Kuang Zhanting

Carbon emission reduction has become the focus of the current shipping and its upstream and downstream industries. How are shortterm and long-term targets for emission reductions determined? How to choose the technical path of carbon reduction? How to plan the cost of carbon reduction and where will the money come from?

Recently, at the Green Shipping Seminar with the theme of greenhouse gas emission reduction in the shipping industry, participating experts discussed the carbon emission reduction of ships and expressed their views.

Approaching time limit vs. confused road ahead

In the face of various carbon emission reduction regulations and conventions, the shipping industry feels heavy pressure and confused about the road ahead. Chen Ji, senior manager of the Maintenance & Safety Supervision Office of the Safety Supervision Division of China COSCO Shipping Group, believes that shipping companies have realized that they must make preparations for the study and implementation of carbon emission reduction regulations and conventions in advance. However, different from the previous sulfur emission reduction and ballast water treatment, carbon emission reduction involves the reform of the ship's power system. It is a new and huge challenge which cannot be handled with mere experience of shipping companies in situation interpretation and performance prediction.

On the one hand, the implementation of the relevant regulations and conventions on carbon emission reduction is related to many departments of shipping enterprises and is a systematic project. For example, the EU Emissions Trading System (EU ETS) has a huge impact on the shipping financing business; the content of the Declaration on Green Shipping Corridors is related to the operating departments responsible for route setting and cargo arrangements; and the "FuelEU Maritime" initiative uses sustainable marine fuels and zero-emission technologies, which is also related to the ship management department. A slight move in one part may affect the situation as a whole. The carbon emission reduction performance is equivalent to the overall action of a shipping company, which needs to be comprehensively considered from the aspects of management structure, control process, and internal system.

On the other hand, the path and prospects for carbon reduction are uncertain. "Thanks to the development of the low-sulfur oil industry and related fuel supply chains, the response to the sulfur restriction order has become a relatively successful implementation case in the shipping industry, while carbon emission reduction has not yet been clearly answered." Chen Ji said there is a consensus among industry experts that whether it is LNG, LPG, methanol, biofuels or hydrogen fuels, ammonia fuels, there are different problems in terms of penetration, infrastructure, TRL, price, etc., as well as energy density, storage difficulty, carbon intensity, safety, compatibility and other technical angles, and there is no final choice for the zero carbon or at least net zero emissions target.

Take the initiative vs. respective choices

Despite all the doubts, there is no doubt that the direction of carbon reduction is clear. Zhang Shouguo, executive vice president of the China Shipowners Association, believes that ship carbon emission reduction is the main content of environmentally friendly shipping, and it depends on the coordinated development of upstream and downstream industries such as green fuel, green equipment, and green ships

Li Yanqing, Secretary-General of the China Association of the National Shipbuilding Industry (CANSI) and Chairman of the Ship and Ocean Technology Committee of the International Organization for Standardization, noted that ship carbon emission reduction has become the focus of widespread concern in the international community, and under the leadership of Europe and the United States, through multilateral initiatives and other actions, ship carbon emission reduction rule and convention framework is being accelerated.

At present, the content of carbon emission reduction rules and conventions in Europe and the United States has gradually become clear, and the industry has exclaimed that "the iron gate is falling", and international major shipping enterprises have had clear carbon emission reduction explorations and actions. CMA CGM as a fan of the LNG powered ship solution has placed orders to build a number of LNG dual-fuel container ships in shipbuilding groups including CSSC, and it is expected that by 2024, about 40 dual-fuel tank ships will enter the CMA CGM fleet, and the specifications of new ships will range from 23000TEU very large container ships to 1400TEU feeder container ships. It is reported that the company will build 10 new Ice-class dual-fuel feeder container ships with a total price of more than $620 million, which is exactly twice as expensive as ordinary regional container ships.

While significantly increasing the proportion of LNG fuel used in its fleet, CMA CGM will be investing in the production of 12,000 t/a biomethane, and plans to take the lead in launching a biomethane low-carbon shipping service. The 12,000 t/a biomethane with a Guarantee of Origin (GO) can accommodate two 1400 TEU container ships to sail between St. Petersburg and Rotterdam for a full year. From May 2021, CMA CGM customers will be able to use biomethane as fuel in the Act with CMA CGM+ series of services. CMA CGM believes that biomethane combined with dual-fuel gas-powered technology can reduce the company's greenhouse gas emissions by at least 67% across the value chain and reduce GHG emissions by 88% at the ship level.

Another major shipping giant, Maersk Group, chose methanol as an alternative fuel. Following placing the order for the world's first 2100 TEU carbon-neutral methanol fuel regional container ship at Hyundai Opo Shipbuilding in South Korea, Maersk Group signed an agreement with Hyundai Heavy Industries of South Korea to order eight methanolpowered 16,000 TEU container ships, the first of which will be put into operation in 1Q24. Compared with the industry average for ships of the same size, the energy efficiency of the transport of a single container of the ship type will be increased by 20%. After the completion of the deployment of eight methanol-powered vessels, Maersk Group expects to reduce CO2 emissions by about 1 million tons per year.

Shi Yingtong, general manager of policy and regulatory affairs of Maersk (China) Co., Ltd., said that carbon emission reduction is imminent, and shipping companies must act immediately. Compared with alternative fuels such as LNG and ammonia, Maersk believes that methanol used as fuel technology is relatively mature, with high safety, normal temperature and atmospheric pressure storage and other advantages, as long as the problem of green methanol production is solved, its applicability will be very strong. To that end, Maersk has partnered with the renewable energy company REintegrate to build a new carbon-neutral electric methanol production facility with an annual output of 10,000 tons, and has also invested in waste fuel, a startup company that produces green biomethanol and renewable natural gas -- Waste Fuel and Prometheus Fuels。

Accelerate action vs. results emerge

"Take action" has become the consensus of the shipping industry. Li Yanqing reminded that although China's shipbuilding industry has also made contributions to ship carbon emission reduction, the current framework of the Ship Carbon Emission Reduction Convention is built under the leadership of Europe and the United States, and China's shipbuilding industry needs to accelerate systematic thinking and research on the issue of ship GHG emission reduction and provide Chinese solutions

As a responsible major country, China is actively promoting carbon emission reduction and has made solemn commitments to peak carbon by 2030 and achieve carbon neutrality by 2060. Li Yanqing believes that for shipbuilding powers, ship carbon emission reduction is more of a strategic opportunity. He said that at present, the shipbuilding industry is actively exploring and preparing for the reduction of ship carbon emissions, and has already achieved several important results. But in finding the optimal solution, without the demand drive, without the deep involvement of the shipping industry, unilateral efforts of the shipbuilding industry are not enough. "It is hoped that the upstream and downstream of the industrial chain will strengthen cooperation, joint research, accelerate relevant demonstration and verification, especially in the aspect of alternative energy solutions, explore more systematic solutions that conform to national conditions," he said.

Zhang Shuang, an associate researcher at the Shipping Development Research Institute of Dalian Maritime University, echoed the view. She suggested that the shipping industry and upstream and downstream industries should accelerate the implementation of carbon emission reduction measures in a down-to-earth manner, in addition to the current more mature LNG alternative fuel schemes, they also need to broaden their thinking and study and explore the most realistic carbon emission reduction schemes.

In fact, China's shipbuilding industry has carried out a lot of work in the exploration and application of carbon emission reduction technology, and has achieved phased results. Zhang Zhuo, deputy director of the Ship Type Development Department of Shanghai Ship Design and Research Institute (SDARI) under CSSC, shared their experience in the R&D of carbon emission reduction equipment. He said SDARI analyzed the current technical achievements of various alternative fuels and the construction and operating costs, and found that the current ship charter price cannot fully cover the cost of applying alternative fuels for the time being, and it is unrealistic for ships to simply convert fuels from an economic point of view. Therefore, from the perspective of ship design, it is a very realistic choice to apply carbon reduction design to make ships as optimal as possible in energy efficiency under the existing technical framework.

In the field of ship construction, China's backbone shipbuilding enterprises have never stopped exploring environmental protection ships, and in recent years, they have developed and built various specifications of ships using energysaving and environmental protection technologies, as well as ships that apply alternative fuels.

At present, the financial community is also more interested in ship carbon emission reduction projects. Yong Sheng, senior account manager of the shipping leasing department of BOCOM Financial Leasing Co., Ltd., said that financial institutions will have preferential policies for the financing of lowcarbon ships, and the refinancing of low-carbon ship projects will also be supported by the market; on the contrary, for ship products with high carbon emission intensity, financial institutions will become more and more conservative in providing financing solutions. Zhang Shuang believes that according to the IMO's meeting arrangement, the IMO will put forward specific and substantial carbon reduction requirements by 2025, if shipping companies can accelerate action to promote net zero emission ships to join the fleet in a timely manner, it will be of great significance to the industry.