Where we are going with decarbonisation – ABS event

Speakers from Mediterranean Shipping Company (MSC), The World Bank and Oldendorff Carriers shared perspectives on where the shipping industry is going with decarbonisation, at an ABS event in London

Asustainable company needs both economic viability and to “meet society’s expectations of how to do that responsibly,” said Bud Darr, Executive Vice President, Maritime Policy and Government Affairs, Mediterranean Shipping Company (MSC) Group, speaking at the event “ABS Sustainability Summit 2023,” held on Sept 11 2023 during London International Shipping Week.

“Sustainability is the art and science of finding the right balance,” he said.

MSC is the world’s largest container shipping company according to S&P (2022). It also operates cruise ships and ferries.

Mr Darr believes that the maritime industry wants to decarbonise whether it is forced to by regulation or not, because it is an expectation of its customers.

But decarbonisation cannot happen without the fuels being available, he said. “It is a stretch, to be honest with you.”

So far, the only lower carbon fuel which is widely available is LNG. MSC has “70 to 80” vessels on its order book with LNG fuel, he said.

There is uncertainty over true carbon benefits of using LNG, because a small amount of methane slips through the engine uncombusted (known as ‘methane slip’), and methane is a stronger greenhouse gas than carbon dioxide. Different studies have made a different calculation of the number of years it stays in the atmosphere, ranging from 20 to 100 years.

However, there are many other environmental gains of using LNG, such as the lower emissions of particulates, sulphur, and NOx, he said. The operating costs can be lower than conventional fuels.

In any case, LNG itself will gradually be decarbonised, as it is made more with biogas and synthetic gas with renewables. “I think the days of fossil LNG in mainstream fuel will be pretty limited,” he said.

MSC is considering converting some of its vessels to run on methanol fuel. But burning methanol also causes CO2 emissions, unless it is ‘green methanol,’ and that is “pretty much a unicorn at this moment in time,” he said.

Many environmental campaigners do not understand how hard it is to obtain low carbon fuels now. “There’s a substantial mismatch between the rhetoric of some of those trying to push industry hard, and the [market] volumes we’re seeing,” he said.

“We’re out in the market every day, trying to figure out where it comes from.”

We should not be too optimistic about how fast new types of fuel will be available, with typically an 8–10-year lag between then energy companies make investments and when the fuel is available on the market. “We need to be realistic but be ready,” he said.

Mr Darr sees the outcome IMO’s MEPC discussions, with a target to decarbonise by 2050 as a “remarkably good result.”

“They got the big-ticket items right. Zero by 2050, that is pretty good. It is what the industry has been saying for 2 years,” he said.

“I think those that were openly hostile to the outcome had no experience of making things happen at IMO, and certainly don’t have experience trying to decarbonise a shipping company,” he said.

The intermediate decarbonisation targets “are guesses but they are not bad guesses,” he said. “They send a signal of roughly the trajectory and commitments.”

Shipping companies should not need much extra incentive to improve efficiency, because it has direct business benefits. “You should run, when you find a solution which balances economical and environmental benefit,” he said.

MSC has been involved in a project to support just in time arrival’ for the Port of Long Beach, Los Angeles, so container ships can adjust the speed of voyage, so they do not arrive early, so reduce fuel consumption. Before the project was implemented, there could have been as many as 120 vessels at anchorage off Long Beach. “It’s possible if everyone wants to pull in the same direction,” he said.

MSC is predicting that 7 to 10 per cent of the capacity in the [container] market could be scrapped due to inability to comply with CII. Some ships will comply by reducing speed, but there is a limit to how much this can be used to reduce CO2. “You reach a point of diminishing returns,” he said. Ship engines are most efficient when operating near to their design power.

With CII, ships can get a better score if they carry less cargo, since it is based on the CO2 emissions per miles travelled, and an emptier vessel needs less fuel and so emits less CO2. This is a ‘perverse incentive,’ he said. And the left behind cargo would then need to be carried on another ship.

While CII was perhaps the only measure governments felt able to implement when the rule was created, now we are moving towards fuel standards and economic costs on emissions. This means direct financial impact of CO2 emissions, and so may be more likely to make a difference.

Mr Darr said nuclear power for vessels is “near and dear to my heart,” since he has an academic background in submarine nuclear engineering. There would be big advantages in never having to bunker the vessel, he said. “From a technical perspective, given time, I’m convinced it can work,” he said.

But there are other big challenges. For molten salt reactors, there are questions about availability of fuel, he said. And of course, it would need regulations and public acceptance, and that may take much longer than the technology.

With maritime e-fuels made with renewable electricity, a concern is that overall demand for electricity will continue to grow as heating and transport is electrified. Future governments may prefer that all available renewable electricity is used by the grid, where it can be used much more efficiently. In comparison, making e-fuels for ships from renewable energy is a relatively inefficient process.

The industry may have regrets if it does not “exploit the bio track,” he said.

“I think its important to keep both tracks alive” [biofuels and e-fuels].

Asked for his thoughts about onboard carbon capture, he said that the challenge is the lack of CO2 reception facilities in ports around the world to take it.

Christopher Fee, Oldendorff

“Sustainability” in shipping means meeting high standards in all aspects of ESG – environmental, social and governance, said Christopher Fee, director of global engagement and sustainability with Oldendorff Carriers. Treatment of crew can be part of the ‘social’ component.

Oldendorff is considering engines which can run on methanol for its fleet. “It is proven, Technology Readiness Level (TRL) 9,” he said. “We can use the fuel with existing infrastructure.”

But there is a challenge in ensuring that methanol will be available where and when it is needed, he said. Vessels need to go where the cargoes need to go.

Other concerns about methanol are that the energy density is half that of conventional fuels, so fuel tanks twice the size are needed. And there may be very little ‘green methanol’ available by 2030.

Mr Fee sees just in time arrival’ as a ‘low hanging fruit’ in decarbonisation. It is part of an international ‘task force’ working to optimise port calls, put together by the International Association of Ports and Harbours (IAPH).

Oldendorf believes there are so many flaws in CII it published a paper on its website about them. One of the biggest is that your emissions index decreases as distance travelled increases. “A vessel can be sailing around in circles to chase a good rating,” he said.

On the other hand, a vessel may be stuck in port for reasons beyond its control, emitting CO2 while not covering any distance.

Transhipment, where cargo is moved from one vessel to another, can also mean emissions with less miles. “We want correction factors, especially for transhipment,” he said. “I think it is critically important something is done.”




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