated regulatory pathways will evolve alongside as it influences ship design, technology and operations.
In recognition of this goal, ABS explores the two energy transition value chains in the fourth of its series ‘Setting the Course to Low Carbon Shipping’.
This publication examines how the maritime sector will be impacted based on the latest trends and developments out of the IMO, technology readiness of low carbon and alternative fuels and the hydrogen and carbon value chain accelerators. It also examines the possible capacity demand and related emissions output trends on a global basis to envision the environments in which targets may be achieved through the prism of those value chains.
Furthermore, we examine how shipping becomes a significant value chain enabler as it supports the transportation of energy and explores technologies that leverage these new energy sources. We once again attempt to explore the boundaries of applicability by looking into conceptual designs of liquefied hydrogen and liquefied CO2 carries and how that could support the value chains. We also evaluate the challenges and considerations of capturing carbon on board.
With the Outlook as guidance, we believe industry stakeholders can understand the complexity of the task-at-hand, make informed decisions and move forward effectively as they evaluate their options for a transition to low-carbon operations and subsequently a zero-carbon future for shipping.
