The Lloyd’s Register (LR) Maritime Decarbonisation Hub has launched ‘First movers in Shipping’s Decarbonisation – a framework for getting started’, a methodology that enables a detailed comparison of different fuel transition pathways regardless of vessel type or trade route.
The framework evaluates the entire supply chain, from fuel production to usage onboard vessels, and can be applied to any fleet, revealing the implications of each transition strategy and offering insights, in support of future fleet investment decisions.
In this first study using the framework, LR experts focused on three transition pathways – methanol, ammonia, and hydrogen – and applied these to the containership feeder fleet operating regionally between Singapore, Hong Kong, and other Asian countries nearby.
Key findings from the first analysis have revealed:
Different transitions might be suitable for this specific fleet. Based on either methanol, ammonia or hydrogen as fuels, which in turn can be produced from natural gas, renewable electricity, or in some instances, sustainable biomass
Similar emissions reduction trajectories have different implications for the fuel supply infrastructure. The fleet transitions based on methanol, ammonia or hydrogen can all meet similar emissions reductions; however, this result is achieved using different infrastructure and at different implications
The sector must balance early results with long-term planning. This analysis shows a trade-off between early efforts to decarbonise the fleet, which allows for a smoother transition, versus the long-term planning approach, which attempts to find the solution with the lowest overall cost. This balance must be found while providing a growing supply of fuel through different feedstock routes without major price fluctuations
Both retrofitting and newbuild will be required to meet net zero by 2050. In all transition pathways, approximately 26 per cent (by number of ships up to 2050) of the transition is achieved through retrofitting. This means that replacing vessels near the end of their lives with newbuilds fuelled by zero-carbon fuels is no longer sufficient to meet a net zero 2050 target. Instead, younger vessels in operation today need to be retrofitted to accelerate the uptake of zero-carbon fuels
Fleet costs vary per transition pathway. Fleet total costs up to 2050 are lowest for the ammonia transition ($44.5 bn), followed by methanol ($51.5 bn) and then hydrogen ($69.4 bn). This compares to the fossil fuel baseline of $42.3 bn including carbon cost
Voyage costs dominate the fleet’s total costs. Voyage costs represent between 71-82 per cent of the cumulative fleet total costs depending on the transition. This means improving vessel efficiency and voyage optimisation becomes more and more important to reduce the cost of decarbonisation
The fleet fuel transition leads to a specific fuel supply. The production location delivering the cheapest fuel production option typically also benefits from being the location with the lowest feedstock prices, except in instances when the cost of transporting that fuel to the fleet becomes too large (e.g. for the hydrogen transition)
Co-location of fuels produced with natural gas and fuels produced with renewable electricity could deliver further cost reductions. Saudi Arabia and Australia are likely production locations because the relative lower feedstock prices. There can be key economic advantages in colocation of plants. This would de-risk investments and build long-term security over supply capability and associated costs.
Charles Haskell, programme manager, LR Maritime Decarbonisation Hub, said: “Until now, research has either focused on a specific ship and fuel or been too high level and generic to have real relevance for shipping companies. Our ‘First movers in Shipping – a framework for getting started’ can support the container fleet in Asia by helping to reduce uncertainty and risk by providing an understanding of the transition pathways open to them. This can also inform a strong business case for a potential coalition that will support their route ahead.”
“The wider shipping industry can also benefit from LR’s Maritime Decarbonisation Hub’s new report as it can form a framework for further studies that will unlock pathways for other fleets and vessel types in other regions. Risks can also be accurately evaluated, and mitigation plans can be put in place which in turn can support investment decisions today and more importantly, stimulate real action over words,” said Carlo Raucci, LR decarbonisation consultant and lead author of the framework.
The framework, in addition to the case study and its findings, were reviewed by a range of industry stakeholders.
Professor Lynn Loo, chief executive officer, Global Centre for Maritime Decarbonisation, said: “Carried out with a level of granularity that allows for meaningful comparison across different fuel type scenarios, the LR first movers study highlights the complexities and points to the trade-offs shipping should consider as it transitions to a lower/zero-carbon future. The specificities of this study can help concretise the scope and accelerate the execution of future pilots, and rally stakeholders together to more cohesively tackle the energy transition.”
Download the ‘First movers in Shipping – a framework for getting started’ report here.