Shipping, Ports and Logistics Enable Shift to Sustainable Energy

Singapore freight forwarders – Star Concord
21-Sep-2023

In the latest launch of the Low Carbon Outlook by ABS, the transportation of critical elements such as carbon, ammonia and hydrogen and the developments in clean energy, digitalization and applied research, are offering greater sustainability and much higher operational efficiencies.

In this article, Panos Koutsourakis, VP, Global Sustainability, ABS, explains the maritime industry’s pivotal role in bridging the global energy landscape’s gaps between production, storage and consumption.

As the maritime industry looks ahead and dives deeper into the complexities of the three value chains – production, storage and consumption – it becomes clear that shipping is more than a spectator in the global green energy revolution. Instead, it serves as a critical facilitator and enabler.

However, it is essential to invest in cutting-edge technology that can significantly lower the industry’s carbon footprint. This involves both the adoption of alternative fuels, EETs and novel solutions such as onboard carbon capture systems.

This transition to greener technologies also requires substantial investment and will incur initial expenses that change the dynamic of shipping’s commercial relationships. But in the long-term, shipping operations could benefit from lower emissions, reduced fuel use and simplified regulatory compliance.

The Energy Transition

The global energy market is at a crossroad. With rising energy consumption to meet consumer demands and a pressing need to simultaneously reduce carbon footprints, there is a definitive shift toward renewable and low-carbon energy sources.

One of the solutions to the decarbonization challenge is the evolution of the energy industry, which will support creating an alternative, low-carbon fuel supply chain. The ABS Market Outlook provides a comprehensive analysis of the current energy sector and highlights the upcoming challenges and possibilities.  With energy consumption rising to meet consumer demand and a pressing need to simultaneously reduce carbon footprint, there is a definitive shift toward renewable and low-carbon energy sources.

As companies worldwide increase their carbon capture projects, the requirement to transport collected carbon becomes essential. Ships built to transport liquid carbon as cargo are emerging as an important link in the carbon value chain. These vessels ensure that liquid carbon is transported safely and efficiently from capture sites to utilization or storage facilities.

The Regulatory Backdrop

The IMO GHG reduction strategy, as revised at the IMO’s 80th meeting of the Marine Environment Protection Committee (MEPC 80), will lead to significant changes for vessel design and operations.

The global fleet must switch from traditional fuels to greener alternatives, which will prompt new designs, engine upgrades and retrofits and the development of new fueling infrastructure. Improved energy efficiency measures, such as improved hull designs and operational changes like optimized routing, will be essential.

Additionally, vessels may need to be equipped with real-time emission monitoring and reporting systems, which will require crew training for effective implementation and compliance.

Older ships may also see challenges with retrofitting, potentially rendering them commercially unviable before the end of their expected service life. Conversely, new, compliant ships might see a relative increase in market value.

Emissions Reduction

While intriguing, the research into alternative fuels presents its own set of obstacles in terms of supply, cost, infrastructure and safety.

Concurrently, while energy efficiency technologies (EETs) provide a practical and realistic pathway to improve ship operational efficiency and thus reduce carbon emissions, they’re expected to play a broadly supportive role in the majority of decarbonization projects. Onboard carbon capture, while still in its early stages of development, has the potential to transform the way industry manages carbon emissions.

Carbon

The carbon value chain — which includes core elements like the capture, utilization, storage and transportation of carbon — is an integrated step for carbon emissions management, from source to potential utilization or sequestration.

The maritime industry can support carbon capture activities worldwide by providing safe and efficient transportation, thereby assisting in efforts to reach a carbon-neutral future.

Ships built to transport liquid carbon as cargo are emerging as an important link in the carbon value chain. These vessels ensure that liquid carbon is transported safely and efficiently from capture sites to utilization or storage facilities.

Understanding and improving the carbon value chain will become increasingly important as the entire global economy steps up its efforts to combat climate change. The maritime industry, which accounts for a substantial portion of global trade will be at the centre of making this value chain a reality.

Ammonia

With strong potential as a green fuel, ammonia represents a twofold opportunity for the shipping industry. While it can be used as an alternative bunker fuel, it must also be transported as cargo. As countries and industries investigate ammonia-based energy solutions, the marine sector is at the forefront, ensuring regional supply.

Ammonia will play a major role in the wider energy matrix because of its ability to store and transmit energy effectively, as well as its carbon-free emissions. As the world deals with energy storage and transportation challenges, ammonia’s position as an energy carrier becomes increasingly important and provides a sustainable answer to some of our biggest energy challenges.

The importance of the ammonia value chain in the global green transition cannot be over-stated. As the world works to reduce its carbon impact, ammonia stands out as a potential viable fuel option and critical cargo.

Hydrogen

Commonly referred to as a long-term fuel option, hydrogen will continue to grow as a key component in the worldwide endeavor to build a sustainable energy landscape. Its importance in the transportation industry, both as a cargo and as a potential fuel will increase in step with mounting energy transition pressures and tightening emissions limits.

The maritime industry’s acceptance of hydrogen represents a bold step toward a more sustainable future. More than tackling its own carbon impact, shipping’s embrace of the hydrogen value chain positions it as a vital actor in the global green energy revolution.

Transportation of hydrogen, particularly green hydrogen derived from renewable sources, is critical to the creation of a worldwide hydrogen economy. With its huge network and experience, the shipping industry is primed to be a cornerstone in this initiative.

Adoption of Alternative Fuels

Investments in LNG, LPG and methanol dual-fuelled vessels continues to grow quickly, prompting industry discussion and debate around which alternative fuels producers can provide at affordable prices.

For this updated Low Carbon Outlook ABS re-examined the supply and demand data for alternative fuels and updated the future fuel mix to reflect the latest market information. In addition, the study looked at how the recent adoption of the revised IMO decarbonization strategy and the 2050 net-zero targets affected the projected future fuel mix.

By combining the derived ship demand with a forecast for a changing fuel mix in deep sea shipping, the scenarios for global energy consumption are translated into global fuel consumption by ships. Overall, with the updated findings, ABS finds that by 2050, demand for fossil fuels has the potential to be marginally lower than what was estimated in the previous edition of the Low Carbon Outlook, once again underlining the need for carbon capture technologies.

The Future

As the maritime industry – and shipping in particular – sector navigates the challenges of the energy transformation, it will be critical to invest in cutting-edge technology that can significantly lower the carbon footprint of its operations. This involves both the adoption of alternative fuels, energy-efficient technologies and novel solutions such as onboard carbon capture systems.

This transition to greener technologies will require substantial investment and will incur initial expenses that change the dynamic of shipping’s commercial relationships. But in the long-term, shipping operations could benefit not just from lower emissions but also from reduced fuel use and simplified regulatory compliance.

Considering the characteristics of the alternative fuels being considered by the maritime industry it is clear that safety procedures and protocols as well as seafarer training will also need to evolve.

Despite the challenges, the shipping industry remains dedicated to decarbonization. This is demonstrated by the investments already being made in vessels using new fuels and in EETs and voyage optimisation.

Panos Koutsourakis is VP of Global Sustainability at ABS.

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