Energy Transition Gains Momentum in Shipping
Shipping, a hard to abate industry, is seeing progress on its transition to cleaner fuels. The impact will be significant.
Viking Line, a ferry operator, is working hard to modernize its fleet. To lower its carbon footprint, the company has commissioned multiple new vessels capable of using new, alternative fuels like biodiesel and LNG. It recently sold off its most heavily polluting vessel as part of its commitment to this effort.
However, this ship, a roll-on roll-off (RORO) ferry named the R/S Rosella, isn't headed for the scrap heap. Even after over 40 years of service (it first began running in 1980), the vessel was sold to another European ferry operator and is looking forward to many more years of burning bunker fuel.
Shipping definitely fits the definition of a "hard to abate" sector, and part of the challenge is the exceptionally long life of the assets. A few weeks ago, I highlighted how ferries are leading the way in the electrification of the shipping industry. This is mostly possible due to their shorter, more predictable point-to-point routes, which allow for regular charging or advancements in battery-swapping technologies.
But what about the rest of the shipping industry?
When we think of the energy transition, it is mostly sybollized to the general public by renewable energy installations and electric cars. However, for most heavy industries, it looks a lot different. Although the theme of electrifying everything is certainly still an important part of it, switching to cleaner fuels is also a critical.
When I learned that little factoid about the R/S Rosella moving on to its second life in the Aegean Sea, it was just a footnote in an article about the vessels replacing it. What caught my eye was the headline about alternative shipping fuels becoming more readily available.
+Viking Line Sees Improved Supplies of Bio-LNG on the Market - Maritime Executive
Viking Line is a Finnish shipping company that operates a fleet of ferries and cruise ferries. For the last decade, the company has been investing in cleaning up its fleet by investing in vessels that can use cleaner fuels despite the limited availability of the fuels themselves at the time.
However, as the article highlights, the availability of these fuels is beginning to improve.
There is now enough biogas being produced in the market so that we can start to use this fuel together with liquefied natural gas for these two climate-smart vessels.
This example shows the challenging "chicken and egg" nature of the energy transition in shipping and other industries where asset lives span 40 years or more.
Imagine making investments in that environment. Paying significant premiums ten years ahead of the supply chain for vessels that can use fuels that don't exist yet (so they still need to be able to run on the available, dirty stuff in the meantime).
On the other side are the suppliers, the energy companies developing and producing biofuels at significant quantities and building out terminal infrastructure for customers that don't exist yet.
The example from Viking Lines shows how the gears of change have slowly begun to turn, and how significant the impact is once it happens.
Under Viking's low-carbon pricing program, passengers on the Turku route are offered the option of buying biofuel to cover their journey. This adds a manageable fee of up to €5 in addition to the fare, which ranges between €45-55. The price is based on the typical fuel usage per passenger, and effectively reduces the passenger's carbon footprint by up to 90 percent.
I'll take a 90% solution. Although it is important to note that the savings is over LNG, which is widely considered a clean(er) transition fuel (but isn’t without issues, ie methane) and will be consumed widely for decades to come.
What about when the ship reaches shore?
That's where electrification can take over. As ports upgrade their infrastructure to support the greater availability of shore power, ships are able to turn off the diesel generators they use to power the ship while at port.
Allowing cruise ships to turn off diesel engines and use clean electricity at berth is a major strategy in cutting emissions... As a result, each cruise ship that plugs in can reduce diesel emissions by 80 percent and CO2 emissions by 66 percent on average.
+Port of Seattle Expands Shore Power for Cruise Ships - Maritime Executive
And who can forget this incredible story about the consumption of an impounded Russian oligargh’s mega-yacht.
The boat needs to be constantly air-conditioned in order to keep the hardwood floors and leather interior pristine which ensures Antigua receives top dollar when — if — it ever sells. That means its diesel generators must constantly be running, burning through $2,000 in fuel every day.
Shipping represents 2-3% of global emissions, approximately the same as aviation. In an earlier article, I noted an statistic from a podcast on cleaning up the shipping industry:
in the big picture of shipping decarbonization, only 40% of gains will be made by all of these new fuel technologies - biofuels, methane, or ammonia. The majority of fuel reduction, a full 60%, will come from gains in efficiency.
I've also written about how part of the efficiency is coming from cool sails attached to cargo ships. Still, it's essential to appreciate the progress being made in that other 40%, the fuels themselves.
I agree with the sentiment of a Wired article quote below and the examples above back up the point.
“Peaking emissions is just the start. The world needs to then reduce emissions, and quickly. But the downslope will be easier than the turning point.”