Alternative Fuels

ICCT on IMO’s newly revised GHG strategy: What it means for shipping and Paris Agreement

Success in decarbonizing shipping will likely require international rules complemented by more ambitious regional, national, and sub-national rules, says Bryan Comer of ICCT.

Published

3 months ago

July 11, 2023

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International Council on Clean Transportation (ICCT) published a post on Friday (7 July) on the International Maritime Organization (IMO) adopting the newly revised GHG reduction strategy for global shipping at MPEC 80 and its impact to the industry and the Paris Agreement:

By: Bryan Comer, Ph.D. and Francielle Carvalho, Ph.D.

In the first scheduled revision of the International Maritime Organization’s (IMO’s) greenhouse gas (GHG) strategy, member states just agreed to (1) reach net-zero GHG emissions by or around 2050 and (2) “indicative checkpoints” that call for reducing total GHG emissions by 20% and striving for 30% by 2030 and 70% and striving for 80% by 2040, both relative to 2008. This is a big improvement on the IMO’s initial GHG strategy, set in 2018, which aimed to cut GHG emissions by only 50% by 2050 and contained no absolute emissions reduction targets for the intervening years.

The initial strategy wasn’t compatible with the Paris Agreement’s aim to limit global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. By our new estimates of the revised strategy, international shipping will exceed its current share of the world’s 1.5°C carbon budget by approximately 2032 but will not exceed the well below 2°C carbon budget (“well below” interpreted as 1.7°C) if it follows the emissions reduction pathway implied by this revised strategy.

The revised strategy’s “zero date” of by or around 2050 and its focus on life-cycle emissions are both key improvements. The latter are measured in terms of CO2e100, which refers to carbon dioxide equivalent emissions based on the 100-year global warming potentials of carbon dioxide, methane, and nitrous oxide. This blog post explained why it’s important that the IMO’s strategy include a year by which life-cycle, well-to-wake (WTW) GHG emissions would fall to zero and that it be not later than 2050.

In that same blog post, we estimated that the sector could only emit 10 gigatonnes (Gt) of cumulative tank-to-wake (TTW) CO2 from 2020 onward to align with 1.5°C. To keep well below 2°C (also interpreted as 1.7°C), the budget increased to 17 Gt TTW CO2. Because the IMO’s revised GHG strategy focuses on life-cycle emissions, let’s explore how much WTW CO2e100 is now available in the budget.

Based on the emission factors in this study and the international shipping fuel mix from the Fourth IMO GHG Study, we estimate that the ratio of WTW CO2e100 to TTW CO2 for international shipping is currently 1.21 to 1. This implies that the sector’s carbon budget is approximately 12 Gt WTW CO2e100 for 1.5°C and 21 Gt for well below 2°C. These are associated with a 67% probability of limiting global temperature rise to these levels. Using the same ratio and emissions data and projections from the Fourth IMO GHG Study, we estimate that international shipping currently emits about 1.1 Gt of WTW CO2e100 annually and that’s growing by about 1.3% on average each year. That places the sector on a track to exceed the 1.5°C budget by 2030 and the well below 2°C budget by 2037. With the emissions reductions expected under the initial GHG strategy, the 1.5°C budget is not exceeded until 1 year later, by 2031, and the 2°C budget is expended by 2041.

How do things change with the revised strategy? The first chart below compares a straight-line emissions trajectory that satisfies the emissions reduction targets in the revised (2023) GHG strategy with the pathway implied by the initial GHG strategy. The second chart shows the cumulative WTW CO2e100 emissions between 2020 and 2050 compared with the 1.5°C and well below 2°C carbon budgets. As you can see, the revised strategy is not compatible with 1.5°C but is compatible with well below 2°C. Had member states agreed to achieve zero emissions by 2040, the strategy would have been aligned with 1.5°C. Under the revised (2023) strategy, we’re set to exceed the 1.5°C budget by approximately 2032 under either the 20% or 30% (striving) target; however, if shipping can get to zero WTW CO2e emissions by 2050 along this pathway, it will not exceed its well below 2°C budget. Following the “striving” trajectory results in 17.1 Gt of cumulative WTW CO2e emissions, less than the 19.2 Gt under the less ambitious 2023 targets, and that improves the probability of keeping well below 2°C.

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MEPC 80 fig2 913x576 1

While this revised strategy is not legally binding, the measures used to implement it can be. After the initial GHG strategy, the IMO agreed on “short-term measures” to regulate GHG emissions from ships. Two of these entered into force in 2023: the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII). These measures are legally binding because they are incorporated into an international treaty, the International Convention for the Prevention of Pollution from Ships (MARPOL, for short). Unfortunately, we don’t expect their current iterations to meaningfully drive down emissions.

The EEXI is not stringent enough—it’s expected to avoid about 1% of future emissions by 2030—and the CII merely grades ships from A to E. Luckily, though, both measures are set to be revised by no later than January 1, 2026. Changing these to be more effective can include regulating CO2e emissions, not just CO2, covering WTW emissions under CII, and increasing their required emissions reductions.

For the CII, there’s more that can be done. Each ship’s CII score could be published so the market can reward or punish ships that overperform or underperform. Plus, there could be consequences for ships that consistently score D or E. Right now, ships that receive a D for three consecutive years or an E in any year are required to draft and implement a plan of corrective actions. However, there are no requirements for what must be included in these plans, and there is never a time when a ship’s environmental certificates are revoked, no matter how many times the ship fails.

Beyond the short-term measures there are also mid-term measures being developed at the IMO that could enter into force as soon as 2027. The “basket of measures,” as IMO delegates are calling it, will include a technical element and an economic element. The technical element is expected to be a GHG fuel standard (GFS) that will gradually reduce the allowable WTW CO2e intensity of marine fuels. The economic element is less-well-defined; there are several things being considered, including a GHG fuel levy, a feebate program, and a cap-and-trade scheme. With regard to the GFS, we presented work based on ICCT’s Polaris energy use and emissions projection model at an IMO expert workshop and it showed that aligning with 1.5°C would require a 38% reduction in the WTW GHG intensity of marine fuels by 2030, 97% by 2040, and 100% by 2050.

Finally, countries and regions can also set their own requirements for ships that call on their ports. The European Union did this under FuelEU Maritime, which is similar to the proposed IMO GFS, and by incorporating shipping into its Emissions Trading System. Success in decarbonizing shipping will likely require international rules complemented by more ambitious regional, national, and sub-national rules. As governments develop and amend laws and regulations to enable a timely transition in the sector, the ICCT will provide technical advice and analysis to support policies that effectively reduce WTW CO2e emissions from global shipping. And we’ll be in the room when the IMO revises its GHG strategy again in 2028.

Photo credit: International Maritime Organization
Published: 11 July, 2023

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IMO: Revised GHG reduction strategy for global shipping adopted

Biofuel

Bunker Holding scales up biofuel bunker availability to over 80 ports worldwide

Group is providing different types of lower carbon products as well as blends of biofuels and conventional marine fuels and can deliver those products to numerous ports.

Published

5 hours ago

October 4, 2023

Admin

Marine fuel supplier Bunker Holding on Tuesday (3 October) said it has now secured bio bunker fuel availability in more than 80 ports around the world, catering to last mile delivery.

With the recent adoption of the FuelEU Maritime regulation, the entering into force of the IMO CII, and the inclusion of shipping in the EU ETS just around the corner, the Group said it is ready to help clients with the optimal solutions to reduce their GHG emissions.

Valerie Ahrens, Senior Director of New Fuels and Carbon Markets at Bunker Holding, said: “Bunker Holding is overcoming the challenges from the green transition simultaneously with our customers. It is affecting how we conduct business in a changing market, driven by the new IMO GHG strategy and new regulations such as IMO CII, EU ETS, and FuelEU maritime.”

“We are all in the same boat but as a leading marine fuel supplier with an extensive network and global reach, we are well positioned and equipped to help our clients. Much of our work has gone into building strong and reliable supplier relations, which are essential to ensuring we can connect reliable suppliers with the end-users of biofuel globally.”

Manja Ostertag, Head of Biofuels, who is coordinating the global efforts to develop the supply of biofuels in key regions and ports, said: “During the past months, we have been intensifying our efforts on ensuring biofuel availability at numerous ports and at a global scale. This puts the Group in a unique position as a marine fuel supplier. Providing a relevant and competitive value proposition including low-carbon fuels is a crucial part of our New Fuels strategy and key to succeed as a business, given the upcoming IMO and EU regulations.”

As part of this effort, Bunker Holding and its subsidiaries are focusing on the individual needs of its clients. As every segment and business in the marine sector is different and hence might have different needs, Bunker Holding, through its affiliates, aims to provide customised and compliant solutions. That means the Group is providing different types of lower carbon products as well as blends of biofuels and conventional fuels and can deliver those products not only to flow ports, such as ARA and Singapore, but also in numerous other ports.

During the past months, biofuels have been bunkered by the Group to different segments, reaching from cruise and ferry lines and container ships to offshore clients and even smaller businesses.

“When delivering lower carbon fuel solutions to our clients, it is crucial for us to work with reliable certified suppliers that have the same high principles on delivering product quality and sustainability as we have. Such reliable supply chains are indispensable in delivering relevant value to our clients,” says Manja Ostertag.

Bunker Holding is not only delivering lower carbon fuel solutions through its affiliates, such as Biofuels or LNG, but also prepares for the evolving offtake of alternative marine fuels, such as methanol and ammonia. In addition to that, the Group supports its clients in any topic around EU ETS, such as buying EUA’s (EU Allowances). As an advisor for the green energy transition, the Group wants to position itself as a one-stop-shop to its clients.

Photo credit: Bunker Holding
Published: 4 October, 2023

Alternative Fuels

Cepsa begins supplying bio bunker fuel at Port of Barcelona

Firm said it has undertaken the largest supply of second-generation biofuels to date at the Port of Barcelona; firm supplied biodiesel to Hapag-Lloyd-operated boxship.

Published

5 hours ago

October 4, 2023

Admin

Cepsa begins supplying bio bunker fuel at Port of Barcelona

Spain’s energy for maritime transport supplier Cepsa on Monday (2 October) said it has undertaken the largest supply of second-generation biofuels to date at the Port of Barcelona.

The operation, conducted on a 350-metre-long container vessel operated by Hapag-Lloyd in the Mediterranean, marks the energy company's inaugural venture in Barcelona and positions the Port of Barcelona as a key player in the decarbonisation of maritime transportation.

The supplied biodiesel contains a 24% sustainable component, which will prevent the emission of 2,860 tons of CO2, equivalent to planting 34,300 trees. This biofuel has been produced from used cooking oils.

Currently, the energy company can supply these sustainable fuels by barge in the Port of Barcelona and the area of the Strait of Gibraltar, and by tanker in all the ports in which it operates.

Samir Fernández, director of Marine Fuel Solutions at Cepsa, said: “Second-generation biofuels can be used in ships without the need for modifications to their engines, and they have a high potential for reducing CO2 emissions compared to conventional fossil fuels, achieving a reduction of up to 90%, which makes them an ideal immediate solution.”

“That’s why we want to make them available in all the ports in which we operate and lead their production in this decade to help our customers meet their own decarbonisation challenges.”

The company said it aspires to be the leading biofuel producer in Spain and Portugal by 2030, with a production capacity of 2.5 million tons annually, and green hydrogen, with 2 GW of electrolysis capacity.

Photo credit: Cepsa
Published: 4 October, 2023

Alternative Fuels

KPI OceanConnect hosts alternative fuels & carbon markets forum in Greece

Forum brought together marine energy experts to talk on bio bunker fuels, their regulation and adoption and their important role in helping the shipping industry comply with emissions regulations.

Published

5 hours ago

October 4, 2023

Admin

KPI OceanConnect hosts alternative fuels & carbon markets forum in Greece

Global marine energy solutions provider KPI OceanConnect on Tuesday (3 October) said it held its Alternative Fuels & EU ETS Forum for clients in Greece on 27 September, where it brought together a line-up of marine energy experts to talk about biofuels, their regulation and adoption and their important role in helping the shipping industry comply with emissions regulations.

For the evening’s seminar, speakers included KPI OceanConnect’s Jesper Sørensen, Global Head of Alternative Fuels & Carbon Markets, and from Bunker Holding, Valerie Ahrens, Senior Director of New Fuels & Carbon Markets and Manja Ostertag, Head of Biofuels. They were joined by Maria Tzigianni of Bureau Veritas’ VeriFuel.

The speakers presented on the range of biofuel products available to the marine sector and how the market for these products is shaped by the oil market, feedstock sectors such as agriculture, and regulations at national, regional and global levels. Delegates also learnt about pilot projects that had tested the performance of biofuels and measured how they would help ship owners and operators to decarbonise.

More than 100 guests attended an evening at Golf Privé in Glyfada, Athens, and were welcomed by Michalis Manassakis, Managing Director, KPI OceanConnect Athens. Attendees followed a very interesting seminar and were also able to learn more about KPI OceanConnect’s values and main activations through interactive touchscreen technology.

With EU ETS regulations coming into effect in the shipping industry on January 1st 2024, KPI OceanConnect’s guests also heard about the important role that voluntary and regulated carbon markets would have in helping the shipping industry to decarbonise.

The shipping industry, vessel owners and operators in particular, face many important questions about decarbonisation, while ongoing innovation means the alternative fuels market is constantly moving.

In its role as a provider of marine fuels, the firm said it was important that KPI OceanConnect shares its knowledge and expertise with its clients and customers.

Michalis Manassakis, said: “It was a pleasure to host a frank and open discussion for so many of our friends in the Greek market and we are grateful to have had so many join us today. As the shipping sector tackles the decarbonisation challenge, it is important that we help our partners to understand the changes that are happening in the marine energy market. And that we work to build trust in the supply of products that will drive forward the energy transition in our sector.”

Photo credit: KPI OceanConnect
Published: 4 October, 2023