Decarbonisation Technology - November 2023 Issue

November 2023 Decarbonisati n Technolo gy Powering the Transition to Sustainable Fuels & Energy

ERTC 2022

ACCELERATING DECARBONISATION TOGETHER

The world’s energy system is changing. To solve the challenges those changes present, Shell Catalysts & Technologies is developing its Decarbonisation Solutions portfolio — to provide services and integrated value chains of technologies, designed to help industries navigate their path through the energy transition. Our experienced teams of consultants and engineers apply our diverse, unique owner-operator expertise to co-create pathways and technology solutions to address your specific Decarbonisation ambitions — creating a cleaner way forward together. Learn more at shell.com/decarbonisation

Decarbonisation Solutions

Contents

November 2023

5 Decarbonisation of transport fuels to reduce emissions Yvon Bernard Axens

Reducing GHG emissions from international shipping Eddy Van Bouwel EvBo Consult

Hydrogen economy Part 2: Converting strategy into reality Robert Ohmes, Nathan Barkley, Mike Annon, Greg Zoll and Jessica Hofmann Becht

Andalusian Green Hydrogen Valley H2 Business Unit Cepsa

Hydrogen through methane pyrolysis MP Sukumaran Nair Centre for Green Technology & Management, India

Technological challenges facing the current carbon market Charles L Kimtantas and Joe Selby Bechtel Energy Technologies and Solutions

Paving the way to low-carbon propylene from the FCC unit Bani H Cipriano, Clint Cooper and Stefan Brandt W. R. Grace & Co

Circular economy strategies for petrochemical sustainability Vahide Nuran Mutlu SOCAR Türkiye Research & Development and Innovation Inc

Heat trace solutions for the energy transition Jim Dawson and Pele Myers nVent

Carbon storage in concrete through accelerated carbonation Gareth Davies and Luan Ho Tunley Environmental

Fuelling the decarbonisation of international shipping Sebastiaan Bleuanus Wärtsilä Netherlands BV

Decarbonisation through innovation Ametek and nVent

©2023. The entire content of this publication is protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the copyright owner. The opinions and views expressed by the authors in this publication are not necessarily those of the editor or publisher and while every care has been taken in the preparation of all material included the publisher cannot be held responsible for any statements, opinions or views or for any inaccuracies.

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In September 2023, the IEA announced an updated Net Zero Roadmap (available at https://bit.ly/3F6Abse), which shows that due to record growth in clean energy technologies, it is still possible to limit global warming to 1.5ºC. This seems somewhat contrary to earlier reports from the IPCC and others, which project that we are likely to hit 1.5ºC in the next five years. The IEA itself reports that many of the required actions to meet net zero are not on track. Credible commentators talk about a 1.5ºC overshoot and consider massive amounts of carbon dioxide (CO₂) drawdowns will be essential if we are to ultimately stabilise our climate. The difference between the IEA’s Roadmap and its tracking reports is that the Roadmap lays out what is needed to achieve the desired ‘possible’ outcome, whereas the tracking reports monitor actual progress and then assess what is probable. In a sense, the IEA has laid out a new challenge: to turn the possible into the probable. To paraphrase the IEA, it will take ‘strong international co-operation’ and ‘Governments need to separate climate from geopolitics’. Politicians must stay the course and recognise that investment in the energy transition and clean energy infrastructure is essential for social stability and economically prudent. Acting now will avoid much higher costs in the longer term. Decarbonisation Technology magazine brings together the global community working to deliver the energy transition by sharing the progress in developing and deploying clean energy technologies and implementing policies that drive and support the transition. This edition has a focus on maritime transport, with articles on the International Maritime Organization’s revised GHG strategy and developments in new marine engines designed for flexibility to use a range of low-carbon fuels. The importance of regulatory support for the emerging hydrogen economy is discussed, with a call for alignment on global standards. The importance of hydrogen hubs within industrial clusters is also highlighted. This last point is exemplified in the article on the Andalusian Green Hydrogen Valley and the hydrogen corridor between South and North Europe. As the IEA stresses, there is little point in the drawdown of CO 2 unless we also minimise CO 2 emissions by transitioning to renewable energy sources and capturing the carbon from residual fossil fuel combustion during the transition. In this context, research into minimising carbon emissions from concrete production is also valuable. Returning to the IEA Net Zero Roadmap, we need to accelerate investments in renewable energy production, drive for energy efficiency, and minimise methane emissions as well as CO₂ during the transition.

Managing Editor Rachel Storry

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Cover Story nVent is proud of its mission-critical role in the energy transition. Our high-performance products and solutions help build a more sustainable and electrified world. nvent.com/RAYCHEM

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Capturing green opportunities

Carbon capture and storage or utilization (CCS/CCU) is a key strategy that businesses can adopt to reduce their CO 2 emissions. By selecting the right technologies, pressing climate change mitigation targets can be met while benefitting from new revenue streams. Sulzer Chemtech offers cost-effective solutions for solvent-based CO ² absorption, which maximize the amount of CO 2 captured and minimize the energy consumption. To successfully overcome technical and economic challenges of this capture application, we specifically developed the structured packing MellapakCC™. This packing is currently applied in several leading CCS/CCU facilities worldwide, delivering considerable process advantages. By partnering with Sulzer Chemtech – a mass transfer specialist with extensive experience in separation technology for carbon capture – businesses can implement tailored solutions that maximize their return on investment (ROI). With highly effective CCS/CCU facilities, decarbonization becomes an undertaking that can enhance sustainability and competitiveness at the same time. For more information: www.sulzer.com/ chemtech

Decarbonisation of transport fuels to reduce emissions With transportation responsible for almost one-third of global CO 2 emissions, the priority is to be able to meet future demands while moving towards net zero

Yvon Bernard Axens

T ransport emits nearly 8 Gt of carbon actions are required to meet future demand while lowering the carbon intensity of transport fuels and chemicals. The use of renewable and alternative feedstocks (such as municipal waste, second-generation vegetable oil, and forestry residues) will play an increasing role in this transition. Axens is actively contributing to the energy transition in the industry and society by providing technologies for the production of gasoline and middle distillates (jet fuel and diesel) that meet the most stringent standards. The decarbonisation of transport fuels and the reduction of greenhouse gas (GHG) emissions, with the relevant Axens technologies, will be discussed in this article. Together, these form part of the solution along with a range of complementary measures (not all of which need technological solutions) for reducing emissions across different transport modes: • Avoid unnecessary journeys for the movement of people or goods. • Incorporate energy efficiency across the transport system value chain. Obvious examples dioxide (CO₂) each year, or 30% of global CO₂ emissions (IEA, 2023). Urgent are refinery processing efficiency, including carbon capture, and using energy efficiency indices for new ship design (maritime) and retrofitting existing ships. • Encourage more sustainable use of transport. In cities, this includes behavioural measures such as switching from cars to forms of transport with lower emissions, including electrified public transport and cycling (one of the most economical ways of commuting). • Government policies that drive and support the

transition, include mandates such as ReFuelEU, tax incentives such as the US IRA, project funding from research through to first projects, with the Horizon Europe funding a good example, and finally the permitting process to build out renewable capacity and sites for long-term carbon storage. In the following sections, various technologies will be presented using different inputs and producing different products, addressing the fuel market and other industries that also need to reduce their carbon footprint. Potential to reduce the carbon intensity of the transportation sector with biofuels  Sustainable/low-carbon road fuels Emissions from road transport were 5.87 Gt CO₂ in 2022 (IEA, 2023). Major economies, including Australia, China, the EU, India, the UK, and the US, have adopted policies that support the uptake of battery electric vehicles (BEVs) and the decarbonisation of transport. In Europe (EU and UK), mandates banning the sales of internal combustion engines (ICE) in passenger vehicles and vans will become effective from 2035. Even then, it will take another decade or more for the turnover of the light-duty fleet to BEVs. Progress in rural communities is likely to lag that in the bigger cities, where BEVs are also seen as part of the solution for air pollution. Given that in 2023, more than 80% of the existing fleet of cars and vans on the road are powered by internal combustion engines, substituting fossil fuels with renewable/low-carbon fuels is vital for rapid action to reduce emissions from road transport.  Sustainable aviation fuels Aviation transport emissions totalled 0.89 Gt

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w Sustainable marine fuels Marine transport accounted for 0.78 Gt eqCO2 per year in 2022 (IEA, 2023). In its initial strategy, the International Maritime Organization (IMO) had already adopted the use of energy efficiency and carbon intensity indices for new ship designs and retrofitting existing ships. In July 2023, the IMO adopted a revised strategy with the goal of reaching net zero emissions by 2050, which will require the uptake of alternative zero and net-zero GHG emission fuels (covered in more detail elsewhere in this issue). In contrast to SAF, a wider range of fuel types are under consideration for the decarbonisation of marine fuels, from gases such as hydrogen, ammonia, and bio-methane to lighter liquids, such as methanol and heavier bio-diesels. In common with SAF, these lower-carbon intensity alternative marine fuels are more expensive than conventional marine diesel. Reducing the carbon intensity of fuels is possible, and some plants are already producing biodiesel, SAF, and bioethanol. The following section will discuss available technologies from Axens to support the effort of GHG emission reduction. Integrating technologies for the production of renewable/low-carbon transport fuels Renewable or waste-derived feedstocks can be divided into three categories – renewable oils and fats, lignocellulosic biomass residues, and captured CO₂ with renewable hydrogen – each of which then determines which technology options can be used for conversion into sustainable fuels and chemicals, as shown in Figure 1 . Integrating renewable technologies within existing refinery processes may represent one of the quickest, most efficient, and economically viable transition pathways. Hydrogenation, can represent the most cost-effective way of producing low carbon-intensity hydrogen in the refinery, providing there is regulatory support for this route and that CO₂ is sequestrated (in depleted wells). Axens can provide such decarbonisation technologies with DMX and Advamine.

eqCO₂ per year in 2022 (IEA, 2023). The International Civil Aviation Organisation (ICAO) adopted a long-term aspirational goal of net-zero carbon emissions by 2050. The Air Transport Action Group (ATAG), an industry body, proposed a range of technical, operational, and behavioural solutions to reach the goal of net zero by 2050. The deployment of sustainable aviation fuels (SAFs) is expected to contribute a minimum of 53% towards this goal (ATAG, 2021). “ SAFs are drop-in fuels, fully fungible with conventional aviation jet fuels, which do not require equipment change, special infrastructure or modification of the supply chain ” Seven fuels are qualified under ASTM-D7566 for the production of SAF (CAAFI, 2023). Axens provides mature technologies for the three main pathways: • The HEFA pathway with the Vegan process for hydrotreatment of lipids to produce hydroprocessed esters and fatty acids (HEFA) • The Fisher-Tropsch (FT) pathway with the BioTfueL process (gasification and FT) to produce SAF from lignocellulosic biomass (Annex 1) • The Alcohol-to-jet (ATJ) pathway with the Jetanol process to produce SAF from low- carbon/renewable ethanol. SAFs are drop-in fuels, fully fungible with conventional aviation jet fuels, that do not require equipment change, special infrastructure or modification of the supply chain. However, SAFs are currently a few factors more expensive than conventional aviation kerosene.

Hydrogenation processes

Hydrogenation processes use substantial amounts of hydrogen. As already discussed, hydrogen from electrolysis relies on the availability of electricity from fully renewable sources. Retrofitting carbon capture technology to steam methane reformers

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Co-processing Hydrotreatment Vegan Hydrotreatment BioTfuel Gasication & FT Bio-TCat Flash pyrolysis

Renewable & low carbon fuels

Renewables oil & fats

SAF

Ethanol Diesel & gasoline

Bio-based chemicals

Jetanol Alcohol to jet Atol Ethanol dehydration BioButtery BioButadiene production

Solid biomass

1G ethanol

Toluene

Futurol Enzymatic conversion 2G sugars Enzymatic conversion

Benzene

P-Xylene

Ethylene

Naphtha

Butadiene

Hydrogen

rWGS CO production

Gasel Fischer-Tropsch

DMX/Advamine Carbon capture

Ethanol C/C sugars

Carbon dioxide

Figure 1 Axens technologies for renewable/low-carbon fuels and bio-based chemicals

hydrocracking, and fluid catalytic cracking are all mature, established technologies that can be readily adapted to co-process varying amounts of renewable feedstocks. As an increasing diversity of renewable and waste-derived feedstocks are considered, additional investments in technologies not widely used in conventional refineries, such as gasification, pyrolysis, and Fischer-Tropsch synthesis, will be required. We will now detail the production schemes depending on the feedstock:  Renewable vegetable oils and animal fats Vegetable oils and animal fats (lipids) can be hydrotreated to produce HEFA suitable for use as renewable diesel and renewable kerosene for SAF. Over the last 10 years, many new hydrotreating plants have been built, and 10 operating units (some operating, some under construction, and some starting up soon) use the Vegan hydrotreating process licensed by Axens (see Figure 2 ). The lipids are hydrotreated to remove oxygen and other contaminants, followed by a hydroisomerisation step to upgrade the linear paraffins. Vegan technology can be easily tuned to match the required boiling range and cold flow properties of the desired product, allowing operators to balance the production

of renewable diesel and/or SAF according to market demand. Hydrotreatment is a mature technology in widespread commercial use in refineries. Some refiners have opted to co-process renewable feedstocks in their existing hydroprocessing unit as an economically viable short-term solution with only minor modifications, but still with the expertise needed from a licensing company to properly assess the quality and quantity of feedstock to be processed with the associated impact on unit performance. Others have retrofitted those hydroprocessing units or invested in a new unit to process only renewable feedstocks. Interest in hydrotreatment may have plateaued in Europe, mainly due to the cap on

Pretreated renewable oils & fats

SAF renewable diesel

HDI 2

HDT

Figure 2 Vegan hydrotreatment to produce HEFA for renewable fuels

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Raw biomass

Torreed biomass

Raw syngas

Clean syngas

SAF, RD, RN

Pretreatment

Conditioning

FT & upgrading 4

Gasication

Figure 3 BioTfueL process from biomass to renewable fuels

first-generation biofuels and concerns about the availability of second-generation biofuels, such as used cooking oil, animal fats, and low indirect land use change (ILUC) crops. Elsewhere, the US have a different approach to calculating carbon intensity, resulting in continued interest and investments. In India, jatropha is gaining interest as an oil crop that can be grown on marginal land, which presents a low ILUC risk.  Solid biomass Lignocellulosic residues from forestry and agriculture are favoured biomass feedstocks that do not compete with food production. These can be converted to fuels using thermal (gasification or pyrolysis) or biological processes. BioTfueL: biomass gasification with Fischer-Tropsch synthesis to aviation jet Axens worked since 2010 as a member of the Bionext partnership (Avril, Axens, CEA, IFPEN, thyssenkrupp Industrial Solutions, and TotalEnergies), with funding from the French Government and the Hauts-de-France region to develop the BioTfueL technology for the production of SAF for aviation from biomass residues. Paraffinic naphtha is also produced and can be used in a steam cracker, the entry gate to the plastic world and its need to reduce fossil usage.

BioTfueL (see Figure 3 ) is a four-step process: torrefaction of biomass, gasification to produce syngas, syngas conditioning (cleaning, acid gas removal, and purification), and then Fischer- Tropsch synthesis to convert the syngas into advanced bio-jet. Following success with the demonstration units in France, this technology is now ready for commercialisation with a first licence sold to Elyse Energy for a project in the South of France. The BioTfueL process is flexible and can be used to produce kerosene for SAF as well as naphtha to be used in steam crackers for the plastic industry. Bio-TCat flash pyrolysis Axens has partnered with Anellotech, which has developed a fast pyrolysis process to produce bio-based aromatics, including benzene, toluene and xylenes (BTX) and paraxylene, to offer a competitive decarbonisation pathway for the production of polyesters, PET, and other chemicals. Bio-TCat (see Figure 4 ) is a three-step process: a feed pretreatment section (MinFree) which removes minerals in the feed; a one- step reaction section (biomass-to-aromatics conversion through the thermocatalytic process); and a section for upgrading and separation of the aromatic mix obtained. Following success with the demonstration units in the US, this

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Benzene

Mineral free biomass

Toluene

Aromatics

P-Xylene

MinFree Feed preparation

Bio-TCat Reactor

Separation / hydrotreatment

Figure 4 Bio-TCat process to produce renewable biofuels and bio-based chemicals as alternatives to petro-based products (Anellotech, 2023)

technology is now ready for commercialisation. Futurol and Jetanol: from enzymatic conversion of lignocellulosic biomass and catalytic conversion to advanced biofuels Today, the main substitute for fossil gasoline is bio-ethanol produced from first-generation food crops (sugar cane, sugar beet, and starchy crops) via the fermentation of sugars to ethanol. In the EU, the updated Renewable Energy Directive (RED II) capped the use of first- generation biofuels for road and rail transport at 7%, with a reduction to 3.8% by 2030. At the same time, RED II introduced targets to increase the use of advanced biofuels to at least 6.8% by 2030. Some new targets have been proposed at the European Commission level, and an awaited version III of the RED should be voted on and agreed before the end of 2023. Futurol technology, developed by Procethol

partners) produces advanced bio-ethanol from lignocellulosic residues (for example, wood chips, straw from cereal crops, bagasses, rice straw, and bamboo). As shown in Figure 5 , the Futurol process involves four steps u Biomass pretreatment: Lignocellulosic biomass is broken down into three major components: cellulose, hemicellulose, and lignin. Hemicellulose is then converted into monomeric sugars. v Biocatalysts production: Enzymes as well as yeasts are produced on-site for economical reasons, avoiding external supplies. w Hydrolysis and fermentation: The enzymes are used for enzymatic hydrolysis of the cellulose into sugar monomers and, simultaneously, the fermentation of these sugars into ethanol by yeasts. x Products recovery: Fermented mash from the hydrolysis and fermentation step is treated to separate and recover the different products:

2G, a company composed of different partners (R&D, industrial, and financial

2 Biocatalysts production

Yeasts

Enzymes

4 Products

3 Hydrolysis & fermentation

Pretreatment 1

Stillage

Ethanol

Lignin CO

Figure 5 Axens Futurol technology for bio-ethanol production

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CO lean solvent

Gas treated

Decanter

Up to 5 barg

Lean solvent

Stripper

CO rich solvent

Absorber

Reboiler

Flue gas

Rich solvent

Lean solvent

Figure 6 Axens carbon capture technology DMX process scheme and demonstration plant

fuel-grade ethanol, lignin, clarified stillage, and CO₂. Captured CO 2 and renewable hydrogen for synthetic fuels u DMX: Capturing CO₂ with advanced demixing solvent Axens has a strong track record in the application of pre- and post-combustion carbon capture technologies for a range of industrial flue gases (steam methane reforming, naphtha cracking, steel and cement manufacture, power plants and waste incinerators). The DMX CO₂ capture absorption process (see Figure 6 ) uses a solvent that reduces the energy intensity for carbon capture by nearly 30% compared with the industry standard MEA (monoethanolamine). A DMX demonstration plant is currently in operation at the ArcelorMittal Steel mill plant in Dunkirk, with a process to be commercialised in the coming months. v Reverse water gas shift: Gasel: a complete integrated suite of technologies E-fuels are classified as synthetic fuels (if the

CO₂ is biogenic or from direct air capture) or recycled carbon fuels (if the CO₂ comes from fossil origin) which use captured CO2 and transformed into carbon monoxide via a reverse water gas shift (RWGS) reaction (see Figure 7 ). It is then mixed with hydrogen from the electrolysis of water using renewable electricity to make a syngas. The syngas is then processed into an Axens Gasel Fischer-Tropsch process used to synthesise longer chain hydrocarbons, followed by hydrocracking/isomerisation to produce fuels with a suitable boiling range for e-kerosene and e-diesels. This process produces e-kerosene that qualifies as synthetic aviation fuel under the new ReFuelEU regulation, as well as paraffinic naphtha. Alternatively, the syngas can be combined with hydrogen for the production of e-methanol with existing processes and then combined with methanol-to-olefin technology and olefin-to-jet (Jetanol) technology. Conclusion The challenges ahead are to rapidly expand the availability and to improve the economics

DMX

G asel

Syngas

Carbon capture

Reverse water gas shift

Fisher-Tropsch Synthesis unit

Upgrading unit

Electrolysis

Water

Figure 7 E-fuels: from CO₂ and H₂ to low-carbon fuels

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of sustainable transport fuels and renewable chemicals. Government support in setting long- term objectives, providing funding for the scale- up of emerging technologies, potentially giving guarantees to investors for the first plants, and setting production and blending mandates or tax credits is welcome and necessary in creating a positive environment for the uptake of these fuels. Axens, together with it parent company, IFP Energies nouvelle, can support customers Catalytic conversion of advanced/ bioethanol to ethylene Advanced bioethanol or bioethanol (1G ethanol) can be processed and dehydrated using the energy-efficient Atol process for the production of bio-ethylene, an effective route for the decarbonisation of ethylene-based chemicals, such as plastics. Alcohol-to-jet process The alcohol-to-jet process is one of seven pathways certified

and investors with proven technologies for sustainable fuels to meet growing demand from the different transport sectors. Advamine, BioTfueL, DMX, Futurol, Gasel, Jetanol, and Vegan are trademarks of Axens. Bio-TCat and MinFree are trademarks of Anellotech. under ASTM D-7566 for the production of SAF. Earlier in 2023, Axens announced a project pipeline approaching 1.4 million tonnes per annum of SAF production using its Jetanol alcohol-to-jet technology in different countries. The bio-ethylene is dimerised to butenes and hexenes, which in turn are oligomerised to the kerosene range, followed by a hydrogenation step to saturate the olefins and meet ASTM D7566 specifications (Bernard, et al., 2022).

Yvon Bernard yvon.bernard@axens.net

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Reducing GHG emissions from international shipping

The International Maritime Organization’s revised strategy and future plans

Eddy Van Bouwel EvBo Consult

T he International Maritime Organization (IMO) holds responsibility for regulating emissions from international shipping. The IMO is a United Nations agency headquartered in London, and brings together 175 Member States (IMO, 2023). IMO established GHG reduction ambitions for the first time in 2018, when an initial GHG strategy was adopted (IMO, 2018). The initial strategy included the ambition to ‘reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008, while, at the same time, pursuing efforts towards phasing them out entirely’. Importantly, the initial strategy included a commitment to review the strategy every five years. IMO’s Marine Environment Protection Committee (MEPC) was given a timeline to adopt a revised GHG strategy in 2023. Revised IMO GHG Strategy A revised strategy was adopted at the 80th

session of the Committee in July 2023, significantly raising the level of ambition and the speed to reach net zero GHG emissions (IMO, 2023). The most significant change is the adoption of a net zero GHG target by or around 2050. In addition, indicative checkpoints have been added for 2030 and 2040, including the ambition to have at least 5% of the energy used to be from near-zero GHG technologies by 2030. The initial and revised strategies are summarised in Table 1 . Current emission levels and outlook to 2050 As all targets are expressed as percentage reductions vs 2008, it is interesting to look at the most recent emissions data vs 2008. IMO’s Fourth GHG study, published in 2020, provides an authoritative reference (IMO, 2021). Over time, different methodologies have been used to estimate GHG emissions from international

Timeline

Initial IMO GHG Strategy (2018)

Revised IMO GHG Strategy (2023)

As soon as possible

Peak GHG emissions as soon as possible Reduce carbon intensity by at least 40% Uptake of zero or near-zero GHG emissions technology: at least 5%, striving for 10% of the energy used Indicative checkpoint: reach at least 20% total annual GHG emissions, striving for 30% reduction Indicative checkpoint: reach at least 70% total annual GHG emissions, striving for 80% reduction

By 2030

Reduce carbon intensity

by at least 40%

By 2040

By 2050

Pursuing efforts towards 70% carbon intensity reduction Phase out emissions as soon as possible in this century

By or around, i.e. close to 2050: reach net-zero

GHG emissions

2050+

Table 1 IMO 2018 and 2023 GHG Strategies (all % reduction targets are relative to 2008)

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IMO GHG report includes a reassessment of the 2008 emissions based on the new estimation methods. Table 2 summarises the main GHG emissions estimate numbers reported by the 4th IMO GHG study. In the absence of further regulations, emissions are projected to increase from about 90% of 2008 emissions in 2018 to 90-130% of 2008 emissions by 2050 for a range of plausible long- term economic and energy scenarios (see Figure 1 ). The current projections are significantly lower than earlier ‘Business As Usual (BAU)’ estimates. For example, the BAU scenarios considered in the Third IMO GHG study (IMO, 2015) projected an increase in emissions by 50% to 250% in the period to 2050. As historically different methodologies have been used to estimate total GHG emissions from international shipping, measuring progress towards IMO’s targets will be less straightforward than one would expect. IMO’s ability to assess global emissions, however, should further improve through the implementation of the Data Collection System (DCS) (IMO, 2016). Starting from January 1, 2019, ships of 5,000 gross tonnes (GT) and above are required to collect and report fuel consumption data for each type of fuel oil they use. The reporting process includes a third- party verification step. This should allow IMO to produce more accurate estimates of emissions. Obviously, the 2008 reference emissions will need to be reassessed to ensure a consistent basis for measuring progress towards IMO’s GHG strategy targets. Carbon Intensity Carbon intensity (CI) is a measure of ship efficiency in relation to the cargo carried, assessing GHG emissions per ton-mile of transport work. It can be measured in two ways: relative to the ship’s cargo carrying capacity, referred to as the Annual Efficiency Ratio (AER) and measured in gram CO₂/Dwt/nm (where Dwt = dead weight tonnage), or, relative to actual cargo carried, referred to as the Energy Efficiency Operational Indicator (EEOI) and measured in gram CO₂/ton cargo/nm. The IMO Fourth GHG report has estimated CI improvements relative to 2008 for both CI indicators and based on the two emission

Total GHG emissions Mton CO 2 eq, (% change vs 2008)

Voyage based

Vessel based

2008 2012 2018

794

940

701 (-11.7%) 740 (-6.8%)

848 (-9.8%) 919 (-2.2%)

Table 2 Evolution of emissions from international shipping

shipping; two such methodologies were used in the Fourth IMO GHG report: vessel-based allocation and voyage-based allocation. Vessel-based estimation uses vessel characteristics combined with assumptions of typical operations by vessel type to estimate total emissions. This methodology was used in earlier IMO GHG assessments. Voyage-based estimation uses actual voyage data combined with vessel characteristics. This obviously requires a lot more data and data processing but should yield a more accurate estimate of total emissions. While there is a significant difference in the results of both methods in terms of assessing progress towards the new IMO GHG targets, the most important point is to look at the numbers on a consistent basis. To that purpose, the 4th

140%

120%

100%

80%

60%

40%

20%

2020 2015

2025

2030

2035

2040

2045

2050

SSP2_RCP2.6_G SSP4_RCP2.6_L

SSP2_RCP2.6_L OECD_RCP2.6_G

SSP4_RCP2.6_G OECD_RCP2.6_L

Credit: Reproduced with the permission of the International Maritime Organization (IMO), which does not accept responsibility for the correctness of the material as reproduced: in case of doubt, IMO’s authentic text shall prevail. Readers should check with their national maritime Administration for any further amendments or latest advice. International Maritime Organization, 4 Albert Embankment, London, SE1 7SR, United Kingdom. Figure 1 Projections of maritime ship emissions as a percentage of 2008 emissions (IMO, 2021)

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AER

EEOI

Vessel based (g CO 2 /Dwt/nm)

Voyage based (g CO 2 /Dwt/nm)

Vessel based (g CO 2 /Dwt/nm) 13.16 (-23.1%) 12.33 (-27.9%) 11.67 (-31.8%) 17.10

Voyage based (g CO 2 /Dwt/nm) 12.19 (-19.6%) 11.30 (-25.5%) 10.70 (-29.4%) 15.16

2008 2012 2015 2018

8.08

7.40

7.06 (-12.7%) 6.64 (-17.8%) 6.31 (-22.0%)

6.61 (-10.7%) 6.15 (-16.9%) 5.84 (-21.0%)

Table 3 Estimates of carbon intensity as reported by the IMO Fourth GHG study with percentage improvement vs 2008

inventory methodologies discussed above. The results are summarised in Table 3 . CI has clearly improved quite substantially since 2008. It is interesting to note that the largest improvements apparently happened between 2008 and 2012. This was when the first energy efficiency measures were being discussed at IMO. From 2012 onwards, annual improvements appear to settle in the 1-2% per year range. The difference between vessel-based and voyage-based CI numbers is directionally consistent with the observed differences in total emissions estimates between the two methods. The difference between AER and EEOI numbers is striking. This undoubtedly reflects the effect of so-called ballast voyages, when ships travel empty between ports while pursuing new cargo, and partial load voyages. EEOI should be the preferred indicator, as it reflects actual transport work. However, using EEOI requires the collection of more data, including data that is sometimes seen as commercially sensitive. As a result, IMO’s recent energy efficiency regulations, such as the Carbon Intensity Indicator (CII), are based on AER. Regardless of which CI indicator is considered, the 2030 target of 40% improvement vs 2008 appears to be realistically achievable if the current annual improvement trend can be maintained. Coherence of 2030 targets Table 1 shows three distinct targets for 2030, raising the question of which is more ambitious. The target regarding the uptake of zero or near- zero GHG emissions technology is a subset of the CI target, as any use of such fuels will obviously lead to reduced CI. We will look at that in more detail later in this article. The absolute emissions target and CI are linked through the demand for shipping services. In case of a higher

demand for shipping services in 2030, CI will need to improve further to reach the same level of total emissions from international shipping. This relationship is illustrated in the waterfall charts of Figure 2 . Figure 2(a) illustrates the relationship for the 2018 voyage-based AER data shown in Table 3. The data imply that demand for shipping services has grown by 18% in the 2008-2018 period. With an estimated CI improvement of 21%, the resulting 2018 emissions are 6.8% below the 2008 emissions. Figure 2 Scenario 1 looks at what it would take to reach the 30% emission reduction, assuming that the CI target of 40% reduction is achieved. The graph shows that demand for shipping services would only be allowed to grow by 16.7% between 2008 and 2030. This means we would need to see a small reduction in demand between 2018 and 2030. Figure 2 Scenario 2 shows that demand can grow by 33.3% between 2008 and 2030 to reach the minimum emissions reduction target of 20% while achieving the CI reduction target of 40%. Figure 2 Scenario 3 shows what further reduction in CI would be needed to reach the more ambitious target of -30% emissions reduction in case demand grows by the same 33.3% as in Scenario 2. That would require a CI reduction of 46.7%, which implies a faster reduction than we have seen in the 2012-2018 period. This is where the introduction of near- zero carbon emission fuels may play a role. Pathway towards net zero Two elements must work together to guide the industry towards net-zero emissions: reducing the amount of energy needed to move ships as much as reasonably possible and introducing zero and near-zero GHG emission technologies.

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IMO 2030 GHG targets ( S cenario 1)

2008–2018 GHG emissions

120 140

+18.0% –21.0%

+16.7% –40%

–6.8%

100

60 80

–30%

2012 emissions

2030 emissions

2008 emissions

Demand growth

Cl reduction

2008 emissions

Demand growth

Cl reduction

Increase

Decrease

Total

IMO 2030 GHG targets ( S cenario 2)

IMO 2030 GHG targets ( S cenario 3)

120 140

100

+33.3%

–20%

60 80

–30%

–40%

–46.7%

2030 emissions

2008 emissions

Demand growth

Cl reduction

2008 emissions

Demand growth

Cl reduction

Figure 2 Relationship between demand for shipping services, carbon intensity, and total GHG emissions: (a) 2008-2018 – voyage-based AER data, (b) 2008-2030 Scenario 1, (c) 2008-2030 Scenario 2, (d) 2008-2030 Scenario 3

IMO started introducing measures to improve energy efficiency in 2011 with the adoption of the Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP) regulations. In 2021, further regulations were adopted: the Energy Efficiency Existing ship Index (EEXI) and CII rating. These regulations steer the first element of the net zero pathway. They have been identified as short-term measures in the IMO strategy and have steered the continuous improvement in carbon intensity observed to date. Role of low- or zero-carbon fuels So far, there are no IMO regulations in place to address the second element of the net zero pathway. The introduction of near zero-carbon fuels into the mix should lead to an acceleration of the CI reduction trend. The industry has not been waiting on the regulations to start the development and piloting of zero-emission ships and fuels. The Global Maritime Forum (GMF) is tracking these developments on a

regular basis. The fourth edition of the GMF report includes 373 registered projects, a significant increase vs the 203 projects identified in the third edition (Anna Rosenberg and Ana Madalena Leitão, 2023). However, surely, the full transition from conventional fossil fuels to zero and near-zero GHG fuels will not happen on a voluntary basis as long as the alternatives are significantly more expensive than conventional fuels. Therefore, the IMO strategy has identified so-called mid-term measures that will be aimed at stimulating the use of low- and zero-carbon fuels. Two candidate measures have been put forward (IMO, 2023): a technical element, namely a goal-based marine fuel standard regulating the phased reduction of the marine fuel’s GHG intensity, and an economic element on the basis of a maritime GHG emissions pricing mechanism. As guidance for the development of the so- called mid-term measures that should steer the initial introduction of zero and near-zero fuels, the revised IMO GHG strategy mentions some key

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principles and criteria that should be considered: • The measures should effectively promote the energy transition of shipping and provide the world fleet with the necessary incentive • The measures should contribute to a level playing field and a just and equitable transition • They need to consider the impacts of measures on states, including developing countries, in particular the least developed countries (LDCs) and small island developing states (SIDS). Considering these principles and criteria, we can put forward a number of more concrete considerations that can be used to arrive at an optimised basket of measures as defined in the strategy. The measures should steer the energy transition, and the word transition is very relevant. It describes a process over a period of time and not a sudden step change. This is logical, as the transition requires the introduction of new fuel production and new engine technologies. This process that takes time, with a need to develop experience before going into the large-scale roll-out of the new technologies. The introduction of new technologies typically follows an S-curve with relatively slow initial growth in the application of the new technology, followed by a ramp-up period. To foster this process, a combination of measures can and should be put in place that gradually disincentivises the use of conventional technology and incentivises the application of the new technologies. It is rather important that the disincentivising of conventional technologies does not happen in a brutal, sudden way, as that would have an immediate important effect on the cost of shipping and may lead to an unacceptable impact on states. Rather, a modest initial disincentive with a pre-announced timeline for increasing the disincentive would do the job. It would provide a clear signal that conventional technology will be phased out while leaving sufficient time for the industry to adjust and avoid a major increase in shipping cost, for example by further focus on energy efficiency measures. Incentives for the new technologies, on the other hand, will need to be substantial initially. The need for incentives should decrease over time as experience is gained, technologies are improved, and economy of scale helps to bring down the cost of alternative fuels.

To maintain a level playing field, measures will be needed that effectively close the cost gap between conventional fuels and zero and near-zero GHG fuels. While there may be ways to do this through a combination of levies and subsidies, a strong business case could also be created by allowing compliance with the GHG standard within a pool of ships. In this way, the higher cost of an alternative fuel used in one vessel could be covered by the pool, effectively spreading the cost over a number of vessels that continue to use conventional fuels while meeting the GHG standard on a pool basis. The EU’s recently adopted FuelEU Maritime regulation includes such a mechanism (Council of the EU, 2023). Availability of near-zero carbon fuels A further critical question concerns the availability of alternative fuels in sufficient quantities to allow the shipping industry to meet the IMO targets. A study commissioned by IMO to look into the feasibility of different decarbonisation pathways concluded that full decarbonisation by 2050 is feasible through a realistic sustained annual fuel production growth rate, provided measures to create the demand are put in place promptly (Michael Campbell, 2023). On the other hand, a recent study by DNV has looked into this question and concluded, based on a comprehensive mapping of currently announced projects, that demand for shipping could amount to 30 to 40% of global carbon- neutral fuel production in 2030 (DNV, 2023). Other industry sectors will be competing for these fuels as part of their decarbonisation efforts. This means that a supply shortage could occur, leading to high market prices. It may, therefore, be desirable to consider a mechanism that caps the maximum fuel cost, at a level that is high enough to encourage the switch to low- and zero-carbon fuels, but such that the impact on shipping costs and, consequently, the impact on states remains acceptable. Again, the EU’s recently adopted FuelEU Maritime regulation includes such a mechanism. European countries have developed a proposal that would introduce similar concepts at a global level to IMO. Focusing on the technical element of the proposed IMO mid-term measures should hold

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the key to stimulating the initial deployment of low- and zero-carbon fuels that is needed. The objective to reach 5% of energy demand by 2030 will be challenging. The sooner IMO can provide clarity on how the envisioned technical fuel GHG standard will be introduced, the higher the probability that the 5% target can be achieved. It should be noted that ships will need compliance options, as not all existing ships will be able to accommodate alternative fuels, and they may not be able to access low- or zero-carbon fuels. Finally, a critical factor in the development of IMO’s mid-term measures is the finalisation of the well-to-wake (WtW) GHG footprint methodology, the so-called LCA guidelines. The framework for this tool was agreed at MEPC 80 (IMO, 2023), but significant work remains to develop default GHG footprint values for the alternative fuels that are being developed. Due attention will need to be given to the verification and certification processes needed to guarantee that fuels on the market realise actual GHG savings and that fraud is detected and sanctioned. However, clarity on how WtW footprints will be calculated is needed to provide

certainty to investors in near-zero carbon fuel production facilities. Conclusion IMO has taken a major step forward with the adoption of its revised GHG strategy in July 2023. The energy efficiency measures rolled out since 2011 have contributed to an improvement in CI of at least 20% since 2008. Further measures to be adopted will now need to focus on the transition to near-zero carbon fuels. To achieve the objectives of the 2030 GHG strategy, the development of IMO’s mid-term measures needs to proceed swiftly according to the timetable included in the revised strategy. That is critical to provide the certainty of demand needed to attract the vast amount of capital to speed up the production of alternative fuels.

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Eddy Van Bouwel evbouwel@skynet.be

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