DOSSIER

 

DNV: will we reach IMO 2030 targets?

 

DNV presented modelling about whether shipping will reach the various IMO 2030 and 2050 targets at a webinar. It also gave an update on legislation, and the current perspective in shipping companies

The good news is that achieving IMO’s emission target of a 20 per cent reduction in total CO2 emissions from shipping by 2030 compared to 2008 is “quite reasonable in our estimates,” said Tore Longva, Maritime Decarbonization Director at DNV.

He was speaking at DNV’s Maritime Energy Transition Summit on Feb 7.

In 2008, the shipping industry emitted 800 MT of CO2 equivalent on a tank to wake basis.

DNV estimates that shipping has reduced  its total emissions by about 13 per cent from 2008 to 2022, although shipping activity (cargo transported) increased 42 per cent in that period.

This means energy efficiency per tonne has improved by 40 per cent already, another of IMO’s 2030 targets.

If trade grows a further 12 per cent by 2030, it means energy efficiency needs to be improved by a further 15 per cent by then to reach the total emissions target, DNV calculates, and this seems achievable.

2030 zero emission fuel target IMO also has a target of 5 to 10 per cent of maritime fuels or technologies to be “zero or near zero greenhouse gas emission” by 2030. This looks much tougher to achieve That’s the bad news..

DNV has mapped two thousand projects to produce carbon neutral fuels around the world which could be used by shipping. Most of these are not specifically planning shipping as their customers. For example zero carbon ammonia can be used as fertiliser, and methanol can be used in the chemical industry.

It has identified which stage they are at – planning, investment decision or operational – and assigned a likelihood of them going ahead. The final estimate was world production of 45m to 65m tonnes of carbon neutral fuel by 2030 on an oil equivalent basis.

The shipping industry uses 280m tonnes of fuel a year calculated on an oil equivalent basis (although it is nearly all fuel oil).

So, if the shipping industry is to find 6 per cent carbon neutral fuel by 2030, that would be 17m tonnes a year, so between 26 and 38 per cent of total low carbon fuel production. And bear in mind that shipping only uses 3 per cent of all fuel produced in the world today.

Knut Ørbeck-Nilssen, CEO maritime with DNV, said he thought that for shipping to receive such a large proportion of the global supply of carbon neutral fuels would be “highly unlikely, bordering on the impossible.”


Defining carbon neutral fuels

As part of this analysis, there needs to be careful consideration of whether a fuel truly counts as carbon neutral.

If CO2 is emitted to the atmosphere in making the fuel, it effectively means “shifting emissions onshore,” Mr Longva said.

Guidelines and regulations for CO2 emitted in producing fuels are included in the EU Renewable Energy Directive and IMO Lifecycle Assessment Guidelines.

For example, there are statements that well to wake emissions must be below a certain threshold, such as a 70 per cent reduction on emissions if fossil fuels were used. If renewable electricity is used to power electrolysers, it must come from ‘additional’ renewable electricity, not electricity which would be otherwise used somewhere else.

If it is a biofuel, it should not come from a land which formerly had a high ‘carbon stock’ such as forestry.

There are also specifications on operational practises, such as use of water, chemicals, and waste. You have to review emissions made in extraction, processing, transport, and distribution.

“Each actor in the supply chain needs to keep an account and be audited on where they get their feedstock, a calculation of their emissions,” he said. “The Proof of Sustainability is handed to the next link in the supply chain.

This goes all the way up to fuel bunkering.”

The bunker supplier needs to provide some kind of ‘proof of sustainability’ together with the bunker delivery note. And when the ship produces its emissions report, this should be included in the documentation, so it is possible to verify that the emissions are as claimed.


Is full decarbonisation possible?

Could we ever achieve full decarbonisation, or net zero by 2050? DNV has done modelling to try to work out how decarbonisation could be achieved.

It believes a third of the necessary reduction could come from energy efficiency measures, said Eirik Ovrum, Principal Consultant, Environment Advisory, Maritime, DNV.

Further reduction can come from using alternative fuels, with more than half of ships planned to be built able to operate on alternative fuels. The word ‘alternative’ is applied to fuel which needs a different engine to a conventional fuel, he said.

Decarbonisation would be easier if shipboard carbon capture or nuclear power were commercially viable.

DNV did some basic modelling to determine whether onboard carbon capture or nuclear propulsion could be viable, based on a 15,000 TEU container vessel.

For shipboard carbon capture, a vessel could have 4,000m3 of tanks, and offload four times during a round trip.

The economics were compared to a conventional ship, a dual fuel methanol ship, and a dual fuel ammonia ship. Different price scenarios were looked at, due to uncertainty about what the fuel prices will be.

Two shipboard carbon capture cost models were made. A high-cost model used a carbon storage cost of $80 per tonne, and worked on the basis that the carbon capture system would use an additional 30 per cent of fuel. The low-cost model used a $40 per tonne price for CO2 storage, and 15 per cent additional fuel requirement penalty to run the capture system.

The results showed that onboard carbon capture can compete with other decarbonisation solutions, he said.

It looked at nuclear propulsion. This is already in use on 160 vessels, mostly naval vessels, which are subject to different regulations. It assessed use of a small modular reactor, which is being developed by the nuclear industry for use on land. It found it would be technically feasible to use on a ship.

Commercially, it estimated the costs at 8 per cent of the total capital cost per year, guessing the capital costs based on other prices of land based nuclear power. The result showed that commercially, nuclear power could compete with other decarbonisation solutions.

A major obstacle, of course, would be gaining regulatory acceptance.

“Our recommendation are that shipowners should reduce energy consumption now, consider all options, focus on fuel flexibility, and consider long term strategy,” Mr Ovrum said.


Overview of regulation

At the IMO MEPC 81 meeting in March 2024, there will be an important decision on a greenhouse gas intensity fuel standard, said Eirik Nyhus, director of environment for maritime at DNV.

This will limit the carbon impact of fuel which is used by engines, which is a separate issue to the amount of fuel which is being burned. The standard will have increased stringency over time. It is a similar concept to Fuel EU Maritime.

“You will see the fuel mix in shipping changing because of this regulation,” he said.

MEPC 81 is also likely to decide about a form of carbon pricing. “We don’t know what IMO will land on, but some form of cost associated with GHG emissions is going to come out, entering into force at the same time as the intensity regulation,” he said.

The decision needs to be made at IMO now in order to bring regulation into force in 2027-28, so there will be sufficient time for legislation to be implemented.

We are also seeing EU regulations. EU ETS (in force now) and Fuel EU Maritime, which will come into force in 2025.

“Impact-wise they are a little bit different,” he said. “EU ETS imposes a cost on shipping emissions associated with port calls in Europe. With Fuel EU maritime, if you burn conventional fuels in 2025 you will be noncompliant from day one.”

The UK has agreed there will be a maritime emission trading scheme coming into force in 2026. “The date and the design features are not finalised, we expect to see final decisions quite soon.”

So, there is something every year – EU ETS in 2024, Fuel EU maritime in 2025, UK ETS in 2026, new IMO regulations in 2027-28. Plus, a review of CII in 2025.

“I am sure there will be other changes that also impact shipping. It is going to be a quite impactful decade,” he said.

“Decisions are being made about what kind of changes to make to business models and fuels. It’s all going to matter hugely.”


Shipping industry perspective

Shipping companies have the challenge of how to navigate and accelerate the energy transition at the “top of their minds,” said Knut Ørbeck Nilssen, CEO maritime with DNV.The drive to decarbonise is coming from “stakeholders throughout the value chain,” particularly cargo owners, as well as regulators.
Cargo owners “are listening to their customers and to society at large. They understand their responsibility and obligations to make supply chains greener. They expect their maritime partners to help them achieve this,” he said.
Shipowners “need to make thorough examinations of these technologies and decide what the best fit is,” he said. Then they should make short-, mid- and long-term decarbonisation plans.

“The actions we take now can both deliver short term results and ripple throughout the 21st century,” he sai

 

 

 

 

 

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