DNV: Oil demand in transport sector to half by 2050 with maritime transitioning to a mix of fuels

Despite oil demand in the transport sector being forecast to half by 2050, the present pace of the transition still falls severely short of the goals of the Paris Agreement, the recent Transport in Transition report from DNV shows.

Today, transport of passengers and goods accounts for about a quarter of global energy-related CO₂ emissions, a share that will grow to 30% by 2050. Therefore, opportunities to accelerate change through pilot projects and uptake of alternative energy need to be seized as soon as possible, DNV said.

Road transport leads the way in reducing reliance of fossil fuels, falling from 38 million barrels per day (bpd) today, to 19 million bpd in 2050, reducing share from 91% to 57%. Conversely, the consumption of oil within aviation will be virtually flat to 2050, with hydrocarbons set to have a 60% share in the sector in the same year.

Driven by the decarbonization push, the fuel mix in the maritime sector will also change significantly over the coming decades. By 2050, it will likely transition from being almost entirely oil-based to an energy mix comprising of 50% low- and zero-carbon fuels, 19% natural gas and 18% biomass. Electricity will obtain only a 4% share, from short sea shipping and port stays for larger vessels, DNV’s report says.

Regions such as Europe, North America, and Greater China are frontrunners in the uptake of battery electric vehicles (BEVs). In parallel, those regions are investing in hydrogen and hydrogen-based fuels as the most promising option for moving heavy goods over long distances. At the other end of the spectrum, regions including Sub-Saharan Africa and North East Eurasia remain far away from establishing the infrastructure and producing the quantities of renewable electricity required to decarbonize road transport.

Biofuels are expected to cover a fifth of maritime energy demand by 2050, while hydrogen-based fuels (such as ammonia and methanol) could represent 50% of the fuel mix by 2050, according to the report.

In the maritime subsector, the uptake of hydrogen is anticipated to start in the mid-2020s, but will take ten years to start scaling noticeably, the report said. Initially, some smaller vessels will be fuelled by pure hydrogen, but the vast majority of hydrogen use in maritime will be in the form of hydrogen derivatives. DNV’s Energy Transition Outlook estimates an uptake of 6.4 EJ/yr in 2050. Based on DNV’s Maritime Forecast 2022, the scenarios for maritime vary from negligible to 10 EJ/yr for hydrogen and hydrogen derivatives.

Given its low energy density and corresponding space demands, limited hydrogen uptake is expected in deep-sea ship segments where 2-stroke engines are a natural choice for propulsion. For the short-sea segment, however, 4-stroke engines are being developed. Hydrogen 4-stroke engines are also being projected with an estimated current technology readiness level (TRL) of 6–7. The proton-exchange membrane fuel cell (PEMFC) technology used to convert hydrogen to electricity is relatively mature with an estimated current TRL of 8, DNV said.

According to DNV’s Alternative Fuels Insight, globally there are 10 smaller ships with hydrogen equipment installed, but not used, and another 24 ships on order as of March 2023. There are currently no bunkering facilities for hydrogen available.

Based on its safety-related properties, hydrogen is considered a challenging fuel. Pure hydrogen can be stored on a ship either as a liquefied gas at very low temperature (-253°C) and a slight overpressure (typically 1–10 bar) or as a compressed gas at very-high pressure (typically 250–700 bar).

As hydrogen is the smallest of all molecules, hydrogen gas is more challenging to contain than other gases; it has a wide flammability range, ignites easily, and may self-ignite. This combination of properties may lead to increased overall risk, unless applicable safety systems and practices concerning hydrogen are implemented, DNV said.

Ammonia has attracted wide interest as a source of zero emission fuel for shipping as it is easier to store than hydrogen and the fuel itself does not contain any carbon. Engine technologies for ammonia are not yet mature, and neither 2-stroke nor 4-stroke engines using ammonia as fuel are currently commercially available.

Given the large interest in ammonia for ship fuel, engine manufacturers have for some time developed their technologies to meet this demand, and the current technology readiness level (TRL) is estimated to be 5–6.

Challenges include ammonia’s combustion properties, nitrous oxide (N2O) emissions, and potential ammonia slip. However, the main challenge is related to safety due to the toxicity of ammonia.

For the time being, steam boilers running on ammonia are an immature technology. At least one boilermaker has begun concept development and testing is planned within the next couple of years, resulting in an estimated TRL of 2, according to DNV.

In addition to the environmental benefits, having boilers able to burn ammonia could also contribute to solving issues related to operational discharges of toxic gases from the ammonia fuel installation.

Solid oxide fuel cells (SOFCs) are interesting for shipping due to their ability to use different fuels, including ammonia, and for their potentially higher energy efficiency compared with diesel engines. The current TRL is estimated to be 5–6 with a projected maturation longer than for internal combustion engines, DNV said.

There is currently no dedicated bunkering infrastructure for ammonia. However, as ammonia is a commonly traded product, there are 215 terminals for local storage in connection with ports.

On a general basis, it is expected that all ammonia terminals could be used as a reload terminal for an ammonia bunker vessel or barge, with no or limited modifications to the terminal.

“Our Transport in Transition report highlights the challenges facing the industry and where further policies and investments are urgently needed to fast-track decarbonization of the transport sector. There is a pressing need for reliable non-fossil fuels to support emission reductions, particularly in the maritime and aviation sectors. It is essential that policy makers accelerate efforts to incentivize research and development, pilot projects and commercial uptake of carbon-neutral and zero-carbon fuels across the transport sector to support mid-century net zero goals,” Remi Eriksen, Group President and CEO at DNV, said.

When it comes to the maritime industry, there is a major gap between policies that aid the emergence of a fuel production and supply infrastructure enabling transitioning the deep-sea fleet to new fuels. Technologies are available or under development and ready for deployment when a firm demand can be established through policies.

DNV pointed out that the expected strengthening of the IMO’s ambitions in 2023, followed up by ship-specific requirements and fiscal policies nationally and internationally, is crucial to establish the required demand. At present, however, the relevant policies across almost all fuels, including electric propulsion are categorized as ‘high challenge’.