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Thursday, October 15, 2020 

DNV GLís Maritime Forecast to 2050 aims to assist shipowners in choosing the right fuel and technology options for next-generation ships, setting out three decarbonisation pathways for shipping and exploring detailed energy mix and fleet composition scenarios, based on different energy prices, demand growth and regulatory options.

With IMO having made the large-scale development and deployment of carbon-neutral fuels a core part of its long-term strategy, and the Poseidon Principles being signed by major shipping banks for assessing the climate alignment of ship-finance portfolios, there is clear pressure to reduce greenhouse gas (GHG) emissions from shipping. Cargo owners and charterers have begun addressing GHG emissions when selecting shipping vendors.

“Decarbonising shipping will require faster technology development, large-scale piloting and appropriate safety standards,” said Tore Longva, principal consultant, DNV GL – Maritime. “In an era of big change, shipowners need to navigate technological, regulatory and market uncertainty to optimise ships’ earning capacity and ensure that they are on acceptable GHG emission trajectories. Structured, scenario-based approaches to future-proofing will help to manage these risks.”

The Maritime Forecast to 2050 creates 30 scenarios to model across three decarbonisation pathways.  These suggest significant fleet-wide uptake of at least three or four different carbon-neutral fuels by 2050, accounting for 60% to 100% of shipping energy use in mid-century.

Fossil LNG is likely to initially gain a significant share. As regulations tighten in 2030 or 2040, bio-MGO, e-MGO, bio-LNG and e-LNG will be used as drop-in fuel for existing ships and bio-methanol, blue ammonia and e-ammonia for newbuilds and some retrofits.

In Decarbonisation by 2040 scenarios, instead of a transition via LNG, the fleet shifts directly to carbon-neutral methanol or ammonia, with bio-MGO and e-MGO as drop-in fuels for existing ships.

“It is difficult to identify clear winners among many different fuel options across all scenarios,” said Longva. “However, e-ammonia, blue ammonia and bio-methanol frequently model with a high market share in the decarbonisation scenarios and are the most promising carbon-neutral fuels in the long run.”

Fuel flexibility and alternative fuel-ready solutions can facilitate the transition from conventional fuel oils, via fuels with lower carbon footprints, to carbon-neutral fuels. Dual-fuel LNG engines gain a significant share in the modelled decarbonisation pathway based on IMO’s GHG reduction ambitions. In this pathway, many ships retrofit to methanol or ammonia engines and fuel systems towards 2050. Modelling of a case study involving a newbuild Panamax bulk carrier shows that installing a dual-fuel LNG engine and fuel system is consistently the most commercially robust choice.

Hydrogen is starting to gain traction in segments such as small ferries. Its comparatively low energy density per unit of volume means controlling and managing it under high pressure to liquefy at very low temperatures, leading to significantly greater capital costs and space implications. But hydrogen fuels could be adopted in niche applications such as ferries and cruise vessels, and in specific locations. Hydrogen plays an integral role as a building block in the production of other carbon-neutral fuels, such as blue ammonia, e-ammonia and e-methanol.

Alongside primary energy prices, regulatory policies are the key driver in the industry’s uptake of carbon-neutral fuels and of the future fuel mix. The speed of transition to carbon-neutral fuels will have major strategic and financial implications for both the shipbuilding value chain and the land-based fuel supply chain. Hence the need in the current decade to start developing a supply of carbon-neutral fuels in major ports, in addition to on-board solutions and corresponding regulations. DNV GL - Maritime supports the development of engine technologies that are flexible and ready for alternative fuels.

While the forecast is based on long-term trends between now and 2050, the Covid-19 pandemic is having a dramatic, and hopefully short-term, effect on maritime activities, particularly as it affects the global energy system.

“For shipping in general, the wide ranges of uncertainty on energy prices, demand growth and regulatory options raise the stakes for a shipowner choosing between options for future-proofing a vessel to remain carbon-robust,” said Longva.

The full report can be read here.

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