The recent International Maritime Organization (IMO) deal on shipping falls short of aligning the shipping industry with the goals of the Paris Agreement but will do more to encourage the uptake of alternative fuels, according to experts.

The 2023 IMO Strategy on Reduction of GHG Emissions from Ships, adopted in early July, significantly increased ambition over the previous 2018 strategy.

The IMO agreed on ‘indicative checkpoints’ of reducing emissions by at least 20% (striving for 30%) by 2030 and at least 70% (striving for 80%) by 2040, with net zero being reached by 2050.

It also agreed that zero or near-zero greenhouse gas (GHG) emission technologies, fuels and/or energy sources to represent at least 5pc, striving for 10pc, of the energy used by international shipping by 2030.

“The new strategy sends a signal for the overall direction of the sector in the long term” Boshell, IRENA

“Overall, the new strategy… sends a signal for the overall direction of the sector in the long term, which should enable increased investments in clean technologies for shipping,” Francisco Boshell, head of innovation and end-use applications at the International Renewable Energy Agency (IRENA) told Hydrogen Economist.

In the short term, IRENA expects most emission reductions to come from energy efficiency improvements and operational adjustments such as slow steaming and powering ships in port from shoreside rather than using bunker fuels.

Drop-in fuels such as renewable diesel or biomethane, which do not require major changes in vessel or bunkering infrastructure, are also a likely to be an early measure for shipowners.

Hydrogen options

But methanol and ammonia demand are likely to be incentivised by the targets in the long term, according to IRENA, with methanol already proving a popular option.

“We have already seen increased interest and orders for ships that can use methanol as fuel,” said Boshell. “Ammonia is another option, but that may take a bit longer.”

In the first half of 2023, 42 vessels capable of being powered by methanol were ordered, according to shipping services firm Clarksons. Of the total vessels on order, 5.4% (109 vessels) will use methanol as a fuel. This compares to 39% (858 vessels) that will use LNG.

There are 122 ports with methanol storage facilities worldwide, and various ports, such as Gothenburg, have issued methanol bunkering rules or are preparing to do so.

The number of ammonia-ready ships is also on the rise, with 191 ammonia-ready now on the order book, according to Clarksons.

“Ammonia may take 3–5 years to reach commercialisation due to safety risks, but we think those can be addressed by technology development and stringent safety standards,” said Boshell.

The industry must keep in mind that any plans for green hydrogen-based fuels must be accompanied by plans to expand renewable power generation capacity, he added.

IRENA estimates that, by 2050, the sector may need around 50m t/yr of green ammonia to supply fuels for the maritime sector, which would require 1,000GW of renewable electricity capacity.

“Our analysis indicates that this renewables growth is feasible and cost-effective, but the right policies need to be in place alongside enabling measures, such as streamlined permitting, harmonised international standards and regulatory frameworks,” said Boshell.

EU laws

Developments in European regulation will also help with the uptake of ammonia and methanol.

In April 2023, the EU passed the FuelEU Maritime (FEUM) law, which sets a mandatory target for the sector to use 2% green e-fuels by 2034 and requires vessels to cut GHG emissions in the energy they use by 2% below 2020 levels by 2025, 14.5% by 2035 and 8% by 2050.

The law applies to vessels above 5,000t and includes 100% of emissions on voyages between EU ports, 100% of at-berth emissions and 50% of emissions on voyages between an EU port and one outside the EU.

Non-profit organisation Transport & Environment has modelled differing ammonia and methanol uptake scenarios for the sector under the FEU policy regime, depending on fuel price and infrastructure rollout.

Under the most ambitious scenario, the two fuels account for more than 50% of demand in the shipping sector. But other scenarios show oil-based fuels and natural gas still making up the majority of fuel demand until 2045.

“The ambition and scope of the regulation still leave huge room for improvement, and more needs to be done to put shipping on a Paris-compliant trajectory,” said the report, titled The impact of Fuel EU Maritime on EU shipping.

The impact of the IMO regulations was not modelled, although the paper notes those regulations are likely to drive even less change than the FEUM law.

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Author: Tom Young