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GHG Reduction: The price of zero-emission fuels would dominate the cost of decarbonization of international shipping

International shipping is bound for significant changes in the way it operates in the coming years. With the upcoming IMO MEPC, there’s a flurry of activity going on. Hereby, Hellenic Shipping News offers you the key studies IMarEST has submitted to the seminal IMO meetings which will inform/be part of the discussions next week during ISWG and MEPC.

ISWG-GHG 3-2-11 – CO2 emissions from shipping a route-level perspective (IMarEST)

Key points from this study relating to the discussions that will take place next week:

– There is sufficient data to determine route level impacts of candidate measures. Impacts on states has been the primary concern of many LCDs and SIDs as well as the argument used by some states for lack of ambitious action on measures.

– There is weak/no relationship between ship age and the routes that these ships serve when broken down by a country’s development status.

– There is weal/no relationship between ship type (e.g. drybulk) and the routes that these ships serve when broken down by a country’s development status.

– SIDS and LDCs accounted for an estimated 13% of the total CO2 emissions of international shipping, half of this is attributed to Singapore (which is treated as SIDS as per UN World Economic Situation and Prospects).

ISWG-GHG 3-3 – The costs of GHG reduction in international shipping (IMarEST)

Key points from this study relating to the discussions that will take place next week:

– Improving energy efficiency for a given size and type of ship is ultimately limited by the laws of physics. Thus, energy efficiency measures on their own are not enough.

– The price of zero-emission fuels would dominate the cost of decarbonization of international shipping.

– Depending on how prices evolve for renewable electricity in coming decades, 100% absolute reduction of shipping GHG by 2050 appears achievable for a marginal abatement cost of $100 to 500 US$/t.

– Whilst hydrogen is well known as a potential future marine fuel, ammonia is less known and an interesting result was that for certain ship types, ammonia appears to outperform hydrogen in terms of profitability (figure 2).

– ammonia, hydrogen and (obviously) electricity can also all be produced from 100% renewable or nuclear energy. In combination of decarbonization policy in the wider energy system, and the increasingly low cost of renewable electricity, is already making “green” zero-upstream-emissions versions of these fuels competitive to their alternative fossil-derived production processes.

– OECD/IEA report Renewable Energy for Industry finds that for both of these potential fuels, cost scenarios were bounded by renewable electricity prices and there is potential for even lower cost production of these fuels when very low marginal price electricity was available from electricity grids with high renewables penetration (refer to OECD figure 4, 7 and 12.

– Conclusion: after initial increases in abatement cost, the cost curve reaches a “plateau” at a value which represents the carbon price needed to make zero-emissions technologies competitive with conventional propulsion.

ISWG-GHG 3-2-7 – On the relevance of the 1.5°C goal (IMarEST)

– Higher levels of climate change pose higher levels of risk, and a temperature increase of 2°C poses higher risks than a temperature increase of 1.5°C. Rapid changes of climatic conditions are expected to have severe impacts.

– With advances in the use of attribution science, the impacts include increased heat (causing a vicious circle on energy demand to cool), ocean acidification, sea level rise, precipitation draughts and water availability, coral reefs and ecosystems, storms, food security, health impacts and migration.

– Most of the above will directly or indirectly impact shipping and the services it provides to accommodate global trade.

Source: UCL Energy Institute, ImarEST

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