SAFETY4SEAlog Issue 37 - May 2019

24 I SAFETY 4SEA Log I May 2019 I ISSUE 37 ARTICLE newable energy sources (wind and solar) will undoubtedly have impor- tant roles to play, but are likely to still leave a requirement for a liquid fuel source. • The evolution of the global fleet and its technological and operational characteristics are just some of the considerations that need to be tak- en into account for the shipping in- dustry’s transition to a low carbon future. • Costs and economic impacts, as well as legal, policy and societal di- mensions need to be considered as well. • How the shipping industry decar- bonizes is most likely to be a trade- off between costs and steps being undertaken by other sectors and economies. Taking the above into consider- ation, the report concludes that the sooner the shipping industry has a clear high-level target, and has iden- tified associated potential pathways for technology transitions, the easier these important conversations with the impinging stakeholders will be, and the sooner assumptions about any non- fossil fuel can be improved. carbon pricing. As the report explains, these dif- ferent scenarios create different path- ways in terms of the stringency of in- sector decarbonization (depending on the amount of offsetting), and there- fore for different fuel mixes, machinery choices, design and operating speed choices, and technology take-up. Key considerations The results of this report show that, in the scenarios considered, “shipping is likely to need to start its decarboni- zation imminently”. In addition, the as- sociated changes will be fundamen- tal and require a lot of further work and development to minimize disruption. In this regard, the report stresses that the later we acknowledge the scale of the challenge and the pathways the sector is likely to take, the less prepared the designers, owners and financiers will be for the future. Other key findings are: • Most of the pathways will require a substitute for fossil fuel, because energy efficiency improvements alone will not be sufficient in the me- dium to longer term. • Energy storage in batteries and re- T he report underlines the need for shipping to start its decarboni- zation imminently and as strin- gency increases over time, increas- ingly high-cost mitigation steps are re- quired. The later we leave decarboni- zation, the more rapid and potentially disruptive it will be for shipping, the re- port concludes. Different scenarios, different pathways Namely, the report analyses three different scenarios for the period 2015- 2050 to describe potential futures that the industry may expect, assuming that there is further GHG policy, the world commits to keep warming below 2oC and there is overall a commitment to- wards decarbonization by all industry stakeholders. The study assumes that all fuel options are available in all sce- narios, however: • Scenario 1: This scenario assumes the availability of hydrogen which is used in fuel cell technology to demonstrate what can be achieved through technology and innovation. • Scenario 2: This scenario assumes a mid-range market penetration of biofuels in the shipping industry. The shipping industry adopts biofuels in a similar way to road transport, through blending targets and man- dates for fossil fuels, and can derive high, medium and low uptake. • Scenario 3: This scenario repre- sents a future where shipping has a higher cost of decarbonization than other sectors in the economy. Ac- cording to this scenario, the start year of a Market Based Measure (MBM) is 2025 and buying offsets of CO2 out of sector is allowed for 50% of the revenue generated from Pathways toward a low carbon shipping: Key considerations A recently published report produced by LR and Shipping in Changing Climates, entitled “Low Carbon Pathways 2050” outlines a number of potential pathways for the shipping industry’s transition to a low carbon future, asking an important question: “Given the best available evidence, what is a reasonable estimate of how shipping might be required to change and what does this look like?”. 7 ) in n with batement es remains see a continued role tional and low sulphur t)). The exact mix of ow Sulphur Heavy HFO) is highly sensitive rice of the two fuels, a marginal capital cost o these scenarios should be attention to the fuel price is because, even taking increased capital cost of the ology (e.g. scrubbers and, Exhaust Gas Recirculation Catalytic Reduction (SCR) Tier III compliance), the ns profitable relative to th atives. FO’s continued role as a marine fuel in these scenarios can be attributed to its future price, as, in a decarbonising world, oil (particularly HFO) will remain cheap since policy and technology are expected to reduce demand faster than supply-side constraints are encountered. We know that most of these reserves will have to be left un-extracted if the Paris Agreement’s target of well below 2°C (aiming for 1.5°C) is to be met. HFO, being a residual fuel, will still b produced and – as long as no substit te demand appears and any tightening of IMO MARPOL Annex VI regulation of air pollution can be met with onboard technology – could remain economically viable. Howev r, much of this will depend on how the oil (particularly the refining) industry evolves over the next few decad s, both in terms of producing increasingly ‘cleaner’ fuels and as part of wide decarbonisation. If the rest of the economy’s demand for crude-oil-derived fuels is removed, it would seem unlikely that refineries will continue to run just to satisfy shipping’s demand for a residual fuel. Fig 4: Aggregate fuel mix for all scenarios HFO/LSHFO MDO/MGO LNG Hydrogen Biofuels 2010 2015 2020 2025 2030 2035 2040 2045 2050 High offsetting (Scenario 3) PJ of energy 2010 2015 2020 2025 2030 2035 2040 2045 2050 20k 15k 10k 5k 0 BAU PJ of energy 2010 2015 2020 2025 2030 2035 2040 2045 2050 High Bio (Scenario 2) PJ of energy 2010 2015 2020 2025 2030 2035 2040 2045 2050 High Hydrogen (Scenario 1) PJ of energy 20k 15k 10k 5k 0 20k 15k 10k 5k 0 20k 15k 10k 5k 0