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What should we do about CO2?

Dr Tristan Smith has a message: shipping must decarbonise. He talks to Unni Einemo about why he is so adamant, and what would it take?

Dr Tristan Smith, who works for the UCL Energy Institute, has become well known in shipping circles for his studies into shipping and energy efficiency, in particular among those engaged in International Maritime Organization (IMO) meetings. He was one of the lead authors of the IMO’s third greenhouse gas (GHG) study and regularly engages with the IMO on the issue of shipping’s carbon dioxide (CO2) emissions.

UE: You have been speaking recently about shipping’s obligations under the Paris Agreement. Shipping is not specifically covered,

and it is a global industry serving the needs of both developing and developed countries, hence the activity level is intrinsically linked with world trade. So why should it be bound by the same CO2 reduction targets as, say, Germany, a country its current CO2 emissions is comparable with?

 

TS: This is a common misunderstanding. Shipping is specifically covered – the Paris Agreement goal of maintaining temperature increases to well below 2 is inclusive of all anthropogenic (manmade) GHG emissions. Shipping is unquestionably a source of anthropogenic GHG – it’s covered. There is no explicit regulation of shipping but there is also no explicit regulation on any individual countries –
Paris works by setting a high level goal and objective, and then creating an expectation of action. That expectation has been responded to by impressive commitments and contributions made across the vast majority of developed and developing countries. So far shipping has made no such commitment. But fundamentally, keeping temperature rises to well below 2 degrees means globally we can emit a finite amount of GHGs. If shipping’s GHGs are not controlled, then much greater reductions than have already been committed to will be needed elsewhere – in agriculture, in industry and manufacturing, in energy generation. The scale of the challenge ahead is phenomenal and all sectors will need to transition. Of course there’s a discussion about whether shipping should need to undertake a commitment exactly equivalent to Germany, but this is not a justification to make no commitment: why should a developing country have to revise its current commitments and further increase the speed of decarbonisation of its energy or food production – just because international shipping refuses to do its part?

 

UE: What level of CO2 reductions would be required for shipping to meet the objectives of the Paris Agreement to limit the global temperature increase?

 

TS: In simple terms, aiming to limit the increase to 1.5 degrees means no fossil-fuel use anywhere after about 2035. So shipping would have to 100% decarbonise in 15-20 years. To maintain a consistent share of a 2 degree budget requires approximately a 50% reduction in 2010 total CO2 emissions by 2050 and full decarbonisation soon afterwards. Therefore the Paris Agreement goal of “well below 2 degrees, aiming for 1.5 degrees” means full decarbonisation in the next 15-50 years with the timing dependent on shipping’s respective contribution and the political will to maintain the Paris ambition for limiting the temperature rise to 1.5 degrees. This is made more challenging because it’s reasonable to expect further increases in trade and transport demand. Taking this into account with a 2 degree trajectory means that the average carbon intensity of shipping (e.g. the average EEOI) needs to reduce from its 2010 average by 60-90% by 2050. Whilst the concept of offsetting needs to be explored further,

it cannot provide anything more than a way to help manage shipping’s transition – the sooner any fossil-fuel consuming sector engages with its genuine long-term decarbonisation, the clearer and less painful and disruptive its transition will be.

 

UE: Those are big reductions. How far can we get with existing technologies and energy efficiency measures?

 

TS: Using current fuels and at current speeds, it varies depending on the ship, but a further 10-40% seems possible. Up to 40% may be possible for a ship that could adopt all available energy efficiency technologies and fit significant wind-assistance (e.g. Flettner rotors). Existing technology could achieve 90% reduction – but it would require ships to be operated at significantly lower speeds (e.g. around 5 knots). So there is no ‘excuse’ that technology is not in existence.

But in our analysis so far, lower speeds are rarely an economically preferable solution to the decarbonisation of fuel, so we see that as

a more likely pathway for the industry.

UE: Proponents of LNG say it can reduce ship CO2 emissions by as much as 20%. Should LNG play a role?

 

TS: Yes and no. It can play a role, but it cannot be more than a short-term solution because 20% even in combination with other technologies will clearly not achieve 100% decarbonisation. Furthermore, LNG requires significant investment in bunkering and ship hardware/technology that so far we have not found any role for besides use of LNG (other than biogas, but as a biofuel we cannot see evidence that this would be cost-competitive to alternative liquid biofuel). This means that widespread adoption of LNG risks creating technology ‘lock-in’ delaying the adoption of the necessary longer-term low carbon fuels and technology. Furthermore with very low carbon fuels looking likely in many scenarios to start entering shipping from 2030, LNG has a window of maybe 10 years before it would start to be competed out of the fuel mix, which risks making a large amount of investments associated with LNG stranded assets. Gas has a much more obvious role on land, where it can substitute for coal (50% lower carbon intensity) and potentially ultimately be connected into Carbon Capture and Storage networks.

 

UE: The trouble with taking life-cycle emissions into account is that the global regulator, IMO, can only deal with what is emitted by ships. How can we achieve a more holistic policy view that considers ‘well to wake’ emissions?

 

TS: The reason why LNG is not a viable long-term solution is not to do with life-cycle emissions, it’s to do with the fact that it is a high-carbon fuel (burning 1 tonne of LNG releases ~ 2.75 tonnes of CO2). The upstream and non-CO2 GHG emissions of LNG, which diminish the argument that it can reduce by even 20% GHG emissions relative to HFO, only make its justification for use as a transition fuel harder.
That said, the issue of how IMO handles the issue of upstream emissions is important and non-trivial. It emphasises how important it will be to consider shipping’s low carbon transition within the context of the rapidly evolving and decarbonising global energy system, and that we will need to be identifying and mitigating risks of unintended consequences of any developing regulation.

 

UE: If we are going to achieve this enormous cut in CO2 emission from shipping, we need to decarbonise the fuel. If LNG is not the answer, how about bio-fuels or maybe bio-derived methanol? Or should we put our faith in technology like the Ecospec scrubber that says it can deal with CO2 as well as SOx and NOx emissions? What are our options?

TS: Bio and synthetic fuels, batteries and renewables (wind and solar assistance). By biofuels, this would be inclusive of methanol, if that is the ‘right’ solution, but it may be that there are cheaper biofuel alternatives, depending on the feedstock and production. By synthetic fuels, we mean those ‘manufactured’ for example the use of low carbon electricity to convert water into hydrogen and oxygen through electrolysis. Synthetic fuels are often referred to as ‘power to liquid’ fuels whereby electricity is used to manufacture liquid fuels. One of the positives about the future is that there is a very good likelihood of widespread low-cost very low carbon electricity (from solar, wind for example). Currently it is difficult and expensive to store this energy, and manufacturing liquid fuels can be a cost-effective way to absorb short-run oversupply whilst simultaneously addressing the challenge of mobile energy consumers like ships. The Ecospec scrubber is interesting but is not quite convincing, so until we can obtain greater clarity of the underlying technology and its life cycle impacts, we have not included it in our analysis.

 

 

 

UE: We will need innovation and environmentally effective regulation. Short term, we are looking at the EU MRV and the IMO’s fuel consumption data collection system. What’s your view on those?

 

TS: Shipping has a well-documented issue of a lack of trusted data on the fuel consumption of ships. This creates failures and barriers in shipping markets, preventing investment in energy efficiency technologies. Addressing this is probably one of the most important and least costly ways for the industry to assist its transition. The EU MRV as currently formed should help in this respect, but the IMO DCS could have done so much more. Instead it is a very poor relation and has justified the retention of the EU MRV, making it very likely shipowners will have to meet the requirements of two systems rather than one. The IMO has therefore scored a massive own-goal with the Data Collection System.

 

UE: We’ve had signals that the EU Parliament wants to include shipping in the EU ETS, while shipping organisations prefer a global system. They also tend to prefer a bunker levy over an emission trading scheme. Which do you think would be easier to implement, and which would be most effective at reducing CO2?

 

TS: In theory, IMO regulation should be easier to implement and more effective at reducing CO2. But current evidence suggests that the jury is still out on whether it will be ‘easier’ or even feasible politically for IMO to make the required regulation. This may yet make EU action a necessary and important first step for avoiding the much worse consequences of dangerous climate change. But it is odd that this is always seen as a confrontation and a binary choice. There are plenty of other examples in shipping where regional regulatory action has helped to pilot regulations and develop solutions, prior to them becoming adopted globally. Why not also on GHG? On the merits of levies and ETS, we do not see big differences but think it will depend on their specifics and details. The levy seems simpler, but to ensure that it is environmentally effective, it should be set according to the price signal needed to achieve a given target/objective on CO2.

This makes the levy a sort of manual equivalent to the ETS – an ETS which would have the market setting the price, and the levy requiring some oversight body periodically reviewing/adjusting levy price. Designing, defining and operating a levy may therefore not be as simple as it appears on the surface, and it would be good to keep the discussion of the two concepts’ relative merits alive to ensure the most cost-effective solution is chosen.

 

UE: Decarbonising shipping would have a radical impact on the bunker supply industry; some might say it is like asking turkeys to vote for Christmas. Do you have any thoughts on how the supply side can deal with this future?

TS: This concern makes a lot of sense, change is often disruptive and uncertainty is difficult to manage. But I think the message for bunker suppliers is the same as to other stakeholders. The decarbonisation of shipping is inevitable and a question of ‘when’ and not ‘if’. But unless there’s some extraordinary progress on batteries, it is very likely that the bio/synthetic fuels that are used in the future will still require bunkering – that’s as much of an opportunity as a risk. So it makes sense to try and think ahead and anticipate how for your organisation you can maximise opportunities and minimise risks – explore whether LNG would work for you as an interim option if it only has a very short ‘life’ in shipping, and how to remain versatile and flexible given uncertainty in details of the future fuel mix and the timing at which certain steps in the transition will occur. And don’t just watch the IMO – change on the fuels/GHG topic could well come from disruptive private sector action as well as regulation, especially if the IMO fails to show signs of meaningful progress.

 

UE: Some call you an “environmental scientist”.

Do you think that’s fair?

 

TS: This is interesting, and I think it’s very understandable given the nature of the messages that we often present. Our research group is interested in making sure good quality evidence is available in the commercial and political spaces, and hopefully made as accessible and clear as possible. We try to be as transparent and rigorous as possible, we publish our assumptions and regularly test these with stakeholder groups, and always welcome inputs and corrections if we have got something wrong. On the topic of climate change, all that evidence comes back to some very simple scientific relationships related to concentrations of CO2 in the atmosphere, which in turn place a very finite further role for fossil fuels in the global energy system. We interpret that science in the context of the temperature goals and political commitment of the Paris Agreement, and try to identify what this might mean under different scenarios for the shipping industry – unsurprisingly it often means change. If that interpretation sometimes aligns with messaging from environment NGOs, it is because sometimes they can be right about things, not because we’ve become lobbyists,
but I can understand the confusion.

Tristan Smith

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