INTERNATIONAL Maritime decarbonization Internationales Verkehrswesen (73) 3 | 2021 50 Challenges for shipping companies when choosing an-alternative fuel Shipping, Alternative fuels, Bunker, Methanol The shipping industry is facing major challenges when it comes to choosing the most suitable fuel in near future. Preferred solutions for practice are analyzed. What is needed is a holistic solution for an environmentally friendly energy supply, which in the best case can make use of the existing bunker infrastructure. For truly environmentally friendly shipping, the entire supply chain of the energy supply must be considered, i.e. from production and distribution of fuel to final use. Jürgen Sorgenfrei T he shipping industry is struggling to identify a clear pathway towards decarbonization. Some discussions on the industry transition are centered around questions about fuels, safety, regulation and technologies. These are all valid topics, on which there are many unanswered questions, but addressing them in isolation will not establish a clear pathway to the future. Current situation It is clear, however, that with the foreseeable end of the consumption of classic heavy fuel oil, the question of an environmentally friendly fuel for as many types of ships as possible, i.e. from small coasters to mediumsized bulkers and tankers to mega-carriers over 400 m long, needs to be answered urgently. The fragmented industry structure complicates the articulation and development of an industry-wide strategy for zero-carbon fuels. Many initiatives are currently being reviewed. Costs remain a major issue. Currently, there is obviously no zero-carbon fuel that can offer a global distribution network at scale which is price competitive with current bunker fuels. However, it is urgently necessary to develop solutions in order not to lose even more time. Thereby the industry has to learn from the mistakes of the past; i. e. holistic solutions for the energy supply have to be found. The ship alone cannot be viewed here. This is the mistake made with LNG. It is absolutely correct that LNG offers significantly better emission values than other fuels in terms of emissions of carbon dioxide, fine dust and sulphur during an optimal combustion process. In this consideration, however, all upstream production and transport losses are neglected. LNG has to be cooled down to -164 degrees Celsius and also stored and transported at this temperature. The ships have to be equipped with completely new, highly insulated tank technology, the infrastructure in the bunker stations has to be rebuilt, and with all of this it has to be taken into account that a lot of harmful gas escapes when refueling. The so-called boilout gas resulting from natural re-gasification is around 25 times more harmful than CO 2 . In addition, it must be mentioned that the so-called methane slip is significantly more harmful to the environment when the combustion engine is not set optimally. And finally, LNG is only available in large quantities at a few bunker stations; i.e. there is a lack of widely available infrastructure. In fact, a completely new superstructure and infrastructure must be built. Taken together, the acceptance of LNG has so far been kept very low. And in practice, this has led to clear positioning: there are clear supporters of LNG, whose argu- Photo: Kurt Cotoaga / Unsplash Maritime decarbonization INTERNATIONAL Internationales Verkehrswesen (73) 3 | 2021 51 ments are mostly related to the clean combustion process, and there are clear opponents whose gaze is directed at the entire transport chain. There are therefore few neutral positions in the professional community. A disillusionment in this discussion occurred in mid-2021 due to the clear positioning of the World Bank, whose publication on April 15 clearly stated that “countries should avoid new public policy supports LNG as a bunker fuel, reconsider existing policy support, and continue to regulate methane emissions to put shipping on a Paris-aligned GHG emissions trajectory”. What is needed is a holistic solution for an environmentally friendly energy supply, which in the best case can make use of the existing bunker infrastructure. In the long run many experts envisage hydrogen as best solution. As with LNG, however, it is true here that neither large quantities are widely available, nor is there a bunker infrastructure. In addition, the technology is currently not so mature that it would be available for ships in the foreseeable future. So interim solutions are required, although the period for these interim solutions can easily take several decades. In addition, these solutions must also offer the potential for real environmental compatibility. In short, this culminates in demands for genuine green solutions. In order to achieve a relevant market share within shipping, the main consumers must be known. Figure 1 shows the largest consumers of HSFO Heavy Sulphur Fuel Oil for the last year before the Corona crisis and before the regulation known as “IMO 2020” came into force. The IMO 2020 rule limits the sulphur in the fuel oil used on board ships operating outside designated emission control areas to 0.50 % m/ m (mass by mass) - a significant reduction from the previous limit of 3.5 %. Without an investment in e.g. an exhaust gas cleaning device, the so called scrubber, the limits cannot be achieved when burning HSFO. Three types of ships are responsible for the consumption of around 75 % of the heavy fuel oil consumed worldwide: bulk carrier, container ships and tanker (see figure 1). It would therefore make most sense to concentrate on these three types of ship. In practice, however, the market with tens of thousands of ships will not be able to turn inside out in the short term. Instead of revolutionary ideas, evolutionary options must be developed. At least the results of the envisaged solutions must be applicable to bulker, tanker and container vessels after a market launch. That would then be a really “green interim solution” on the way to hydrogen. For potential investors in shipping tonnage, it is therefore clear that an alternative fuel must be found, simply because of the IMO 2020 regulation. In addition to the options that are realistically only in theory conceivable at the moment, such as wind, solar or electric propulsion, only bunker solutions remain, i.e. fuels that cannot be generated during the journey, but that have to be taken on board in a relatively short period during lay times (e. g. in ports). But even here, investors are currently facing a multitude of possible fuel alternatives (e. g. GH 2 - gaseous, compressed hydrogen, LH 2 cryogenic, liquefied hydrogen, LOHC Liquid Organic Hydrogen Carrier, NH3 ammonia, CH 4 methane, CH 3 OH methanol, etc.). At least this diversity led in the past few years again and again as a source of uncertainty and deterrence; with the result that there is still no real interim solution on large scale. Feasible interim solution Hydrogen would certainly be the best solution for a permanently safe and environmentally friendly energy supply for ships; however, this technology will not be available in the foreseeable future. Therefore, feasible solutions are required for the next few years (if not decades), which on the one hand meet the environmental requirements, but are also economically justifiable. The following catalog of requirements for an Alternative Maritime Fuel could be derived from this (see table 1). The list of ideal-typical applications is like a wish list, the fulfillment of which would result in renewable substances that could be used for almost all engines without any problems. In this case, experts speak of drop-in fuels, i.e. liquid fuels that can be used in the same way as HSFO, MDO or the like. Drop-in fuels are compatible with conventional engines and distribution systems. For this reason, they have greater potential in the long run than non-drop-in fuels that are not or only partially suited to them. With the ptl (power to liquid) technology, in- which liquid fuels such as e-diesel or e-gasoline can be produced from renewable electrical energy (for example wind or solar Prof. Dr. Jürgen Sorgenfrei, NBS Northern Business School, Institute of Northern-European Economic Research 1 22% 26% 27% % of HSFO bunker demand 2019 Tanker Container ship Bulk carrier Ro-ro/ Car Carriers Offshore LPG Ferry Dry cargo Cruise ship Other Bulker, Containerschiffe und Tanker als Hauptkonsumenten von HSFO 2019 Source: IEA, IHS, own representation Figure 1: HSFO bunker demand (2019 in percent) Source: IEA, IHS, own representation Requirements for Alternative Maritime Fuels • energy density comparable to HSFO/ MDO • 100% sustainable / environmentally friendly (IMO 2020 compliant) • easy handling • fast and easy refueling process • not subject to any political control, i.e. free of restrictions • economically reasonable price • little or no conversion or investment costs for landand ship-side infrastructure • no additional disposal costs • can be produced in sufficient quantities at relatively short notice; i.e. sustainable supply • available at many bunker stations at short notice; i.e. wide range supply • not excessively dangerous, e.g. due to low flash point • no excessively high / new requirements for safety technology, e.g. in fire fighting Table 1: Catalog of requirements for an Alternative Maritime Fuel INTERNATIONAL Maritime decarbonization Internationales Verkehrswesen (73) 3 | 2021 52 power), the goal of an ideal and sustainable green fuel would be achieved. Many research institutions are currently busy with various ptl projects. Realistically, however, it must be stated that neither really comparable fuels with regard to quality can be produced in the foreseeable future, nor will they be available in larger quantities. Also, for bio-diesel there will be no realistic alternatives for shipping in the foreseeable future. The shift from conventional fuels to sustainable fuels is being slowed by the fact that the new fuels do not yet offer the same efficiency and practicality as fossil fuels yet. The drop-in fuels mentioned in the overview are therefore are no realistic option for shipping within the next decade. In a growing world, bio-fuels in addition face the conflict that raw materials are used to generate energy instead of being made available to the food industry. Using food to produce energy is not a long-term solution (see figure-2). Gaseous fuels like hydrogen and methane are indeed easier to produce than liquid drop-in fuels. But they also have additional storage and transport requirements. Hydrogen, Ammonia and Methanol, if produced from renewable electricity, are the most promising for shipping at present. These fuels strike the most advantageous balance of favorable features relating to their lifecycle GHG emissions, broader environmental factors, scalability, economics, and technical and safety implications; i.e. they will have the best chances to meet the a.m. stated requirements for alternative maritime fuels. Furthermore, these green E-fuels offer additional flexibility as they can also be produced from natural gas combined with carbon capture storage (CCS technology)—then often referred to as “blue fuels.” These multiple production pathways can help overcome concerns that not enough renewable electricity may be available initially to produce e.g. “green” methanol. The well-known argument, which has been brought up again and again in many innovative approaches, that the infrastructure is currently not yet sufficiently available is correct, but does not solve the problem. The use of methanol as an example of a liquid non-drop-in fuel, however, shows a feasible solution. Many of the requirements set out above can be met. The adaptation of investments to the use of existing engines is economically justifiable after all that is state of the art. A solution has to be found for each ship individually; however, this solution does not require any fundamentally new technology, as is the case with LNG, for example. The first ships using methanol as fuel also show that the requirements for e. g. safety and fire protection are also being met. Missing links For truly environmentally friendly shipping, the entire supply chain of the energy supply must be considered, i.e. from production and distribution of fuel to final use. Initial tests with ammonia and methanol as potential liquid fuels have shown that a sustainable and environmentally friendly energy supply is possible along the entire supply chain. The next step must now lead from individual positive examples to widespread industrial use. For this, production / energy industry and distribution / logistics must work together and create new offers. Specifically: the fuel must be produced and offered as bunker fuel. What actually is a requirement is a sufficient production of green methanol to ensure security of supply at attractive prices. This is a challenge for the energy industry. Here, however, one can be sure that increasing demand is already being anticipated and that production capacities will be gradually adjusted. The bio-fuels for the automotive industry, such as E10, which were introduced years ago, have shown how quickly the energy industry reacts here. Growing demand will push supply in this market. What is also missing are initiatives from the bunker industry. It is known from the three large bunker ports of Fujairah, Singapore and Rotterdam, that developments in bunker markets are always monitored. However, there is a lack of proactive initiatives. Due to the fact that alternative drive technologies are only gradually becoming established, however, it is to be expected that the bunker markets will react. They have never been active players and probably will not be. However, the fact that this is a market with many providers will create the necessary demand pressure here. This means that the role of the driving investor remains with the ship owners. On the one hand, this is driven by investor pressure to invest for at least a decade. On the other hand, there are also the requirements set by the IMO as well as by many nations with regard to environmental compatibility with regard to CO 2 , PM, NOx, etc. If these requirements are not met, there is a risk of high additional costs or - in the worst case the loss of the operating license. In order to close the missing links, various research activities are currently underway, which make it easier for ship owners to get started with modern propulsion technologies. In addition to the operational and security-relevant technical issues, the economic alternatives and consequences for e. g. OPEX and CAPEX are also considered in detail. Questions arise here, for example, with regard to the suitable fuel for an investment in a certain type of ship in a certain trade area. Such projects, in which the NBS Northern Business School in Hamburg is also involved, should help to make the challenges for investors in ship tonnage more transparent, on the one hand to guarantee an attractive investment, but on the other hand to realize environmentally friendly ship operation in the sense of the IMO. ■ Jürgen Sorgenfrei, Prof. Dr. Northern Business School, Hamburg (DE) sorgenfrei@nbs.de Prof. Dr. Jürgen Sorgenfrei, NBS Northern Business School, Institute of Northern-European Economic Research 4 Example: drop-in and non-drop-in fuels drop-in fuels non-drop-in fuels no modifications to engines necessary modifications to engines and infrastructure required Conventional Fuels Alternative Fuels Fossil HSFO Hydrogen (grey) MDO / MGO LNG Diesel Sustainable Fuels Bio Bio-Diesel Hydrogen (green) Ethanol Bio-LNG E-Fuels E-gasoline Hydrogen (green) E-Diesel Methanol E-LNG Figure 2: Conventional, alternative, and sustainable fuels in the overview