We are proud to announce DNV as a valued sponsor for SNIC 2024!
DNV has chosen this prestigious platform to share their expertise, playing a key role in the maritime and energy transition. We thank DNV for not only sponsoring but also contributing to the collective knowledge through this insightful article.
What the article covers:
- DNV’s Maritime Forecast to 2050, which highlights the challenges of meeting the IMO’s decarbonization goals for the maritime industry.
- The limited availability and high costs of carbon-neutral fuels and realistic pathways to achieving emissions reductions by 2030 and beyond.
- The potential of onboard carbon capture (OCC) as a longer-term solution for reducing CO2 emissions from shipping.
- The need for collaboration between maritime stakeholders and developers to ensure the supply of carbon-neutral fuels and CO2 storage infrastructure.
DNV: Strategies for meeting upcoming decarbonization targets
Decarbonization is one of the greatest challenges facing shipping. Following a slow start, decarbonization aspirations have been embraced by the maritime industry. IMO goals have been set, notably full-scale decarbonization by or around 2050, a 20% emissions reduction by 2030, and a 70% reduction by 2040.
While these moves have been widely welcomed, it’s time to get real. Setting goals is the easy part. Achieving them is extremely difficult.
Driven by EU regulations and IMO goals, the maritime industry is maintaining course for decarbonization but making slow headway towards an alternative-fuelled fleet.
DNV’s latest Maritime Forecast to 2050 report confirms the previous finding that carbon-neutral fuels will remain expensive and in limited supply for the near future. It recommends more realistic decarbonization measures for shipping over the next decade.
Shipping cannot meet 2030 targets by using carbon-neutral fuels
Adding insight into how much carbon-neutral fuels can drive the transition to 2030 and beyond, DNV’s Maritime Forecast to 2050 assesses their existing and planned production. Factoring in the probability of plans becoming reality, it estimates potential “High” and “Low” levels of fuel output for each year.
The report estimates the cumulative capacity of ongoing or announced carbon-neutral fuel production capacities for 2030 to be 44 to 63 million tonnes of oil equivalent (Mtoe). Maritime demand in 2030 is forecasted at 7 to 48 Mtoe. Depending on the actual demands, shipping would need 10 to 100% of the actual available carbon-neutral fuels to reach IMO targets.
The report’s modeling results show it will be tough for shipping to source its needs if production follows the ‘Low’ trajectory. Even if production is ‘High’, other decarbonizing industries such as aviation and road transport will compete for these fuels.
A role for on-board carbon capture
On-board carbon capture (OCC) is attracting interest because it could delay the need for carbon-neutral fuels by removing carbon dioxide (CO2) from conventional fuels and technologies.
OCC could be technically and economically feasible depending on carbon pricing and the availability of value chains and infrastructure for carbon use or permanent storage, a recent DNV white paper concluded.
The scarcity and high cost of carbon-neutral fuels could potentially support a stronger business case for OCC.
On-board carbon capture is a longer-term play
Maritime Forecast to 2050 assesses the value chain required and presents the status of and outlook for carbon storage, suggesting how OCC could become viable for vessels on busy shipping routes.
Based on “High” and “Low” trajectories of CO2 storage capacity for all industries and purposes excluding enhanced oil recovery, the report sees 47 to 67 MtCO2 capacity being available in 2030 compared with its estimated storage demand of 4 to 76 MtCO2 from shipping.
Out of 96 planned projects for dedicated CO2 storage, less than ten have reached final investment stage, and most are still concepts. The uncertainties weigh against installing OCC on ships immediately, but in the report’s exploratory scenarios for achieving decarbonization goals, OCC emerges as an important technology for greenhouse gas reduction after 2030.
Collaboration and energy-efficiency measures are key
Maritime needs to work with developers to secure carbon-neutral fuel supply and CO2 storage to maximize the longer-term potential of these technologies for decarbonizing shipping.
However, the inescapable message is that energy-efficiency measures are essential for achieving fuel and emissions reductions to at least meet the earlier IMO 2030 targets and ensure profitability into the 2030s and 2040s.
Paying the price for decarbonization
Beyond the fuels, technologies, and operational measures covered, Maritime Forecast to 2050 stresses that successful maritime decarbonization requires progressive, goal-oriented regulatory frameworks.
This is highlighted by modeling the impact of regulations such as FuelEU Maritime’s pooling mechanism, which will support a switch to fleet-wide fuel strategies and de-risk investing in alternative-fuelled vessels. This research will be reported in a forthcoming Maritime Impact article.
Smart decision-making and strategic investments are needed today to lay the foundations for future emissions reductions. Using an updated version of DNV’s GHG Pathway Model, Maritime Forecast to 2050 pragmatically assesses the options to assist maritime stakeholders in unlocking the decarbonization code.
Download the full report here.
Hear more about how the industry can take steps towards achieving its decarbonization goals at DNV’s Singapore Energy Transition Insights session during SNIC 2024.
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