Technical solutions for the shipping industry to meet IMO’s 2030 target
As the global maritime sector intensifies its efforts to reduce emissions and prevent the worst impacts of climate change, the International Maritime Organization (IMO) is urging the sector to further reduce its greenhouse gas (GHG) emissions. In its 2023 IMO GHG Strategy, the member states unanimously agreed to bring down the GHG emissions from international shipping to net-zero by 2050. The first indicative checkpoint in that path will be for the industry to cut down the total annual GHG emissions from international shipping by at least 20% and striving to 30% — as compared to 2008 levels — by 2030. It is important to note here that IMO ambitions only relate to international shipping, which is assumed to make up around 70% of the energy demand from total shipping in 2021 based on data from IMO Data Collection System.
To reach the target the industry must renew its focus on the technological and operational solutions that are either already available or are being developed and need to be adopted on a wider scale. According to calculations made at the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS), it is technically possible for the shipping industry to reach the IMO’s 2030 indicative checkpoint by increasing the uptake of sustainable fuel and adopting a wide variety of technological and operational energy efficiency measures.
Figure 1: The estimated historical and projected development of emissions from international shipping and the IMO 2030 indicative checkpoint of 20% emission reduction. The targets have been related to the equivalent energy reduction needed to meet the emission reduction targets. Sources: IMO (2023), IMO (2020a), IMO (2019), IMO (2020b), IMO (2021), NavigaTE, MMMCZCS analysis.
Meeting the IMO’s ambition of reducing total annual GHG emission from international shipping by 20% in 2030 compared to 2008 is equivalent to removing or replacing ~65 million tonnes of Low Sulfur Fuel Oil equivalents (Mtoe), when converting the gap of ~250 Mt CO2eq to Mtoe using a well-to-wake (WTW) emission factor of 3.82.
Sustainable Fuel Uptake
In an optimistic scenario, our analysis indicates that with a mix of low emission methanol, ammonia and bio-diesels such as fatty acid methyl esters (FAME) and hydrogenated vegetable oil (HVO), sustainable fuels can replace ~10 Mtoe in 2030. Additionally, based on our assumptions, bio-methane can contribute to replacing an additional ~20 Mtoe, equivalent to 8% of the expected available bio-methane in 2030, under the assumption that shipping can obtain the same share of sustainable bio-methane as they can of conventional oil today and that all of this will be used by international shipping.
“There will be competition for these fuels as regulation and customer pressure tightens — not only in the shipping sectors but also adjacent sectors that depend on the same molecules to decarbonize,” explains Torben Nørgaard, Chief Technology Officer – Energy & Fuels at MMMCZCS. “The future demand and competition mean that international shipping must be willing to pay the price to access sustainable fuels. This willingness to pay can come both directly from customer demand for green shipping and indirectly from regulatory incentives.”
He adds, “Working our way backwards, the Final Investment Decisions (FIDs) need to be taken in the immediate future if sustainable fuel is to be available in 2030 and onwards. Depending on fuel and scale of the plant, the construction of a plant takes between three and five years from FID and there is an additional lead time before getting to FID.”
Figure 2: An illustrative example of how working backwards from 2030 shows that FIDs must be made today if sustainable fuels are to be delivered in time to meet 2030 IMO checkpoints.
The uptake of sustainable fuels has potential to add up to a replacement of an estimated ~ 30 Mtoe of conventional fuels. Further production and uptake of sustainable fuels is constrained by the very limited timeline towards 2030. MMMCZCS has evaluated the maturity of each fuel pathway because each fuel type has its challenges.
Second generation bio-diesels, such as HVO and FAME, are primarily constrained by access to feedstock but can benefit from the existing infrastructure and onboard technology for conventional oil. Both bio-methane and bio-methanol are also constrained by access to sustainable biomass because it is the primary feedstock. Biomass availability is challenged by high demand across industries, and current practices that do not support large-scale collection of suitable waste streams which limits the scalability of bio-fuel plants. Methane, like bio-diesels, has the benefit of being able to leverage existing infrastructure for natural gas but concerns related to methane slip upstream and onboard must be appropriately addressed.
E-methane and e-methanol are both constrained by lack of access to electrolyzers and biogenic carbon dioxide (CO2), with the latter being a part of these fuels’ feedstock. Biogenic CO2 is difficult to access because it requires a large or scalable point source (e.g., a biogas plant or a papermill where biogenic CO2 is a byproduct) in the right location. At the same time, biogenic CO2 has a competitive offtake market. Unlike methane and methanol, ammonia does not contain carbon atoms and is not limited by biogenic CO2 availability or biomass. The feedstock is not the issue for ammonia; the fuel can be produced in vast quantities and at a comparatively lower price than other sustainable alternatives. The issue lies in the development of engine technology, logistics, bunkering, and handling safety. These must mature before ammonia can become an alternative. Maturation is expected to happen within the 2030 timeframe.
All together, we expect sustainable fuels to have potential to replace up to 30 Mtoe, of the ~65 Mtoe of emission reductions needed to meet the 20% checkpoint in 2030 set forward in the 2023 IMO GHG strategy. Closing the remainder of the gap will require the industry to implement both operational and technological energy efficiency measures.
Increase energy efficiency
Operational and technological measures have different requirements for implementation. Operational measures relate to behavioral and commercial decisions. These measures can be implemented almost immediately, which is an important factor when looking towards 2030. Technological measures, in most cases, are similar to sustainable fuel when it comes to implementation: they need the investment to be made upfront, and they require technical skills and capacity to install and operate the new technologies.
“It is imperative that we focus on increasing the uptake of energy efficiency if shipping wants to reach IMO’s targets,” says Claus Graugaard, Chief Technology Officer – Onboard Vessel Solutions. “Not only can the industry ramp up energy efficiency measures faster than they can produce sustainable fuels, but they can also do it at a lower cost. Energy efficiency brings down the amount of sustainable energy needed, which in turn, means the industry needs to invest much less in the production and handling costs of those fuels. By lowering these costs, energy efficiency significantly reduces the cost to compliance.”
He adds, “Adoption of energy efficiency does not save energy only on the ship. For every 10 Mtoe worth of propulsion energy that we can remove with energy efficiency, we need 20 Mtoe less sustainable fuel, because we have no energy loss from power conversion. Production of 20 Mtoe worth of e-fuel would require close to 40 Mtoe worth of renewable energy. Hence, onboard efficiency will reduce the need for renewable energy and feedstock for production of those fuels. This, in turn, also means less demand from shipping on primary energy like sustainable biomass and renewable electricity which frees up resources for decarbonization of other industries. Energy efficiency investments has this multiplier effect.”
The results from our in-house transition simulation model NavigaTE — which is based on knowledge and insights from experts at MMMCZCS — shows that select operational and technological measures can reduce energy used in shipping by ~20 Mtoe in 2030, provided that sufficiently ambitious economic market based measures are agreed in 2025 as per the IMO GHG strategy.
“There are, of course, a few limitations in terms of the current repair yard capacity, but as we saw during a shipbuilding boom before the financial crisis of 2008, the industry can expand shipyard capacity quickly to respond to demand,” says Claus. “With the right incentives, the industry can move fast.”
He explains, “Our indicative analyses suggest that adopting additional operational efficiency strategies, such as speed optimization and associated adaptions to operations, could significantly cut emissions and potentially achieve emission reductions of at least 10% of the expected energy demand in 2030. The benefit of these measures is that they can be implemented within a relatively short timeframe.”
A 10% emission reduction from speed optimization, and associated commercial adaption to different speeds, would be equal to reducing emissions by ~25 Mtoe in 2030, when applied to energy demand from international shipping. Together with the ~20 Mtoe from other energy efficiency measures, a total of ~45 Mtoe worth of emission reductions in 2030 can be achieved by increasing fleet efficiency.
To make optimal use of the high potential of energy efficiency measures, it is necessary to further mature technologies and scale their uptake within the next few years. Levers to accelerate uptake include, but are not limited to, increased data sharing, innovative financing, and stringent regulation to reduce risk, as suggested in a study by the Global Centre for Maritime Decarbonisation.
While this article has focused on the two ambition levels defined by the 2023 IMO GHG Strategy — uptake of sustainable fuels and energy efficiency — there are other factors that can also reduce emissions but which MMMCZCS does not currently factor in. These include negative changes in trade patterns and development of technologies such as onboard carbon capture and storage and nuclear power on board ships.
Delivering on IMO target
From a technical point of view, it is possible to reach the indicative checkpoint of 20% emission reduction in 2030 compared to 2008. The uptake of sustainable fuels can effectively reduce ~30 Mtoe and increased energy efficiency can further reduce emissions by ~45 Mtoe, which is more than enough to reach the emission reduction target of ~65 Mtoe (Figure 3).
The technologies that can bring emissions down to the IMO’s 2030 checkpoint either already exist or are being developed. What is needed to achieve the ambition is a two-pronged approach: activation of operational and technical energy efficiency levers, and CapEx investments in scaling up alternative fuel production. The industry needs to take its decisions quickly as it has a short timeframe to meet the checkpoint.
“The project development timelines do not allow us to wait. What we need most urgently is clarity and certainty that incentives will be established for the industry allowing the ecosystem to mobilize investments in technologies now,” says Torben. “With a clear line of sight to the right incentives, it would be technologically possible to achieve the IMO’s target of reducing GHG emissions by 20% (compared to 2008) by 2030.”