123Fab #68

1 topic, 2 key figures, 3 startups to draw inspiration from

It’s omnipresent. Decarbonization is underway in many sectors: micromobility, automotive, rail… In last week’s 123Fab, we even saw that a new generation of tractors is making inroads in agriculture. But what about the sector of maritime shipping?

Cargo and container ships, which refer to merchant ships carrying goods and materials from one port to another, are responsible for nearly 1 billion metric tons of carbon each year. Although the industry accounts for a relatively small share of global CO2 emissions — between 2% and 3% according to S&P Global Platts Analytics — scientists have projected that maritime shipping could account for 17% of total emissions by 2050. That’s why the International Maritime Organization (IMO) has set a target of decarbonizing global shipping by at least 50% from 2008 levels by 2050.

Yet many were left disappointed by the Glasgow Climat Pact, the outcome of the COP26 climate conference. Although steps forward have been made since the Paris agreement, which did not include maritime shipping at all, the only concrete outcome that came out of it is the ‘Clydebank Declaration’. The signatory countries agreed to support the creation of at least six green corridors by 2025. Initial analyses focused on two promising candidates for developing green corridors: the iron ore route from Australia to Japan, and container shipping from Asia to Europe. But out of the 50,000 ships currently plying international shipping lanes, only 200 will be green by 2030. This reflects the costs and complexity of decarbonizing shipping. Indeed, alternative fuels are more expensive than conventional heavy fuel oils, they have a lower volumetric density requiring the manufacture of larger tanks and the fragmentation of the industry is such that the incentive to invest in these technologies is low. Maersk, which owns the largest shipping fleet, announced that it would only have 8 ships ready to run on methanol by 2025.  The lack of ambition on shipping emissions has thus been strongly criticized, with COP26 seen as a missed opportunity to push the industry for more rigorous commitments. 

In the maritime industry, a number of measures can support its decarbonization, resulting in multiple possible pathways. In other words, there is no silver bullet to a low-carbon trajectory.  However, only a combination of technological innovation, operational measures and alternative fuels will deliver sufficient CO2 reductions.

  • Technological innovation — these refer to innovations applied to ships to help increase their energy efficiency. These can relate to the weight of ships (lighter materials), the design of ships, ways to reduce friction (hull coatings and air purification) and ways to recover energy (propeller upgrades and heat recovery).
  • Operational measures — these refer to ways in which ships are operated. 4 types of measures can be distinguished: speed, ship size, ship-port interface (lower waiting time before entering a port) and onshore power (change their power supply from vessel’s engines to shore-based electricity).
  • Alternative fuels and energy — numerous fuels exist to replace bunker fuels such as liquified natural gas (LNG), hydrogen, ammonia, methanol.

When it comes to alternative fuels and energy many possible options are currently being explored. While deep-sea vessels must store large amounts of energy to maintain a constant speed over long distances, the options are more varied for short-haul vessels, including the possible use of electric or hybrid-electric power and propulsion systems. Overall, there is a lack of technology when it comes to alternative fuels. If shipowners have begun to convert existing ships to run on LNG, it still emits methane. Biofuels are another solution that is becoming increasingly available as a marine fuel. Unlike LNG, it can be a carbon-neutral solution, but mass-scale biofuel production is not sustainable, which puts it in the same position as liquefied petroleum gas (LPG): a good solution but not a panacea. In the long-term, technological solutions, such as green hydrogen and ammonia, are expected to take hold. Intrinsically carbon-free, these fuels produce zero CO2 emissions when sourced renewably. In fact, the shipping industry is banking heavily on ammonia. Unlike hydrogen, it does not need to be stored in high-pressure tanks or cryogenic dewars and its energy density is 10 times that of a lithium-ion battery. However, for ammonia-fueled shipping to become a reality, port operators and fuel suppliers must build vast bunkering infrastructure so that ships can fill ammonia tanks wherever they dock. And technologies are still underway.

But decarbonization, while still in its infancy, is making progress. In November 2020, Yara claimed to have delivered the world’s first net-zero, battery-powered autonomous container ship to Norway. While it had been in the port of Horten ever since, undergoing further preparations for autonomous operation, the Yara Birkeland completed its first trip to Oslo (around 70km) at the beginning of the week. Alongside the construction of the ship, Yara has also initiated the development of green ammonia. As the world’s largest producer of fertilizers, and thus of ammonia, it is striving to push decarbonization in the shipping industry forward. At the same time, startups are positioning themselves on the topic. Greek startup DeepSea Technologies provides a vessel emission tracking solution, Norwegian startup TECO 2030 develops modular hydrogen fuels and American startup Prometheus Fuels removes CO2 from the air and turns it into zero-net carbon gasoline. In September of this year, Maersk announced its investment in the American startup.

In short, discussions around decarbonizing the shipping sector are emerging yet most measures focus on making ship design and the operation of vessels more energy efficient. To achieve the decarbonization of the industry, mechanisms increasing the use of alternative propulsion technologies will need to be strengthened. However, regulation and financial incentives will be necessary to make them technologically feasible and their adoption commercially viable, to reduce the current price gap between conventional ship fuel and more sustainable options.

2 Key Figures

At least $1 trillion in investments needed to decarbonize shipping 

According to the Global Maritime Forum, the scale of cumulative investment needed between 2030 and 2050 to achieve the IMO target of reducing carbon emissions from shipping by at least 50% by 2050, is approximately USD 1-1.4 trillion, or on average between USD 50- 70 billion annually for 20 years.

1,177 Maritime startups

registered by Tracxn

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Prometheus Fuels, Hy2Gen and Shone.

Prometheus Fuels 

The startup extracts CO2 from the air, creating hydrocarbon fuel with zero impact on greenhouse gas levels, enabling cars, planes and ships to replace fossil fuels with high-performance zero-net carbon fuels made from CO2 that’s already in the air.

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The startup develops, builds and operates plants for the production of green hydrogen and hydrogen-based e-fuels. Hy2Gen recently joined forces with Swiss commodity trader Trafiguar to investigate green ammonia as a marine fuel.

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The startup has developed a shipping automation platform that uses AI to provide a digital co-pilot to improve the safety and energy efficiency of maritime operations, enabling reductions in fuel consumption and carbon emissions.

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