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Alternative Fuels

Rolls-Royce discusses adoption of HVO, methanol alternative bunker fuels for coastal passenger transport segment

Different sectors in the marine industry – deep sea shipping, coastal passenger shipping, yachts and naval – will develop differently when using alternative and climate-friendly fuels, spokesman tells Manifold Times.

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A Rolls-Royce spokesperson for the mtu brand, a power solutions provider for power passenger ships, ferries and yachts, recently offered Singapore bunkering publication Manifold Times its perspective on the adoption of ammonia, Hydrotreated Vegetable Oil (HVO), and methanol as marine fuels for the shipping sector.

Ammonia is amongst future bunker fuels being considered, but it seems is there is no operating ammonia-fuelled marine engine yet. Why is it so?

We are watching closely where the use of alternative fuels is going. In Rolls-Royce Power Systems' markets, it does not currently look like ammonia is going to become a big thing. For operators and owners of vessels that are often used for coastal passenger transport, we see the trend moving towards HVO and methanol, which are easier to handle.

The high toxicity of ammonia is a big threat especially on board of vessels with limited space and limited escape routes. But on the other hand ammonia may offer CO2 free propulsion with a comparably low cost fuel. This makes it attractive enough to be observed.

What is Roll-Royce's forecast of the future marine fuels mix leading towards IMO 2030 and IMO 2050?

From today's perspective, the different sectors in the marine industry – deep sea shipping, coastal passenger shipping, yachts and naval - will develop differently when using alternative and climate-friendly fuels.

For large-scale shipping - container ships, for example - ammonia is emerging as an alternative fuel as well as for come cases laughing gas. However, this is not the market in which Rolls-Royce's business unit Power Systems operates with its mtu brand.

For our mtu marine engines, which often power passenger ships, ferries or yachts, the trend is moving towards two other alternative fuels that are technically easier to handle than ammonia and that enjoy greater acceptance in the passenger shipping industry:

HVO (Hydrotreated Vegetable Oil), a second-generation plant-based fuel made from waste materials e.g. from the food industry, has the potential to replace partly fossil diesel. Most mtu engines are already approved for it. HVO is already available today and will soon be available in larger volumes as demand for it increases. With HVO, a CO2 reduction of up to 90 percent can be achieved on balance. This is because during combustion, the CO2 that the plants absorbed during photosynthesis from the air is released into the atmosphere. Some yacht manufacturers already deliver their new yachts with HVO in the tanks.

Methanol can be produced in a climate-friendly way with electrical energy from renewable sources and CO2 which was captured from a sustainable source. On balance, Methanol is virtually climate-neutral. It is easy to store and handle on the ship and the necessary ship infrastructure can be realised at reasonable expense. mtu methanol engines for marine use are currently under development. The most important thing here is that sufficient green methanol is available in the foreseeable future.

In principle, it is not only technical feasibility, supply and demand that govern the market, but regulatory framework conditions such as laws and ordinances as well as government support for the use of such fuels and their production can have a decisive influence. Powertrain manufacturers such as Rolls-Royce must recognise the trends in their markets and provide appropriate technical solutions. They have comparatively little influence on the future fuel mix.

Since methanol and ammonia are acidic fuels in nature, what steps/technologies are the engine manufacturer taking to protect their power plants from these new types of fuels?

Of course for every new fuel the compatibility of materials needs to be checked. Depending on the fuel specification components containing fuel like fuel tanks and fuel lines need to be adapted for its fuel. For methanol this is a solvable task, as there is experience in racing and other types of engines. Methanol compatibility with stainless steel is good, but of course coatings are also reasonable options. Depending on the use, other materials and manufacturing processes are used, for example other coatings, seals or lubricants.

More or less the same applies to ammonia. Ammonia is highly toxic, but it is used since decades, therefore there is experience with materials.

 

Photo credit: Rolls-Royce
Published: 31 July, 2023

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LNG Bunkering

Titan completes first STS LNG bunkering operation in Cuxhaven

Port of Cuxhaven in Germany had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth, says Titan.

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Titan completes first STS LNG bunkering operation in Cuxhaven

LNG bunker fuel supplier Titan on Thursday (11 July) said it completed the first-ever LNG bunkering operation by ship in the port of Cuxhaven.

Titan’s bunker vessel Optimus successfully delivered LNG to dredger Vox Ariane operated by its long-term client Van Oord. 

“Our ship-to-ship bunkering in Cuxhaven represents a pioneering step in the region's LNG infrastructure development, as the port had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth,” it said in a social media post. 

“LNG infrastructure development is part of a broader trend, with more ports across Germany adopting LNG operations to support shipping’s clean fuels transition.”

Titan added the improved LNG bunkering capabilities in Cuxhaven, a Niedersachsen Ports GmbH & Co. KG port, also opened up the pathway to maritime decarbonisation via liquified biomethane (LBM) and then renewable e-methane going forward.

 

Photo credit: Titan
Published: 12 July, 2024

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LNG Bunkering

UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Firm said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier in the Port of Drammen, Norway.

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UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Norwegian roll-on/roll-off shipping line United European Car Carriers (UECC) on Wednesday (10 July) said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier Auto Achieve in the Port of Drammen on 4 July.

The firm said this was the first time UECC received LNG by barge to any of their vessels in their home country Norway. 

“We also believe that it was the first time LNG was delivered by barge to any vessel in Drammen, and most likely the entire Oslofjord,” UECC said in a social media post.

The LNG was supplied by the Molgas Energy Holding vessel Pioneer Knutsen, owned by Knutsen Group OAS.

“UECC is very pleased to see the expansion of the LNG barge network in Norway,” it said. 

 

Photo credit: UECC
Published: 12 July, 2024

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FuelEU

OceanScore reveals ship segments set to feel EUR 1.3 billion sting of FuelEU penalties

Container segment will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%, says firm.

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OceanScore Managing Director Albrecht Grell

Hamburg-based technology platform OceanScore on Tuesday (9 July) said the financial impact of FuelEU Maritime is focusing the minds of shipping companies as they face potential penalties for non-compliance with greenhouse gas (GHG) intensity reduction targets - and OceanScore has identified those segments set to be hit hardest.

The following is an article by OceanScore elaborating on the matter:

Vessels in the passenger/cruise, container, RoPax, bulker and tanker segments will have significant cost exposure from the complex regulation due to be implemented from 1 January next year, despite a relatively modest initial target of a 2% cut in GHG intensity, according to OceanScore.

The firm’s data analytics team has calculated that shipping will rack up total FuelEU penalties of €1.345 billion in 2025 through analysis of the 13,000 vessels over 5000gt trading within and into the EU/EEA that are subject to the regulation. This is based on data on trading patterns and fuel mix from 2022 - the last full year currently available.

Containers bear burden

The team has been able to determine FuelEU compliance balances and resulting penalties for each vessel using OceanScore’s proprietary data modelling incorporating AIS data, Thetis emissions data, bunker intelligence and advanced analytics/AI. It has factored in the likely fuel mix for each vessel between EU ports and to/from the EU, as well as in ports.

Vessels will be hit with a penalty of €2400 per tonne of VLSFO-equivalent for failing to meet the initial 2% reduction target relative to a 2020 baseline for average well-to-wake GHG intensity from fleet energy consumption of 91.16 gCO2e per megajoule (MJ) - or emissions per energy unit. The GHG intensity requirement applies to 100% of energy used on voyages and port calls within the EU/EEA and 50% of voyages into and out of the bloc.

As with the EU Emissions Trading System (EU ETS), it is the container segment that will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%.

“It is critical for shipping companies to determine a baseline for expected FuelEU costs to secure proper planning and budgeting processes to compare different mitigation options, as well as to decide what to do with outstanding compliance balances,” says OceanScore Managing Director Albrecht Grell.

“This will require, to a higher degree than the EU ETS, a corporate strategy to determine how to reduce the compliance balance/deficit, how to commercialise a surplus and deal with deficits that remain.”

Wide spread of vessel liabilities

OceanScore has found that liabilities per vessel will differ widely across the various segments due to increasingly diversified fuel choices, including greater uptake of biofuels and LNG. Passenger vessels will be penalised the most with an average of €520,000 per vessel annually, followed by RoPax at €480,000 and RoRo at €314,000, with an average penalty for container ships of only €214,000, according to OceanScore.

Grell points out there are also massive discrepancies between vessels within these segments, with a number of ships in the passenger and RoPax segments exposed to penalties of between €1.8m and €2.5m, and payment obligations for some container ships approaching €1m. This is driven by higher energy consumption simply due to vessel size and trading profile.

While penalties will arise from so-called compliance deficits for vessels using conventional fuels, surpluses totalling an estimated €669m will be generated mainly by vessels fuelled by LNG and LPG with significantly lower carbon intensity.

LNG carriers will account for 78% of the total market surplus and gas carriers 8%, while a further 8% will be generated by container ships that have seen a modest uptake in alternative fuels in recent years.

Pooling can halve costs for the industry

Taking into account this estimated compliance surplus, the net cost of FuelEU penalties for shipping from 2025 would be €680m, which indicates that pooling of vessels can roughly halve the gross burden for the industry.

Penalties will, in segments typically using conventional fuels with comparable carbon intensities such as HFO, LFO or MDO, be roughly proportional to the overall fuel consumption, thus correlating with the EU ETS cost.

Initial costs of FuelEU for most conventionally fuelled vessels, prior to pooling, will be around one-third of those associated with the EU ETS next year when the latter regulation will have 70% phase-in. But ultimately FuelEU is likely to prove a much more costly affair as the requirement for GHG intensity cuts rises to 6% by 2030 and then accelerates to reach 80% by 2050.

“It is therefore incumbent on shipowners to define their strategies not only towards fuel choices and the use of onshore power but also towards handling of residual compliance balances such as pooling, banking and borrowing of balances, to mitigate the financial impact of FuelEU. However, pooling will also come at a cost, while banking and borrowing will incur interest costs and only push liabilities into the future,” Grell explains.

‘Sound administrative processes’

He further points out that pooling compensations paid between different shipping companies will effectively divert cash flow away from the EU that it would otherwise have earned from FuelEU penalties – but that this effect is intended by the regulator to “reward” early adopters of clean fuels.

Another factor that will curb potential income for the EU from this regulation is that the compliance gap has been reduced to only 1.6% by 2022, as average GHG intensity from shipping has come down by 0.4% to 90.82 gCO2e per MJ, mainly due to increased LNG carrier calls to Europe after gas supplies via pipelines from Russia were halted when the latter invaded Ukraine. Given this trend and increasing adoption of biofuels, the 2% compliance gap will probably be closed before the first tightening of reduction targets in 2030.

Grell says the priority for shipping companies, especially at this early stage while cost exposure is relatively low, is to get to grips with the complexity of the regulation and tackle the risks arising from the fact the party liable for penalties - the DoC holder, or possibly shipowner - is not the one responsible for emissions, which is typically the charterer.

“As well as having costs oversight, companies require reliable monitoring and reporting mechanisms with high-quality emissions data. They must also have in place complex contractual arrangements and sound administrative processes to manage compliance and mitigate the financial consequences of the new regulation,” Grell concludes.

Related: FuelEU: New regulation leaves DoC holder with fuel liabilities risk, says OceanScore
Related: ‘Big opportunity’ for bunker traders, suppliers on upcoming FuelEU regulation, forecasts OceanScore

 

Photo credit: OceanScore
Published: 12 July, 2024

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