Time to start getting up to speed on all those new fuels; it’s all about decarbonization. Less than 15 months after IMO2020’s start, there are a number of experiments underway into different fuels- way beyond low sulfur fuel oil and then LNG which is a pathway towards longer term climate targets. Indeed, a few weeks back, the IMO- with ideas for raising $2.5 billion for research into new fuels, held a virtual conference on the subject, where various presenters made their respective cases for various fuels of the future. There have been a variety of fuel coalitions and projects announced during the past year. All good. Then, in the past few weeks, we’ve seen a plethora of new announcements about activities and demonstration projects. Still good- but raising some questions.
Framing the issue a bigger way, there are real questions whether the International Maritime Organization (IMO) take on a much bigger role, trying to “coordinate” the industry’s transition to new fuels. No, we are not talking about the role of “Wizard” optimizing all the optimizers and getting the slow steaming just right to balance supply and demand. Rather, we are talking about someone to actually run a grand plan along the lines of Trafigura’s carbon trading platform (my words, they call it an industry wide “de-carbonisation program”). Trafigura has suggested that the IMO move to the lead; who else, really, could coordinate bringing “Market Based Measures” to such an unwieldy and fragmented business, on an industry-wide basis. It’s a plan that I would whole heartedly endorse- whatever name they give it. Bring it on, guys!
As to the fuels themselves, LNG vessels could always “burn off” some excess cargo in their engines. Now- perhaps looking at oncoming headlights of IMO2020, rival companies including CMA-CGM- a pioneer of sorts, and then, more recently- Hapag Lloyd and Seaspan (chartering onward to Zim) are putting big bets on LNG to fuel mammoth sized container vessels. Maersk, on the other hand, has gotten together with a group that includes Copenhagen Infrastructure Partners (yes, CIP-the same guys who are involved in the inchoate Vineyard Wind project), and is pushing for green ammonia. The Danish container giant has gotten together with CIP and some others in setting up the “Power-to-X” facility on the very windy Danish west coast- where “green ammonia” will be produced in a process powered by wind turbines. Last year, the company had linked up with other Danish companies to produce green hydrogen as a fuel source for multiple transport modes, with wind energy powering the process. Maersk is also experimenting with methanol as a marine fuel- a planned for zero carbon vessel delivering in 2023 that would be methanol powered. CMA-CGM, meanwhile, has been expanding its Coalition for the Energy of the Future (an impressive group with members including Wartsila and Total). The list goes on.
Trafigura, with their carbon trading notion, has invested in “green hydrogen”; like other inchoate fuels, it will be expensive, and will require subsidization (again, my word); on the order of $250- $300/tonne of fuel. Recently, like this past week, Trafigura, along with cohorts including DFDS and CMB, were said to be pushing the European Union (more likely than the IMO to be driving the big fuel boat, at least for awhile) to give good consideration to hydrogen and ammonia.
For now, it’s fun to watch all the action- but, for me, Trafigura’s thinking is on target- someone must be in charge. If not the IMO, then maybe the Global Maritime Forum- which has many Danish connections.
