DNV GL 2017 maritime forecast to 2050

MARITIME FORECAST TO 2050 Energy Transition Outlook 2017

SAFER, SMARTER, GREENER

dnv gl energy transition outlook – maritime

foreword

There are two areas that underpin the global economy as we know it – energy and shipping. Energy, which determines how we power the industries that create the goods and services of the modern world, and shipping that allows us to move both the raw material and the finished products to where we need them.

To obtain a clear and balanced view of the energy future for both our customers and ourselves, we created the Energy Transition Outlook (ETO), which models the energy transition through to 2050. For our Maritime Energy Transition Outlook, we take this model and project it onto the maritime industry of today. Taking into account the uncertainties of looking into the future, we ask: how will the expected shifts in energy production and demand, change the maritime industry? And what might be the impact on individual ship segments?

knut ørbeck-nilssen ceo of dnv gl – maritime

One striking result of our Maritime ETO is how we can see the trends of today become the paradigms of tomorrow.

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The Maritime ETO projects that heading to 2030, our industry will continue with solid growth. Moving from 2030 to 2050, however, our model suggests that demand for shipping is likely to increase at a less rapid pace – with the growth primarily in non-energy commodities, such as the container trade and non-coal bulk.

Overall, shipping growth is likely to be focused in Asia and the Indian Ocean regions, which continues recent trends.

foreword

One striking result of our Maritime ETO is how we can see the trends of today become the paradigms of tomorrow. Shipping will continue its drive for greater efficiency by reducing costs, improving utilization, lowering fuel consumption, increasing vessel size, and deploying new technologies. The current wave of digitalization transforming the industry will also have a profound impact – advancing design and operation, and creating new business models.

The fuel mix that we see beginning to shift today, will be much more diverse in 2050. Oil will no longer be the overwhelming choice for trading vessels. Natural gas will step up to become the second-most widely used fuel, with a third of the world’s fleet, and new low-carbon alternatives will proliferate, supplying nearly a quarter of the fleet.

The continuing pressure to reduce emissions to air and the growing drive toward decarbonization, shapes the fleet of 2050 in important ways, particularly in the choice of fuels.

Because of the long lifespan of a maritime asset, this means that sooner rather than later, the industry will have to look to creating vessels and a global fleet that are “carbon robust”.

A “carbon-robust” asset is one that can remain competitive under shifting energy, weather, demand, and regulatory scenarios.

Well designed and operated, it will have a lower operating and lifecycle cost than other vessels on the market. As part of the Maritime ETO, we have worked to define a framework that could help maritime stakeholders enhance the carbon robustness of their vessels and fleet.

The main ETO forecasts an energy landscape that, while familiar, has undergone significant changes. These changes will have a deep impact on the shipping industry. And we hope that our new Maritime ETO will offer stakeholders a set of interesting and useful insights as they look ahead and make their plans for the future of the industry.

knut ørbeck-nilssen ceo of dnv gl – maritime

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dnv gl energy transition outlook – maritime

acknowledgements

This report has been prepared by DNV GL as a cross disciplinary exercise between DNV GL’s Maritime business area and a core research team in our central R&D unit: DNV GL – Maritime Øyvind Endresen, Tore Longva, Alvar Mjelde, Jakub Walenkiewicz, Gjermund Gravir, Trond Hodne, Helge Hermundsgård, Terje Sverud, Catrine Vestereng, Håkon Hustad DNV GL – Group Technology and Research: Sverre Alvik, Bent Erik Bakken, Christos Chryssakis, Onur Özgün, Caroline Brun Ellefsen, Anne Louise Koefoed DNV GL – Business Assurance Lars Erik Mangset DNV GL – Maritime Communications Simon Adams, Jeannette Schäfer.

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contents

1 2 3 4 5 6 7 8

executive summary introduction past and present shipping the energy transistion: implications for maritime transport the energy transistion: implications for world fleet key issues to monitor the carbon-robust ship references

6 14 18 30 50 64 72 78

5

1 EXECUTIVE SUMMARY

dnv gl energy transition outlook – maritime

1. executive summary

The world energy system undergoes a major transition towards 2050 and this will have significant implications for shipping. Overall the demand for seaborne transport will increase with 60% by 2050, with the pace of growth being highest up to 2030, and with notable differences between the various shipping segments.

This publication is one part of DNV GL’s new suite of Energy Transition Outlook (ETO) reports covering 10 global regions. Here, we describe consequences of the energy transition for the maritime industry, looking at goods to be transported within and between regions, and the types of vessels needed.

We include transport of energy sources such as crude oil, oil products, gas, and coal. We also provide forecasts for the following ship segments: containerized cargo, bulk, and other cargo. The outlook for offshore service ships is also discussed.

Seaborne transport accounts today for almost 90% of international trade, as measured by tonne-miles.

The world fleet currently consumes about 250 million tonnes of oil equivalent (Mtoe) of marine fuel. The cargo-carrying fleet accounts for almost 90% of this.

Deep sea cargo-carrying ships dominate transport work and fuel consumption. Four-fifths (81%) of ship traffic is located in the northern hemisphere.

More than 60% of the traffic is in the Indian and Pacific Oceans, highlighting the importance of Asian trade.

trade towards 2050 Trends and drivers factored into our long-term projections are outlined in the integrated approach to forecasting illustrated below. As we look towards 2050, we also elaborate on carbon risks from a shipowner's perspective.

past and present shipping Over recent decades, the maritime industry has experienced steep growth in global demand for seaborne transport, with a corresponding increase in the world fleet and its carbon dioxide (CO2) emissions.

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We forecast that trade measured as tonne-miles will experience 2.2% annual growth over the period 2015– 2030 and 0.6% per year thereafter, driven mostly by non-energy commodities, as illustrated in Figure 1.2.

Trade in individual energy commodities will decline as their use declines: coal first, then crude oil, thereafter oil products. Despite projected growth in oil imports in some regions, global seaborne crude oil and oil products, trade will reach peak volumes before 2030.

Natural gas – as liquefied natural gas (LNG) and liquid petroleum gas (LPG) – will experience sustained

chapter 1 | executive summary

figure 1.1 energy transition outlook integrated forecasting baseline studies - Current world fleet - Transport work carried out - Energy mix and emissions

transport demand outlook towards 2050

world fleet outlook towards 2050

- Transport demand per commoditiy

- Supply of ships per main segment

- Demand per region

- Energy mix and emissions

- Change in trade patterns

growth, as gas takes over as the largest energy source.

Global gas consumption will decline after 2035, but growth in seaborne gas trade will be sustained as demand shifts to areas with less domestic gas and many new sources of unconventional gas are not connectable by pipelines.

Container growth is solid, closely following GDP growth. The trade will experience the strongest growth of all segments, as measured by tonne-miles; 3.2%/ yr on average to 2030, driven by strong demand for consumer goods and continued containerization. It will thereafter decline to average 2.1%/yr. Over the entire forecasting period to 2050, annual growth will average 2.6% for container tonne-miles and 2.4% for global GDP; so, the container trade multiplier (trade growth relative to GDP growth) will average 1.1.

Bulk transport will continue to grow, but with notable cargo differences. Bulk commodities will see average growth of 1.8%/yr in tonne-miles to 2030, and 0.6%/yr thereafter, driven by strong increases in grain, moderate rises in ore and other minor bulk, and a decline in coal. We predict that declining offshore oil and gas activity, and decreasing initiation of new fields,

will lead eventually to less offshore-related shipping activity, though fast growth in offshore wind will partly mitigate the reduction.

Geographically, seaborne trade growth will be strongest in the Asian regions. Our analysis provides better regional insights for energy commodities than for non-energy trade. We expect gas, non-coal bulk, and container trades to grow across most regions, with above-average growth rates in China, the Indian Subcontinent, South East Asia, and Sub-Saharan Africa. Longer term, we see the level of oil exports from the Middle East being maintained, but declining in most other regions. Coal trade will reduce across all regions after 2030.

world fleet towards 2050 The global cargo fleet will track the changes in trade volumes, as illustrated in Figure 1.3, but digitalization and improved utilization mean that the fleet will grow somewhat more slowly than trade. Measured by deadweight tonnage (DWT), the crude oil fleet will decline by approximately 20% by 2050, with the decline beginning after 2030. The product tankers fleet remains stable. The bulk segment Âť

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dnv gl energy transition outlook – maritime

figure 1.2 world seaborne trade: tonne-miles Units: Trillion tonne-miles per year

Cargo type

90

Other cargo Container Bulk Natural gas Oil products Crude oil

80 70 60 50 40 30 20 10 0

1980

1990

2000

2010

2020

2030

2040

2050

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

experiences a moderate growth of about 50%.

The greatest increase comes in the container and gas segments where fleet tonnage rises almost 150% to mid-century, responding to increased trade.

For other cargo vessels, we project a doubling of tonnage by 2050.

Looking at fleets’ fuel mix, oil use will decline: by 2050, only 47% of energy for shipping will be from oil-based fuels. The share of gas in the fuel mix will rise to 32%. More than a fifth will be provided by carbonneutral energy sources, such as biofuel and electricity.

Improved energy efficiency due to technical and operational improvement (including speed reduction) will see fuel use per tonne-mile reduce by 35–40% over the forecast period, with the largest reductions coming in the segments container, natural gas and other cargo. Energy use for international shipping will increase from 10.7 EJ in 2015 to 12.0 EJ in 2050, while decarbonization of the fuel mix will help the CO2

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emissions to decline by a quarter from 800 million tonnes (Mt) today to near 600 Mt in 2050. The carbon efficiency per tonne-mile will improve by 51% between 2015 and 2050. Still, carbon emissions elsewhere will decline faster; so, shipping’s share of overall energyrelated CO2 emissions grows from 2.6% to 3.5% over the forecast period.

key issues to monitor We model long-term trends towards 2050 and do not factor in or attempt to predict short-term dynamics, such as rates, overcapacity, or short-term policy changes. Developments over the next five years are important for understanding longer-term dynamics, so the report describes some key issues to watch in various shipping segments in the shorter term.

chapter 1 | executive summary

major shifts in transport demand

We also discuss three potential game-changers that could affect our forecast:

decarbonization and environmental awareness Decarbonization will challenge the way ships are designed and operated. Several developments with potentially great impact, but involving high uncertainty, could influence technology uptake and our future fleet projections. The need for Greenhouse gas (GHG) emissions reduction drives energy efficiency and the development and use of alternative fuels. Fleet-growth assumptions may be challenged by future regulations, requiring significant investment to ensure compliance.

Additive manufacturing (3D printing), robotization, and automation could enable relocation of production back to developed countries, thereby shortening global value chains and potentially reducing demand for seaborne transport. There is also rising interest in, and action to establish, circular economies to reduce consumption of virgin materials and waste generation, trends that can shift and reduce transport demand.

In addition, China’s OBOR (One Belt and One Road) initiative, which aims to reshape intercontinental trade through a new network of maritime and landside links between Africa, Asia, and Europe, is a potential gamechanger for the shipping industry. It could work 

figure 1.3 fleet development 2015-2050 by segment Units: Million DWT

Segment

3 000

Non-cargo Other cargo Container Bulk Natural gas Oil products Crude oil

2 500

2 000

1 500

1 000

500

0 2015

2020

2025

2030

2035

2040

2045

2050

Source: DNV GL

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dnv gl energy transition outlook – maritime

in both directions: rail and road transport might capture market share from shipping, but trade growth could also favour the latter.

digitalization and innovation Digitalization can change current business models and how ships are operated, which may impact on their energy use. Phasing in autonomous ships opens the way for very low speeds without incurring high crew costs, and greater use of batteries and alternative fuels.

The results are reduced energy demand, fuel use, and emissions.

the carbon-robust ship Based on our forecast of the most likely energy future, the world fails to achieve the Paris Agreement’s target of limiting average global warming to well below 2°C above pre-industrial levels. Securing a 2°C future will not be achieved without a steeper reduction in the use, and hence transport, of fossil fuels. A low-carbon future would also require more energy-efficient ship designs and operations, and carbon-neutral fuels. Future regulations and stakeholder expectations might imply significant investments to upgrade and renew ships.

Companies need to prepare for and mitigate carbon-related risk. Here, we introduce the concept of ‘the carbon-robust ship’ and describe a threestep approach to evaluate and improve the carbon robustness of vessels and fleets. The approach stress-tests how well a ship, fleet, and company will perform under different energy transition scenarios. 

A low-carbon future would also require more energy-efficient ship designs and operations, and carbon-neutral fuels.

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chapter 1 | executive summary

13

2 INTRODUCTION

dnv gl energy transition outlook – maritime

2. introduction

A global transition towards greater use of renewable energy and less use of fossil fuels is underway and will progress towards mid-century. The consequent changes will impact all players in the maritime sector.

Driven by our purpose of safeguarding life, property, and the environment, DNV GL enables organizations to advance the safety and sustainability of their businesses. Around 70% of our business is energyrelated in one form or another.

We provide classification, technical assurance, software, and independent expert advisory services

Around 70% of our business is energy-related in one form or another.

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to the maritime, oil and gas, and the power and renewable energy industries. We also provide certification services across many industries.

As a leading player in the industry, DNV GL routinely publishes maritime outlooks such as Technology Outlook 2025, Shipping 2020, and low carbon pathways studies. The company shares its analyses

chapter 2 | introduction

of supply and demand trends with stakeholders and customers. This latest publication provides an independent forecast of the maritime energy future and examines how the transition will affect the industry.

This publication is one part of DNV GL’s new suite of Energy Transition Outlook (ETO) reports.

Alongside a main outlook, the suite includes three separate reports discussing implications for maritime, oil and gas, and power and renewables industries.

In all cases, we provide predictions through to 2050 for the entire world energy system.

Here, we describe consequences of the energy transition outlook for the maritime industry, looking at goods to be transported, and the types of vessels needed. We include transport of energy sources such as crude oil, oil products, gas and coal. We also provide forecasts for other bulk, containerized cargo, and other cargo types.

sectors such as buildings, manufacturing, and transportation (air, maritime, rail and road).

Some key predicted regional trends and analyses are discussed, and more detailed analysis is available from DNV GL. We can also tailor such content to the needs of individual organizations and companies.

We stress that our model presents the ‘most likely’ future, not a collection of scenarios. The coming decades to 2050 hold significant uncertainties: future energy policies; human behaviour and reaction to policies; the pace of technological progress; and pricing trends for existing and new technologies.

Comprehensive analysis of sensitivities related to our modelling is available in the main report (DNV GL, 2017a).

All our outlooks are based on DNV GL’s independent ETO model that tracks and forecasts regional energy demand and supply, and energy transport, for 10 global regions. On the demand side, it analyses key

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3 PAST AND PRESENT SHIPPING 3.1 historical developments and shifts in shipping 3.2 characteristics of the world fleet 3.3 traffic patterns for the main ship types 3.4 traffic patterns by ship size

21 23 25 29

dnv gl energy transition outlook – maritime

3. past and present shipping

This section highlights some main developments and changes for shipping in recent decades. It also outlines the current global trading picture for shipping, based on global AIS (Automatic Identification System) tracking, reflecting main trading routes. The key question of how global trade and the world fleet will develop towards 2050 is addressed in sections 4 and 5 of this report.

There has been rapid growth in global demand for seaborne transport over recent decades, with corresponding increases in the world fleet and CO2 emissions. China heavily influenced transport market dynamics as its imports of dry bulk increased nearly sevenfold in volume over 2000–2015 (UNCTAD, 2016).

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The slowdown in growth in 2015–2016 is a good example of China's impact on the market, as it was attributed mainly to weaker Chinese economic growth and reduced raw material imports as the country transitioned from an industrial to a service-oriented economy.

chapter 3 | past and present shipping

3.1 historical developments and shifts in shipping

Seaborne transport accounts today for almost 90% of international trade as measured by tonne-miles, more than tripling since 1980 (Table 3.1). Expansion of the world fleet has been slightly lower, reflecting improved fleet productivity. Trade in all main commodities increased between 1980 and 2015. The largest relative growth was in containers, followed by LNG, coal, and iron ore (Figure 3.1). In 2016, 70% of the total international seabourne trade, in terms of tonnes of cargo loaded, was carried by dry cargo vessels, with oil and gas tankers making up the remaining 30% (UNCTAD, 2017).

Recessions in the 1980s and 2000s resulted in idle tonnage and lower productivity. Shorter-term business cycles will inevitably have an impact on shipping in the future as well, but have not been included in our model based on longer-term trade dynamics until 2050.

1965, for example. The operational and technological characteristics of specialized vessels have improved logistics efficiency, with related reductions in energy use and emissions. Switching fuels for existing engines can typically be achieved more swiftly than implementing new main engines. Moving towards 2050, increased uptake of alternative fuels and innovative propulsion technologies is expected, as outlined in Section 5.

Excluding fishing vessels, the merchant world fleet consists of about 87,000 ships of greater than 100 gross tonnage (GT), of which cargo-carrying ships account for roughly 60% by number1. The other 40% is employed in activities such as offshore service and supply, passenger transport, and general services – towage or surveying, for example. These ships are, on average, far smaller than cargo-carriers. The future development of the world fleet is discussed in Section 5.ď Ž

More efficient and specialized ships have penetrated the market; the first deep sea cellular container ship in

table 3.1 world seaborne trade 1980

1990

2000

2010

2015

Cargo transported (million tonnes)

3 700

4 000

6 000

8 400

10 830

Trade in cargo (billion tonne-miles)

16 800

17 100

23 000

44 400

53 330

670

630

790

1 280

1 750

Cargo fleet size (million DWT) DWT = deadweight tonnage Source: UNCTAD, Clarkson Research

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dnv gl energy transition outlook – maritime

Units: Billion tonnes/yr

Units: Million DWT

Cargo type

Moving towards 2050, increased uptake of alternative fuels and innovative propulsion technologies is expected.

22

chapter 3 | past and present shipping

3.2 characteristics of the world fleet

DNV GL’s detailed analysis of global ship traffic uses ship movement data from the Automatic Identification System (AIS), mandatory for ships of 300 GT and upwards engaged on international voyages, and for all cargo ships of 500 GT or more. Small vessels without an AIS are not included in this study.

Table 3.2 presents AIS-based calculations of key performance characteristics for the world cargo fleet and vessel types in 2016. Bulk vessels dominate by the number of nautical miles (nm) sailed, while container vessels are the largest fuel consumers.

The AIS-based modelling of 2016 ship traffic indicates that the world fleet consumes about 250 million tonnes of oil equivalent (Mtoe) of marine fuel; the cargocarrying fleet accounts for 89% of the total. These numbers are based on ships with AIS-transponders and cover national and international traffic. According to the third International Maritime Organization (IMO) greenhouse gas (GHG) study, international traffic accounts for some 85 % of total fuel consumption.

The other 15 % is used by fishing and domestic shipping (Smith et al., 2014). A separate AIS analyses, indicates that about 15% of marine fuel consumption for the world fleet occurs under port stays, anchorage, and when ships operate at very low speed, below one knot (kn). There is wide variation between different ship types.

In Figure 3.2, ships’ fuel consumption is charted to reflect global trading patterns and routes in 2016.

The distribution of such consumption is presented on a global grid of 0.1 by 0.1 degree latitude and longitude. Our result shows that 81% of marine fuel consumption is in the Northern hemisphere (Table 3.3).

International traffic dominates, though some national traffic is included.

Simpler worldwide traffic distributions are available for year 2000 (Endresen et al 2003; OECD 2010). While nearly doubling the transport work from 2000 to 2016, traffic patterns seem largely to persist, though some changes emerge. The Indian and Pacific Ocean trades »

table 3.2 ais-based analysis of world cargo fleet in 2016 Variable

Bulk vessels

Oil tankers

Container vessels

Other cargo vessels*

TOTAL

11 844

6 532

5 383

19 824

43 583

Sailed distance (million nm)

529

211

372

726

1 838

Share of maritime fuel consumption

23%

16%

26%

24%

89%

Number of vessels

Source: DNV GL *Chemical/product tankers, gas tankers, general cargo vessels, RoRo and refrigerated cargo vessels – in descending order ranked by amount of fuel consumed

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dnv gl energy transition outlook – maritime

All vessel types

-6

Note: 10-6 % of the fuel consumption (per 0.1° by 0.1° grid cell) Source: DNV GL

show traffic growth, while there is a significant relative reduction in intercontinental traffic in the North Atlantic.

More than 60% of 2016 traffic is in Indian and Pacific waters, highlighting the importance of Asian trade.

UNCTAD (2017) reports that Asia is the main importing and exporting region, accounting for 61% of unloaded cargo and 40% of loaded cargo in 2016. Developing economies are key players in supply of raw materials, but also growing sources of consumption import demand. In 2016, developing economies accounted for 6% of unloaded cargo and 59% of loaded (UNCTAD, 2017).

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chapter 3 | past and present shipping

3.3 traffic patterns for the main ship types

The global distribution of main cargo ship types shows large variation in traffic patterns, reflecting differences in transport of oils, imports of raw materials for manufacturing industries, and trade in manufactured products (Table 3.3).

Compared with container ships and oil tankers, bulk vessels have around twice as much of their traffic in the Southern hemisphere. Nearly half (45%) of bulk and container ship traffic is in the Pacific, but only 30% of oil tanker traffic.

The dominant transport routes are seen in Figure 3.3, with the busiest ports in Asia, Europe, and the US. These trends will not continue throughout the period to 2050 as coal trade declines sharply, gas trade erupts in new locations, and oil trade grows initially before entering long-term decline as discussed in Section 4 of this report. New sea routes will emerge, with changing trade patterns for deep sea and coastal shipping. ď Ž

table 3.3 share of total fuel consumption by ship type and hemisphere World fleet

Bulk vessels

Oil tankers

Container vessels

North

South

North

South

North

South

North

South

Atlantic Sea

24%

6%

15%

11%

22%

6%

19%

4%

Indian Ocean

16%

8%

10%

16%

27%

7%

19%

5%

9%

-

4%

-

7%

-

8%

-

32%

5%

36%

8%

28%

3%

41%

4%

81 %

19%

65 %

35%

84%

16%

87%

13%

Mediterranean Sea Pacific Ocean

Segment totals Source: DNV GL

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dnv gl energy transition outlook – maritime

All vessel types

Oil tankers

Source: DNV GL

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chapter 3 | past and present shipping

Bulk vessels

Container vessels

27

dnv gl energy transition outlook – maritime

Short sea shipping: tankers < 25,000 GT

Deep sea shipping: tankers > 25,000 GT

Source: DNV GL

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chapter 3 | past and present shipping

3.4 traffic patterns by ship size

The AIS-based modelling offers great potential for performing in-depth studies on ship type and size categories. One example is for oil tankers, which account for some 16% of total maritime fuel oil consumption (see Table 3.2). We have performed detailed analysis of this segment, splitting results into short sea and deep sea shipping, and differentiating between transport of crude oil and oil products.

It comes as no surprise that the larger ships, mainly above 25,000 GT, are deployed on long-haul routes (deep sea shipping), whereas the smaller ones operate in intra-regional trade (short sea shipping). The ship traffic by location and fuel used is shown in Figure 3.4.

Table 3.4 presents key performance characteristics for crude oil tankers and product tankers in 2016. The deep-sea crude oil tankers dominate by transport work (91%), and account for 70% of total fuel oil

consumption. The short sea segment accounts for 19% of fuel consumption and approximately 2% of tonne-miles (total oil tanker). Half the fleet, measured by vessel numbers, is consuming about 80% of the fuel and delivering almost all tonne-miles.

Compared with the short sea segment, deep sea vessels have fewer options for reducing fuel and CO2 emissions (DNV GL, 2017b). When modelling future fleet size and technology shifts in Section 5, results are provided separately for short and deep sea.ď Ž

Deep sea vessels have fewer options for reducing fuel and CO2 emissions.

table 3.4 key data on oil tankers Ship type and operational parameters

Percentage of vessels Tonne-miles Fuel consumption

Crude oil tankers

Product tankers

Total oil tankers

Short sea

Deep sea

Short sea

Deep sea

Short sea

Deep sea

2%

42%

48%

8%

50%

50%

< 1%

91%

2%

7%

2%

98%

1%

70%

18%

11%

19%

81%

Source: DNV GL

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4 THE ENERGY TRANSITION: IMPLICATIONS FOR MARITIME TRANSPORT 4.1 the eto model 4.2 trade towards 2050

33 38

dnv gl energy transition outlook – maritime

4. the energy transition: implications for maritime transport

Economic activity is the main driver of sea transport. Examples include: transporting fossil fuels, raw materials for the manufacturing industry, and manufactured products for final use. This section provides an outlook for the maritime industry based on volumes to be transported, and covers crude oil, oil products, gas, and bulk and containerized cargo as well as an outlook for offshore service ships.

Our globally connected energy system model can quantify the need for trade in commodities between and within 10 regions, thus enabling trade forecasts that reflect dynamics, such as growth in the fossil fuel trade in the next decades, then its subsequent decline.

These dynamics are influenced by the energy transition towards renewables, new production methods – such as hydraulic fracturing – and changes in geographical focus of fossil-fuel demand and supply. So far, our literature survey has not found similar approaches where shipping volume dynamics are included as an integral part of the energy transition to 2050 (DNV GL, 2017a).

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chapter 4 | implications for maritime transport

4.1 the eto model

Our ETO model, designed to forecast the energy transition in 10 global regions (Figure 4.1), is a system dynamics feedback model implemented with Stella software and covering the energy system from source to sink.Âť

The main drivers for the transition of the supply is a decarbonization push.

figure 4.1 regions analyzed in the energy transition outlook Region North America (NAM) Latin America (LAM) Europe (EUR) Sub-Saharan Africa (SSA) Middle East and North Africa (MEA) North East Eurasia (NEE) China (CHN) Indian Subcontinent (IND) South East Asia (SEA) OECD Pacific (OPA)

33

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

The main drivers of energy demand are increasing GDP and improved energy efficiency restricting demand growth (Figure 4.2). Key demand sectors such as buildings, manufacturing, and transportation (air, maritime, rail and road) are analyzed.

The main drivers for the transition of the supply are a decarbonization push manifested as energy policies favouring some energy carriers over others.

Technology learning curves and corresponding cost developments are driving down costs of all energy sources, while resource availability constraints might drive up costs. Differences between these cost developments help to determine the future energy supply mix between and within fossil- and non-fossil fuel categories. The outlook has a significant focus on technology and quantifies uptake of new energy technologies.

In the main ETO report (DNV GL, 2017a), we detail our approach and resulting regional forecasts for energy demand and supply. We forecast that global energy demand stabilizes from 2030 at levels little higher than now. Energy supply peaks around the same period, and consumption of thermal fuels reduces, impacting maritime transport of coal and oil.Âť

The outlook has a significant focus on technology and quantifies uptake of new energy technologies.

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chapter 4 | implications for maritime transport

figure 4.2 overview of the eto model

energy intensity

population

gdp per capita demand

transport

manufacturing

buildings

road

goods

residential

aviation

base materials

commercial

maritime

non-energy

rail

policy

exchange

supply

trade volumes

fuel extraction & refining

oil

gas

bulk

oil

gas

coal

refineries

energy market

power

power

oil

coal

gas

coal

gas

nuclear

renewables

Source: DNV GL

35

dnv gl energy transition outlook – maritime

seaborne trade Fossil-fuel trade within and between regions is a major component of the forecast. Crude oil trade is determined by regional differences between its production and the respective demand for it. On the crude oil supply side, we model production capacity as a cost-driven global competition between regions and in three segments (offshore, onshore, and unconventional). Since crude transportation is typically less than 10 % of crude’s final cost, we use total breakeven production cost to estimate the location and type of future oil production. The gap between a region’s crude oil production and refinery input determines the surplus for export or a deficit to be met by imports, which is mainly transported on keel. The base assumption is that maritime crude trade flows only one way, in or out of a region, with ballast moving in the opposite direction. The final seaborne crude oil trade also accounts for intra-regional trade, estimated as a fraction of regional oil demand.

We adopt a simpler approach for shipment of oil products. Our oil products algorithm starts with interregional trade, driven by total import needs of regions.

This need is calculated from the difference between final oil products demand and refinery output. Intraregional trade and additional demand due to biofuels are accounted for using trade multipliers.

To determine seaborne gas trade, we deduct the current share of gas transported by pipelines. This reasoning is supported by historic data and trends in gas production. For gas in the form of LNG and LPG, transportation cost, including piping, liquefaction, and regasification, is a significant component of the final consumer gas price to users. Consequently, we model regional gas production differently from crude oil. Step one is to determine the fraction of gas demand to be supplied from the region’s own sources.

This varies between regions due to geographic, political, and economic differences, and over time.

Any shortfall in meeting demand from regional production is allocated to exporting regions according to their current shares as gas trading partners.

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Intra-regional trade is determined as a constant multiplier of regional gas demand.

Coal use is derived from sectors such as power, manufacturing, buildings, and transport, with demand for brown coal confined to its use for power. Each region’s hard coal supply reflects its mining capacity, which expands as demand increases and is limited by its geologically available reserves. As in the case of natural gas, we assume a stable mix and shares of trade partners for coal. Regions with domestic shortfalls import coal from those which export.

The model also tracks regional manufacturing of finished goods and the use of raw materials.

It provides a baseline for non-energy commodity trade on keel. Global minor bulk trade is correlated with worldwide production of base materials such as metals, paper, steel, and wood, thus enabling us to forecast global minor bulk trade. Iron ore trade is also driven by base material production, but uses a different trade multiplier than minor bulk. We have no explicit agriculture sector, and thus assume that grain production dynamics will follow population and GDP-per-capita growth of existing and potential grain-importing regions. Similarly, we define a relationship between container trade and the global supply of manufactured goods. A similar relationship exists between manufactured goods, production and other cargo trade, including shipping of dry cargo unaccounted for in other categories.

For most commodities, we estimate future distance of cargo based on historic data and expected changes in regional balances, and multiply the distance with the forecasted global trade volume to calculate tonnemiles. For natural gas and coal, we multiply each region pair’s trade volume with a sailing distance estimated by selecting two representative ports for each region and taking a weighted average. Because this approach utilizes regional imports and exports, the effect of new routes, such as North America emerging as a new exporter, is also reflected in tonne-miles. 

chapter 4 | implications for maritime transport

figure 4.3 model overview for the maritime sector

refineries Oil products production

trade volumes

tonne-miles

Crude oil

Crude oil tankers

energy demand

fuel extraction

Oil products

Oil products tankers

Oil demand

Crude oil production

Natural gas

Gas carriers

Gas demand

Natural gas production

Coal

Bulk carriers

Coal demand

Coal production

Non-coal bulk

Container ships

Containers

manufacturing

Other cargo vessels

Other cargo

Base materials

Manufactured goods

Source: DNV GL

37

dnv gl energy transition outlook – maritime

4.2 trade towards 2050

bulk, the combination of an increase in non-coal bulk trade with eventual reductions in coal transportation implies sustained growth to 2050, when trade will be almost 40% higher than currently.

We forecast a 35% rise in seaborne trade to 2030 and an additional 12% growth thereafter. We project increased seaborne transportation for all trade segments except crude oil and oil products, which peak around 2030 (Table 4.1). The largest relative growth in transportation demand is seen for gas and container cargo, each increasing by 135-150%. For

Variations in sailing distances explain the differences in the relative scale of trade by cargo type seen in Tables 4.1 and 4.2. As a result, the growth in annual transport of goods in tonne-miles from 2015 to 2030 will be 38%, slightly above the 35% projected growth in tonnes.

Similarly, the tonne-miles growth from 2030 to 2050 will be 14%. 

table 4.1 world seaborne trade tonnage

table 4.2 world seaborne trade tonne-miles

Cargo type

Cargo type

Trade (million tonnes/yr)

Trade (billion tonne-miles/yr) 2015

2030

2040

2050

Crude Oil

8 990

11 240

9 880

7 500

1 030

Oil Products

2 910

3 910

3 560

3 000

700

770

Natural Gas

1 420

2 900

3 210

3 570

6 080

6 330

6 640

Bulk

26 620

34 690

37 130

39 100

1 660

2 660

3 390

4 040

Container

8 290

13 290

16 910

20 100

1 120

1 650

1 940

2 260

Other Cargo

5 090

7 600

8 950

10 370

10 830

14 600

15 570

16 290

53 330

73 620

79 650

83 650

2015

2030

2040

2050

Crude Oil

1 870

2 250

1 990

1 540

Oil Products

1 020

1 330

1 220

Natural Gas

330

640

Bulk

4 820

Container Other Cargo

Total

38

Our seaborne trade forecast for selected years is presented in Tables 4.1 and 4.2 and the bigger picture over the forecasting period 2015–2050 in Figures 4.4 and 4.5, along with a breakdown of cargo type.

Total

chapter 4 | implications for maritime transport

figure 4.4 world seaborne trade: tonnage Units: Billion tonnes per year

Cargo type

18

Other cargo Container Bulk Natural gas Oil products Crude oil

16 14 12 10 8 6 4 2

0

1980

1990

2000

2010

2020

2030

2040

2050

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

figure 4.5 world seaborne trade: tonne-miles Units: Trillion tonne-miles per year

Cargo type

90

Other cargo Container Bulk Natural gas Oil products Crude oil

80 70 60 50 40 30 20 10 0

1980

1990

2000

2010

2020

2030

2040

2050

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

39

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

4.2.1 BULK As we attempt to distinguish energy commodities from all other cargoes, we analyse bulk trade as coal and non-coal. The latter includes grain, iron ore, and minor bulk (Figure 4.6). Non-coal bulk is vastly exceeding the coal trade, growing by 2.4%/yr to 2030 and 1.0%/yr thereafter. We forecast growth in iron ore and minor bulk trade to slow down, especially after 2030, because of a reduction in world base material output growth, which is itself driven by weaker GDP growth. Grain trade will also grow more slowly than recently, but growth will be sustained, reflecting GDP growth in developing regions.

Global seaborne coal trade is currently dominated by hard coal imports to China, India, Japan, and Korea from Australia and Indonesia. We forecast current massive Chinese coal imports to decline amid decarbonization of the countryâ&#x20AC;&#x2122;s power and manufacturing sectors, which will allow indigenous coal production to catch up with demand. The Indian Subcontinent will, by contrast, see sustained growth in coal consumption, but its production will also expand to enable self-sufficiency towards 2050.

Decarbonization of power generation in Japan and Korea will not gain enough momentum before 2030

figure 4.6 global seaborne bulk trade Units: Billion tonne-miles per year 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0

1980

1990

2000

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

40

2010

2020

2030

2040

2050

chapter 4 | implications for maritime transport

figure 4.7 regional net crude oil imports Region

Units: Million tonnes per year 2 000

OPA SEA IND CHN NEE MEA SSA EUR LAM NAM

1 500 1 000 500 0 0 -500 -1 000 -1 500 -2 000 1980

1990

2000

2010

2020

2030

2040

2050

Source: forecast - DNV GL; historical data — IEA, 2016

4.2.2 OIL to bring down imports, which are their only source of coal. This will make intra-regional trade within OECD Pacific the largest coal trade route in the world in 2030.

After 2030, an accelerated widespread shift from coal to alternatives will reduce its trade significantly. In 2050, the major importers will be the Middle East and North Africa, which are almost completely dependent on imports for coal, and some South East Asia countries, such as the Philippines and Thailand, that lack local coal resources. Middle East and North Africa will meet coal demand through supplies from Latin America, North East Eurasia, South East Asia, and Sub-Saharan Africa. Indonesia will remain the largest national exporter of coal. 

With more than 90% of crude oil trade on keel, changing production and consumption patterns impact seaborne trade directly. By 2030, as Europe and OECD Pacific reduce their oil consumption, China will continue to be the largest importer of crude, followed by the Indian Subcontinent. Exports will continue to come mainly from Middle East and North Africa, North East Eurasia, Latin America and Sub-Saharan Africa (Figure 4.7). Later, North-American exports become significant.

With a fast-growing transport sector, oil use will increase towards 2030 in China, Latin America, and North East Eurasia. Thereafter, it will start to reduce, due in large part to electrification of the sector. This contrasts with the Indian Subcontinent, Middle East »

41

dnv gl energy transition outlook – maritime

and North Africa, Sub-Saharan Africa and South East Asia, where oil demand keeps increasing until 2040.

This delay in peak oil demand is caused partly by slower electrification rates of vehicles in developing regions with less extensive power-grid infrastructure.

Oil use for air transport will also grow, propelling the Indian Subcontinent into the top crude importer position, leaving current leader China a close second.

By 2050, imports to these two regions will constitute two-thirds of seaborne crude oil trade. West African exports will vanish, as Sub-Saharan oil demand increases to equal the region’s indigenous production level.

There will be interesting supply-side developments beyond 2040. Early signs of resource depletion in Middle East and North Africa will result in a 10% reduction in the region’s oil exports from 2040–2050.

The cost of shale oil in North America continuously

declines and will drive exports from there, mainly to Asian regions.

Currently, more than 85% of global seaborne crude oil trade is inter-regional, the remaining 15% being within regions. Seaborne crude oil trade will plateau some 15% higher than now within the next decade, thereafter trending down after 2032 to reach around 7.5 trillion tonne-miles in 2050 (as illustrated in Figure 4.8).

Forecasting trade in oil products as a function of regional refineries’ output and demand, we conclude it will follow a similar pattern to crude oil trade, following the levelling off and eventual decline of global oil demand. The seaborne oil products trade in terms of tonne-miles is around one third of the crude oil trade in 2015, and the reduction will be a little less than for crude oil, partly due to increased biofuel trade.

figure 4.8 global seaborne crude oil and oil products trade Units: Billion tonne-miles per year 12 000

10 000

8 000

Crude oil

6 000

4 000

Oil products 2 000

0

1980

1990

2000

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

42

2010

2020

2030

2040

2050

chapter 4 | implications for maritime transport

4.2.3 NATURAL GAS Trade in natural gas (the sum of LNG and LPG), will continue to increase (Figure 4.9).

However, shifting demand and supply patterns will change trade flows. This is illustrated in the map below (Figure 4.10), where the thickness of the lines represents trade volume in tonnes, although the paths do not represent detailed trade routes. The most salient feature is the stark increase in exports from North America to China and Africa.

Driven by manufacturing sector growth, China’s rising need for natural gas sees it become the leading gas importer by 2030. A manufacturing boom and population growth drive Indian Subcontinent’s demand between 2030 and 2050. Regional production will not keep up with demand, making Indian Subcontinent the largest gas importing region in 2050. Sub-Saharan Africa becomes a net importer of natural gas as its own cheap onshore and offshore resources are depleted after 2030.»

figure 4.9 global seaborne natural gas trade Units: Billion tonne-miles per year 4 000

3 500

3 000

2 500

2 000

1 500

1 000

500

0

1980

1990

2000

2010

2020

2030

2040

2050

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

43

dnv gl energy transition outlook – maritime

Most gas exports are currently through pipelines, Russia to Europe being the prime example. This will change, as inter-regional trade - particularly North American exports - will grow towards 2050, when we project the share of piped natural gas trade between countries to decrease to less than 50%.

The position of Middle East and North Africa as the largest exporter region will be rivalled by North America as unconventional gas production there expands. North America – together with smaller contributions from Europe, Latin America, and Middle East and North Africa – will supply Sub-Saharan Africa’s new gas demand. Middle East and North Africa will be the main source for meeting Indian Subcontinent’s increased gas demand.

44

China’s rising need for natural gas sees it become the leading gas importer by 2030.

chapter 4 | implications for maritime transport

2015

Exporting Region OPA SEA IND CHN NEE MEA SSA EUR LAM NAM

2050

Source: DNV GL Please note: while the thickness of the lines represents actual trade volume in tonnes, the connections shown do not represent particular trade routes.

45

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

4.2.4 CONTAINERS Container trade has grown strongly for decades, outpacing global seaborne trade because of an ever-increasing containerization rate. As the share of dry cargo being transported in containers overtakes alternatives and reaches a natural limit, containerization growth will slow down. However, slower growth due to limits on increased containerization is offset by increasing trade in finished products. We forecast container trade to increase by 3.2%/yr to 2030 and 2.1%/yr thereafter (Figure 4.11).

Container growth is projected for all regions, and will be greatest in those with the largest growth in manufactured output. We expect Indian Subcontinent to show the strongest growth, China to sustain substantial increases, and South East Asia and Sub-Saharan Africa to outpace average growth, leading to a strong rise in Indian Ocean trade.ď Ž

figure 4.11 global seaborne container trade Units: Billion tonne-miles per year 20 000

15 000

10 000

5 000

0

1980

1990

2000

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

46

2010

2020

2030

2040

2050

chapter 4 | implications for maritime transport

figure 4.12 global seaborne other cargo trade Units: Billion tonne-miles per year 12 000

10 000

8 000

6 000

4 000

2 000

0

1980

1990

2000

2010

2020

2030

2040

2050

Source: forecast - DNV GL; historical data - Clarkson Research, 2017

4.2.5 OTHER CARGO Other cargo is a category encompassing all types not described above. It includes general cargo, and chemicals carried on tankers and vessels. Parts of the other cargo segment will move to containers over time. This is one main reason why the segment will see annual growth rates decline towards 2050 (Figure 4.12): seaborne other cargo trade will increase 2.7%/yr on average until 2030, and 1.6%/yr thereafter. Our analysis does not track geographical change in this trade, but we foresee a slow eastward shift in line with growth of Asiaâ&#x20AC;&#x2122;s share in the world economy.ď Ž

Slower growth due to limits on increased containerization is offset by increasing trade in finished products.

47

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

4.2.6 OFFSHORE SHIPPING A significant amount of shipping activity relates to offshore activities. These are principally oil and gas exploration, development, and production, although offshore wind, aquaculture, and other sectors also need shipping.

Our analysis forecasts offshore oil and offshore gas production (DNV GL, 2017a; DNV GL, 2017e), providing important input for predicting future activity levels of offshore shipping compared with a baseline year of 2015 (Figure 4.13).

Figure 4.13 illustrates offshore oil and gas output over the forecast period and projects changes in production capacity â&#x20AC;&#x201C; particularly related to capacity additions (new start-ups). Significant declines are forecast.

48

Offshore gas production will rise from the early 2020s to plateau around mid-decade before entering a slow, sustained decline from the mid-2030s. Our model focuses only on longer-term trends and developments. The shorter-term dynamics of year-onyear changes are not reflected; so, some divergence from actual data is to be expected.

Changes in shipping activity are not directly proportionate to the scale of shifting patterns in either offshore production or new offshore developments.

Factors such as distance to shore, geography, subsea engineering activity, water depth, field complexity, and the maturity of the field will also have an influence.

Still, we expect that offshore-shipping activity related to new oil and gas field developments will likely more

chapter 4 | implications for maritime transport

We predict that offshore wind energy generation will grow 200-fold over the forecast period (DNV GL, 2017f); more energy will come from offshore wind than from offshore oil in 2050. Offshore wind requires significant shipping activity for installation and subsequent operations. We expect China to become the largest region for offshore wind, followed by North America, OECD Pacific, and Europe. Our analysis does not include offshore aquaculture or other non-energy related activities.

than halve over the forecast period. We also anticipate reduced shipping activity related to existing fields.

Decommissioning of offshore oil and gas assets will increase over the period, but not to an extent that will compensate for reduced activity in new and existing fields.

Drilling rig activity naturally scales with levels of exploration, new field developments, and oil and gas production. It will follow a similar track to the forecast reductions in offshore oil and gas shipping activity.

Geographically, such shipping activity will shift towards the Middle East and South East Asia, areas that will dominate offshore production and new developments.

Summarized, much offshore oil and gas ship activity will decline over the forecast period, while offshore wind requires significant new shipping activity. ď Ž

figure 4.13 offshore oil and gas activity relative to 2015 Units: Percentage of 2015 level 120%

100%

Natural gas production

80%

60%

Natural gas capacity additions

40%

Crude oil production

20%

Crude oil capacity additions

0%

2015

2020

2025

2030

2035

2040

2045

2050

Source: DNV GL

49

5 THE ENERGY TRANSITION: IMPLICATIONS FOR WORLD FLEET 5.1 technology and fuel uptake 5.2 future fleet size 5.3 energy mix and co2 emissions 5.4 carbon efficiency and co2 emission development

53 56 58 62

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

5. the energy transition: implications for the world fleet

This section provides an outlook for the world fleet, discussing how it may develop to meet transport demand in the light of expected technology developments and upcoming regulations. We focus only on long-term developments and the fleet needed to meet forecast demand for transport; we have not modelled short-term cycles.

The projected transport demand in 2050 is 84 trillion tonne-miles, nearly 57% more than in 2015. Strongest growth will be in the container,

52

gas, and other cargo trades: demand for tankers will level off and later decline.ď Ž

chapter 5 | implications for world fleet

5.1 technology and fuel uptake

In Low Carbon Shipping Towards 2050 (DNV GL, 2017c), DNV GL projected the uptake of a wide range of energy-efficiency measures, alternative fuels, and other emission-reduction technologies based on projected investment decisions and upcoming regulations. Energy use and emission levels will depend on the availability of technological solutions applicable to each segment, their emission-reduction potential, and uptake rates.

Modelled levels of uptake depend on the expected payback time for each technology and fuel, the investment horizons of ship owners, and on regulation requiring specific technologies or specifying general levels of energy efficiency and carbon intensity.

Energy use and emission levels will depend on the availability of the technological solutions applicable to each segment, their emissionreduction potential, and uptake rates.

Fleet growth and scrapping rates determine the possible penetration rate of new technologies and fuels. Old vessels are scrapped first; new vessels are added to match expected demand, taking into account changes in speed, utilization, and ship size.

Possible technologies and solutions to reduce energy use and CO2 emissions are grouped into three main categories: alternative fuels; energy-efficiency measures; and logistics and speed reduction.

Measures evaluated in this study, and their expected individual impacts, are listed in Table 5.1. The forecasted percentage changes are relative to the performance of an ‘average ship’ built in 2015 but running on low-sulphur fuel, as this will be the default from 2020 with the introduction of global low-sulphur requirements.»

53

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

table 5.1 technology and fuel options: impact on carbon and energy efficiency

Fuel option

Energy efficiency

Logistics and speed

Carbon efficiency (%)

Energy efficiency (%) (main engines)

Energy efficiency (%) (auxilliary engines)

Baseline: switch to low sulphur fuel

-

-

-

HFO with scrubbers

-

-5

-5

LNG

20

-

-

Biofuels (gas or liquid)

100

-

-

Electricity

100

50

50

Hull form - new buildings

-

12-17

-

Hydrodynamics - retrofit

-

13-20

-

Machinery improvements

-

4-8

12-23

Waste heat recovery

-

0-8

-

Battery hybridization

-

3-15

-

Operational measures

-

3-11

-

Cold ironing

-

-

30-70

Renewable energy (wind, solar)

-

0-10

0-2

Air lubrication

-

3-5

-

Speed reduction (5%)

-

10

-5

Vessel utilization

-

3-20

-

Increase vessel sizes

-

4-14

-

Alternative sea routes

-

0-20

-

Sources: DNV GL (2017c), Smith et al (2014), and DNV GL (2017b)

54

chapter 5 | implications for world fleet

Including these measures and related reduction factors in our investment decision model, DNV GL predicts the following trends over the period 2015–2050 (DNV GL, 2017c): __ Fuel consumption per vessel will decline 18% on

average due to energy-efficiency measures, mainly hull-form and machinery improvements

__ Vessel speeds will decline by about 5% on average,

reducing fuel consumption by 10%

__ Electricity from batteries will power a third of ships,

mostly smaller vessels accounting for about a thirtieth of the total energy demand from shipping

__ LNG and LPG will account for 32% of total shipping

energy use, and biofuel about 18%

__ Vessel utilization will increase in all segments:

about 25% for deep sea trades except bulk, around 5% for deep sea bulk, and some 20% for short sea ships

__ The average size of deep sea vessels will rise 40%

for LNG tankers (due to more deep sea vessels), 30% for container and other cargo, and 10% for bulkers

This study assumes, in line with the Intergovernmental Panel on Climate Change, that combustion of biofuels and use of electricity is carbon-neutral. Any emissions due to production are accounted for elsewhere in our ETO analysis and are not double-counted in this maritime outlook.

Although the carbon-neutrality of biofuels is debated, those used in the future will be different from today.

Third- and fourth-generation biofuels will likely be closely examined to see if they can be approved for use and labelled as carbon-neutral and sustainable (see DNV GL 2017a, pp 141, for a more detailed discussion on this topic).

In line with established GHG-accounting procedures, emissions from power stations are accounted for when fuels are combusted for generation. Electricity use in shipping will thus give zero emissions in the maritime sector.

For LNG, we assume a 20% reduction of CO2 emissions, though emissions of unburnt methane (‘methane slip’) may mean GHG emissions are cut by only about 10%.

The global 0.5% sulphur limit from 2020 will shift fuel use to low-sulphur fuels. In the shorter term, ships will still use heavy fuel (residual) oil and will be fitted with scrubbers, but this solution will be phased out in the longer term. Such exhaust-gas cleaning will result in a 5% fuel-consumption penalty for the affected fleet, but will not impact on the forecasted energy consumption in 2050.

55

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

5.2 future fleet size

The projected fleet size in deadweight tonnes will rise by almost half (48%) by 2050. The forecasted development by segment is shown in Figure 5.1. We predict that the crude oil fleet will decrease by nearly a fifth (18%) come mid-century, peaking around 22% greater than today in 2030, before it is shrinking towards 2050. The product tanker fleet will by then be about the same size as today.

High demand growth for LNG tankers will see the fleet size double by 2030 but then slip back for a total increase of 146% by 2050. The bulk segment will remain relatively stable with moderate long-term growth of about 34% to 2030 and 50% to 2050. The greatest increase after gas carriers will be in the container segment where fleet size grows with GDP and rises 66% to 2030 and 143% to mid-century.

figure 5.1 fleet development 2015-2050 by segment Units: Million DWT

Segment

3 000

Non-cargo Other cargo Container Bulk Natural gas Oil products Crude oil

2 500

2 000

1 500

1 000

500

0 2015 Source: DNV GL

56

2020

2025

2030

2035

2040

2045

2050

chapter 5 | implications for world fleet

figure 5.2 impact of selected drivers on cargo fleet size by 2050 Units: Number of ships 65 000 63 800

64 000 63 000 62 000 61 000

2 900

60 600

Speed reduction

Expected fleet size

-2 900 60 000 59 000 58 000 -3 200

57 000 56 000 Baseline fleet size

Increased utilization

Increased size

Source: DNV GL

For other cargo vessels, we predict a doubling of the fleet by 2050.

The demand for non-cargo ship transportation and services, including offshore, are not modelled directly, but are included for the purpose of estimating the fleet size and energy use. Average annual growth for these demand parameters is assumed to be 2.0% (DNV GL, 2017b) for non-cargo vessels, which results in a forecasted doubling of the fleet by 2050.

The effects of these drivers vary by shipping segment.

Figure 5.2 illustrates our predictions for their individual and combined impacts on cargo fleet size by 2050, with the baseline being the expected fleet numbers in 2050 without any improvements or speed changes.

The increased need for tonnage due to reduced speed is negated by the increased utilization of the fleet. Increased vessel size will reduce the number of vessels, but does not change the total deadweight of the fleet. ď Ž

The number of ships and total fleet size (deadweight) will grow differently than demand (tonne-miles).

Speed reduction, vessel utilization, and vessel size will impact directly on the relationship between tonne-miles to be transported and the corresponding deadweight tonnage. Lower speed requires higher deadweight tonnage to handle the same transport work, while better utilization and larger ships reduce the deadweight tonnage needed.

57

dnv gl energy transition outlook – maritime

5.3 energy mix and co2 emissions

We forecast that by 2050, nearly half (47%) of shipping energy will be supplied by oil-based distillates, 32% by gas, and only 21% by sources with significantlyreduced carbon footprints, such as electricity and biofuels (Figure 5.3). Short sea shipping will use 37% of the total energy, and in these segments electricity can constitute a significant share (9%) of energy use.

Total energy use and energy efficiency vary considerably between segments with their typical sizes and speeds. Product tankers are generally smaller and less energy efficient than crude oil carriers, but the number of the former is higher and their total energy use is about the same as for the carriers.

Greater energy efficiency coupled with speed reduction will see energy use per tonne-mile shrink by 35–40%, with the highest potential reduction being in container, LNG tanker, and other cargo carriers (Figure 5.4). For tank and bulk, current operating patterns already include slow steaming; further reductions will be harder to achieve.

The container and bulk segments will account for the largest shares of total shipping energy use, 35% and 20% respectively. We predict that total energy use in international shipping will increase from about 10.7 EJ in 2015 to 12.0 EJ in 2050. This equates to 256 Mtoe in 2015, while figures for 2050 are 276 Mtoe of Heavy Fuel Oil (HFO)/Marine Gas Oil (MGO), LNG, and biofuels, and an additional 110 terawatt houss (TWH of electricity).

58

Greater energy efficiency coupled with speed reduction will see energy use per tonne-mile shrink by 35–40%.

chapter 5 | implications for world fleet

figure 5.3 shipping energy mix 2050 Segment Total fleet

3.8 EJ 32%

2.2 EJ 18%

Deep sea

5.6 EJ 47%

0.4 EJ 3%

2.5 EJ 32%

1.4 EJ 18%

Short sea

3.8 EJ 50%

1.4 EJ 32%

0.8 EJ 18%

1.7 EJ 41%

HFO/MGO LNG Biofuel Electricity

0.4 EJ 9%

Source: DNV GL

59

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

figure 5.4 fleet characteristics 2015â&#x20AC;&#x201C;2050 by ship segment Units: Million DWT 1 200

1 000

Fleet size

800

600

400

200

0 Crude oil

Product tankers

Natural gas

Bulk vessels

Container

Other

Non-cargo

Units: MJ/tonne-mile 0.5

Energy efficency

0.4

0.3

0.2

0.1

0 Crude oil Source: DNV GL

60

Product tankers

Natural gas

Bulk vessels

Container

Other

chapter 5 | implications for world fleet

Years

Units: Billion tonne-miles/yr 40 000

2015 2050

35 000

Transport work

30 000 25 000 20 000 15 000 10 000 5 000 0 Crude oil

Product tankers

Natural gas

Bulk vessels

Container

Other

Units: EJ/yr 5

Energy use

4

3

2

1

0 Crude oil

Product tankers

Natural gas

Bulk vessels

Container

Other

Non-cargo

61

dnv gl energy transition outlook – maritime

5.4 carbon efficiency and co2 emission development

Grouped into three categories – energy-efficiency measures, alternative fuels, and logistics improvements and speed reductions – the drivers in our model will progressively decarbonize shipping by 2050. We forecast that average carbon efficiency (CO2 emitted per tonne-mile) on average will improve by 51% by then (Figure 5.5). This assumes the availability of 2.2 EJ or 51 Mtoe of biofuels, which is about 4% of the total projected global modern biomass energy available in 2050 (DNV GL, 2017a).

figure 5.5 shipping: average carbon efficency 2015-2050 Units: Gramme CO2 per tonne-mile

62

CO2 emissions for international shipping will fall by a quarter from 800 Mt to 594 Mt by 2050.

chapter 5 | implications for world fleet

figure 5.6 international shipping: emissions pathway 2015â&#x20AC;&#x201C;2050 Units: Million tonnes CO2/yr

Segment

1 500

Logistics and speed Fuel Energy efficiency Baseline Remaining

1 000

500

0 2015

2020

2025

2030

2035

2040

2045

2050

Source: DNV GL

Based on projections of demand for maritime transport work, we forecast that CO2 emissions for international shipping will fall by a quarter from 800 Mt to 594 Mt (Figure 5.6) by 2050. Carbon-neutral fuels contribute around 40% of the total CO2 reduction by mid-century.

The impact of lower speeds and other logistical measures can be achieved to full effect early in the period up to 2035, as these options can be implemented without renewing the fleet. Beyond 2035, we will see the full impact of gradually improving the energy efficiency of new ships and the shift to alternative fuels.ď Ž

63

dnv gl energy transition outlook â&#x20AC;&#x201C; maritime

6 KEY ISSUES TO MONITOR 6.1 the next five years 6.2 potential game-changers towards 2050

67 69

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6. key issues to monitor

This section addresses some key issues by segment to monitor over the next five years, and potential game-changers that could shift our projections in the long run towards 2050.

While the model forecasts the most likely development of the energy transition based on our current assumptions and data sets, the actual pathways and outcomes in 2050 will remain subject to change.

There are naturally uncertainties to the projections presented here, and further details of the sensitivities of our analysis are available in the main report (DNV GL, 2017a). Other studies have forecasted stronger growth in transportation demand (e.g., Fang et al, 2013; OECD/ ITF (International Transport Forum) 2017; Sharmina et al, 2017; OECD/ITF 2016; OECD 2014). This is partly explained by their expectations of higher economic growth, fossil fuel use, and trade multiples compared with the levels factored into our ETO analysis. An overview of short- and medium-term seaborn trade forecasts has been provided by UNCTAD (2017, Table 1.11).ď Ž

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The rapidly evolving digital economy, influences international trade.

chapter 6 | key issues to monitor

6.1 the next five years

The main ETO report devotes a separate chapter to key issues that are important to monitor over the next five years, and which will indicate where our projections might diverge from actual outcomes. Some issues are particularly important to maritime transport, and some are key for all maritime market segments.

The world fleet development is driven by many factors, such as newbuilding activity, scrapping, deliveries, changes of newbuilding, and second-hand and scrap prices. In addition, one needs to pay attention to speed, congestion, and lay-ups, as well as port and logistic capacity developments. All these elements will shape the future size and the productivity of the fleet, and thus influence the capacity utilization that, ultimately drives the earnings. All these factors should be closely monitored. Specific regional initiatives, such as the â&#x20AC;&#x153;One Belt and One Roadâ&#x20AC;? initiative in China and the expansion of the Northern Sea Route (NSR), could also factor into changing trade patterns and fleet requirements.

Key issues to watch in the bulk, container, gas and oil tanker shipping segments over a five-year horizon are discussed below.

bulk The share of globally produced coal that is traded on keel is relatively low. As such, any predictions about coal trade are consequently very sensitive to domestic coal production levels, particularly in China and India.

If these regions reduce local production, demand for seaborne coal trade will not decline as forecast.

Non-coal bulk has been dominated by growth in China, where the trend in recent years indicates a slower industrial production growth and a gradual shift towards a more service-oriented economy.

It is important to monitor whether this pattern continues and spreads to more countries. Complicating the picture for the seaborne grain trade in the future, are the offsetting impacts of improving agricultural productivity and global climate change. There is both a significant upside and downside potential for this trade, particularly with respect to the developing countries.

container In the container segment, the seaborne trade versus GDP multiplier has been gradually falling in the recent years. However, in 2017 this indicator reverted up to the previous higher levels. If it falls below 1.0, it may indicate that our forecast for container trade may be on the high side. Increased regionalization will further increase intra-regional trade, consequently reducing the importance of the major trunk lines between continents and will naturally lead to shorter voyage distances.

Containerization of the trade continues to develop into new areas. This will not only increase the container trade, but it will also reduce the other cargo trades. For example, food importers in Asia are switching from dry bulk cargo ships to container vessels, filling empty containers after unloading consumer goods in Western countries2. The impacts of ship upsizing, the expansion of the Panama Canal, and the emergence of megaalliances could also lead to improved fleet capacity utilization.

Rapidly evolving digital economy, influences the international trade as well and thus should be closely monitored. For example, trade in ICT (information and communications technology) goods has grown dramatically over the last decade. In addition, worldwide shipments of 3D printers more than doubled in 2016, and sales of robots are on their Âť

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highest level ever (United Nations and UNCTAD, 2017). Also, products are increasingly purchased and delivered across borders, with some 380 million consumers making purchases on overseas websites.

gas Today, more international gas trade is piped than moved on keel. However, Europe especially, the security of the supply of piped gas from Russia has been called into question, and many projects are underway to reduce this uncertainty of supply through imports of LNG. Attention should also be paid to the geopolitics of the Middle East and the shale gas revolution in North America. North America will soon become a major global LNG exporter, which will have a substantial impact on the future global gas transport patterns and sailing distances. Developments in Australia will play a key role in providing LNG to the Asian countries. In addition, new projects such as Yamal in Russia, Malaysia and Cameroon will also influence the future global trade of LNG. We forecast that an increasing share of world gas transport will be on keel. Finally, the booming FSRU (Floating Storage and Regasification Unit) market introduces new LNG importers, which again will have an impact on the trade. In the short term, the construction of gas terminals and new pipelines will see our forecast either validated or refuted.

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oil tankers The geopolitical situation in the Middle East tops the agenda for tanker owners; stability in Iran, Iraq, Saudi Arabia, and neighbouring countries is considered important. OPEC's (the Organization of Petroleum Exporting Countries) evolving strategy regarding production limits, not to mention the degree to which this is implemented, might alter crude shipping in the coming years. Oil is a global commodity and average transport distances are linked to changes in global production patterns - for example, continued increases in output of North American shale oil. Trade routes could diverge from the trends we expect, thereby extending or shortening actual trade distances.

China, with its increasing imports, could be used as an example, as it constantly diversifies the sources of oil supply. Moreover, over the next few years we assume a significant improvement in transportation fuel efficiency worldwide, and especially in North America. In some countries where fuel efficiency is not regulatory driven, a low fuel price might delay the expected improvement.ď Ž

chapter 6 | key issues to monitor

6.2 potential game-changers towards 2050

Key drivers that could trigger game-changing shifts in energy use, emissions, transport, and technology development in shipping include the following:

decarbonization and environmental awareness Future energy emissions are forecast to be far higher, and to contribute to stabilization at 2.5°C more than pre-industrial levels, the least ambitious target in the Paris Agreement (DNV GL, 2017a).

The energy shifts needed to achieve the 2°C, and more ambitious 1.5ºC targets, are key uncertainties when predicting future energy use and energy trade on keel.

Only extraordinary steps, combining governmental, private sector, and societal efforts can avoid overshooting the global-warming limits. The impetus of the Paris Agreement and implementation of national and international policies could drive technology development of emission-reduction solutions and of carbon capture and storage technologies (CCS). The impact on maritime trade can work in both directions: failure to follow up on the Paris Agreement, or wide scale adoption of CCS, could sustain higher trade in fossil-based energy than those projected. Conversely, if fossil-based fuels are phased out entirely, trade in oil and coal will decline significantly and could even be replaced by other energy carriers such as biomass/ biofuels, and hydrogen.

The shipping energy use and emissions, forecasts described in Section 5 suggest that the sector’s emissions will decline by a quarter by 2050. A forthcoming IMO GHG strategy will address emission reductions from international shipping3 ; it is not part of the Paris Agreement. If the strategy is entirely

successful, and is supported by governments and related international bodies, decarbonization of the sector will progress further and faster than projected.

That said, IMO requirements will, in any case, not take effect before 2023, and its GHG strategy may not have a significant impact before the end of the next decade.

New regional or local regulatory requirements, targets and policies on GHG emissions and/or fuel types could change the competitiveness of energy-efficiency technologies and alternative fuels. The impact of decarbonization and how shipping can handle associated the risks and opportunities are discussed in Section 7.

As pressure on land use increases, the marine environment will assume more importance in achieving the UN’s Sustainable Development Goals. Shipping has a critical role to play in facilitating the development of offshore wind, tidal, and wave energy, the harvesting of food and raw materials from the oceans, and in providing sustainable transport solutions for cities and other populated coastal areas (DNV GL, 2017d).

Transport of fresh water may emerge in the long term, and we can expect a higher demand for construction materials in order to adapt to a changing and less hospitable climate (OECD, 2017).

major shifts in transport demand Energy is not the only category of trade subject to uncertainty. There is, for example, vast potential to improve the level of recycling of industry input factors.

There is rising interest in, and action to, establish ment of circular economies, which reduce consumption of virgin materials and the generation of waste, trends that might shift transport demand. »

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We assume increasing use of renewable electricity in manufacturing, and greater reuse of materials. It will take a significant improvement in heavy industry’s processes to enable such shifts. If this does not happen, trade in energy, finished goods, and raw materials will be affected.

Grain currently accounts for only about 10% of total bulk trade. Based on a scenario in which the global population reaches 9.2 billion in 2050 – similar to our own assumption – the Food and Agriculture Organization (FAO) of the United Nations expects food imports in the developing world to double by then (FAO, 2017). If so, our assumption of a mildly growing bulk grain fraction is too conservative, and bulk trade would be higher.

Significant trade volumes between big actors – such as China and India on one side, and Russia and Central Asia countries on the other – may flow via other modes, such as rail and pipelines, as an alternative to seaborne transportation. Large infrastructure-development projects, such as China’s OBOR (One Belt and One Road) initiative and the Japan-Asian Development Bank partnership, will stimulate growth and demand for seaborne transport (UNCTAD, 2016). For example, the OBOR initiative involves construction of a trade network involving 60 countries, with around 900 projects either under negotiation or under way (UNCTAD, 2016; 2017). On the other hand, OBOR also predicates a significant increase in land-based trade, which would negatively affect seaborne.

Additive manufacturing, or 3D printing, could gain significant momentum. It is expected to have some impact on trade in manufactured goods, but less so for raw materials, as these still have to be transported from the original sources. The increased use of robots could enable relocation of production back to developed countries, shortening global value chains, and potentially reducing demand for seaborne transport (OECD, 2016b).

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Trade liberalization over the past decades has generally benefitted international trade and maritime transport. Recent years have brought renewed focus and debate on trade liberalization. Protectionist trade policies would pose a potential downside risk to maritime transport. Our base assumption is that prevailing trade regulations and relevant governance institutions will continue unchanged so that, at least in the medium term, the risk to trade will be less than from the energy transition and manufacturing’s decreasing share in advanced economies.

digitalization and innovation Digitalization can reduce the cost of shipping while improving safety. It is set to enable reduced downtime, predictive maintenance, performance forecasting, real-time risk management, and energy efficiency.

Operators will generate cost savings through advanced data analytics, process digitalization, robotic process automation, and connecting and sensing technology (DNV GL, 2014).

We assume that digitalization will boost shipping efficiency and improve related energy use, increase utilization of the current fleet by improving logistics and planning, boost port development, and enhance voyage performance through better weather routing and autopilot. Indirectly, digitalization can enable new business models and better ship operation, with a positive impact on energy use. Autonomous ships can sail at very low speeds without incurring high crew costs, allowing greater use of batteries and other fuel types (DNV GL, 2014).

Innovative ship concepts may also emerge to create a leap forward in performance. Examples include ballast-free ships, and low- and zero-emission hybrid ships, incorporating various advances such as novel hull forms above and below the water, innovative light materials, alternative powering, including from shore, and energy-storage modules. 

chapter 6 | key issues to monitor

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7 THE CARBONROBUST SHIP

dnv gl energy transition outlook – maritime

7. the carbon-robust ship

In this section we assess the impact of a low carbon future on the maritime industry, primarily in terms of ship structures and vessel and fleet operations. The "carbon-robust ship" is a framework to evaluate and improve competitiveness and profitability in a market, climate and regulatory environment.

With the forecast, energy future, the world fails to achieve the Paris Agreement’s target of limiting average global warming to well below 2°C above pre-industrial levels. Securing a 2°C future will not be achieved without a steeper reduction in the use, and hence transport, of fossil fuels. A low-carbon future would also require more energy-efficient ship designs and operations, and carbon-neutral fuels.

Future regulations and stakeholder expectations might require significant investments to upgrade and renew ships.

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The maritime industry is confronted with the need to adapt to a future in which carbon efficiency will become a more important source of competitive advantage, but where the scale, pace, and policy drivers of decarbonization are uncertain. Even if the world does get on track for a well below 2°C future, the exact impact on the global shipping sector is unknown; intenally, the industry will be subject to emission reduction requirements, and external expectations will be that the sector contributes to global decarbonization.

chapter 7 | the carbon-robust ship

Companies need first to understand how climate change trends will impact commercial risk. In considering this, we introduce the term â&#x20AC;&#x2DC;the carbonrobust shipâ&#x20AC;&#x2122;. It refers to a ship or fleet that can maintain both short- and long-term profitability, given any decarbonization scenario. Amidst an uncertain energy transition, a vessel launched today may well experience abrupt market and regulatory changes in its lifetime.

A ship that can withstand not only stormy weather, but also noticeable market and regulatory changes will become indispensable.

An approach to evaluating the carbon robustness of vessels and fleets is outlined in Figure 7.1. It builds on a three-step approach, identifying risk and opportunity drivers, scenario-stresses testing, and assessment of carbon robustness. A key component to evaluating the carbon robustness, is to stress-test how well a ship, fleet, and company perform under different energy transition scenarios.Âť

A vessel launched today may well experience abrupt market and regulatory changes.

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step 1: risk and opportunity drivers

__ Technology: Technology will assist efforts to limit global warming to well below 2°C. There will be a continued focus on achieving cost savings through energy-efficiency technologies.

Policymakers may introduce or vary incentives for technologies that promote decarbonization and may penalize less environmentally-friendly performance. Either way, the business benefits of cleaner shipping will be strengthened. It will be important to be able to create flexible ships with low retrofit costs, or to develop vessels whose energy costs will be competitive in both the shortand long-terms.

Start by identifying risk and opportunity drivers directly impacting business performance measures such as profitability. Drivers depend on segments, ship types, relevant technologies in the fleet, regulatory developments, stakeholders, and weather conditions.

Identification can be structured around key uncertainties associated with climate change and decarbonization. Among these, physical climate risk refers to structural changes in the climate system leading to alterations in natural operating conditions for shipping. Extreme weather may impede vessel operations by challenging the structural integrity of the ship. More chronic climate change may eventually change trade patterns due, for example, to shifts in production patterns related to agricultural production, while also creating new commodity trade demands.

Non-physical climate-change risk and opportunity factors are associated with uncertainty arising from society’s transition to a ‘well below 2°C’ world. If the transition happens, these inter-linked risk factors will impose dramatic changes for the commercial operating conditions for shipping. For the maritime industry, the impact of change could come through: __ Regulation: Achieving the Paris Agreement will require tighter GHG policies. This will likely entail global/regional regulation of ship CO2 emissions and of other industry sectors – which may affect patterns of trade demand for shipping – and the introduction of pricing of ship CO2 emissions. More energy-efficient ships will be less exposed to CO2 cost levels and thus more carbon robust.

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__ Markets: Curbing climate emissions to the degree

necessary to limit global warming to well below 2°C will require changes in global trade volumes and patterns. Fossil-fuel trade could experience a much more dramatic fall than we forecast.

Demand for trade in new or expanding energy carriers, such as biofuels and hydrogen, could emerge and escalate. Short sea shipping and new vessel operations tied to renewable energy and new ocean industry-related ‘blue growth’ might further drive innovative thinking on how the maritime industry can play a supporting role towards a more sustainable future.

__ Stakeholders: We are already seeing stakeholders

in the maritime industry are heightening their focus on climate concerns. Finance sector requirements on climate risk assessment and disclosure may become common in a few years.

If so, carbon performance and climate-risk exposure will be required information.

chapter 7 | the carbon-robust ship

step 2: scenario stress-testing This involves testing the impact of several scenarios on performance indicators to assess how a ship or fleet will respond to challenges. The forecast presented in this report is our view of the most likely development of the energy transition, but other possibilities are discussed in Section 6. For example, it is plausible that political action, in line with the Paris Agreement, will result in a high carbon price. If a ship is energy efficient, or uses carbon-neutral fuels, its exposure to carbon pricing will be mitigated. The operating costs of well designed and operated ships will be lower than those of more energy- and carbon-intensive vessels.

step 3: carbon robustness The final step is to calculate the carbon robustness of a ship or company fleet, and develop mitigating strategies. It involves assessing various factors that impact on the ability to handle potential decarbonization and climate-change scenarios.

These factors are: __ Carbon flexibility: the ability of a ship/fleet

to withstand different future carbon prices

__ Fuel flexibility: the ability of a ship/fleet to switch

between fuel types throughout its lifetime to enable use of the most advantageous fuel

__ Retrofit flexibility: the ability of a ship to adopt

a ‘wait and see’ strategy; additional space on the ship may be designed to allow for cost-effective retrofitting when or if needed

__ Speed flexibility: the ability of a ship to sail

at an optimal speed under different market demand and fuel price scenarios

__ Cargo flexibility: the ability of a ship to transport

different cargo types to adapt to changes in market demand 

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references

1 The world merchant fleet - Statistics from Equasis’, http://www.emsa.europa.eu/equasis-statistics/ items.html?cid=95&id=472 2 Food importers shift from dry bulk cargo ships to containers https://www.reuters.com/article/agri-container/ food-importers-shift-from-dry-bulk-cargo-ships-tocontainers-idUSL5N0LF3MZ20140214 3 Low carbon shipping and air pollution control http://www.imo.org/en/MediaCentre/HotTopics/ GHG/Pages/default.aspx 4 DNV GL, (2017a). Energy Transition Outlook 2017: A global and regional forecast of the energy transition to 2050 5 DNV GL (2017b). Navigating a low-carbon future, DNV GL report 2017-0205 for the Norwegian Shipowners’ Association 6 DNV GL (2017c), Low Carbon Shipping Towards 2050 7 DNV GL (2017d), Sustainable Development Goals: Exploring Maritime Opportunities, Report for the Norwegian Shipowners’ Association. https://www.rederi.no/globalassets/dokumenteren/all/fagomrader/smi/dnv-gl-sdg-maritimereport.pdf

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8 DNV GL, (2017e). Oil & Gas, Forecast to 2050.

Energy Transition Outlook 2017 9 DNV GL, (2017f). Renewables, power and energy use, Forecast to 2050 Energy Transition Outlook 2017 10 DNV GL (2014), The Future of Shipping, 2014 11 Endresen, Ø., Sørgård E., Sundet J. K. , Dalsøren S. B., Isaksen I. S. A., Berglen T. F., and Gravir G., Emission from international sea transportation and environmental impact, Journal of Geophysical Research, 108 (D17), 4560, doi:10.1029/2002JD002898, 2003 12 Fang, I. et al (2013), Global Marine Trends 2030. Lloyd’s Register, QinetiQ and University of Strathclyde. http://www.futurenautics. com/wp-content/uploads/2013/10/ GlobalMarineTrends2030Report.pdf 13 FAO (2017). Food and Agriculture Organization of the United Nations. How to Feed the World in 2050.

Executive summary. Rome. Accessed Nov 14, 2017. http://www.fao.org/fileadmin/templates/wsfs/ docs/expert_paper/How_to_Feed_the_World_ in_2050.pdf

references

14 OECD/ITF (International Transport Forum) (2017), ITF Transport Outlook 2017, ISBN 978-92-82-108 00-0 15 OECD/ITF (International Transport Forum) (2016), Capacity to grow, Transport Infrastructure Needs for Future Trade Growth, https://www.itf-oecd.org/ 16 OECD (2017), Climate-Resilient Infrastructure: Getting The Policies Right – Environment, Working Paper No. 121 17 OECD (2014), International Freight and Related CO2 emissions by 2050: A new modelling Tool, https://www.itf-oecd.org/sites/default/files/docs/ dp201421.pdf 18 OECD (2010), Globalisation, Transport and the Environment, ISBN 978-92-64-07919-9

19 UNCTAD (2017), Review of Maritime Transport, UN, New York, ISBN 978-92-1-112922-9 20 UNCTAD (2016), Review of Maritime Transport, UN, New York, ISBN 978-92-1-112904-5 21 United Nations and UNCTAD (2017), Information Economy report 2017, Digitalization, Trade and Development, October 2017, ISBN 978- 92-1-112920-5. http://unctad.org/en/ PublicationsLibrary/ier2017_en.pdf 22 Sharmina et al (2017). Global energy scenarios and their implications for future shipped trade. Marine Policy 84, pp 12-21 23 Smith et al (2014), Third IMO GHG Study 2014; International Maritime Organization (IMO) London, UK, June 2014

FOOTNOTES 1 ‘The world merchant fleet - Statistics from Equasis’, http://www.emsa.europa.eu/equasis-statistics/items. html?cid=95&id=472 https://www.reuters.com/article/agri-container/food-importers-shift-from-dry-bulk-cargo-ships-to-containersidUSL5N0LF3MZ20140214

2

http://www.imo.org/en/MediaCentre/HotTopics/GHG/Pages/default.aspx

3

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energy transition outlook Our main publication deals with our model-based forecast of the world’s energy system through to 2050.

It gives our independent view of what we consider ‘a most likely future’, or a central case, for the coming energy transition. The report covers: __ Our main assumptions, on population, productivity, technology, costs and the role of governments

ENERGY TRANSITION OUTLOOK 2017 A global and regional forecast of the energy transition to 2050

__ The model behind our forecast results

OIL AND GAS __ Our findings on global energy supply, demand FORECAST TO 2050 andTransition eachOutlook of the energy carriers — and a sensitivity Energy 2017 analysis

RENEWAB AND ENER FORECAST

Energy Transition Outlook 201

__ Energy forecasts for each of our 10 world regions __ Issues to watch in the next 5 years

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__ The climate implications of our outlook __ Highlights from our supplementary reports.

oil and gas forecast to 2050 Oil and gas will be crucial components of the world’s energy future. While renewable energy will increase its share of the energy mix, oil and gas will account for 44% of world energy supply in 2050, compared to 53% today.

OIL AND GAS FORECAST TO 2050 Energy Transition Outlook 2017

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In our oil and gas report, we have translated the energy requirements of key demand sectors into the trends we expect to see across the value chain. We discuss how the oil and gas energy system will meet this demand from existing and new production capacity. We also RENEWABLES, POWER consider implications for LNG and AND ENERGY USE pipelines, and the roles digitalization andTO emerging technologies will play FORECAST 2050 Energy Transition Outlook 2017 across the value chain.

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renewables, power and energy use forecast to 2050 This report presents implications of our energy forecast for key stakeholders including electricity generation, including renewables; electricity transmission and distribution; and energy use.

The report covers: __ Key conclusions from our model __ Key technologies and systems, focusing on

RENEWABLES, POWER AND ENERGY USE FORECAST TO 2050 Energy Transition Outlook 2017

SAFER, SMARTER, GREENER

results from the model and on the expected key developments. The technologies and systems considered include: onshore and offshore wind; solar; hydropower; biomass; nuclear; coal; transmission grids and system operation; distribution grids; off-grid and micro-grids; electrification of energy use; buildings and their energy efficiency; energy efficiency in manufacturing industry; and storage. __ Takeaways for specific types of stakeholders __ Important issues to monitor over the next five years

maritime forecast to 2050 In our Maritime report, we describe the consequences of the energy transition for the maritime industry.

We examine the goods to be transported within and between regions, and the types of vessels needed.

The report examines the transport of energy sources such as crude oil, oil products, gas and coal. We also provide forecasts for the following ship segments: containerized cargo; bulk; and other cargo. The outlook for offshore service ships is also discussed.

MARITIME FORECAST TO 2050 Energy Transition Outlook 2017

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