WtW DISCUSSIONS KEY TO IMPROVING FUEL FRAMEWORK

Collaborative projects advancing new fuels are underway, but a more supportive framework for change is being called for

There’s wide acceptance in the industry, and beyond, for the need to assess new fuels on a well-to-wake (WtW) basis. The International Energy Agency (IEA), for example, released its Transport Tracking Report in September last year saying that reducing CO2 emissions from shipping calls for a focus on research, development and deployment of low-carbon fuel supply chains. “Policies such as those proposed by the European Union – namely ReFuelEU Aviation and FuelEU Maritime – set the right example by proposing ambitious targets based at least in part on the performance metric that matters: the emissions incurred by producing, delivering and using the fuel” – that is, unlike the IMO’s current decarbonisation regulations such as the Carbon Intensity Indicator, on a WtW basis.

With a WtW approach, comes the need to collaborate with fuel producers. Negotiations on FuelEU Maritime are now entering their final phase, and the European Community Shipowners' Associations (ECSA) has called on the European Parliament and the Council to support the mandatory inclusion of fuel suppliers under its scope. The organisation says this will be key to ensuring that shipowners are not unduly penalised if the sustainable fuels necessary for compliance are not delivered. This provision, together with a binding target for maritime fuel suppliers as proposed by the Parliament in RED III, is essential for the energy transition of shipping, says ECSA.

Ammonia Marine Fuel Mou

Major marine fuel supplier, ExxonMobil, plans to invest more than $15 billion by 2027 in lower-emissions projects. The company aims to provide more than 40,000 barrels per day (2.3 million metric tons p.a.) of lower-emission fuels by 2025 and 200,000 barrels per day (11.3 million metric tons p.a.) by 2030.

ExxonMobil has a range of marine fuel projects already underway, including developments for ammonia and hydrogen. For example, the company has signed a memorandum of understanding along with Grieg Edge, North Ammonia, and GreenH to study the potential production and distribution of green hydrogen and ammonia for lower-emission marine fuels at its Slagen terminal in Norway. The study will explore the potential for the terminal, powered by hydroelectricity, to produce up to 20,000 metric tons of green hydrogen per year and distribute up to 100,000 metric tons of green ammonia per year.

Tapering Carbon Intensity

ExxonMobil is also planning to build one of North America’s largest low-carbon hydrogen production facilities at its Baytown, Texas petrochemical complex and is studying potential for a similar facility at its Southampton Fawley complex in the UK.

ExxonMobil’s position paper High science on the high seas – Advancing new technologies for lower-emission fuels calls for policy that sets declining annual targets for the WtW carbon intensity of marine fuels. It says policy should be technology neutral to encourage multiple pathways and innovation, and it should promote a life cycle assessment approach that helps to provide an effective tool for comparing alternative fuels. It also calls for including carbon intensity on Bunker Delivery Notes.

In its 2023 View from the bridge, industry group SEA-LNG also voiced support for WtW fuel assessments and further reiterated its call for assessments of alternative marine fuel pathways to be made on a like-for-like basis. “Discussion of alternative fuels too often compares the green versions of, for example, ammonia and methanol, with fossil, or grey, LNG. The reality is that all fuels share a common pathway from fossil-based versions, produced from natural gas (often in the form of LNG) to hydrogen-based, renewably produced synthetic fuels. These synthetic fuels will only become available as and when sufficient renewable electricity and electrolysis capacity comes online to produce them.”

The industry organisation notes that fossil LNG offers significant GHG emissions reduction when used as a marine fuel compared with VLSFO – up to 23% on a WtW basis. By contrast, the use of fossil methanol, ammonia and (liquid) hydrogen results in emissions far higher than those associated with VLSFO because of the large amounts of fossil energy required for their production. “Fossil methanol emissions are 14% higher than VLSFO on a full lifecycle basis; for ammonia the corresponding number is 47%. This implies that ship owners and operators choosing methanol and ammonia pathways will be forced to continue using VLSFO until renewable versions of these fuels become available at scale i.e. not until about 2030, postponing emissions reductions for several years. If methanol and ammonia are to achieve emissions parity with fossil LNG, then the grey versions of these fuels need to be blended with approximately 30% renewable or green methanol and 50% renewable or green ammonia.”

Looking Beyond Transition

SEA-LNG says that LNG enables vessels to be compliant with FuelEU Maritime’s GHG intensity targets until 2035. The use of a 20% drop-in blend of bio-LNG will extend compliance until beyond 2040. Thereafter, compliance can be achieved through the use increasing proportions of bio-LNG and e-LNG as and when it becomes available.

SEA-LNG member Titan has announced it will build the world’s largest biomethane liquefaction plant in the Port of Amsterdam, with production expected to commence in 2025. The company will operate the 200,000-tonne-per-year plant in partnership with biogas supplier BioValue and Linde Engineering. Titan’s investment program for the immediate and long-term future is 100% dedicated to carbon neutral fuel infrastructure. It says that if blended as a 10% drop in fuel with LNG, the output of this plant could enable almost 50 14,000 TEUs container vessels be compliant with FuelEU Maritime’s decarbonisation trajectory for 2040.

Despite the need for massive additional renewable electricity, a growing number of e-fuel projects are finding ways forward. In December 2020, Yara announced plans for 500,000 tonnes per annum green ammonia production in Norway, powering emission-free shipping fuels and decarbonised food solutions. Against this backdrop, Yara announced plans to fully electrify its ammonia plant in Porsgrunn, Norway, and it has subsequently pre-ordered 15 floating ammonia bunkering terminals from Azane Fuel Solutions.

Late last year, Ørsted took FID on the 50,000 tonnes/year FlagshipONE e-methanol project. FlagshipONE will be Ørsted’s first commercial-scale Power-to-X facility and is an important stepping stone towards Ørsted’s ambition of taking a leading position in renewable hydrogen and green fuels. Located in Örnsköldsvik in Northern Sweden, FlagshipONE is Europe’s largest green e-methanol facility to reach FID status. The e-methanol will be produced using renewable electricity and biogenic CO2. The facility is expected to enter into operation in 2025 and will produce around 50,000 tonnes of e-methanol each year.

Ørsted has said that e-methanol is the best solution currently available to decarbonise hard-to-electrify sectors like global shipping. It is also developing the 300,000 tonne ‘Project Star’ in the US Gulf Coast area and the ‘Green Fuels for Denmark’ project in Copenhagen, which will both produce significant volumes of e-methanol for shipping.

Defining Green Hydrogen

Green fuels for shipping come at a price premium compared to fossil-based alternatives, and Ørsted says the industry needs supportive regulation to incentivise demand and to drive the maturation of green fuels at scale and at speed. Until this regulation materialises, pricing of e-methanol, even from world-class Power-to-X assets like FlagshipONE, is subject to substantial uncertainties – and large-scale offtake appetite is yet to develop. Ørsted is prepared to lead the development of the power-to-X industry and assume risk in the process but says regulatory action that matches the ambitions of developers and shipping companies is urgently needed.

That sentiment is shared widely across the industry. In February, the International Chamber of Shipping, which represents over 80% of the world’s merchant fleet, reaffirmed its commitment to meet 2050 net zero carbon goals. The IMO is planning to revise its GHG strategy this year, and the industry is now waiting to see what will be agreed at MEPC 80 in July. It is not yet clear whether the IMO will increase its ambition to net zero by 2050. Instead, it has established a research project into the availability and preparedness of future low and zero carbon marine fuels and technology.

GoodFuels says, with EU and IMO regulations already coming into effect, decarbonisation is no longer a question confined to long-term strategic plans. The engines, bunkering infrastructure and supply chains for future zero-carbon fuels are still developing, so biofuels will take a more prominent role in the coming years. “The past few years have seen a formidable growth in demand for biofuels, and the sheer numbers show that biofuels are no longer the preserve of a handful of first movers but have gone mainstream.”

8 Titan has announced it will build the world’s largest biomethane liquefaction plant in the Port of Amsterdam, with production expected to commence in 2025

The EU continues to refine its legislation, and in February, the European Commission proposed detailed rules for defining what constitutes renewable hydrogen in the EU, with the adoption of two Delegated Acts under the Renewable Energy Directive. The acts aim to ensure that all renewable fuels of non-biological origin are produced from renewable electricity. The new acts are now with the Parliament and Council for approval.

Meanwhile, a record amount of new utility-scale solar and wind capacity was added globally in 2022 – about 300GW, according to Rystad Energy, and it’s a record that is likely to increase again this year. Rystad Energy says the inflection point for global fossil fuel CO2 emissions is on track for 2025. “On the current global pathway of announced policies, projects, industry trends and expected technological advancements, global CO2 emissions are poised to hit about 39 gigatonnes per year (Gtpa) in 2025 before settling into a steady annual decline as industries clean up their carbon footprint.”