The majority of the world’s governments have committed to the Paris Agreement. The majority of countries in the world are aiming to reach peak emissions as soon as possible and have set their eyes on carbon neutrality. But shipping’s place in the Paris Agreement’s global ambitions is complex. It is an international industry that isn’t easily included in national regulations.
Despite that, I believe that the majority of the ship owners and managers feel an immense responsibility to decarbonize, and I know that there is plenty of commercial opportunity in this too. The reality is that shipping needs to find a pathway to decarbonization and take action, starting now.
For international shipping, the conclusion we have come to is that hydrogen is likely to be the dominant fuel with LNG playing a vital role in the interim. This will ensure we reduce cumulative emissions now, while hydrogen is developed commercially and at scale. This is because, of course, any new fuel is going to take time to test, commercialize and scale – even as the sector pushes to do that as quickly as possible.
Our modeling shows that the fastest pathway to net-zero, with the lowest total emissions, is the accelerated adoption of LNG, combined with widespread use of energy efficient technologies, while developing fuel cells ready to transition directly to zero emission fuels in the future.
I want to look at the important role LNG can play in driving decarbonization and aiding the transition to future fuels. There has been much discussion on this topic in the last week with two new reports, from the World Bank and Sphera highlighting some of the opportunities and challenges of an LNG pathway.
So first, let me be clear, LNG is the lowest emission fuel available at scale in the shipping sector today. It has no near rival in this regard.
According to Sphera’s latest study, LNG reduces greenhouse gases by up to 23 percent on a well-to-wake basis and up to 30 percent on a tank-to-wake basis compared with current oil-based marine fuels. LNG-fueled vessels emit virtually no SOx while dramatically limiting emissions of NOx. LNG also virtually eliminates particulate matter.
As both the Sphera and World Bank reports rightly point out, greenhouse gas performance must include measurement, and effective management of methane. Methane, a potent greenhouse gas has to be tackled across the supply chain. And new technologies, such as sensors and drones are providing the innovation for the industry to improve its performance here. For example, Shell has a methane emissions target of 0.2 percent by 2025. On the ship itself, the Sphera report uses the very latest primary data sources, peer-reviewed, in its finding that engines built today experience only minimal methane slip.
So, to minimize cumulative emissions from the shipping sector before future fuels are available in enough quantity for the global shipping fleet, LNG is the choice today.
And when we turn to the need for a global bunkering network, LNG is available in more than 150 ports around the world. And this is growing to meet demand – there are now more than 600 LNG-fueled vessels on the water. Ports such as Rotterdam, Singapore and Canaveral are seeing the case to invest. And this investment, used by LNG today is interchangeable with bio and synthetic options, providing a low risk, long-term decarbonization alternative for infrastructure players and ship owners.
LNG already has its own pathway to decarbonization through bio-LNG. The European Biogas Association expects an increase in biogas in Europe by 2030 to be ten times today’s volumes, and according to a study by the International Energy Agency (IEA), every part of the world has significant scope to produce biogas and/or biomethane, a fundamental part of bio-LNG. Other technologies, such as carbon capture and storage and synthetic-LNG, will also go through the development cycle to play a role.
We believe LNG must be a part of the solution to ensure that the new build investments the sector makes today, which will be the legacy fleet for the coming decades, have as low emissions as possible. In addition, new technologies and feedstocks will enable LNG to incrementally decarbonize over that same time period.
Looking ahead to future fuels, there are several important areas that I would like to highlight here.
Firstly and most importantly, on safety. The safety risks with ammonia and hydrogen are more challenging when compared to today’s conventional hydrocarbon fuels. But our testing with DNV at the Spadeadam Facility, where we are developing a detailed understanding of hydrogen’s properties, is demonstrating that the safety risks associated with hydrogen appear to be more manageable.
When you look at ammonia, the risks are high due to its lethal toxicity, both to the health of the seafarers and to the environment. When we consider the total emissions, hydrogen will enable greater emissions reductions than ammonia.
To us, when compared to other potential zero emission fuels, hydrogen has some very clear advantages. Green hydrogen is the building block for any of the future fuels being discussed. Liquid hydrogen requires one thermodynamic transformation: gas to liquid. All other options require additional chemical transformations to produce them, and then convert back to hydrogen before it is consumed. This is less efficient and the process requires more energy.
Although Shell will continue to make the case for hydrogen as part of shipping’s future, it is not a competition. We will need to work together, remain open to new ideas, test our views, trial new technologies, so that we can all unite around the fuels and technologies for the future, and start to really make progress. Whatever the solutions for different sectors of the industry, we will need to coordinate our efforts.
