As an industry that moves 80% to 90% of the world’s traded goods and contributes to 3% of global greenhouse gas emissions, shipping has a lot of work to do to reduce emissions enough to limit global temperature rise to 1.5 degrees Celsius.
To reach this target, the International Renewable Energy Agency (IRENA) said in a report released Wednesday that 70% of the shipping industry’s energy mix needs to be green hydrogen-based fuels by 2050.
This fuel shift would reduce emissions by 80% compared to 2018 levels, according to IRENA. Hydrogen-based fuels like e-methanol and e-ammonia “are set to become the backbone of the sector’s decarbonization,” the report said.
Green hydrogen is produced using renewable electricity to power electrolysis, which separates hydrogen from oxygen, emitting only oxygen. E-methanol is created by combining captured carbon dioxide from industrial sources and green hydrogen. E-ammonia, or green ammonia, is produced by combining nitrogen from the air with green hydrogen. Renewable electricity is used to power the production process for both e-methanol and e-ammonia.
Read: E-methanol: Missing piece to shipping’s decarbonization puzzle?
Because large ocean vessels have a long, useful life of 25 to 30 years, the report said carbon-neutral vessels and engines need to be developed between 2025 and 2030. And it’s going to take a lot of ship conversions and builds to decarbonize this sector. The International Maritime Organization predicts that demand for maritime shipping could increase by 40% to 115% compared to 2020 levels by 2050.
IRENA said this is the ideal shipping fuel mix for 2050:
- 10% from advanced biofuels. These biofuels are said to be especially important for reducing emissions in the short term.
- 60% from green hydrogen-based fuels such as e-methanol and e-ammonia.
- 43% could come from e-ammonia alone, which would require about 183 million metric tons in 2050.
- 17% could come from e-methanol if e-ammonia accounts for the majority of green hydrogen-based fuels.
- 30% from all other fuel sources.
Green premiums currently exist for these carbon-neutral fuels. IRENA said that increased investments in R&D and continually dropping renewable electricity prices would help reduce the price gap. But there was another strategy mentioned to quicken the transition process: a price on carbon.
“A realistic carbon levy will be critical, putting an adjustable carbon price on each fuel to prevent new fossil fuel investments and stranded assets,” the report said.
While many in the shipping industry are hesitant to adopt green technologies or invest in supplying green fuels due to lack of reliable demand, purchasing new fossil fuel-powered vessels could come with its own set of risks. If governments, companies, customers downstream and consumers put regulations in place or express demands for cleaner shipping, shippers may abandon assets.
“While hydrogen may find a home with hard to abate sectors like trucking, aviation and maritime, there will be healthy competition with other alternative fuels and electrification. Everyone should be exploring all emission-reduction opportunities and consider the potential for broad demand as that will drive down price and push infrastructure investments for specific technologies and fuels,” said Danny Gomez, managing director of financial and emerging markets at FreightWaves.
Hydrogen updates: Investments and road transport
Green hydrogen is a fuel that experts say has great potential to decarbonize maritime shipping, long-haul trucking and aviation. Traveling farther distances is one of the reasons hydrogen wins out over battery electric-power for these cases. But recent insights indicate that hydrogen investments will need to increase dramatically to decarbonize the transportation sector by 2050.
Read: Report: Batteries usually more feasible, environmentally beneficial than green hydrogen
“While the adoption of hydrogen as a clean fuel is accelerating, it still falls short of what is required to help reach net-zero emissions by 2050,” said a recent International Energy Agency (IEA) report.
If all of the announced industrial hydrogen plans are realized, the IEA predicted the number of deployed hydrogen fuel cell electric vehicles (FCEVs) would only reach 6 million by 2030, 40% of the amount needed to meet the agency’s net-zero emissions scenario. It also predicted that electrolysis capacity would fall short of the 850 gigawatt goal for 2030, only reaching 90 gigawatts.
“We estimate that $90 billion of public money needs to be channeled into clean energy innovation worldwide as quickly as possible – with around half of it dedicated to hydrogen-related technologies,” the IEA report said.
While the IEA sees significant room for improvement in hydrogen technology investment, IDTechEx estimated the market value for hydrogen FCEVs could increase to $160 billion in 2042, according to a report released Monday.
IDTechEx stressed the importance of investing in low-carbon hydrogen such as green hydrogen in the transition to cleaner road transportation.
“Cheap grey hydrogen generated from fossil fuels makes little sense as a low-emission transport fuel because the well-to-wheel emission footprint of a FCEV using grey hydrogen offers only a marginal carbon dioxide saving versus modern diesel vehicles,” the IDTechEx report said.
Read: What is well-to-wake emissions analysis?
“Much faster adoption of low-carbon hydrogen is needed to put the world on track for a sustainable energy system by 2050,” said the IEA.
Click here for more FreightWaves articles by Alyssa Sporrer.
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