Similarly, the availability of zero-carbon fuels had among the lowest preparedness scores of the section.
At the end of January 2019, Lloyds Register, in collaboration with UMAS, published Zero-Emission Vessels: Transition Pathways, which evaluated solutions that are both in line with a decarbonisation trajectory and are realistic technologically.
By identifying technologies with the best chance to compete in a more dynamic marine fuels market, the study identified three possible pathways:
- The first is based on large-scale availability of renewable electricity, with electric fuels consequently the dominant fuels in shipping. The majority of the fuel mix would come from technologies including hydrogen and ammonia produced through electrolysis, e-methanol, and improved energy storage.
- The development of biofuels is a second path, assuming that a fundamental change in large areas of land use is acceptable and sustainable. Bio-gasoil and bio-methanol could cover a major share of shipping’s fuel mix.
- Thirdly, energy could be supplied through a mix of electric fuels, biofuels, and hydrogen and ammonia produced from natural gas, with carbon capture and storage (CCS).
The results also indicate that the competitiveness of zero-carbon solutions is seen as a major barrier to shipping’s decarbonisation over the next 10 years.
To be widely adopted across the maritime industry, zero-carbon solutions must be commercially viable compared to traditional fuels.
This will require innovative technology and maturation, which can reduce the cost of alternative fuels and zero-carbon technologies, as well as policy measures that can help bridge the remaining price gap. Whether this will happen in time to achieve the IMO targets is a concern.
Developing Environmental Policy and Financial Solutions
Ian Parry, Principal Environmental Fiscal Policy Expert at the IMF, says that two critical policies are needed in order to overcome the competitiveness barrier to the deployment of low-emission technology into maritime fleets.
“One is an aggressive research and development program administered by the IMO, to develop technologies and lower their costs,” he says.
“The other policy is a tax on the carbon content of maritime fuel, or fuel levy, which would level the playing field between technologies with different carbon intensities, thereby providing incentives for clean technology adoption. The tax could be collected by an IMO administered fund, should be applied globally and could be ramped up progressively over time in line with other pricing schemes.”
The survey highlights another important barrier to shipping’s decarbonization in the next 10 years: customer interest in zero carbon solutions.
Zero-emission fuels and solutions are currently more expensive than traditional fuels, making it difficult for ship operators to use unless customers are willing to provide economic incentives, for instance in the form of a price premium.
An outstanding question in this regard is whether customers of the maritime shipping industry are prepared to pay a premium for shipping services with lower greenhouse gas emissions or provide other forms of economic incentives for shipping companies that are first movers in this field.