Tougher measures needed to meet IMO targets: WoodMac

With events like COP26 focusing global attentions on the urgency of net zero targets, the IMO has increasingly come under pressure to go beyond its initial target of halving emissions by 2050, towards a commitment to zero emission shipping. But, says Mowat, achieving the current target of cutting emissions by 50% is already a major challenge.

Maritime transport is responsible for roughly 940 MT of CO2 annually and approximately 2.5% of global greenhouse gas (GHG) emissions. Without mitigation measures, there are concerns that shipping’s share of carbon could increase. International shipping is also on the rise: global maritime trade is expected to expand by nearly 50% by 2030 in comparison to 2015 levels.

The adoption of EEDI and EEXI measures at MEPC 76 ensures that international shipping is well placed to meet carbon intensity targets, he says, but those measures will not be enough to fully decarbonise the sector.

Fuels of the future

Wood Mackenzie predicts that marine oil bunker fuel will peak in 2025 and that LNG will be the main source of market growth in the longer term, displacing nearly 0.6 million b/d of oil bunkers by 2030. In the early 2030s, the global marine fuel market should start to decline, and synthetic e-fuels should become more widespread after 2040 when green hydrogen capacity will be more readily available.

Mowat says that while some biofuels could directly replace distillates and provide a new source of supply in the longer term, this is not a perfect solution. Trials are taking place and biofuel technology is developing, but supply availability is a key constraint because shipping will have to compete with aviation, which is likely to be a bigger source of future demand growth.

“In order to support a much faster decline in carbon emissions, the relative costs of low and zero carbon fuels needs to fall substantially over the next two decades,” says Mowat. “While we do not expect this to occur in relation to biofuels, the cost of synthesised e-fuels derived from green hydrogen is expected to fall considerably as the costs of production decline.”

These e-fuels could be the ultimate renewable shipping fuel. Versions of diesel, methanol and ammonia are all possibilities. However, production costs are currently high.

“The cost of carbon in conventional fuels could be made more expensive through a GHG levy, or other mechanisms could be introduced such as a GHG fuel standard and/or GHG cap and trade system. All of these measures are likely to be considered by the IMO as part of the development of mid and long-term GHG reduction measures for international shipping.”

Boosting efficiency

Initiatives such as using smaller engines, deploying wind and solar power and waste heat recovery could be helpful in the sector’s efforts to cut emissions, says Mowat. However, many of these technologies have high marginal abatement costs. For example, the marginal abatement cost for solar panels is substantially higher than for wind power, as wind energy is being used for direct propulsion on the vessel. “Solar PV would be used to convert sunlight to electricity, which would then be used to charge a battery, which would then be used to power an electric motor, as an additional source of propulsion on the vessel. This would require substantially more investment for a similar contribution to the vessel’s propulsion when compared to wind power.”

The most attractive energy efficiency measures are hull shape optimisation and engine derating, as they are both highly cost effective.

More is needed

Mowat says that the adoption of EEDI and EEXI requirements will likely result in the IMO achieving its target of reducing carbon intensity by at least 40% by 2030. However, a major shift towards low- and zero-carbon fuels by 2050 is absolutely required to reach IMO’s target to halve overall greenhouse gas emissions from international shipping by 2050, and to meet the 2050 carbon intensity target, the IMO needs to extend EEDI regulations beyond Phase three with ambitious new targets.

“Emissions will need to decline at a much faster rate after 2030 if the sector is to meet its target, and if the IMO commits to net zero, even more will need to be done,” says Mowat.