Zero-emission fuels need to make up 5% of the fuel mix by 2030

Zero-emission fuels need to make up 5 percent of the international shipping fuel mix by 2030 to enable decarbonization in line with Paris goals, the Getting to Zero Coalition said in an analysis.

To reach decarbonization by 2050, zero-emission fuels need to
represent 27 percent of total energy by 2036, and 93 percent by 2046.

This adoption degree would enable zero-emission fuels to become commercially viable, according to an S-curve-based analysis from the coalition.

An S-curve consists of three phases. It starts with a slow emergence phase, when there is rapid learning and the costs start to come down.

After this, the diffusion phase starts with rapid adoption of the new technology, with positive feedback loops between different actors raising confidence, increasing demand and investment throughout the value chain.

The curve flattens out again in the reconfiguration phase as the new technology is adopted and a new normal is established.

As explained, there are three primary subsegments of shipping that could move first and achieve this 5 percent target.

1. Container shipping is likely the first shipping sector to start to decarbonize as a few ports/routes account for a large share of volume, and the sector is closer to the end consumer. For example, 10 large deep-sea routes accounted for 7 million tons of CO2 in 2018. These 10 routes could make up 0.8 percent of the total 5 percent needed.

2. If ammonia is selected, ammonia and LPG tankers are well suited to be first movers, as storage, systems and crew are well adapted to this fuel. This is also true for ships used to transport other hydrogen-derived fuels. Ammonia transport alone accounted for approximately 0.1 percent of emissions in 2018.

Together with LPG tankers, the sum could be 2 percent of the total 5 percent needed. This is an upper bound and would require high rates of transport demand growth.

3. Niche international routes (non-container shipping) with high likelihood of having enabling conditions for first movers of zero-emission fuels – for example, Chile-US, Japan-Australia, Dubai-Singapore, Australia-Singapore, Denmark-Norway – could provide another 2 percent.

In addition, domestic shipping could account for another 2-3 percent. 32 developed nations make up approximately 50 percent of domestic shipping emissions. If they achieve 30 percent of energy from zero-emission sources, this would correspond to 15 percent of domestic shipping energy and 2-3 percent of total shipping energy.

Therefore the UN Climate Champions have set 15% of zero-emission
fuels by 2030 as the Breakthrough necessary for domestic shipping.

In terms of scalability, the coalition believes hydrogen-derived fuels have the biggest long-term potential for rapid scaling in the following decades and should be a significant part of the 2030 fuel mix. A key question is, therefore: Will it be possible to supply enough hydrogen-derived fuels for international shipping to enable up to a 5 percent penetration by 2030?

Maritime consultancy UMAS estimates that the overall energy need for shipping will be 12.9 Exajoules in 2030.

Five percent of this amounts to 0.64 Exajoules, or 15.8 million tons of heavy fuel oil equivalent. Assuming that the hydrogen-based fuel used is ammonia, to produce it in this amount would require roughly 60 gigawatt of green hydrogen electrolyzer capacity.

60 gigawatt of green hydrogen electrolyzer capacity for shipping by 2030 is achievable when considering the large-scale ambitions announced by leading economies, the coalition estimates.

To name a few:

• Australia has committed more than $500 million to back new hydrogen projects,
• Chile is aiming for 5 gigawatt of electrolysis capacity under development by 2025,
• China has a goal to support demand for 60 million tons of hydrogen by 2050 – equivalent to 510 gigawatt electrolyzer capacity,
• The EU’s 2020 Hydrogen Strategy articulates a strategic objective to install at least 40 gigawatt of renewable hydrogen electrolyzers by 2030 and support production of up to ten million tons of renewable hydrogen by the same year – equivalent to 85 gigawatt electrolyzer capacity), and
• Japan will boost the amount of power it plans to generate using hydrogen, looking to burn about 10 million tons annually by 2030 – equivalent to 85 gigawatt of hydrogen electrolyzer capacity.

In addition, the Green Hydrogen Catapult, an initiative by seven
green hydrogen industry leaders Yara, Iberdole, Orsted, Acwa Power,
CWP renewables, Snam and Envision, aims to deliver 25 gigawatt of green hydrogen electrolyzer capacity by 2025 at 2$/kg.

Their long-term goal is to align the production and use of green hydrogen with a trajectory that displaces fossil fuels at a rate consistent with achieving net zero global emissions by 2050. With a green hydrogen price of $2/kg, the price of green ammonia would be roughly double that of heavy fuel oil.

To reach the right quantity and price of green hydrogen, several other
actions are needed to boost zero-emission fuels by 2030, the coalition believes.

For example, large scale system demonstrations are needed to showcase feasibility and draw conclusions. Freight purchasers can also give important demand signals by committing to use zero emission fuels where available at a certain premium.

“The need for a rapid deployment of capital and low cost long-term investments requires institutional investors and IMO regulation in line with Paris targets focusing both on operational efficiency measures and on incentives to adopt zero-emission fuels,” the Getting to Zero Coalition said.

“In conclusion, a quantified target for zero-emission fuel adoption
by 2030 would help mobilize action from industry stakeholders.”

The coalition insists that to enable decarbonization of international shipping by 2050 (1.5C aligned), zero-emission fuels will need to account for approximately 5 percent of the fuel mix by 2030.

“Even if the target is a 50% absolute reduction by 2050, this still requires rapid growth of zero carbon fuel use in the 2030s, which requires a similarly small initial use by 2030,” the coalition concludes.

“Achieving this is feasible on all counts – with regards to fuel supply,
vessel technology, port infrastructure, safety, demand, government
commitment and finance.”