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Container shipping: how the maritime energy transition should succeed

2023-01-12T06:37:58.087Z


Container ships are the most important and most efficient means of transport for global freight transport. However, freighters are responsible for a significant proportion of global CO2 emissions. What is the industry doing about it?


Enlarge image

Too harmful to the climate: The shipping industry emits almost 3 percent of global CO2 emissions

Photo: Christian Charisius / picture alliance / dpa

Hardly anyone knows the shipping industry better than

Uwe Lauber

.

Since 2015, the 55-year-old has been CEO of MAN Energy Solutions, the world market leader in two-stroke engines that power large container ships and bulk carriers.

And Lauber sees a trend reversal in the market: "A year ago we had about ten inquiries per year for engines powered by methanol," explains the CEO.

"Today, that project pipeline has grown twentyfold."

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"The trend is towards methanol":

Uwe Lauber

, CEO of MAN Energy Solutions

Photo: PR

The Augsburg-based company prepared for the energy transition years ago.

"The key experience for us was the Paris climate agreement in 2015, where the 1.5-degree target was agreed," Lauber describes his change in strategy.

"Since then we have been developing engines that can also be powered by synthetic fuels."

This is also sorely needed, after all, shipping alone is currently responsible for almost 3 percent of global CO₂ emissions.

If international shipping were a country, there would only be five countries that emit more CO₂.

At the same time, the freighter is and remains the most important and most efficient means of transport in the world.

The ocean liners already move around 70 percent of all goods traded worldwide – with just an average of 20 employees per freighter.

In addition, sea transport produces fewer harmful greenhouse gases than land or air transport alternatives.

The Organization for Economic Co-operation and Development (OECD) predicts that the share of sea transport will increase to 75 percent by the year 2100.

The International Maritime Organization (IMO) also expects demand to continue to grow every year.

The industry must therefore act urgently in order to achieve the goal of the Paris climate agreement.

"The technology is there"

The IMO has therefore set itself the goal of halving CO2 emissions by 2050 compared to 2008 levels.

Industry and shipping companies are even more ambitious.

The Association of German Shipowners (VDR) wants to completely decarbonize the German fleet by 2050 and is also demanding that the IMO tighten the specifications.

And this voice carries weight, after all, with more than 1900 ships, Germany is still one of the most important shipping nations in the world and, with the Hamburg shipping company Hapag-Lloyd, is home to the fifth largest container shipping company in the world.

MAN ES boss Lauber is even more optimistic and assumes that international shipping will be able to operate in a climate-neutral manner by 2045.

"The technology is there," says Lauber.

The trend is currently towards methanol, because today's freighters powered by heavy oil or diesel can be converted to the alternative fuel comparatively easily.

With a service life of around 30 years for container ships, this is a factor that should not be neglected.

In particular, the Danish shipping company Maersk, number two on the market, is driving this technology forward.

Another promising source of energy is ammonia.

Compared to the other renewable fuels, the fuel is cheaper and the raw materials are more readily available.

Here, however, the development is not quite as far advanced.

Engine developer MAN ES will only bring a corresponding drive onto the market next year, and the Port of Hamburg will only complete a corresponding terminal in 2026.

Ammonia is also toxic in high concentrations.

This is a special challenge, especially for passenger ships.

With both fuels, however, availability is a major problem.

In order to produce methanol or ammonia in an environmentally friendly way, large quantities of green hydrogen are required.

The infrastructure for loading and refueling ships with the new fuels has not yet been developed either.

The industry is awash with money

In recent years, liquefied natural gas (LNG) has therefore established itself on the market as an alternative fuel in shipping, although according to a study by the ICCT (International Council on Clean Transportation) the fuel is even more harmful to the climate over its entire life cycle than should be the conventional marine diesel.

Compared to heavy oil, however, the combustion produces at least less CO₂ and it takes up less space on the ship.

Another advantage: The fossil gas can later be easily replaced by synthetic, i.e. artificially produced, methane, the main component of natural gas.

Hapag-Lloyd recently ordered twelve LNG-powered ships with the aim of reducing CO₂ emissions by up to 20 percent.

The company is digging deep into its pockets for this: the order is worth around two billion euros.

But the decarbonization of shipping should not fail because of money.

As data analyst Drewry has calculated, 2022 will be the most profitable year ever for the ten largest liner shipping companies with a combined industry-wide EBIT of $270 billion.

For comparison: In 2020 the EBIT was 26.1 billion dollars, in the pre-corona year 2019 it was only 6.5 billion dollars.

The companies benefited from an exploding demand triggered by the corona pandemic, which met with freight capacities restricted by the corona restrictions.

This caused freight rates to increase tenfold.

The problems lie elsewhere.

"The maritime energy transition depends to a large extent on the availability of green hydrogen, which is necessary for the production of low-carbon fuels," explains MAN-ES boss Lauber

.

Politicians have at least recognized this and decided on the national hydrogen strategy in 2020, with which corresponding projects are to be prioritized.

With Vladimir Putin

's (70) attack

on Ukraine last year, the need to expand renewable energies has become even more urgent.

At the beginning of December, Federal Minister of Economics

Robert Habeck

(Greens; 53) was in Namibia to explore closer cooperation on the subject of hydrogen.

But it takes too long for companies.

"In order to achieve the CO₂ target we have set ourselves, we need a revolution in fuels," demands VDR President

Gaby Bornheim

.

More planning security and effective CO₂ tax

In addition, industry and shipping companies need more planning security through regulatory requirements in order to invest in the maritime transformation.

"Overall, shipowners are still very cautious when it comes to so-called 'e-fuels'," explained

Steve Gordon

, Managing Director at the British specialist institute Clarksons, recently at the Hansa Forum for ship financing in Hamburg, one of the most important international conferences in the shipping industry.

This is mainly due to the lack of a regulatory framework.

After all, the companies don't know which fuel will prevail in the end.

In addition, fossil fuels are still cheaper than synthetic ones.

Many market participants would like to see a global CO₂ tax that, unlike today, also applies to shipping.

The hope: the higher the price for emissions and the cheaper alternative fuels are, the more likely shipping companies around the world will convert their fleets to climate-neutral drives - and the pioneers will not be disadvantaged.

But the wheels of the London IMO, which is responsible for international regulation, grind slowly.

After all, the organization has more than 170 member states and the majority of them come from the economically weak Global South.

So it remains the case that in 2022, the majority of new ships will still be ordered with a diesel engine.

The ambitious targets for reducing emissions cannot be achieved in this way.

How quickly the maritime transformation will succeed depends to a large extent on politics.

Source: spiegel

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