DNV: Onboard CC and nuclear propulsion can compete with other decarbonization solutions

Onboard carbon capture and nuclear propulsion, previously regarded as ambitious concepts, are not only mere contenders in the quest for cleaner shipping but formidable ones, fully capable of taking on established decarbonization solutions, according to the recent findings from DNV.

DNV has conducted two comprehensive case studies, spotlighting the potential of onboard carbon capture and nuclear propulsion.

Neither onboard carbon capture nor nuclear propulsion require a shift to energy carriers made from highly sought-after renewable or bio-based energy sources, DNV said.

The findings were released in the company’s latest edition of the Maritime Forecast 2050, and described in more detail in a webinar hosted by DNV earlier today.

Carbon Capture and Shipping’s Carbon Conundrum

In a world where shipping, responsible for a staggering 1,000 million tons of CO2 emissions annually, seeks to reduce its carbon footprint, onboard carbon capture emerges as a compelling solution. The study, conducted on vessels navigating between the Far East and Europe, highlights a critical challenge: emissions from carbon-containing fuels like fuel oil, LNG, LPG, or methanol.

The potential solutions, as identified by the study, fall into three categories:

1. Fuels Without Carbon: Exploring alternative fuels devoid of carbon content.
2. Sustainable Carbon to Produce Fuels: Utilizing sustainable carbon sources to create cleaner fuels.
3. Carbon Capture from Combustion: Capturing CO2 emissions from combustion processes.

High Demand for Sustainable Fuels

The study underlines the high demand for sustainable fuels across various industries, including aviation, grid electricity, and industrial uses. Biofuels, electrofuels, and blue fuels are all in great demand. As shipping embraces the shift toward sustainability, competition for sustainable biomass and renewable electricity intensifies.

Onboard carbon capture stands out as a viable solution to shipping’s carbon challenge, which would enable shipowners to continue using fossil fuels while capturing emissions onboard, thus refraining from the anticipated race for a share of alternative fuels and the infrastructural headaches this might cause.

The case study carried out by DNV involves a 15,000 TEU container vessel of a modern design and it has delved into several aspects of the technology including whether it is operationally realistic and its economic competitiveness with other solutions. The size of the vessel represents a common ship size trading between Western Europe and the Far East.

The technology, although requiring a considerable amount of energy, can be incorporated into vessels without significant space constraints. Capturing and storing CO2 in tanks onboard the ship, combined with the use of suitable fuels can lead to a net-zero or near-zero emissions scenario.

Cost Considerations

The study delves into the cost implications of onboard carbon capture, presenting multiple scenarios. These scenarios include low-cost options with a 15% penalty on fuel consumption and high-cost options with a 30% fuel penalty. The cost of capturing and storing CO2 on ships is estimated at various price points, ranging from $40 to $80 per ton of CO2.

These costs encompass the discharge, transportation, and storage of captured CO2 in geological storage sites.

For onboard CO2 storage, it is assumed that the ship will feature tanks with a liquefied CO2 storage capacity of 4,000 m³. By comparison, a 15,000 TEU vessel powered by LNG could hold 12,000 m³ of LNG for fuel, equivalent to the energy content of 6,700 m³ of heavy fuel oil (HFO).

Capture rate calculations reveal that without carbon capture fuel penalty and carbon-neutral fuels, the ship would emit 8,400 tonnes of CO2 per trip in either direction (east to west or west to east). Considering a high fuel penalty of 30%, the total CO2 emissions rise to 10,920 tonnes per trip.

The assumed maximum annual capture rate stands at 70%, translating to 7,644 tonnes of CO2 captured per trip. Achieving net-zero emissions entails a 30% blend-in of carbon-neutral marine gas oil (MGO), with the remaining emissions from fossil fuel offset by the negative well-to-wake emissions from the carbon-neutral fuel.

In terms of offload frequency, the 4,000 m³ CO2 storage capacity implies that the ship will need to offload CO2 twice during each trip (e.g., from east to west) to achieve a 70% capture rate. This may involve simultaneous operations, combining container loading/offloading with CO2 offloading, given that the ships used as the basis for the case study frequently make multiple port calls on each trip.

Two distinct scenarios are constructed for the ship equipped with onboard carbon capture, each varying in terms of fuel penalty and CO2 deposit costs:

• The “High CCS” scenario encompasses a high fuel penalty (30%) and high CO2 deposit cost (80 USD/t).
• The “Low CCS” scenario features a low fuel penalty (15%) and low CO2 deposit cost (40 USD/t).

“By comparing the total costs of supplied energy for the most commonly discussed carbon-neutral fuels with these two scenarios for onboard carbon capture, we see that if carbon capture ship technologies can reach low fuel penalties and a CCS industry is developed that can offer the low CO2 deposit costs used here, there can be an economic case for onboard carbon capture,” the report said.

Commenting on the regulatory impacts on the onboard CCS and well-to-wake uses of LCO2, Tore Longva, Decarbonization Director, Regulatory Affairs, DNV, said that regulations around carbon capture in conjunction with shipping regulations are not fully mature yet.

“The only regulation that includes CCS explicitly is the EU ETS, which gives credit if a shipowner hands over captured CO2 to a certified storage site. The Fuel EU Maritime has no provision on this matter yet. There is an intention in the IMO to start working on it and discuss wider implications of CO2 capture. However, currently, the CII and EEXI regulations give no credit for installing onboard carbon capture,” Longva explained.

“Onboard carbon capture, like alternative fuels, has many of the same issues: it requires additional space onboard and the development of land-based infrastructure, i.e., fuel production or receiving infrastructure for stored CO2. The regulations are not quite mature for either CCS or alternative fuels, and there are no explicit rules on how this well-to-wake aspect of emissions would be handled,” Eirik Ovrum, Principal Consultant at DNV Maritime Advirosry, lead author of Maritime Forecast 2050, said.

As for the land-based aspect of CCS, Ovrum explained that the technology has been tested substantially and that the prospects look promising with the EU ETS laying the groundwork.

“Clearly, shipping will have smaller volumes than other industries and potentially greater role in collecting captured CO2 from larger industries. But, there will be be some technical issues when considering the temperatures, pressures and purity of the different streams. therefore, there will have to be some development on the infrastructure for marine CO2. Therefore, yes, this is definitely a bottleneck, but that’s the same for all the other fuel options,” he added.

Nuclear Propulsion on the Horizon

The report also explores the potential of nuclear propulsion, with historical data suggesting its feasibility. Nuclear reactors, widely used in the naval sector, are being considered for merchant vessels. While there are challenges to overcome, including regulatory hurdles and public perception, the case study by DNV presents leasing cost scenarios for nuclear reactors, indicating their competitiveness with other decarbonization solutions.

The study shows that putting a smaller nuclear reactor on board a merchant vessel is technically feasible.

The prospect of utilizing nuclear reactor propulsion systems in the maritime industry comes with a veil of uncertainty, particularly in the realm of capital expenditure (CAPEX). Estimates suggest that the CAPEX for nuclear reactor propulsion could range from one to two times that of the entire vessel itself.

To mitigate financing challenges, cash flow issues, and risk for shipowners, discussions surrounding the leasing of nuclear reactors are actively underway. In the context of nuclear-powered ships, a leasing approach for the reactor and associated systems and services is assumed.

Due to the inherent unpredictability of reactor costs for merchant vessels, two distinct scenarios are crafted, referred to as the “High Nuclear” and “Low Nuclear” scenarios, taking into account data from literature and industry insights.

The maritime sector, however, differs significantly from land-based nuclear power plants in terms of CAPEX variations.

While cost discrepancies between land and sea reactors are expected, ship reactors are typically smaller and may entail higher specific CAPEX. Yet, they could benefit from streamlined licensing processes when part of a series of identical small modular reactors (SMRs), DNV said.

This decision-making landscape for ship reactors is influenced by regulatory approval challenges, limiting the range of available reactor sizes. Design optimization becomes essential, weighing costs and potential revenue gains, such as through the installation of larger and more costly reactors to enable higher speeds and increased revenue. It’s important to note that this case study primarily delves into cost considerations while not exploring revenue optimization aspects, according to the report.

In the early 2030s, several maritime industry actors are planning pilot projects with nuclear reactors onboard ships. However, it’s important to acknowledge that there are substantial barriers to the widespread implementation of nuclear power in the maritime sector. These barriers include issues related to developing a commercial nuclear reactor adequate for shipping, access to ports, regulatory complexities, and public perception.

To address the financing and cost-related challenges associated with nuclear reactors for merchant vessels, the case study has made an assumption regarding fixed annual leasing costs. This approach aligns with what industry actors exploring this field have indicated. The leasing cost system is modeled based on historical prices for land-based nuclear power plants, with leasing costs spanning the lifetime of the ship. An 8% interest rate is applied to the CAPEX, resulting in the formulation of two scenarios, each represented by distinct annual cost lines.

“This shows that nuclear propulsion can compete with the other proposed decarbonization solutions, especially in the Net zero regulatory regime. Both onboard carbon capture and nuclear propulsion for merchant vessels need development and maturation,” Ovrum said in today’s webinar.

Shipping will require an estimated 30-40 percent of global cross-sector carbon-neutral fuel supply in 2030 in order to achieve net-zero emissions by 2050. This transition entails embracing new technologies, fostering their development, and ensuring that global production standards align with the goal of reaching net-zero emissions by or around 2050.

To succeed in this journey, fuel producers must accelerate their efforts while securing commitments from fuel buyers, DNV believes.

Energy consumption plays a pivotal role in lowering emissions and mitigating the impact of rising energy costs. Achieving these objectives will necessitate large-scale transformations within the maritime value chain, potentially involving the creation of green corridors or signaling mechanisms.

Therefore, the 2020s are a crucial period for shaping the future of shipping, according to the maritime Forecast to 2050, with recommendations emphasizing a focus on reducing energy consumption, prioritizing fuel flexibility, and establishing long-term fuel strategies.