Report shows biofuels key to zero emissions by 2030 for marine sector

In the UK, a recent report by Lloyd’s Register and UMAS, ‘Zero Emission Vessels 2030’, aimed to assess the viability of these low/zero-emission fuels and technologies through the economic lens (i.e. profitability). The report looks at five ship types and several ship sizes, in three different scenarios. It shows that costs at the ‘ship level’ would vary widely between the different fuel and machinery options when compared to a conventional ship of today, for which the study uses the example of a 9,000-TEU containership.

Biofuels appear to be the clear winner (noting the availability and sustainability issues surrounding biofuel supply), the next best options are hydrogen with an internal combustion engine and ammonia with a similar configuration, with the trade-off being around cost of CAPEX (for hydrogen) and OPEX (for ammonia).

In the scenario with a low renewable price (e.g. in the case of hydrogen, where hydrogen production is cheap), the Marginal Abatement Cost Curve (MACC), a graphical depiction of what the carbon price might be to achieve certain levels of CO2 reduction, shows that by 2050 a carbon price of $100/t of CO2 leads to almost 75%-85% reduction in CO2 emissions – see graph below.

This estimate is not too dissimilar to the findings of an international team led by the well-known economists Stiglitz and Lord Stern. This study suggested that the carbon price for the economy as a whole required to achieve the Paris Agreement temperature goals and using a carbon price to create the economic incentive for change, would need to be between $50-100/t of CO2 in 2030, with expectations that it would continue to rise thereafter.

This indicates that, at least in the ‘low renewable fuel price’ scenarios considered, the estimates for shipping’s foreseeable cost of decarbonization aligns well with the cost of decarbonization across the global economy and removes a cost-based justification to delay any action on shipping’s decarbonization. In other words, arguments that it will be more expensive to decarbonize shipping than many other sectors of the economy are not justified.