A study from The Maritime Executive outlines systemic challenges slowing shipping’s transition to carbon-neutral fuels. The report from Accelleron identifies five interlinked deadlocks based on interviews with industry stakeholders.

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State of the Transition

The technology for ships to run on methanol, ammonia, and hydrogen-based fuels exists, but the fuels themselves are not yet available at scale. A concerning trend shows the dual-fuel portion of the new ship orderbook is decreasing, with LNG becoming dominant among dual-fuel vessels, indicating a deadlock.

Key Barriers

The first barrier is the proliferation of too many fuel options, diluting investment, though the industry has largely narrowed long-term pathways to methanol and ammonia. Second, the need for large-scale, cost-effective e-fuel production creates centralized hubs, complicating worldwide distribution. Third, shipping has attracted only about $14.5 billion of an estimated $3.5 trillion in available global ESG financing.

Fourth, the regulatory framework has not caught up with decarbonization ambitions. Finally, ports face enormous investment requirements to manage bunkering and storage for multiple fuel types.

Investment Scale and Collaboration

Fully decarbonizing shipping with hydrogen-based fuels would require 100-150 million tonnes of hydrogen annually, representing a $2-3 trillion investment. When combined with other hard-to-decarbonize sectors like aviation and steel, the total need is 500-600 million tonnes of hydrogen, requiring about $9 trillion. This underscores that no single sector can achieve this alone, making cross-industry collaboration on production and distribution essential.

Transition Period Solutions

During a 10-15 year transition, emissions can be reduced without waiting for full-scale e-fuels. Biofuels offer an initial step, though they are not scalable to ultimate needs. LNG provides about a 30 percent CO2 reduction. Energy-saving technologies, if widely implemented, can achieve 35 percent reductions. These include air lubrication, wind assist devices, hull design improvements, and heat recovery systems.

Operational measures like speed optimization, weather routing, and more frequent hull maintenance also contribute. New ships are more efficient, but waiting for fleet renewal is not a solution.

Regional Progress in Asia-Pacific

The Asia-Pacific region is showing movement, driven by government support. Countries like Australia, Japan, Korea, Singapore, and China are advancing. China’s motivation includes energy security and industrial strategy, aiming to become a major player in e-fuels.

On production, Australia and China are moving ahead with ammonia, including smaller, modular facilities. On the demand side, ports in Singapore, China, and Korea are developing infrastructure, sometimes for uses outside marine, such as blending ammonia into coal-fired power plants. Strong trade corridors, like the iron ore route from Australia to China and Singapore, facilitate this cross-sector approach.

Global Lessons and Framework

The key lesson from Asia-Pacific is that action need not wait for perfect global regulation. However, regional progress can only go so far without a global framework. A net-zero framework from the International Maritime Organization that makes fossil fuels more expensive through CO2 taxes while helping alternative fuels become cheaper through scaling and temporary subsidies is needed.

Accelleron’s Role and Engine Efficiency

Accelleron provides turbochargers, fuel injection systems, and digital solutions that are fuel-agnostic, focusing on vessel performance optimization and enabling new fuels. Efficiency is crucial, especially as e-fuels have poor round-trip energy efficiency, making minimizing consumption paramount.

Future of Combustion Engines

Combustion engines are expected to remain relevant well beyond 2050 for shipping. Battery-electric propulsion has severe limitations for long-distance shipping due to the immense energy storage required and the weight of batteries. Nuclear propulsion faces societal acceptance and regulatory hurdles. While fuel cells present technical challenges, combustion engines can run efficiently on net-zero e-fuels.

E-fuel costs are expected to fall to two or three times current bunker fuel prices through scaling and subsidies. Combustion engines with e-fuels will likely be a main solution, alongside niche applications for other technologies like batteries on short-distance ferries.

Outlook

There is optimism about the industry’s path forward, as regions that move first will gain competitive advantages. Available solutions like wind assist, efficiency technologies, and operational improvements can significantly reduce emissions during the transition. The critical factor is cross-sector collaboration to develop the hydrogen economy for multiple industries.

Source: IndexBox Market Intelligence Platform