ClassNK: Support for shipping with Alternative Fuels Insight
APPROACHING International Maritime Organization and EU regulatory milestones for decarbonisation mean that time is running out for hedging strategies on reducing greenhouse gas emissions from ships.
Shipowners and operators will be fully aware that the IMO’s 2023 GHG Strategy includes targets to reduce shipping’s annual GHG emissions by at least 20% by 2030, and at least 70% by 2040. The IMO is also discussing new regulations to promote the use of zero- and low-emission fuels, due for finalisation in 2025 and enforcement in 2027.
Meanwhile, the EU Emissions Trading System aims to reward lower-carbon ship operations, and the FuelEU Maritime package will promote the decarbonisation of fuels used on board ships from 2025.
But the green transition must advance amid uncertainty over the readiness of lower-carbon fuels, unresolved shipboard safety and storage challenges.
With objectives clear but the means of achieving them still evolving, ClassNK has developed a portfolio of “ClassNK Transition Support Services” to facilitate the smooth transition to decarbonisation. Covering alternative fuels, energy efficiency improvement technologies, and shipboard CO2 capture and storage systems, services can be tailored to the needs of individual clients.
Given the variety of new fuels which promise to propel shipping’s lower carbon future and their different levels of maturity, it is necessary to consider not only technical evaluations but also understand trends including cost and supply availability. ClassNK recently published and updated a special series: ‘ClassNK Alternative Fuels Insight’ 2.0 as part of its ClassNK Transition Support Services, to understand latest information on various alternative fuels such as cost estimations including regulatory compliance.
‘ClassNK Alternative Fuels Insight’ 2.0 captures a market steadily increasing investments in new fuels, which are expected to be powering more than 1,000 ships by 2026 (excluding LNG carriers). While demand for methanol-fuelled ships is rising, ClassNK projects LNG as continuing to dominate the alternative fuel ship orderbook.
ClassNK’s overview highlights the crucial relationships between new fuel selection and factors such as ship type, size and route. It also considers additional shipbuilding costs generated by alternative fuels, which need different storage tanks and fuel supply systems. In addition to technical matters, the overview highlights how owners navigating the lower carbon future must grasp alternative fuel trends including availability and projected costs.
Where the supply costs of alternative fuels are concerned, ClassNK predicts they will be 1.5 to four times higher than conventional fuel oil by 2030, depending on choice of fuel. The gap is expected to narrow as production ramps up.
ClassNK assesses progress in bringing low- and zero-carbon alternative fuels to market, at a time when most initiatives are conceptual or at the feasibility stage. It predicts rising blue hydrogen production capacity through the latter half of the 2020s, US- and European-led green methanol production by 2030, green hydrogen production capacity “increasing rapidly after 2030”, and green ammonia production “increasing gradually”.
ClassNK Alternative Fuels Insight also recognises the role biofuels can play in ship CO2 reduction effects, noting they promise lower cost against hydrogen-derived counterparts. However, ClassNK says biomass-derived fuels face supply constraints, while their impact in reducing CO2 will “vary depending on regulations”.
“To minimise regulatory compliance costs, it is important to understand the default values of emission factors in each regulation and the differences in emissions for each fuel,” ClassNK notes.
In fact, the whole basis of the report is in fully understanding the scope of GHG regulations and weighing the pros and cons of each fuel under regulation. In evaluating each alternative, ClassNK’s guidance extends not only to calorific values during combustion, storage requirements and consequences for operating profiles, but also GHG emissions across each fuel’s lifecycle.
As ClassNK observes, the scope of emissions targeted by regulations varies, for example, and can be framed as including “CO2 or GHG” and “Tank-to-Wake or Well-to-Wake”.
“Understanding the extent to which GHG emission costs will affect the fleet in the future is the first step in considering the adoption of alternative fuels.”
ClassNK Alternative Fuels Insight will continue to be updated according to industry needs and the alternative fuel trends in international shipping. For detailed information, please follow the link to: ClassNK Alternative Fuels Insight (Version 2.0).