In focus: Backed with government and private funding, offshore energy and shipping industries go full steam ahead towards net-zero future

The transition to a fully decarbonized energy system was always bound to be a very costly, yet vital, undertaking. Therefore, the industry will have to rely on government funding to a large extent for the foreseeable future should the transition be achieved in a timely and efficient manner. Europe and the United States have set in place a number of funding programs designed to boost and accelerate the development of a very diverse ‘clean energy sector’, which is being backed by significant initiatives from the major players coming from the more established maritime and oil and gas industries, which are becoming increasingly aware that the clean future has no other alternative.

Starting with clean fuel that has the unparalleled potential to accelerate the energy transition – green hydrogen – and the latest commitment from the European Union to further advance its uptake and development.

Namely, late in August, the European Commission has outlined terms and conditions for its upcoming pilot auction dedicated to European renewable hydrogen production under the umbrella of the EU Hydrogen Bank.

The auction, funded by the Innovation Fund, will award up to €800 million (around $870 million), to renewable hydrogen producers in the European Economic Area (EEA).

Intended to open on November 23, 2023, the pilot auction will be followed by annual auction rounds and could be expanded to clean products beyond renewable hydrogen if the level of participation in this round proves high, according to the European Commission. This awarding mechanism is expected to enable a faster rollout of innovative technologies needed for the green transition, especially in hard-to-abate sectors.

As the renewable energy technologies which are inherently clean and have the potential to contribute to the production of green hydrogen as well, the offshore wind and marine energy have been acknowledged by the United States, which has unveiled plans to financially support further research into the industries with the goal of enabling durable and environmentally responsible new deployments of these offshore renewables.

This funding opportunity will target technologies with applicability to offshore wind and marine energy deployments in all regions of US waters including the Atlantic Ocean, Pacific Ocean, Great Lakes, and the Gulf of Mexico.

Earlier in the week, the US Department of Energy’s Water Power Technologies Office (WTPO) issued a notice of intent for a $14.5 million funding opportunity to support marine energy and floating wind research at US institutions of higher education.

According to the agency, foundational research is critical to advancing novel and new technologies, especially marine energy and floating offshore wind given their potential, as the total available marine energy resource in the United States is equivalent to approximately 57% of all its power generation in 2019, while floating offshore wind has 2.8TW of potential power, which – if fully developed – would equate to more than double the current the country’s electricity consumption.

Capitalizing on the ‘black gold’ for the most part of the previous century and up until this point, the oil and gas majors have amassed the abundance of wealth – a small part of which has only recently started to be shifted in the direction of clean and renewable energy and decarbonization efforts.

The latest move comes from the Brazilian state-owned oil and gas giant Petrobras which has teamed up with several Chinese companies in a bid to bring its strategic five-year plan to life and prepare itself for a more sustainable future during the energy transition journey.

In line with this, several cooperation agreements related to the energy sector were inked with China National Offshore Oil Corporation (CNOOC), China Petrochemical Corporation (Sinopec), China Energy International Group, and Citic Construction (CITIC).

Though the first memorandum of understanding, inked with CNOOC, relates to segments of mutual interest, mostly to oil and gas exploration and production, refining, and petrochemical industry, the others are also focusing on collaboration and evaluation of opportunities in Brazil or abroad for energy transition projects, and carbon capture segments.

This includes the establishment of strategic cooperation framework agreement with China Energy International Group, which is expected to aid in identifying potential business opportunities in Brazil related to renewable energy generation and the production of sustainable hydrogen and ammonia.

In Europe, a collaborative renewable subsea power project, run by wave energy company Mocean Energy and intelligent energy management specialist Verlume, alongside oil and gas players like Baker Hughes, Serica Energy, Harbour Energy and others, has completed an initial four-month test program and secured extension for further testing in the North Sea.

A key objective of the project was to demonstrate that the system could supply power to subsea electronics modules, provided by Baker Hughes, simulating the control and communications needed for subsea well heads using 100% renewable energy.

Following the success of these tests, showing an integrated alternative to subsea umbilical cables, the test program has been extended.

Likewise, the shipping and maritime industry has been very active in curbing down the CO2 emissions from its operations by adopting alternative, cleaner fuels to sustain its essential place in the net-zero future.

The latest milestone is related to the world’s first methanol-powered boxship, which is slowly but surely making its way from South Korea to its final destination of Copenhagen where it will be christened in September.

The 2,100 TEU boxship, built by Hyundai Mipo Dockyard, arrived in the Port of Rotterdam – the final stop on the ship’s pioneering maiden voyage – where it was refueled with methanol for the fourth time, marking also the first-ever green methanol bunkering operation in Europe.

The containership has been refueled with green methanol by OCI Global, taking on OCI HyFuels green methanol for the final leg of its maiden voyage. The 1,500 km trip will provide real operational experience for Maersk seafarers handling the new engines and using methanol as fuel, as the company prepares to receive a fleet of new, large ocean-going methanol-enabled ships from 2024.

The momentum for methanol as a ‘future marine fuel’ continues to pick up pace as confirmed in the latest move by the prominent American financial institution JP Morgan, which has placed an order for two advanced dual-fuel methanol carriers with China’s Guangzhou Shipbuilding International (GSI).

Once delivered, in 2026, the methanol carriers will be employed on a time charter with France’s energy giant TotalEnergies.

The investment, valued at $50.0 million per tanker, has bolstered the increasing significance of methanol as a pivotal component in the ongoing drive for greener shipping practices.