Towards Sustainable Seas: Innovations in Maritime Decarbonization

By
Flavia Sales, Marketing at Finboot
April 4, 2024

Maritime decarbonization is the critical path towards limiting global temperature rise to 1.5 degrees Celsius by reducing greenhouse gas (GHG) emissions from the maritime industry, which accounts for about 3% of annual global GHG emissions, according to the International Maritime Organization’s (IMO’s).

This endeavor is essential, given the shipping industry's foundational role in the global economy and the pressing need to mitigate its environmental impact amidst predictions that maritime emissions could soar to 17% by 2050 without concerted action (international shipping enables 80-90% of global trade and comprises about 70% of global shipping energy emissions).

The exploration of alternative fuels, such as hydrogen and LNG, stands at the forefront of strategies for decarbonizing shipping, leveraging existing maritime transport infrastructure while contemplating the carbon footprint across the supply chain to ensure genuine sustainability.

As governments establish ambitious maritime emissions reduction targets, the alignment between regulatory frameworks and industry support becomes paramount. This synergy paves the way for implementing low-carbon fuels and advanced technological solutions, like carbon capture and electrification, within the maritime law and policy structures designed to spur the transition towards a greener maritime industry.

Such collaborative efforts underscore the dual focus on immediate reductions in transport-related emissions and the long-term goal of achieving a transparent and reliable decarbonization process through enhanced supply chain transparency, supported by digital innovations such as blockchain technology.

Emerging Fuels in Maritime Decarbonization

In order to reduce carbon emissions in the maritime industry, it is important to focus on exploring and using new types of fuels. These fuels can be easily incorporated into the existing infrastructure of the maritime industry. However, using these fuels comes with both advantages and challenges that need to be carefully considered and addressed.

This transition is already happening, and the report Maritime Forecast to 2050 by DNV predicts that by 2030, the shipping industry will require 30-40% of the global supply of carbon-neutral fuels. This estimate takes into account the expected demand of 17 MTOe (million metric tons of oil equivalent) per year and the current greenhouse gas (GHG) strategy set by the International Maritime Organization (IMO).

Source: Maritime Forecast to 2050, DNV

A recent survey conducted by Global Centre for Maritime Decarbonisation, the Global Maritime Forum, and the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (with analytical support provided by McKinsey), to find out how industry leaders are thinking about future fuels. Collectively, these shipping companies own and operate fleets—including container ships, tankers, dry bulkers, gas carriers, car carriers, cruise ships, tugs, and offshore vessels—comprising roughly 20 percent of the world’s total capacity.

The snapshot that emerges from respondents’ answers portrays a world with a wide range of fuels in the mix through 2050. Many respondents expect their fleets to run on multiple types of fuel well into the future. This suggests that shipping’s route to decarbonization could be complex. But companies that are currently plotting investment strategies might consider viewing this inchoate moment as an opportunity for bold decision making. Multiple fuel pathways continue to be viable, and advantages for first movers are there for the taking.

Among the survey findings:

  • More than 80% of respondents indicate that the following four developments would be most transformative: greater availability of alternative fuels, cost reductions for alternative fuels, customer willingness to pay a “green premium,” and regulatory change.
  • 80% of respondents believe that greater availability, cost reductions, customer willingness to pay a premium, and regulatory change are key to accelerating the transition to greener fuels.
  • 49% of respondents expect to adopt four or more fuel families by 2050.
  • 46% of companies have run pilot programs with low-carbon fuels and have plans for further implementation.
  • 35% of companies have taken no action regarding greener fuels.
  • Projections for fuel consumption in 2050 are split evenly among various options.
  • Respondents expect to spread their consumption across multiple fuel families.
Source: The shipping industry’s fuel choices on the path to net zero, McKinsey

The report says:

¨In the world suggested by these survey answers, the role of first movers—and of entities that can galvanize entire value chains, from fuel production to a vessel’s consumption—will be vital. Organizations that lead the way might provoke and shape others’ actions, catalyzing investments that create their own momentum and, over time, perhaps result in the inevitability of a specific fuel scenario.¨
  • Liquefied Natural Gas (LNG): While LNG emits the lowest amounts of CO2 among fossil fuels, its environmental benefit is mitigated by methane slip in certain engines. Its abundance and relative affordability make it a transitional fuel, yet its methane content, a potent greenhouse gas, raises concerns.
  • Biofuels and Synthetic Fuels: Derived from biogenic sources or synthesized through processes like the Fischer-Tropsch method, these fuels promise significantly lower lifecycle GHG emissions. Sustainable marine fuels, including bio-methanol, lignin-alcohol mixes, and bio-diesel, can achieve over 70% reductions in emissions with the right feedstock and processes. Their compatibility with existing engines and infrastructure positions them as immediate solutions for reducing emissions.
  • Hydrogen-based Fuels: Hydrogen, offering clean and scalable energy, faces hurdles in cost, availability, and safety. Ammonia, a hydrogen derivative, emerges as a carbon-free option when produced renewably, though it presents challenges in energy density and safety.

Also, another viable alternative is:

Electrification: Electrification suits shorter voyages, with ongoing advancements to overcome limitations for longer distances. According to a study on the potential for using batteries on ocean-going cargo ships led by The Maritime Battery Forum and CIMAC, currently there are 94 cargo ships with a battery system installed, with 17% being inland cargo ships, 64% coastal cargo ships, and 19% ocean-going cargo ships.

Source: Maritime Battery Forum

The transition to these fuels underscores the importance of a lifecycle approach, emphasizing supply chain transparency and chain of custody to ensure genuine sustainability. This comprehensive view addresses the critical question of sustainability by tracing the origin and production process of these fuels, from raw materials to end-use, highlighting the role of renewable energy and carbon capture in achieving a lower carbon footprint.

Regulatory Framework and Industry Support for Maritime Decarbonization

The regulatory framework and industry support play a vital role in facilitating the transition towards greener shipping practices, ensuring the successful implementation of maritime decarbonization measures.

  • The U.S. co-leads global efforts like the Mission Innovation Zero-Emission Shipping Mission and the Clydebank Declaration for Green Shipping Corridors, aiming to reduce maritime fuel emissions.
  • Federal agencies, including the Maritime Administration and the Environmental Protection Agency, support maritime decarbonization through programs like the Maritime Environmental Technical Assistance (META) and the Port Initiative.
  • The International Maritime Organization (IMO) targets a 50% GHG emission reduction by 2050, setting the stage for stringent emission limits and energy-efficient ship designs. This paper by IRENA provides details on these mandates.
  • Main barriers include regulatory uncertainty, the cost and availability of zero-carbon fuels, and the slow pace of innovation within the maritime value chain.

It is important to note that ports play a crucial role in shipping logistics, requiring access to land near manufacturing districts and/or raw materials. Decarbonizing these ports can significantly reduce CO2 emissions from shipping infrastructure. To reduce greenhouse gas emissions in the shipping sector, it is essential to improve the infrastructure and processes involved in the supply chain and logistics of shipping. Shipping lanes, which are predetermined routes for ships, are also crucial for optimizing trade routes. When planning these routes, factors such as geographical boundaries and access to international industrial regions are taken into consideration.

As we can see, the synergy between regulatory frameworks, industry initiatives, and international partnerships is instrumental in overcoming these challenges. By focusing on planning, policymaking, and facilitating research and development, stakeholders can accelerate the adoption of sustainable fuels and technologies, ensuring maritime decarbonization aligns with global climate goals.

Source: Maritime Forecast to 2050, DNV

The Life Cycle Assessment (LCA) Methodology

The concept of life cycle assessment (LCA) methodology encompasses the assessment of emissions of greenhouse gasses from the point of fuel production to its ultimate consumption by a vessel, an approach often termed as "Well-to-Wake." This methodology is bifurcated into two segments:

  • Well-to-Tank: This segment accounts for the emissions incurred during the upstream phase of the fuel's lifecycle.
  • Tank-to-Wake: This segment covers the downstream emissions that occur from the storage tank of the ship until the point of utilization.

The International Maritime Organization Convention laid down the "Guidelines on Life Cycle GHG Intensity of Marine Fuels," also known as the LCA Guidelines.The purpose of these guidelines is to delineate procedures for the precise calculation of both well-to-wake and tank-to-wake GHG emissions for all types of fuels and energy sources utilized on maritime vessels, which also includes electrical power. These guidelines are subject to ongoing evaluations and enhancements, particularly in areas such as default emission factors, sustainability benchmarks, fuel authentication, and strategies for carbon capture on ships.

The LCA Guidelines serve as a resource detailing the GHG emissions that occur during the entire lifecycle of marine fuels. The term "lifecycle" refers to the comprehensive process that starts with fuel production and continues through its distribution to its final application in maritime operations. The "GHG intensity" is indicative of the volume of greenhouse gas emissions produced for each unit of fuel utilized. The primary objective of the LCA Guidelines is to establish a uniform framework that facilitates the assessment and comparison of GHG intensity across various marine fuel types.

EU ETS – Emissions Trading System

The EU ETS (Emissions Trading System) is a key policy tool used by the European Union to control greenhouse gas emissions. It operates on the "cap and trade" principle, where a cap is set on the total amount of certain greenhouse gasses that can be emitted by covered entities. These entities are then allocated or auctioned a limited number of emission allowances, which they can trade with one another as needed, in order for the EU to meet its target of a 55% reduction in GHG emissions by 2030 relative to 1990 and net zero by 2050. The maritime industry has been brought into the EU ETS from 2024 as part of the EU's efforts to reduce emissions from this sector. Here are some key points to consider:

  1. Business Impactsome text
    • For maritime companies, this inclusion means they will need to account for their emissions and acquire the necessary allowances to cover their activities.
  2. Compliancesome text
    • Maritime companies will need to ensure compliance with the EU ETS regulations, which may involve implementing new monitoring and reporting processes to accurately measure and report their emissions.

EU ETS timeline and Requirements

The European Union Emissions Trading System (EU ETS) will be introduced over a three-year period, with the coverage of emissions increasing gradually. The timeline is as follows:

  • Phase-In Period: The EU ETS will start by covering 40% of emissions in 2024, increasing to 70% in 2025, and reaching 100% coverage in 2026.
  • Scope Expansion: Initially, the EU ETS will apply to cargo and passenger ships above 5000 gross tonnage (GT) from 2024, and it will extend to offshore ships above 5000 GT from 2027.
  • Inclusion of Additional Gasses: While initially focused on carbon dioxide emissions, the EU ETS will be broadened to encompass methane and nitrous oxide from 2026.

Potential Inclusion of Smaller Ships: General cargo ships between 400 and 5000 GT may also be required to report emissions and could be incorporated into the EU ETS at a later stage.

Source: Maritime Forecast to 2050, DNV

Shipping companies operating to or from ports in the EU or European Economic Area (EEA) will have to adhere to the following obligations:

  • EUA Holdings: They must possess an adequate number of EU Allowances (EUAs) to cover the greenhouse gas (GHG) emissions from the ships under their control and surrender these allowances to the authorities annually.
  • Emissions Monitoring and Reporting: These companies are mandated to monitor, report, and verify their GHG emissions annually under the EU Monitoring, Reporting, and Verification (MRV) regulation. The reported information is utilized to determine the allowances they are obligated to surrender.

By implementing robust digital solutions and integrating them into the supply chain, the maritime industry can effectively streamline operations and reduce greenhouse gas emissions. These digital solutions enable real-time monitoring and optimization of fuel consumption, route planning, and vessel performance, leading to enhanced operational efficiency and competitiveness. With the collective efforts of industry stakeholders, regulatory bodies, and technological innovations, the maritime sector can accelerate its journey towards decarbonization and contribute to the global effort to reduce carbon emissions.

How digitalization can Accelerate Decarbonization in the Maritime Industry

Shipping was easy, fuel costs were passed on to cargo owners. Now, the maritime industry must comply with regulations and meet expectations from stakeholders, customers, and partners. The industry needs to manage CII performance, account for carbon emissions, settle EUAs, follow LCA Guidelines, and handle the impact of the EU Emissions Trading System in the maritime supply chain.

Digitalization can significantly help the maritime industry decrease carbon emissions through innovative technologies and digital tools. Here's how:

  • Utilizing cloud computing, edge AI, blockchain, big data, sensors, IoT, satellite, and 5G can optimize onboard energy consumption, routing, and terminal operations.
  • These technologies enable real-time monitoring and data sharing for energy-efficient practices, facilitating access to emissions data for the entire merchant fleet and increasing visibility into shipping-related emissions across the supply chain.

For instance, the development of chain of custody systems – which allow the emission profile of a zero-emission fuel to be separated from the physical flow of that fuel in a transportation supply chain, can play a major role in accelerating the early phases of shipping’s decarbonisation transition, by ensuring the security, compliance, and integrity of goods during their journey to meet the needs of fuel producers, shipowners, cargo owners and charterers shipping ocean freight.

Digital Traceability Solutions for Sustainable and Traceable Operations

Transparency is crucial in order to foster sustainability in the transport sector. By embracing data-driven approaches and cutting-edge technologies like blockchain, stakeholders can ensure the tracking of the origin, production, and distribution of sustainable fuels. This heightened transparency fosters accountability, bolsters emissions reduction efforts, and aids in ensuring adherence to regulatory standards, thus significantly contributing to decarbonization initiatives. Our digital traceability solution, MARCO Track & Trace, offers four flagship features that can help in your commitment to sustainability:

  1. Automated Mass Balance and Book & Claim Chain of Custody: Streamline your record keeping for sustainability credit and bring traceability from feedstock to final product, down to batch-level granularity. 
  1. GHG Emissions: Track and trace your supply chain emissions, obtaining a final measure of a product's emission footprint that is broken down for the emissions caused by each part of the supply chain.
  2. Scheme Regulation: Simplify document creation and management. Easily configure and create sustainability declarations and other supply chain documentation based on readily available data in your traceability ecosystem.
  3. Digital Product Passports: Bring all your product and value chain data together in one place to share with clients, regulators, and consumers in the form of interactive Digital Product Passports

We are committed to using digital innovation to help the transport industry achieve sustainable and traceable operations, including data management, data sharing, and traceability; furthermore, we promote sustainable practices, circular product management, responsible manufacturing, and carbon credits.

By integrating these digital solutions, the maritime industry can accelerate its journey towards decarbonization, optimizing operations, and reducing GHG emissions while enhancing operational efficiency and competitiveness.

Conclusion

Throughout this blog on maritime decarbonization, the compatibility of emerging fuels with current infrastructure offers immediate emission reductions but requires scrutiny for sustainability. Their lifecycle emissions must be evaluated, not just their combustion outcomes. Fuels derived from plant matter, waste products, or carbon capture techniques rely on transparent supply chains and tracing of origins and production processes to ensure a lower carbon footprint than traditional fossil fuels.

It is important to remember that while the adoption of sustainable fuels is crucial, it is also essential to explore other decarbonization solutions, such as speed reduction, route optimization, digitized systems, and energy-saving technologies. Additionally, onboard carbon capture and storage and nuclear propulsion should be considered as potential long-term solutions.

In light of these considerations, the collaboration between industry stakeholders, regulatory bodies, and technological innovations is crucial for navigating the complexities of maritime decarbonization. Collective efforts in promoting sustainable fuels, digitalization, and regulatory support pave the way for a greener maritime industry. This transformation is not only an environmental imperative but also a strategic economic shift towards sustainable development in global trade. Maintaining vigilance in supply chain management and promoting transparency are essential.

Contact us to learn how we can optimize resource management and enhance transparency in maritime transport, contributing to global decarbonization.

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