Achieving the IMO decarbonization goals
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Achieving the IMO decarbonization goals

IMO’s strategy to reduce greenhouse gas (GHG) emissions from shipping affects containerships ordered today. They will spend most of their operating life in the years ensuing 2030. By that time the average CO2 intensity will have to be significantly reduced. What are the options to achieve the targets and prepare for future compliance today?

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Addressing the GHG reduction ambitions

IMO’s strategy towards decarbonizing defines three levels of ambition, with two interim goals remaining: achieve a 40% reduction of the average carbon intensity by 2030 and a 70% reduction by 2050, compared to 2008 levels. The industry’s total GHG emissions are to be reduced by 50% by the year 2050. The strategy is underlined by short, mid and long-term ambitions. A quick short-term win is to begin reducing the shipping industry’s carbon intensity. This has been implemented by introducing the Energy Efficiency Design Index (EEDI) for new ships and ship speed reduction as an easy preliminary measure. Successful implementation of the two remaining levels of ambition will depend on timely technological innovation and global availability of alternative fuels and/or energy sources. But technology alone will not be enough; there is also a need for international regulations that will create incentives for selecting cleaner fuels. The main focus should be on developing zero-carbon fuels to achieve the 2050 targets. Finding cooperation partners in other industries that will also rely on zero-carbon fuels is essential.

Is there enough time to develop new carbon-neutral fuels by 2050?

Developing and implementing new carbon-neutral fuels within 30 years is a real challenge. As the timeline shows, over the past century many resources, fuels and technologies have been used by other industries long before being adopted as a fuel by the shipping industry. LNG existed for 50 years before it was introduced as a fuel for all ship types five years ago. Now within 30 years the shipping industry will need a new fuel for carbon-neutral shipping for the entire shipping industry. From a technical point of view, there are currently various discussions about potential alternative fuels. Combinations of fuels are being considered with the aim that current engine and tank systems are used for future carbon-neutral fuels with low retrofit costs.

Can any existing technologies reduce CO2 enough to meet the IMO GHG targets ?

Studies show that engine technologies available to containerships today could significantly reduce SOx, NOx and particulate matter by using different exhaust gas treatment systems when operating on HFO/LSHFO or MGO. The benefit of gas turbine systems is that no exhaust gas treatment is needed to reduce these emissions. However, current engine and gas turbine systems cannot reduce CO2 emissions when running on heavy fuel oil (HFO), low-sulphur heavy fuel oil (LSHFO) or marine gas oil (MGO). In contrast, using LNG as a fuel for the current available engine technologies could reduce CO2 emissions to a certain extent. In combination with other technical solutions, LNG is a suitable immediate measure to meet the 2030 target.

How much CO2 do various fuels emit?

DNV GL evaluated the greenhouse gas emissions from production to ship tank (“Well to Tank”; WTT) as well as from fuel combustion (“Tank to Propeller”; TTP). The results show that LNG emits less carbon dioxide than HFO, MGO, methanol or hydrogen produced from methane and LPG. The CO2 emissions of biodiesel largely depend on the production method.

Will alternative fuels be available in sufficient quantities to power ships for the mid and long term?

Looking at the current fuel consumption of ships and comparing it with the total available quantities of various energy sources indicates that LNG is the only alternative fuel that can meet the projected fuel demand for the next ten years. A rapid increase in demand for alternative ship fuel or competing demand from other industries will require a steep increase in production capacity for all fuels except LNG. Hydrogen-based fuels are currently not available in sufficient quantities for deep-sea shipping, just short-sea. Synthetic fuels produced from green energy is presently close to zero and will require significant efforts to increase the production capacity. The global power-to-fuel (PtoF) initiative is targeted to develop zero-carbon fuels which could be used for all transportation activities.

How do alternative fuels differ in terms of space requirement per distance travelled?

The reference line in the diagram represents today’s ship fuels. In terms of the required tank volume only some fuel alternatives are acceptable for deep-sea shipping. Hydrogen requires more than 4.5 times the volume of oil-based fuels. Considering the resulting loss of cargo capacity and efficiency, hydrogen is not feasible for long distances. LNG and LPG require 1.5 to 1.8 times the volume of the reference fuel. This appears more realistic, with LNG requiring the same tank volume as PtoF methane, a future carbon-neutral option, if available in sufficient quantities. There would be no need to replace tanks when switching from LNG to synthetically produced gas as fuel. A similar bunker infrastructure to what exists for HFO/LSHFO would be needed to avoid further enlargement of the tank volume. By achieving economies of scale, enhanced bunkering infrastructure would lead to reduced tank volumes.

What technologies are available for the production of synthetic fuels?

Power-to-fuel technology, developed around 1950, was never actually applied to producing synthetic fuels because of the disproportionate amount of energy it requires. The cost of energy has since declined, and carbon-neutral energy sources such as wind and solar power are available. PtoF would help achieve level 3 of IMO’s GHG ambitions but will require substantial investments to deliver sufficient quantities of synthetic fuels. As a fully renewable energy source, PtoF is currently the most attractive solution.

Is the regulatory environment ready for alternative fuels?

As a fuel for merchant ships, LNG is subject to the IMO IGF Code. LNG is currently the only advanced regulated alternative fuel, and regulations for low-flashpoint fuels, including methanol, are under development. Flag states can grant exceptional permissions for other fuels, but such a newbuilding project will be more complex and time-consuming compared to LNG. Early involvement of all stakeholders is necessary to facilitate the process. DNV GL supports the industry with class rules for all available fuel options. To encourage the uptake of alternative fuels, appropriate regulations should be passed on as soon as possible, as this is a complex process and a holistic approach including the necessary bunkering structure should be followed.

Is the number of LNG-fuelled vessels increasing?

DNV GL's Alternative Fuel Insight (AFI) statistics show that orders for LNG-fuelled vessels deliverable over next six years are increasing and that many owners are considering LNG as a fuel. The trend to ordering LNG-powered newbuilds is strongest in the containership segment, a clear indication that LNG is the preferred alternative transitional fuel for containership owners.

Building compliant vessels for the future today

A containership ordered today will operate until around 2043 to 2045. As of 2030 the vessel will have to contribute to the IMO GHG goal of reducing the shipping industry’s average carbon intensity by 40%, compared to 2008. A carbon-intensity reduction of approximately 20% by 2020 has already been achieved. Therefore it is essential for shipowners to make sure new tonnage ordered today will meet the 2030 objective. The question is whether this can be achieved with the technologies and fuels available today.

The decarbonization toolbox

Several measures can be taken to ensure compliance beyond 2030. Combining modifications of ship components with design adaptations can achieve fuel savings of up to 20 to 25%. While this still misses the 40% target, using alternative fuels can be an additional element in the decarbonization toolbox to achieve and even exceed the IMO goals.

How can a 14,000 TEU vessel cut fuel costs by 18%?

This example shows the energy efficiency achieved by adapting all current technical and design solutions to a 14,000 TEU containership. In this case fuel costs were cut by 18%. Using LNG as fuel in addition to these measures would accomplish the desired savings of 40% and consequently ensure compliance beyond 2030. It is important to note that the reduction could be achieved without accounting for parameters such as economies of scale, meaning that the CO2 footprint would be calculated per TEU and nautical mile.

How can future containership demands and the 2030 CO2 reduction target be met?

The present containership fleet comprises approximately 5,200 vessels, with close to 400 additional vessels in the orderbook. If the maritime industry were to stop building containerships between now and 2030, only 1,724 vessels would remain of the current fleet by then, provided that all vessels older than 18 years are scrapped before 2030 to achieve the decarbonization targets set by IMO. This means that around 3,000 new vessels will need to be built over the next ten years to meet the containership demand as well as the 2030 CO2 reduction target, which translates to an annual addition of 100 new LNG-powered vessels in all sizes to the fleet until 2030.

Fuel comparison study of a 23,000 TEU containership

DNV GL has compared the investment and operating costs of a 23,000 TEU vessel for three different fuel scenarios: LSFO as the baseline fuel, HFO combined with a scrubber system, and LNG, assuming the following operation modes:
- Operation mode 1: Ocean: LSFO (0.5%), ECA: MGO (0.1%)
- Operation mode 2: Ocean: HFO + scrubber (0.5%), ECA: HFO + scrubber (0.1%)
- Operation mode 3: Ocean: LNG + MGO pilot fuel, ECA: LNG + MGO pilot fuel

The study included the following considerations:
- Operational profile
- Technical feasibility: Tank size
- Financial analysis: Estimates of CAPEX, OPEX, fuel costs and payback time

Payback times for different fuel scenarios

The chart indicates investment costs for a Tier III main engine and scrubber system of approximately 6 million US dollars and a payback time of around one year, compared with LSFO based on the outlined fuel-price scenario. The costs of installing LNG technology currently ranges around 21 million US dollars, with the lion’s share going to an LNG tank sized for one bunker stop per round trip. The payback time, compared to a similar vessel running on HFO with a scrubber system, is eleven years in the base price scenario. If the price of LNG drops by just US$ 1/MMBtu in the constant HFO base price scenario, the payback time will shrink to as little as six years; at US$ 7/MMBtu, payback time will be down to three years. However, compared with an LSFO-powered vessel, the payback time for LNG is just three years. The study thus demonstrates that the payback time for an LNG-fuelled vessel is reasonable and will be even shorter if the LNG market price decreases further compared to HFO/LSHFO.
If we look past return on investment as a boon, a 25% CO2 emissions reduction may in the future come with further advantages. For example, if cargo owners seek to reduce their carbon footprint in the total logistics chain, vessels with reduced CO2 emissions will benefit from increased cargo loads.

Achieving the IMO decarbonization goals

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