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Insight brief summarises discussions from Global Maritime Forum Annual Summit

Findings of paper include combination of policy measures is the best way to close the competitiveness gap between fossil fuels and scalable zero emissions fuels (SZEF).

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The Global Maritime Forum on Thursday (1 December) announced a new Insight Brief prepared by several authors that summarises discussions from the Global Maritime Forum Annual Summit around the policy imperative to decarbonise shipping in line with the Paris Agreement’s 1.5 degree Celsius temperature goal, in the context of the momentum for policy action that has emerged over the past years.

The brief titled Shipping’s urgent need for Paris-aligned regulation said the Global Maritime Forum discussions echoed the now wide call from across shipping’s industry associations for IMO to adopt a high ambition GHG Strategy and associated regulation to transform shipping and ensure a level playing field and commercial viability.

The main findings of this Insight Brief are that:

  • The Revised IMO GHG Strategy should set clear 1.5-aligned interim targets, for example GHG emissions reduction targets for 2030 and 2040. Targets should be guided by IPCC science and specify the reduction rates over each decade. The IPCC science indicates GHG reductions in 2040 at least 80% below 2008 emissions. A higher value (90% or more) is likely to be necessary to acknowledge that deep absolute reductions may not be achievable by 2030.
  • A combination of policy measures is the best way to close the competitiveness gap between fossil fuels and scalable zero emissions fuels (SZEF) and phase out GHG emissions. This is because no single individual measure is likely to effectively do this on its own.
  • A combination of policy measures could at least include 1) an economic instrument, for example a carbon levy as this is the simplest to administer for industry, and it can generate revenue to support the transition, and 2) a global GHG fuel standard, as this would send a clear signal to industry for gradual and final phase-out of GHG emissions.
  • Both the Revised IMO GHG Strategy and policy measures must adopt a well-to-wake framing for targets and incentives.
  • Provisions for revenue allocation and spending should be developed to ensure an effective transition that is also just and equitable for workers, communities and countries. Provisions should include climate finance for developing countries, especially SIDS and LDCs.
  • Provisions for revenue allocation could also include a system of funding seafarer training for new fuels and other decarbonisation technologies. Other options are support for development, distribution, and buying of SZEF and development of zero emission vessels.

Following these recommendations and steps to take for the IMO, the paper suggests they are more likely to create strong demand for SZEFs, zero emission technologies and vessels, which will maximise the required investments in shipping decarbonisation including the critically important land-side investment in new scalable zero emission energy supply chains. Strong, clear regulation at the IMO is the safest way to ensure that both the fleet and fuels needed will be available in the quantities needed for a 1.5-aligned transition.

The available time to reduce GHG emissions in line with 1.5 is so compressed, that failure to agree on science-based interim targets in 2023 could mean that investments and an orderly transition would no-longer be possible.

The paper further stresses that shipping’s decarbonisation transition will have huge implications for seafarers and maritime workers across the value chain. It is critically important that the voice of seafarers is listened to in the revision of the Strategy and policy measures, and in the continuous work to review and improve regulation.

There is a need for stakeholders in the shipping industry and value chain to help amplify these requests. The damage to the industry that can result from the significant downside risk of a late, disorderly, or globally fragmented transition means that it’s in our collective interest that IMO provides clarity and ensures a level-playing field by taking the above steps. Now is the time to seize the window of opportunity and put trust in the IMO to adopt a clear and ambitious strategy with the policies the industry and its value chain needs to manage the risks and opportunities of important new investments.

Note: The full ‘Shipping’s urgent need for Paris-aligned regulation insight’ brief can be found here.

 

Photo credit: Shaah Shahidh on Unsplash
Published: 7 December, 2022

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LNG Bunkering

Singapore: Pavilion Energy supplies LNG to TFG Marine dual-fuel bunker tanker

“MT Diligence” was refuelled with 34 cubic metres of LNG bunker fuel, supplied by Pavilion Energy, marking the first LNG bunkering of TFG Marine’s bunker vessel.

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Singapore: Pavilion Energy supplies LNG to TFG Marine bunker tanker

Global marine fuel supply and procurement firm TFG Marine on Monday (20 May) announced the completion of the first liquefied natural gas (LNG) refuelling of its dual-fuel bunker tanker MT Diligence this week in Jurong Port, Singapore.

The 34 cubic metres (m3) of LNG to power the MT Diligence was supplied by the Marine division of Singapore-headquartered Pavilion Energy. 

“Deploying a vessel that can be powered by LNG as well as conventional low sulphur marine fuels helps TFG Marine to meet its licence requirement with the Maritime and Port Authority of Singapore (MPA),” TFG Marine said in a social media post.

Singapore: Pavilion Energy supplies LNG to TFG Marine dual-fuel bunker tanker

“Built and operated for TFG Marine by CBS Ventures Pte Ltd, the 5,000 dwt MT Diligence has been designed to our technical specifications, including stringent safety considerations and has joined our supply fleet this year in the major bunkering centre of Singapore.”

Manifold Times previously reported TFG Marine christening the first LNG dual-fuel bunker tanker to join its fleet.  

The newbuild vessel, MT Diligence, has joined the company's low sulphur fuel oil and biofuel supply operations in the major bunkering centre of Singapore.

Related: LNG dual-fuel bunker tanker “MT Diligence” joins TFG Marine fleet for Singapore ops

 

Photo credit: TFG Marine
Published: 21 May 2024

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Methanol

Argus Media: Low-carbon methanol costly EU bunker fuel option

Despite GHG emissions savings that low-carbon methanol provides, it cannot currently compete on price with grey methanol or conventional marine fuels.

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Ship owners are ordering new vessels equipped with methanol-burning capabilities, largely in response to tightening carbon emissions regulations in Europe. But despite the greenhouse gas (GHG) emissions savings that low-carbon methanol provides, it cannot currently compete on price with grey methanol or conventional marine fuels.

17 May 2024

Ship owners operate 33 methanol-fueled vessels today and have another 29 on order through the end of the year, according to vessel classification society DNV. All 62 vessels are oil and chemical tankers.

DNV expects a total of 281 methanol-fueled vessels by 2028, of which 165 will be container ships, 19 bulk carrier and 14 car carrier vessels. Argus Consulting expects an even bigger build-out, with more than 300 methanol-fueled vessels by 2028.

A methanol configured dual-fuel vessel has the option to burn conventional marine fuel or any type of methanol: grey or low-carbon.

Grey methanol is made from natural gas or coal. Low-carbon methanol includes biomethanol, made of sustainable biomass, and e-methanol, produced by combining green hydrogen and captured carbon dioxide.

The fuel-switching capabilities of the dual-fuel vessels provide ship owners with a natural price hedge. When methanol prices are lower than conventional bunkers the ship owner can burn methanol, and vice versa.

Methanol, with its zero-sulphur emissions, is advantageous in emission control areas (ECAs), such as the US and Canadian territorial waters. In ECAs, the marine fuel sulphur content is capped at 0.1pc, and ship owners can burn methanol instead of 0.1pc sulphur maximum marine gasoil (MGO). In the US Gulf coast, the grey methanol discount to MGO was $23/t MGO-equivalent average in the first half of May. The grey methanol discount averaged $162/t MGOe for all of 2023.

Starting this year, ship owners travelling within, in and out of European territorial waters are required to pay for 40pc of their CO2 emissions through the EU emissions trading system. Next year, ship owners will be required to pay for 70pc of their CO2 emissions. Separately, ship owners will have to reduce their vessels' lifecycle GHG intensities, starting in 2025 with a 2pc reduction and gradually increasing to 80pc by 2050, from a 2020 baseline.

The penalty for exceeding the GHG emission intensity is set by the EU at €2,400/t ($2,596/t) of very low-sulplhur fuel oil equivalent. Even though these regulations apply to EU territorial waters, they affect ship owners travelling between the US and Europe.

Despite the lack of sulphur emissions, grey methanol generates CO2. With CO2 marine fuel shipping regulations tightening, ship owners have turned their sights to low-carbon methanol.

But US Gulf coast low-carbon methanol was priced at $2,317/t MGOe in the first half of May, nearly triple the outright price of MGO at $785/t. Factoring in the cost of 70pc of CO2 emissions and the GHG intensity penalty, the US Gulf coast MGO would rise to about $857/t. At this MGO level, the US Gulf coast low-carbon methanol would be 2.7 times the price of MGO. By comparison, grey methanol with added CO2 emissions cost would be around $962/t, or 1.1 times the price of MGO.

To mitigate the high low-carbon methanol costs, some ship owners have been eyeing long-term agreements with suppliers to lock in product availabilities and cheaper prices available on the spot market.

Danish container ship owner Maersk has led the way, entering in low-carbon methanol production agreements in the US with Proman, Orsted, Carbon Sink, and SunGas Renewables. These are slated to come on line in 2025-27. Global upcoming low-carbon methanol projects are expected to produce 16mn t by 2027, according to industry trade association the Methanol Institute, up from two years ago when the institute was tracking projects with total capacity of 8mn t by 2027.

By Stefka Wechsler

 

Photo credit and source: Argus Media
Published: 21 May 2024

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Bunker Fuel

Bunker Holding, 123Carbon and BV launch carbon insetting solution

Bunker Holding has concluded its first blockchain-powered carbon insetting operation in a new partnership with 123Carbon and Bureau Veritas.

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Bunker Holding:Bunker tanker vessel supplying marine fuel to a cargo ship at anchorage

Marine fuel supplier Bunker Holding on Thursday (16 May) said it has concluded its first blockchain-powered carbon insetting operation in a new partnership with carbon insetting experts 123Carbon and Bureau Veritas.

This insetting partnership allows for the additional cost delivery of lower carbon, alternative marine fuels – such as sustainable biofuel – to be shared by carriers, freight forwarders, and cargo owners within the same value chain; allocated based on a globally accepted book and claim methodology.

“We’re excited to work with 123Carbon and Bureau Veritas, as we believe in complete transparency of how insets are created and transferred. Insetting is not new, but one concern within the maritime sector is under what circumstances alternative fuels are supplied, and who owns the emissions reductions,” said Tobias Troye, Head of Carbon Solutions at Bunker Holding.

By combining its alternative fuel supply expertise, its global access to low-carbon fuels and extensive carrier network with 123Carbon’s secure platform, Bunker Holding said it can offer carriers, freight forwarders, and cargo owners complete transparency and assurance regarding how their insets reduce maritime emissions.

“We are delighted that Bunker Holding not only uses our advanced platform for the issuance of the certificates, but has also chosen a fully branded solution to deliver the certificates in a secure environment to its customers,” said Jeroen van Heiningen, Managing Director of 123Carbon.

Working with 123Carbon’s blockchain-based insetting platform, and Bureau Veritas as third-party assurance partner to verify the fuel intervention and all related documentation, ensures that all insets are issued according to Smart Freight Centre’s Book & Claim methodology and 123Carbon’s assurance protocol.

To facilitate the intervention, Bunker Holding connected three different parties: the cargo owner, who wishes to reduce their scope 3 emissions and is willing to pay the “green premium”, the ship operator, to decarbonise its vessels through the use of biofuels, and the biofuel supplier, to deliver safe, high-quality low-carbon fuels. Due to the commitment from the cargo owner to purchase scope 3 insets, Bunker Holding was able to offer the biofuel at a more competitive cost to the ship operator, enabling the carrier to use biofuels instead of conventional fossil fuels.

“As a group, we are operationalising our decarbonisation strategy, and one key component has been to develop our alternative marine fuel supply capabilities, among others by securing fully certified biofuel availability in more than 100 ports around the world. The relative higher cost of alternative fuels may still prevent carriers to bunker it. However, carbon insetting helps bridge that gap, as it enables cost sharing and also sends an important demand signal to alternative fuel producers to scale up production,” said Valerie Ahrens, Senior Director of New Fuels and Carbon Markets at Bunker Holding.

 

Photo credit: Bunker Holding
Published: 21 May 2024

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