Markets - 13/March/2018

The tide is turning

If the global marine transportation sector were a country, it would be ranked sixth in terms of CO2 emissions. A number of progressive leaders in the industry are starting to explore alternative ways to propel their ships, but more investment is needed.

Ships emit vast volumes of black carbon from their smokestacks, a much more powerful carbon forcer than carbon dioxide, yet their electrification is barely mentioned in the news compared with electric cars. That may be about to change.


Shipping, the industry that is largely out of sight, out of mind and outside of the international Paris climate agreement, is finally coming under pressure to change its means of propulsion.

The sector’s fuel of choice is heavy fuel oil (HFO), a cheap, highly toxic and viscous residual from crude oil refineries. When burned it emits high levels of black carbon, a substance that is 3200 times more powerful a climate forcer than carbon dioxide (CO2) per tonne and is linked to increased heart and lung disease among those who inhale it. When spilt it is disastrous to wildlife and livelihoods.

Being generally high in sulphur, HFO (which in 2017 accounted for over 80% of marine fuel, according to the International Energy Agency) and the other main shipping fuel, distillate fuel, produce significant amounts of sulphur dioxide (SO2) and particulate emissions, which are responsible for acid rain and respiratory diseases.

The dominance of these fuels, however, may be about to change

Within the bureaucratic machinery of the International Maritime Organisation (IMO), the United Nation’s shipping agency, there are four different but closely related initiatives that impact shipping’s fuel options.

First, a cap on the sulphur level of permitted fuels will come into effect in 2020. Second, technical discussions have started about abatement measures for emissions of black carbon. Third, an initial greenhouse gas reduction strategy that envisages for the first time a reduction in total greenhouse gas emissions from international shipping was adopted by the IMO in April. This would mean a reduction in carbon emissions from shipping to no more than half of 2008 levels by 2050. Last, at the same meeting, an IMO sub-committee was directed to develop a ban on heavy fuel oil use and carriage for use by ships in the Arctic.



Environmental protection

The initial proposal to reduce the risks posed to the Arctic by implementing a HFO shipping use ban was co-sponsored by Finland, Germany, Iceland, the Netherlands, New Zealand, Norway, Sweden and the US. At the April IMO meeting it was supported by 14 other countries, including Denmark but not by Russia, Canada, China, the Bahamas and the Marshall Islands. Given these differing opinions, the ban is being developed “on the basis of an assessment of the impacts” and “on an appropriate timescale.”

“The motivation is of course environmental protection—oil spills in the Arctic Ocean would be a huge risk to the sensitive Arctic environment. The properties of HFO mean the environmental consequences could be particularly serious and long-term,” says Laura Sarlin of Finland’s Ministry of Transport and Communications.

“A single HFO spill could have devastating and lasting effects on fragile Arctic marine and coastal environments. In addition, Arctic shipping is projected to continue to rise, thus increasing the risk of a spill,” said the eight co-sponsors in their formal proposal, arguing for the ban on HFO to be implemented “as soon as possible” and that any delay in its implementation “should be short-lived.”

The decision by IMO members in April to move towards a ban on HFO use by shipping in the Arctic was applauded by the Clean Arctic Alliance, an international coalition of NGOs committed to phasing out its use as marine fuel in the region. “A ban is the simplest and most effective way to mitigate the risks of the world’s dirtiest fuel to the Arctic,” said the Alliance’s Sian Prior, speaking after the meeting. “Now we’re calling on the IMO to ensure that this ban will be in place by 2021.”

A ban on HFO in the Arctic is supported by over 70 companies, politicians and explorers, including Ikea, the British explorer Ranulph Fiennes and Members of the European Parliament. They have all signed up to the Arctic Commitment, a joint initiative of the Clean Arctic Alliance and Norwegian cruise ship operator Hurtigruten, which calls for a phase-out of HFO from Arctic shipping.

A switch from HFO to higher quality fuels in the Arctic would reduce black carbon emissions by 33%, CO2 emissions by 55%, SO2 emissions by 95% and sulphate (SO4) particulate matter by 93%, says Prior.

The mandatory global cap on marine fuel sulphur content, to be implemented in 2020, is expected to expand the range of fuels in use globally, says the Arctic HFO ban’s original co-sponsors. “Therefore, by 2021 it is expected that marine distillate fuels will be increasingly available and that many ships will have switched to using them.”


A ban on HFO use by ships will reduce black carbon emissions in the arctic

Greenhouse gases

While a switch to low-sulphur distillate marine fuels will radically reduce black carbon and sulphurous emissions, it will not tackle global shipping’s substantial greenhouse gas emissions. And for many experts the IMO’s recently agreed 2050 emissions reduction deadline is too distant. Indeed, the non-profit Clean Shipping Coalition estimates that emissions would need to be cut by 70-100%, rather than the proposed 50%, by 2050 to align shipping with the goals of the Paris agreement.

“If it were a country, the global marine transportation sector would have ranked sixth in terms of CO2 emissions in 2015, just below Germany and well above Korea,” according to the International Council of Clean Transportation. In a study released in October 2017 into the trends in global shipping for the years 2013-2015, the council found that emissions increased over this period, with efficiency improvements more than offset by increases in activity.

The shipping industry has just 12 years of its fair share of carbon emissions left at current rates if humanity is to prevent the temperature rising beyond the critical 1.5ºC threshold, says Faig Abbasov of the Brussels-based NGO Transport and Environment. It assigned shipping a portion of the remaining global carbon budget according to the 1.5ºC scenario developed by the Intergovernmental Plan on Climate Change and using current emissions projections for the sector. “We argue that shipping should be given no more than 2.3% of the remaining budget,” says Abbasov.

Gavin Allwright of the International Windship Association, which promotes the use of wind propulsion in commercial shipping, says the shipping industry is probably at least five years behind other sectors in greenhouse gas reduction. His association was one of the organisers of Ambition 1.5ºC, a joint effort in November 2017 to drive the sector’s decarbonisation agenda. Over 150 industry representatives including Kjartan Ross of Green Ship of the Future, a public private partnership from across the maritime industry, and Maria Bruun, skipper of trade and employer organisation Danish Shipping, gathered at the most recent conference of the Parties to the UN climate convention meeting, held in Bonn. Describing themselves as “shipping’s most ambitious and commercially-savvy leaders” their aim was to map out a draft action plan of how shipping can contribute its fair share of greenhouse gas reductions and decarbonise enough to help meet the target of limiting global temperatures to 1.5ºC.

“We have an initial [IMO] greenhouse gas strategy that goes for at least 50% reductions in CO2 by 2050 but measures to implement that won’t be in place until 2023 at the earliest as things stand today,” says Allwright. “The need for a high ambition approach was one of the reasons we worked on this shipping Ambition 1.5ºC event, as this will be too little too late. We need a much greater sense of urgency in the industry.”


Maritime renewables

The consensus among the shipping experts gathered in Bonn was that the industry already has the technology toolbox required for decarbonisation. Options include fuel cells, battery powered ships, hybrid ships and wind propulsion technologies. The shipping sector with the most breakthroughs in sustainable technology and new fuel use is the cruise and ferry sector. “Passengers are saying that when I am sitting in my deck chair I’d like to get up without being covered in soot,” says Allwright.

The Ampere is the world’s first all-electric ferry launched in Norway in 2015. As of February 2018 it has reduced CO2 emissions by 95% and operating costs by 80%, showing that environmental measures can be good for the industry’s bottom line, too. The Norwegian parliament has decided that all tenders new tenders for ferries must stipulate zero-emission and low-emission technology, says Lars Christian Espenes of the Norwegian Maritime Authority.

“Many new electric and hybrid ferries will be built and put into service in the next few years,” he adds. The first hydrogen fuelled Norwegian ferry will be in service by 2021. “We expect more to come,” says Espenes. A joint Norwegian government and industry green coastal shipping programme aims to create the world’s most effective and environmentally-friendly fleet of coastal vessels, he says.

Other examples of the ferry and cruise sector leading the way are the hybrid ships being built by progressive expedition tour operator Hurtigruten. “They are based on distillate fuels now, but will be able to operate on batteries within the lifetime of the ship,” says the Clean Arctic Alliance’s Prior.

In Finland, there are many individual showcases of emissions reduction. “For instance, an electric ferry operating in the Turku archipelago, a Finnish company specialising in rotor sails and a big LNG-fuelled passenger ship that can use biogas as fuel that is produced from the food waste on board,” says the transport ministry’s Sarlin.


Barriers to action

Despite these existing pioneering vessels and those already under construction in shipyards, industry leaders gathering in Bonn agreed that building more demonstrator vessels for the trialling of new technologies is a key baseline requirement of any decarbonisation action plan. “We simply don’t have enough demonstrator vessels,” says Allwright. “If you have three points of reference on any technology, three applications that are being demonstrated commercially, that breaks through into commercial reality.” In the case of wind technology, most, if not all, wind-assisted and primary wind technologies have been tested and certified by certification societies and are now available to shipping companies. “There are a handful of wind-assisted vessels out there operating at the moment but it’s not enough,” says Allwright.

Another barrier to the commercial uptake of wind technologies is the perception that wind or wind-assisted propulsion is a step backwards. “The majority of it now is very high tech. It’s all automated. We are not going to have hundreds of crew members up in the rigging,” says Allwright. “There is auto-furling for soft sail, there are hard sails, there are rotors, there are kites.”

He says the final barrier to uptake of these technologies is the current rate of return on investment. Retrofitting with a wind-assisted technology will reduce fuel bills by up to 30% and a new-build ship that is optimised for wind can reduce fuel costs by 50%. “Because the price for heavy fuel oil is so low at present, the return on investments is around four and a half to five years and the shipping companies don’t want to deal with anything more than three years,” says Allwright. Over the past six months the price of a tonne of heavy fuel oil in Rotterdam has averaged around $350.

“If the figure for a tonne of fuel were around $600 then we could have an economic discussion without a boardroom of directors laughing,” he says. “At that point you start to come into the three and a half years return on investment.” Since September the price per tonne of low-sulphur fuel in Rotterdam has been on an upward trend and is currently around $580. “Now that’s before the world-wide sulphur cap is coming on and that’s going to put strain on the refineries,” says Allwright.


Testing, testing

Regardless of fuel prices, by early next year there will be at least five examples of Flettner rotor vessels in operation. Flettner rotors work by using electricity to spin cylinders that suck the ship forward using what is called the Magnus effect. “Maersk shipping, the biggest shipping company in the world, is going to be testing two next year and Viking shipping line is going to be retrofitting this year onto one of their ferries,” says Allwright.

In Norway, plans are on course for an unmanned electric container ship, Yara Birkeland, to start service in 2019. Initially a detachable bridge with equipment for manoeuvring and navigation will be included. In 2020 it should be fully autonomous and will sail within 12 nautical miles of the coast between three ports in southern Norway. In Japan, Eco Marine Power, a marine renewable technology company, is working on the planning and pre-engineering for sea trials of its integrated rigid sail and solar power system in cooperation with strategic partners and ship owner Hisafuku Kisen KK. “This includes studying the routes and operational profile of several ships to determine which ship will be most suitable for the sea trials phase,” says Greg Atkinson of Eco Marine Power.

As a start up venture in marine renewable energy technology it is hard to attract investors, he says. “I would like to see fund managers and pension funds being more active in the shipping green tech sector especially for smaller companies with innovative technologies,” he says. “Also banks and funds that provide loans for new ship building projects should also start to consider sustainability as part of their lending requirements.”

In February, Dutch bank ING and the European Investment Bank (EIB) agreed to support green investments for the European shipping market for a total value of €300 million. The facility can be used for projects with a green innovation element covering the construction of new vessels or retrofitting of existing vessels.

Three years ago many marine renewable energy technologies were mostly on engineers’ design blocks. Now they are slowly becoming a reality. It seems the tide is finally turning on the shipping industry’s means of propulsion.


Writer: Iva Pocock


This article was updated on April 18, 2018 to include the agreement by the International Maritime Organisation on April 13, 2018 to reduce greenhouse gas emissions from shipping


This article is part of the Nordic Clean Energy Series, published by FORESIGHT Climate & Energy to support Nordic Clean Energy Week. A week where energy leaders from around the globe gather in Copenhagen and Malmö to discuss the policies, business and technological solutions and challenges involved in tackling climate change. 
Learn more about the week – Nordic Clean Energy Week
Take a look at FORESIGHT’s Nordic Clean Energy Special Edition published in May 2018.  

3 responses to “The tide is turning”

  1. […] NGOs cannot disclose the contents of these papers, on March 13th, Foresight Climate and Energy Business reported that one paper, co-sponsored by Finland, Germany, Iceland, Netherlands, New Zealand, […]

  2. […] March 13th, Foresight Climate and Energy Business reported that one paper, co-sponsored by Finland, Germany, Iceland, Netherlands, New Zealand, […]

  3. […] March 13th, Foresight Climate and Energy Businessreported that one paper, co-sponsored by Finland, Germany, Iceland, Netherlands, New Zealand, […]

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