Energy Transition

Shipping decarbonization, an opportunity for developing countries

Richer maritime nations lead the transition, but there is a lot at stake for other countries too

Currently, among the 100,000 commercial sea-going ships afloat, only a handful are zero emission vessels. There are a few (very expensive) Norwegian short crossing ferries and some (not yet scalable) traditional sailing vessels hauling gourmet chocolate, coffee and wine throughout the Atlantic. Other than those, test pilot programs are running in different parts of the world.

The workhorses of world transportation – bulk carriers, tankers, container ships, and the like – remain helplessly dependent on fossil fuels and therefore key contributors to climate change. With shipping responsible for 2.5-3.0% of the world’s GHG emissions, the market pressure from environmentally conscious clients is mounting. There is a race for the zero-emission vessel, or rather, there is a race for finding the technology portfolio that will enable zero emission shipping.

In this context, the news that Maersk has committed to have their first zero-emission feeder container ship on the water by 2023 is encouraging. The dual fuel ship will primarily consume methanol, with the company adding that “methanol (e-methanol and bio-methanol), alcohol-lignin blends and ammonia remain the primary fuel candidates for the future”.

ocean health
Image credit: A.P. Moller – Maersk

Maersk is not alone in its interest in methanol and ammonia. Many other shipping companies are considering both alternatives as the carbon neutral fuels of the future, as well as industry champions Methanex and Yara who naturally desire to see their leading commodities turning into worldwide bunker fuels. Alcohol-lignin blends, such as lignin ethanol oil (LEO), contend as the underdogs, but might as well prove to be viable options in the future.

The Danish shipping giant does not disclosure in full detail why LNG, batteries and hydrogen were excluded early on in their multimillion-dollar analysis effort. However, it sure has something to do with energy density for hydrogen and batteries, and for limited options for full sustainability in the case of LNG.

Meanwhile, with few exceptions, the developing world is almost detached from the most important energy transition since the 1820s. Brazil’s Bolsonaro, for example, just announced tax cuts for diesel and GLP. Fuel subsidies in Venezuela, Ecuador, Argentina and Mexico remain untouched. Removing them in the short term is unrealistic due to the political repercussions under the COVID-19 pandemic.

As shipping tries to go back to zero emission transportation 200 years since the first iron ocean-going steamship was launched in 1821 (the Aaron Manby), it seems there is hardly a more exciting time to be around. It is not about emotions, though. Skeptics argue that the energy transition is too risky and too costly for developing countries, and that the winners in the end will be the equipment manufacturers, financiers, shipping companies and shipyards located in richer parts of the globe. The best approach, then, should be to just wait and see. But is it?

We must admit it is truly unjustifiable that the poor communities traveling in crowded traditional boats along the Amazon, Ganges or Mekong rivers should pay for a ticket 3 times more expensive in order to decarbonize their trips. But they are not the main emitters. The transition might begin with big names exposed to shipping, companies that, as cargo owners for example, have the means to be pioneers, such as Vale, Dangote or Reliance Industries.

We could say that one of the main concerns of any country should be that climate change is a global phenomenon, therefore its consequences are inescapable. But this argument seems not to be motivating enough. We can then turn to where it hurts the most: the wallet. Shipping decarbonization is an opportunity too big to be missed.

Let’s just look at the competing fuel technologies for zero carbon shipping. The basic inputs for them all are just four: renewable energy, biomass, natural gas and captured carbon dioxide. The first two are intrinsically renewable, the other two are not.

Green hydrogen is obtained from water by electrolysis, so it depends heavily on cheap renewable energy.

Renewable ammonia uses hydrogen combined with nitrogen from the air through the Haber-Bosch process.

Methanol might also use hydrogen, combining it with captured CO2 (e-methanol) or through various alternatives processes from biomass (bio-methanol).

LEO is a blend of lignin and ethanol, both derived from biomass.

Then there’s natural gas. It is not only one of the main fuels for electricity generation. Hydrogen can be reformed from natural gas. So as long as the CO2 is captured and sunk somewhere, this “blue hydrogen” might also be considered carbon neutral. Natural gas is also arguably a good alternative for ship propulsion after treatment and liquefaction. After more than 20 years of rather slow growth, its use as ship fuel has taken off in the last couple of years, with Hapag Lloyd and Zim recently joining CMA CGM in landmark orders for big containerships.

Truth be told, currently most of the ammonia and methanol is also produced from natural gas. This means the same blue-washing can be employed so that “blue ammonia” and “blue methanol” are not called “natural gas-based ammonia and methanol”, as long as the resulting CO2 is captured. It is therefore very unlikely that natural gas is only a transitional resource. If CCS technologies can be made competitive, then natural gas might be part of the value chain of basically all future fuels. LNG could also be blended with biomethane produced from biomass, lowering its carbon footprint substantially.

But what does this mean for developing countries? Let us exclude, for the sake of piety, the more controversial inputs (recycled carbon dioxide and natural gas). What would be the opportunities in biomass and renewable energy?

Having ethanol as a globally traded fuel was Brazil’s main goal during the “ethanol diplomacy” of the Lula presidency (2003-2010). The country steadily developed the production, distribution and combustion technology for sugarcane-based ethanol since the Proalcool program was put together in 1975. A revival started during the early 2000s with the “flex engine” inception, which is capable of burning any blend of ethanol and gasoline.

Currently, the vast majority of the Brazilian passenger vehicle fleet is dual fueled. However, the dream of making ethanol a global fuel backfired as falling prices caused a widespread crisis in the sector, together with strong opposition of corn-based producers (mainly the U.S.). On top of it, environmentalists argued that tropical sugarcane production caused deforestation and rising food prices, something that is still not settled in the scientific literature.

Now, with the seemingly unstoppable electrification of the global car fleet, ship fuel might be the long-term redemption for bioethanol producers. Cheap bioethanol could then be blended into the LEO formulation or with methanol.

According to FAO data from 2019, the world’s largest sugarcane producer is Brazil (770M tonnes), followed by India (364M), China (107M) and Thailand (106M). Ethanol production is more concentrated, with 84% of the world’s supply coming from the U.S. and Brazil. This concentration could change substantially by achieving higher productivity in Africa and India, without the need for any land expansion.

The availability of biomass for producing lignin, bio-methanol and biomethane varies throughout the developing world, but most countries have already some resources to contribute.

Lignin, for example, as a byproduct of paper and cellulose production, is widely available in Chile, South Africa, Brazil, Uruguay and Indonesia.

Countries with large cattle populations, such as India, Brazil, Ethiopia, Argentina, Pakistan and Mexico have a huge potential for developing biomethane plants. It can also be produced from human solid waste in landfills.

Bio-methanol might be produced from black liquor coming from the pulping industry but also from a wide array of biomass sources, including rice bran, widely available throughout Asia.

On top of it all, it is in the developing, mainly tropical or subtropical countries, that is the largest potential for renewable energy production. All future fuels for decarbonizing shipping will depend on solar, wind and hydro power to provide green energy.

There are still many technical difficulties to be overcome, but cost is the key component, and the developing world is where the best insulation (for solar) and precipitation (for hydro) is located. For wind, the distribution is rather unequal, with higher potential in northern and southern Africa, northeast Brazil and Patagonia.

It is time for developing countries to embrace the opportunities presented by this monumental energy transition in shipping, and to position themselves as part of the solution. This is not an opportunity to be missed. After all, sometimes being too conservative can end up being a bit too risky.


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