The Week in Alternative Fuels
Here are some of the key developments in alternative bunker fuels from the past week.
PHOTO: Model of the LPG-powered VLGC that is convertible to ammonia fuel. Mitsubishi Heavy Industries
European Parliament members voted against an EU Emissions Trading System (EU ETS) reform that would have included an extension of the ETS to cover shipping.
International Maritime Organisation (IMO) member states missed an opportunity to speed up shipping’s decarbonisation by rejecting a $5 billion R&D fund for zero-carbon technologies and fuels, the International Chamber of Shipping (ICS) said.
With IMO approval this week, a Mediterranean Emission Control Area (MedECA) could come into force from 2025 and boost low sulphur fuel demand.
US-based Plug Power plans to build a 100-megawatt (MW) green hydrogen production plant in the Port of Antwerp-Bruges with a capacity to produce 12,500 mt/year.
Singapore-based Eastern Pacific Shipping (EPS) plans to place an order for a dual-fuel ammonia gas carrier with Hyundai Heavy Industries (HHI). The vessel, which could be a mid-, large-, or very large gas carrier is expected to be delivered in 2025.
Japan’s Mitsubishi Shipbuilding has been exploring ammonia-fuelled very large gas carriers for years and has now come up with a design for an ammonia-ready LPG tanker.
French container shipping firm CMA CGM put in an order for six 15,000 TEU capacity dual-fuel methanol-powered vessels to be inducted by 2025.
A report from P4G and the Getting to Zero Coalition suggest that South Africa can emerge as Africa’s leading zero-carbon bunkering hub due to its substantial renewable energy resource and proximity to the Atlantic and Indian Oceans.
Here are the top five stories in alternative fuels this week:
EU ETS for shipping delayed as parliament rejects proposal
The European Parliament yesterday voted against the EU Emissions Trading System (EU ETS) reform that includes an extension of the ETS to cover shipping.
The ETS proposal was surprisingly rejected with 340 MEPs votes against, and 265 votes in favour, as well as 34 abstentions.
“It is a bad day for the European Parliament,” said European People’s Party (EPP) lawmaker Pieter Liese who was the rapporteur of the ETS proposal.
He found the European Green Party and Socialsts & Democrats responsible for the rejection of the Environmental Committee’s proposal on ETS. Accepting the proposal would have allowed shipping to be included in the ETS much earlier than the Commission had initially anticipated, adds Liese.
Liese made a request for the ETS proposal to be referred back to the Environmental Committee to build consensus on the reform and possibly trigger a new vote after the summer. This request was accepted by his colleagues.
Clean transport NGO Transport & Environment (T&E) reckons that political disagreements should be kept aside to avoid any delays to rolling out ETS for shipping and road transport.
“Negotiators should come back to the table as soon as possible and maintain the ambitious measures already agreed for road and shipping,” T&E aviation director Jo Dardenne said.
Last month, the European Parliament's Environment Committee voted in favour of an extensive emissions regulations agenda that would include shipping emissions in the EU ETS.
The proposal approved by Environment Committee included ETS on all ship emissions from intra-European voyages to be included by 2024. Half of the emissions from voyages to and from EU countries would be included between 2024-2026, before being expanded to 100% from 2027.
Following an approval from the Environment Committee, the proposal needed a green light from European Parliament members. But with a majority of members voting against, the process has now been pushed back.
IMO votes against shipping decarbonisation fund
International Maritime Organisation (IMO) member states meeting virtually for shipping emission discussions this week have rejected a research and development fund that could have sped up the industry’s transition to zero-carbon technologies, says the International Chamber of Shipping (ICS).
ICS has been championing this R&D fund since it joined other shipping associations in proposing it to the IMO in 2019. An International Maritime Research and Development Board (IMRD) would be set up and funded by a $2/mt levy on bunker fuel paid by ships around the world.
They estimate that this could have generated $5 billion to finance R&D for zero-carbon technologies and fuels and boost uptake of these by lowering investment risk. The proposal also had backing from major shipping nations like Greece, Denmark, Japan and Singapore.
“By refusing to take forward the shipping industry’s proposed research and development fund, the IMO has wasted its opportunity to kick start a rapid transition to zero-carbon technologies which will be vital if we are to decarbonise completely by 2050,” ICS secretary general Guy Platten says.
He says the IMO is short-sighted in killing the R&D fund, and that some IMO members have misinterpreted the fund as a market-based measure with lacking ambition.
But it was never the intension to replace other, potentially more effective market-based measures to curb the industry’s emissions with an R&D fund on its own, Platten argues. An R&D fund would have come in addition to other proposed market-based measures such as a global carbon levy or a carbon emission trading system.
These market-based measures are more complex to sketch out, debate and agree on at the IMO level, and are likely years from being adopted and rolled out.
“If governments had shown the political will, the separate R&D fund could have been up and running next year, raising billions of dollars from industry at no cost to governments,” says Platten.
Platten says the shipping industry has shown much more willingness to go for net zero carbon emissions by 2050 than IMO member states have.
Dry bulk shipping association INTERCARGO has been a proponent of the R&D fund and urged governments to adopt it this week.
It also backs an additional global carbon levy on vessel emissions, saying that unless these measures are taken “it will be premature to revise intermediate targets for 2030 or indeed for any subsequent year beyond.”
Mediterranean inches closer to become 0.10% sulphur area after IMO approval
A Mediterranean Emission Control Area (MedECA) could come into force from 2025 after International Maritime Organisation (IMO) members approved it at this week's 78th Marine Environment Protection Committee (MEPC) meeting.
Following the initial approval, the proposal needs a final nod at the IMO's upcoming 79th MEPC meeting scheduled for December.
Regulating the waters proposed in the MedECA has backing from 22 countries including major port nations like France, Greece, Spain and Turkey.
Earlier this year, Mediterranean and EU countries lodged a formal request to the IMO to designate the sea as an ECA for sulphur oxides. Applying a 0.10% sulphur cap on emissions from vessels engaged in international shipping in the Mediterranean Sea area will achieve substantial results at a reasonable cost, the countries said in their proposal.
If it gets a green light at MEPC 79, the MedECA is expected to come into force from 1 January 2025. It will join the Baltic Sea and North Sea as ECAs in the European region. The two other 0.1% sulphur ECAs cover North America and the US Caribbean Sea.
An ECA would certainly boost demand for LSMGO, and possibly ULSFO, in the Mediterranean region.
As these fuel grades typically trade at premiums over VLSFO - the most consumed fuel in the Mediterranean today - it could potentially make scrubber economics more favourable and trigger more installations of these systems to desulphurise and continue to consume discounted bunker fuel oils.
It could also help spur uptake of low- and zero-sulphur alternative fuels such as LNG, methanol, ammonia and hydrogen.
Plug Power to build Europe's second largest green hydrogen plant in Antwerp-Bruges
Plug Power will apply its electrolyser and liquefaction technology to the plant, which is expected to be commissioned in 2025. Liquid and gaseous green hydrogen produced from the plant will cater to demand from the European market.
The company aims to begin construction late next year and expects initial production of green hydrogen to start in late 2024.
The port as an ideal location for the plant as it has transportation links to Germany, Belgium, France, the Netherlands and UK, Plug Power says. It highlights Antwerp-Bruges’ position as a maritime hub with over 289 million mt/year in throughput.
Green hydrogen is produced through electrolysis of water using renewable energy sources like wind, solar and hydropower. Electricity to power the 100 MW electrolyser can be generated from wind turbines near the plant, it says.
Plug Power claims this will be the second largest green hydrogen plants in Europe.
An upcoming 200 MW capacity plant in Rotterdam is set to become one of the world’s biggest when it is due to start production in 2024.
CMA CGM orders six methanol-powered container ships
French container shipping firm CMA CGM has put in an order for six 15,000 TEU capacity dual-fuel methanol-powered vessels to be inducted by 2025.
CMA CGM announced the new orders in its first-quarter results. When these dual-fuel container ships are powered by methanol they are likely to become the shipping giant's first vessels with zero emission potential.
A total of 16 dual-fuelled vessels, including 10 LNG and six methanol-powered vessels, is set to bring its order book to 69.
The company has invested heavily in gas and methanol-powered vessels as part of its decarbonisation strategy to reach a net zero emissions by 2050 target.
In 2017, CMA CGM unveiled a plan to invest in dual-fuel LNG vessels that can run on bioLNG, which it says can cut carbon dioxide emissions by three-quarters.
LNG by itself is widely estimated to have around 25% lower carbon dioxide emissions than conventional bunker fuels.
The container shipping firm is working to develop LNG bunkering infrastructure. Earlier this year, its 15,000 TEU container ship CMA CGM Bali performed its first ship-to-ship LNG bunkering in France’s Marseille-Fos.
CMA CGM currently operates 29 e-methane ready vessels and plans to deploy a total of 77 of them by 2026.
