Try (Just a Little Bit Harder), Part 2 - Very Low- and No-Carbon Alternatives to Old-School Bunker Fuels

The international shipping industry’s push to significantly reduce its carbon footprint over the next three decades is raising an obvious question: Is there a zero- or low-carbon bunker fuel that meets all of the industry’s basic criteria — things like availability, safety, and relative economy, not to mention sufficient on-board energy to transport massive, city-block-sized vessels thousands of miles at a clip. There is no clear answer yet, but there is a lot of talk about ammonia, or more specifically ammonia produced in a way that either generates no carbon dioxide (CO2) or that captures and sequesters much of the CO2 that is generated during production. But several major challenges must be met before “green” and “blue” ammonia can lay claim to even a small slice of the bunkers market, as we discuss in today’s RBN blog.

Leading international shipping associations and many of the large shipowners they represent are pressing the International Maritime Organization (IMO) to take a much more aggressive approach to decarbonizing their industry, and calling for a $100/metric ton fee on carbon dioxide emissions from ships to spur investment in no-carbon propulsion systems. In effect, shipowners—themselves under pressure from their large, ESG-minded customers, are telling the IMO that its goals of reducing global shipping’s carbon intensity by 40% by 2030 and total greenhouse gas emissions by 50% by 2050 are far too timid. They are insisting that the IMO set the industry on a course to quickly ramp down its carbon dioxide emissions in the 2020s and achieve net-zero CO2 emissions by mid-century. If the shipowners prevail, it could result in the phase-out of hydrocarbon-based bunker fuel in favor of low-carbon alternatives like ammonia, hydrogen, and electric batteries. In today’s RBN blog, we begin a review of the big changes ahead for global bunker fuel and what they mean for oil and gas producers and refiners.

With so many low-carbon, carbon-neutral and carbon-negative shipping fuels being touted as the next big thing, it can be hard to determine which are for real and which are mostly hype. Some folks have been talking up LNG, biofuels, clean ammonia, fuel cells ... the list goes on and on. One way to separate the most promising prospects from the also-rans is to keep track of where big shipping companies are placing their bets — and how they’re hedging those wagers, just in case it takes longer than expected to develop fuel-production facilities. Clean methanol in particular is showing signs that it may be one of the frontrunners on both the supply and the demand sides, with an increasing number of firm orders being placed for massive container ships and other vessels that can be fueled by either methanol or low-sulfur fuel oil (LSFO) — there’s the hedge — and a number of new clean methanol production facilities being planned in the U.S. and overseas. (But still, a healthy dose of skepticism about it all is warranted.) In today’s RBN blog, we discuss recent developments in the clean methanol space.