This overview explores these key aspects, highlighting the critical factors that will shape the industry's ability to adopt and implement alternative fuels on a large scale.
Essential in the transition to alternative fuels is the industry’s future ability to scale production of these fuels. Scaling up the production technology of alternative fuels is a significant challenge and depends on several factors. For example, large-scale production of e-methanol will depend on the availability of inexpensive hydrogen and CO2. To reduce the total emissions from the fuel, including emissions from both the production, processing, delivery and the use of the fuel onboard - also referred to as the well to wake emission factor - the production of hydrogen must be decarbonised. This necessitates, among other things, large-scale deployment of both renewable energy sources and carbon capture to ensure the necessary amount of CO2.
Another challenge is the establishment of an infrastructure for these fuels that has the capacity for their production, transport, combustion, and bunkering. Depending on the type of fuel, the expansion of specialised infrastructure for supply, storage, delivery, and combustion of alternative fuels might be required at ports, terminals, and onboard ships. As an attempt to speed op scaling of alternative fuels, the industry, such as the industry-led alliance Getting to Zero Coalition, highlights the potentials of establishing green corridors. Green corridors are specific trade routes between major port hubs where alternative fuel solutions and infrastructure have been demonstrated and are supported.
The maritime industry faces multiple challenges in its transition to alternative fuels, specifically the need to create scale, build proper infrastructure, demonstrate cost-effectiveness, and ensure supply.
Watch the short summery and gain a quick overview over the challenges.
The cost of fuels also poses a challenge regarding the incentive to choose alternative fuels over conventional fuels. Projections suggest that across the 2030s and 2040s, low-carbon fuels will be approximately double the price of conventional fuel at best (Lloyd’s Register & UMAS 2020). This cost gap is, among other things, due to the existence of market barriers, availability issues, and a relative lack of information and regulation on safety. The gap will, according to the Global Maritime Forum, have an impact on the speed of the shipping industry’s adoption of alternative fuels which is why there is a need to reduce the price of alternative fuels.
According to the World Economic Forum, the shipping sector is already competing with several other hard-to-decarbonise industries for the scarce supplies of low-carbon fuels. The chemical industry can directly replace fossil methanol with emission-free methanol to eliminate fossil carbon inputs in its value chains, and the agricultural sector needs low-carbon ammonia to produce fertilisers. If other sectors have a greater appetite and are willing to pay higher prices than the shipping sector, this could potentially limit the supply available for buyers of low-carbon shipping fuels.
