Trafigura Discusses How Hydrogen-Based Fuels Can Decarbonize Shipping

by | Jun 8, 2023

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Trafigura produced a white paper discussing how hydrogen-based fuels can decarbonize the shipping sector – considered complex to abate or electrify. The Swiss-based company says green ammonia and green methanol will benefit the Global South, which is rich in sunshine and wind.

The shipping sector is critical to global commerce. However, it is responsible for 3% of the CO2 emissions. The industry aims to cut those releases by 50% by 2050 compared to 2008 – not ambitious enough, says Trafigura, providing shipping and freight services. It is the world’s largest charterer of vessels, responsible for more than 5,000 voyages a year with almost 360 ships under management. 

The Global Maritime Forum maintains that hydrogen-based fuels must scale from virtually nothing today to 5% of the shipping market by 2030 — if the sector wants to align itself with the Paris Agreement. And it needs to hit 27% by 2036, which is “realistic,” says the White Paper.

“While technology and biofuels have a role to play, ultimately the only way to achieve deep decarbonization of shipping is by switching to low-emission fuels,” the White Paper said. “With the right policy settings, we see large potential for producing two of these fuels – green ammonia and green methanol – in countries with access to abundant solar energy, wind power and land.”

It adds that the International Maritime Organization (IMO) can play a big part, given its role as the de facto global shipping regulator. Setting ambitious science-based targets can accelerate the path to hydrogen-based fuels. The countries with the most potential include Argentina, Brazil, Chile, Colombia, Egypt, India, and Morocco – with ample renewable energy resources to produce green hydrogen, which goes into methanol and ammonia.

Conversely, postponing action will only make the transition more expensive. To that end, it says that using liquefied natural gas can make a small dent – but not a big enough one for the industry to reach its goals; it would cut greenhouse gases by as much as 25%.

“Delaying action will only add to the eventual cost of decarbonization. The IMO needs to decisively move forward to tackle the shipping industry’s emissions and start the journey to a sustainable and resilient future,” said Rasmus Bach Nielsen, Global Head of Fuel Decarbonisation at Trafigura and co-author of the paper.

Enter Ammonia and Methanol

There are a plethora of ways the shipping industry can replace oil-derived bunker fuels with cleaner options, says Trafigura: ammonia and methanol, to name two. 

Natural gas is already used to make hydrogen, and it is widely used in industrial processes. It can also power ships with modified internal engines. But the shipping firm noted the shortfalls, which are that it is hard to compress and has low density, making it problematic to store on board a vessel. “Therefore, we see green hydrogen, as a feedstock for the production of electrofuels rather than a direct propulsion fuel for the foreseeable future.”

Enter methanol and ammonia: Ethanol may be furthest along. Maersk has ordered at least 13 new ocean-going ships using only carbon-neutral fuels, which will arrive between 2023 and 2025. It sets out to operate the vessels on carbon-neutral e-methanol or bio-fuels. But it will be challenging because methanol production has to ramp up.

Green ammonia is an interim step for shippers – a fuel that wind and solar power can produce and that traditional engines or fuel cells can use. DNV GL predicts widespread adoption of ammonia fuel will begin in 2037 – expected to make up 25% of the maritime fuel mix by 2050. The problem: today’s vessels are not equipped to use it, and producing green ammonia to make fertilizers or chemicals is a carbon-intensive process. But Samsung Heavy Industries, Lloyd’s Register, and MAN Energy Solutions are developing an ammonia-fuel ship.

“The decarbonization of the shipping industry must happen in a global way. We cannot afford a two-tiered transition. There is significant potential to produce hydrogen-based fuels in the Global South but that won’t become a reality unless we can close the cost gap between bunker fuels and low-emission alternatives. 2023 presents a window of opportunity to make that happen. We must not waste it,” said Margaux Moore, co-author of the report and Head of Energy Transition Research and Venture Investments.

There are other steps the industry can take. While ships’ engines use heavy fuels, they also have auxiliary engines to run equipment and kitchens. At the same time, once the ships reach the dock, they must load and unload, requiring trucks and cranes that can also run on electricity. The Long Beach and Los Angeles ports, which oversee about 4,000 heavy pieces, want to hit net zero by 2030. Both are decarbonizing their equipment – the kinds of things that move containers after they have come ashore.

No doubt, the road to net zero for the shipping sector is a long and difficult one. But it is possible, and it must start now.

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