The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

E-fuels are not yet widely available but have the potential to scale up this decade and meet the shipping sector's needs

In early March, the UN’s Intergovernmental Panel on Climate Change (IPCC) issued a fresh set of warnings that climate change damages will worsen rapidly unless we speed up cutting emissions. Like all other sectors, international shipping is facing urgent demands to reduce its carbon impact, which amounts to 3% of total global emissions—similar to Germany’s total share. But unlike other sectors, shipping has been making record profits on the Covid-19 crisis, making this is an unprecedented opportunity to invest in a sustainable future. Shipping’s incumbent fuel is uniquely polluting, and damaging to human health and marine life when spilt. Plus, if the European Union needed any further incentive to clean up shipping, Russia is by far the biggest supplier of fuel oil, accounting for around 40% of imports to Europe. But shipping faces difficult choices: which propulsion technology to choose or fuel to invest in? These decisions now will determine the future of many shipping businesses as well as how much negative impact growing global trade flows have on our climate. With several options on the table, it is critical that the industry does not get distracted with short-sighted solutions and instead invests now in future fuels that can scale to create a fully zero-carbon global trade system, within the limited time window climate science says we have.

FALSE ALTERNATIVES A particularly dangerous, false alternative is Fossil Liquified Natural Gas (LNG) which has been embraced by some shipping lines as the “only available alternative” to reduce shipping’s environmental impact. But the reality is that LNG is a fossil fuel and more investments into it will not bring us closer to climate neutrality. Burning LNG onboard vessels leads to significant leakage of methane, a gas with over 80 times more climate-warming than carbon dioxide. The shipping industry is not the only one at risk of getting LNG wrong. Last month Transport & Environment warned that the EU’s draft law for marine fuels, currently in discussion, could drive up the share of fossil LNG from 6% today to a quarter of European shipping by 2030. This would undermine the EU’s own goal of reaching zero emissions by 2050, undermine the EU’s specific pledge at COP26 to reduce methane emissions by 30% by 2030, and it would heat the planet faster by putting more methane into the atmosphere.

STRONG LEGISLATION The European Parliament expected to present its first set of amendments to the draft law by the end of March 2022. This is an opportunity for the Parliamentarian holding the pen, Swedish MEP Jörgen Warborn, to put the misguided proposal right. Ending shipping’s huge climate impact requires that lawmakers stop listening to companies like Total and Shell pushing “alternative” but still fossil fuels, and instead take a science-based approach towards truly sustainable and scalable fuels. We already have solid definitions of minimum sustainability and greenhouse gas saving criteria defined under EU legislation. Renewable electricity, biofuels or biogas produced from waste, and e-fuels produced from renewable electricity are sustainable fuels.

SCALABLE FUELS Scalable means fuel can be produced and deployed at a scale sufficient to meet the sector’s needs. This is important because shipping is a huge international sector, currently consuming around 5% of global oil demand—more than India. There are many sustainable fuels, but not all of them are scalable for shipping. Genuinely sustainable advanced biofuels cannot be scaled up to even a fraction of shipping sector demand before they start becoming unsustainable, such as encroaching on rival land uses such as food production and forests. Fuels matching both of these criteria are e-fuels, which refers to fuels produced from renewable electricity. They are not yet widely available but have the potential to scale up in this decade and ultimately meet shipping's needs, provided that renewable energy capacity increases. E-hydrogen and e-ammonia are especially promising for short- and long-distance shipping respectively. As they do not contain carbon, they have significant sustainability but also cost advantage among other possible e-fuel options. Other types of e-fuels like e-methanol, e-diesel or e-LNG, which are typically produced from renewable hydrogen and carbon, can also be considered sustainable but only if sourced by direct air capture technology. Their advantage is that they can be used together with existing or new propulsion technology commercially available, making them very attractive today for shipowners. However, the sustainability of these ships is not to be taken for granted: with dual-fuel technology, a methanol ship could also run on diesel, fossil methanol or unsustainable amounts of biomethanol.

QUOTAS REQUIRED We are urging the European Parliament to introduce a 6% quota by 2030 in the EU draft law to increase the share of renewable e-fuels in this decade and put EU shipping on track to zero-emission by 2050. Many such technologies already exist—green hydrogen for offshore vessels, passenger shuttles and ferries—with more to come. The time is now for the shipping industry to invest in renewable e-fuels, especially considering their vast profits as freight rates surged ten-fold last year. This should go hand in hand with applying concrete and climate-friendly solutions to reduce fossil fuel consumption in the short term and speed up the uptake of green fuels in the long term. Firstly, slow down. A mere 10% reduction in shipping speed reduces shipping emissions by a fifth. Secondly, harvest the power of wind. By installing smart wind propulsion technologies, ships can cut emissions by up to 20% already today, without any of the regulatory and social licence risks of methane-leaking LNG. Innovative companies, many of them based in Europe, are working on wind ship concepts to deliver further reductions. Finally, connect ships to shore-side electricity for their energy needs at berth. This simple solution eliminates both air pollution and greenhouse gas emissions in ports. Some ports have already committed to provide shore-side electricity connection points for containerships and cruises by 2028. This again needs to be pushed by policies so that all types of ships can plug in at berth within the next ten years. Although the future of clean shipping is not set yet, it is becoming clear that e-fuels produced from green hydrogen have an enormous potential. They are both sustainable and scalable, and their uptake should be backed by strong EU policy incentives that truly phase out fossil fuels. The ball is now with the European Parliament and EU governments to get shipping on track towards a zero-emissions future. •

Do you have a thoughtful response to the opinion expressed here? Do you have an opinion regarding an aspect of the global energy transition you would like to share with other FORESIGHT readers? If so, please send a short pitch of 200 words and a sentence explaining why you are the right person to deliver this opinion to opinion@foresightdk.com.