In a report prepared by Lloyd’s Register (LR) and the University Maritime Advisory Services (UMAS) for the Sustainable Shipping Initiative (SSI), the most likely cost-effective alternatives to fossil fuels including hydrogen fuel cells, electric power, and biofuels, were evaluated using case study ships and a baseline ship.
While there is no one size fits all solution, the study picked out hydrogen, electricity, and biofuels, suggesting that these alternative fuels and technologies have the potential to match the demands of today’s shipping requirements.
The study took a scenario-based approach, simulating two different outlooks of the economic framework that may exist in 2030. Scenario 1 suggests that third generation biofuels are available worldwide and easily accessible for the shipping industry, while electricity is produced from renewable energy sources. Hydrogen is priced low (2 $/kg) and is made from fossil fuel sources.
In terms of technology, scenario 1 suggests marine fuel cells are available at any power requirement and cost around 900 $/kW with efficiency close to the lower bound of 40 per cent. Both battery technology and liquid hydrogen have made significant steps in development but as the price of electricity remains high, capital costs only reach 100 $/kW for batteries.
In scenario 2, the biofuel situation is the same as scenario 1, whereas electricity is produced from a mix of renewable and fossil resources and has a low and stable price over time at about 0.05 $/kWh. Hydrogen is very expensive and fuel cell costs reach around 1,500 $/kW as improvements are made in efficiency of heat recovery systems to achieve overall efficiency of around 75 per cent. Battery production increases, reducing the capital costs to 50 $/kW.
The scenarios were based on the availability of a renewably generated electricity or hydrogen and fuel prices of electricity, hydrogen, biofuels and HFO as well as the upstream generation methods and associated upstream emissions for each fuel.
For the study, three case study ships were used, each looking at the application of hydrogen fuel cells, electrical power, and biofuels to determine the fuel and emissions savings.
The case study ships for the purpose of the report were:
- A bulk carrier – 53,594 DWT, main engine power of 8,958 kW and design speed of 14 knots.
- A containership – 8,893 TWU, main engine power of 67,879 kW and design speed of 25 knots.
- A tanker – 109,678 DWT, main engine power of 14,008 kW and design speed of 15 knots.
A baseline ship that uses current fossil-fuelled technology, including heavy fuel oil (HFO), a marine scrubber, and equipment for the removal of nitrogen oxides (NOx) that adheres to the 2020 sulphur cap requirements, was used to compare results with the three case study ships.
For the bulk carrier vessel, none of the alternative technologies were found to be more profitable than a conventional ship running on HFO (the reference ship). The organisations undertaking the report highlight the importance of a shift in regulatory policy as an enabling factor, given that a free market implies preference to fossil fuels into the future.
Biofuels represent the closest option to economic feasibility, which in the second scenario, are shown to be $16m less profitable over the lifetime of the ship.
For the container and tanker vessels, biofuels are also the nearest competitor to the reference ship. For a fully electric ship, the costs are predicted to be between $1bn and $8.5bn more than the reference ship. Therefore, this option is deemed not to be economically viable for the operational profile of the ships with unaltered bunkering regularity.
The cost of powering electrical ships is heightened by the additional storage of batteries. However, biofuels have no associated additional capital costs for machinery or storage when compared to the reference ship, given that biofuels can be stored and combusted in machinery with identical costs of conventional HFO engines.
Carbon pricing and upstream emissions were also calculated for each vessel under each scenario. The HFO reference ship was still found to be more profitable. Carbon prices would have to be increased by a significant amount to make the baseline ship less favourable in terms of its economic running costs compared with the alternative technologies.
Upstream emissions must be considered with any potential zero emission vessel. According to the report, there is the potential for the upstream emissions to be 0 per cent of current associated emissions from the reference ship’s operational and upstream contributions. For an electric-powered vessel, upstream emissions of producing the electricity are negative. However, with hydrogen fuel cells and electric ships, upstream emissions may be close to the current levels of using HFO. Hydrogen may be produced cheaply from the reformation of fossil fuels, which has significant corresponding carbon emissions.
The overall results indicate that advanced biofuels are likely to be the most economically feasible alternative fuels for the shipping industry in the future. The ability to use them in a similar fashion today, such as through internal combustion means that additional costs are kept low and the cost of running a ship using biofuel will likely be down to the cost of the fuel itself.
However, the sustainability of biofuels is questioned as non-food derived advanced biofuels will be required if they are to replace traditional shipping fuel. Biofuels may be needed for other energy consumers and may limit their availability. Practical production may be harder than expected and prices may rise above the estimations made by the authors of this report. This could lead to other options, such as hydrogen, becoming more competitive. More research and development into the performance, energy density and cost of biofuels for them to be considered a viable alternative fuel in international shipping is required.
For hydrogen, the cost of the technology onboard appears to not be profitable. However, the authors of the report suggest that if the development of the technology is encouraged by other industries or there are policy changes then it may become a more viable propulsion method. Hydrogen could also be used to produce ammonia, which is less expensive to store on board. Hydrogen and ammonia can be used in internal combustion engines to control capital costs.
The authors state that the scope of the report was limited to just three potential fuel and technology combinations and has not explored further pathways. However, they confirm that voyage costs are the largest contributory factor to the poor competitiveness of hydrogen fuel cells and post-2030 excess voyage costs may be able to be passed on to the supply chain due to the use of renewable energy throughout other industries. This would provide a premium on a zero-emission service, decreasing the competitiveness gap and making hydrogen fuel cells economically feasible for certain operators and routes.
Towards 2030, further analysis is required on the technological maturity of these options and constant assessment of evolving regulatory policies to determine future costs.
Read the report ‘Zero Emission Vessels, what needs to be done?’