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Commercial hydrogen fuel cell use has huge potential


While the traditional bunker trade continues to grow in China, the country has one eye very much on the future, as John Rickards reports

The development of commercial-level hydrogen fuel cell power for ships took a major step forward in January this year, when China Classification Society issued the country’s first type approval for a marine hydrogen cell to Wuhan-based Troowin Power System Technology Co.

October 28, 2021

“After 13 months’ drawing review, on-site verification and type tests, CCS concluded that the performance of the fuel cells met the corresponding approval standards and then issued the first certificate of type approval for the congeneric products, which is a landmark indicating an important stride made in the commercialisation of marine fuel cells in China,” the classification society said in
a statement.


Troowin’s type approval comes after seven years of collaborative study and development by eleven companies and institutions across China’s shipping industry aimed at tackling the engineering, manufacturing and practical safety challenges posed by the highly promising technology. The Maritime Safety Administration of the Ministry of Transport of China and CCS are due to publish their interim regulations and survey inspection guidelines for hydrogen fuel cell-powered ships at the time this magazine goes to print, following several intermediate publications as research has progressed in recent years.

The approved fuel cell design is for 50-80 kW and conforms to IEC62282-3 standards as well as CCS’ test requirements of design, manufacture and test according to the characteristics of the fuel cell’s own performance, safety and ship adaptability. The next stage in the process is to be test-bed installation on-ship to evaluate performance in service.


“CCS and the collaboration team plan to build China’s first fuel cell-powered public service vessel classified by CCS and expected to sail in the Yangtze River basin,” CCS said. “The ship, with a rated power of its fuel cell reaching 500 kW, total hydrogen storage of 60 kg, and total energy storage of more than 1MWh, will completely realize ‘zero emission’ of sulphur oxides, nitrogen oxides and greenhouse gases, marking a new giant step forward in the application of key technologies of hydrogen fuel cell powered ships in China.”


Troowin itself was able to give World Bunkering a clearer idea of both the scope and timetable for system deployment. “We are working with a few ship builders on projects that will lead to the demonstration of fuel cell systems for ferries and yachts, and one of the projects happens to be in Zhoushan. These projects will be completed within this year,” the company said.


“We think the potential market for fuel cell systems in marine applications is huge, considering that China has launched the ’30-60’ initiative to see peak carbon consumption in 2030 and become carbon neutral in 2060, and the marine industry is one of the biggest sources of carbon emission. Although fuel cell technology is getting closer to commercialisation, a more viable hydrogen storage and refuelling solution still needs to be developed, and CCS also has a significant role to play in certifying whatever the most suitable solution is. We think it will take at least 5-10 years before we can actually see wide application in this market, but now is a good time to start.”


It’s hard to argue with that. While storage is challenging and carries significant safety considerations, and transfer perhaps even more so, given the relative simplicity of ‘green’ hydrogen production at volume, its use in fuel cells and other applications offers almost unmatched potential when it comes to industry decarbonisation.


As CCS itself said: “The cleaning and electrification of vessels have become a global consensus by now. Fuel cells not only can supply driving power and thermal energy for vessels but also can be used as onshore power system. As a major path for realising the cleaning and electrification of vessels, the fuel cells have the characteristics of high energy densities and the capability of rapid energy supply.”


LNG expansion
Hydrogen is highly promising in either fuel cell or methanol form, but some way off. In terms of existing alternative fuels, China’s demand for LNG continues to rise, and a deal this year between China National Offshore Oil Corporation and Malaysia’s Petronas could pave the way for LNG bunkering to take off in the country. The ten-year MoU covers a swathe of areas – collaboration in LNG, upstream exploration & development projects, refining, oilfield & engineering services, specialty chemicals, lubricants and renewable energy – but gives special consideration to bunkering, and not just in China itself.


“Petronas and CNOOC will also collaborate to grow the use of natural gas as a cleaner marine fuel through LNG bunkering solutions, in support of the International Maritime Organization regulations on the reduction of greenhouse gas emissions from ships,” Petronas said in a statement. “Through the MoU, Petronas and CNOOC will explore the establishment of a global bunkering supply network, leveraging on both companies’ experience in LNG bunkering.”


Development of LNG bunkering in China has lagged a little behind other nations despite the government declaring official support for the move in 2018, particularly for inland shipping. Shenzhen is set to be the first port to offer it following a deal inked last year to build a bunkering facility there, but this is some way behind the Ministry of Transport’s proposed timetable; an initial distribution network had been hoped to be in place by 2020, and 10% of bunkers for inland shipping to be LNG by 2025.


Until alternatives come on-stream, shipping in Chinese ports is going to be reliant on conventional fuel, the same as ever. And on that score, occasional tightness in local refining aside, the picture seems relatively rosy.


Bunkering growth in Yangtze Delta regions
The country’s biggest bunkering hub at Zhoushan has benefitted in part from the shuttering of Hong Kong to bunker-only calls, but also from government measures to promote the Chinese bunker market, as well as strong supplier presence across its anchorages. The Zhoushan Bonded Marine Fuel Association reported sales up in 2020 to 4.724 million tonnes, up 15% on 2019 and in marked contrast to Covid-impacted demand at many other hubs worldwide. International vessels accounted for nearly 40% of total sales, and as a sector this rose much more strongly than the port overall.


Achieving the rise was “not easy”, the port said, highlighting various Zhoushan marine department measures to reduce waiting times and bureaucracy, alongside financial incentives to refiners and suppliers.


The port has also seen the opening up of cross-port bunkering operations with neighbouring Shanghai, with the first pilot bunkering taking place last October, and this summer a push alongside Chinese shipping firms to see more oil tankers bunkering in the port. The ZBSFA used the rapid bunkering of a China Merchants Group VLCC in July as a promotional yardstick to entice other operators to bunker at the port, saying: “Governments at all levels and port units in Zhoushan have worked together to resolve issues such as crew shifts, third-party inspection agencies boarding inspections, and ship departures under the epidemic situation.”

Inland shipping on China’s vast river network is a main target of the government’s emissions reductions plans ©Michael Gwyther-Jones-CC/BY

In June, Dutch energy giant Vitol announced that it was expanding its Yangtze delta bunkering operations in Zhoushan and Ningbo, in partnership with Ningbo Zhoushan Port Group subsidiary SeaportBunker, to Shanghai’s Yangshan port, with two dedicated barges covering Yangshan, one capable of loading 4,500 tonnes of VLSFO, the other 2,300 tonnes of HSFO and 420 tonnes of MGO.


Speaking to World Bunkering, Vitol said that while the promotion of cross-port bunkering was welcome, the expansion to Yangshan wasn’t a result of the measure.


“Both Zhoushan and Shanghai governments encourage cross supplies to Yangshan/Shanghai to facilitate the whole bunkering business in Yangtze Delta Regions thus support more buyers operating there,” a spokesperson for Vitol said.


Instead, the move seems to have been more a reflection of the port’s encouraging performance. The company is bullish about the region’s competitiveness.


“[In terms of] Zhoushan and Shanghai demand, barring the recent typhoons that rendered some port closures and implementation of limited bunkering hours, we have been seeing volume in Zhoushan steadily increasing over the months,” the spokesperson said. “A lot of it is due to the price action in the area. Since Q2, I believe the Zhoushan/Ningbo area has been pricing itself lower than Singapore on most days. We are already seeing some major container lines constantly making comparisons between Singapore and China bunker prices in their considerations.“


So, promising then, and hopefully this can be sustained.


Torrid time for Hong Kong’s bunker market
While Zhoushan has flourished, to say that Hong Kong’s bunker sector has endured a torrid time during the pandemic is putting it mildly. At the end of July last year, the government of the Hong Kong Special Administrative Region announced there would be no quarantine exemption for ships making bunkers-only calls, effectively making the port off-limits for that side of the trade. The exact effect of the move is a little open to question, given the ongoing effect of the pandemic on trade and traffic levels. Local media coverage in January – when the local bunker industry was pressuring the government for a US$4.1 million bailout to cover the quarantine period – quoted comments suggesting volumes were down by up to 70%. Other sources, it should be said, suggested a much more reasonable 30-40% decline. Many ships looking for bunkering headed instead to Singapore, Taiwan or the Yangtze River Delta ports, leading to fears that price competitiveness and convenience could see those ships stop bunkering in Hong Kong for good.


In June this year, the restrictions were lifted, except for ships visiting the red list countries of Brazil, India, Pakistan, the Philippines and South Africa in the previous three weeks. Cause for much celebration – and also a fuel-buying spree; Hong Kong’s Census and Statistics Department reported fuel oil imports up 96.1% in May, when the move became known, versus April 2021, though these were still down 28.6% on the year before, before the restrictions hit.


But then the spread of the Delta variant became impossible to ignore. Indonesia, Russia, Ireland and the UK were added to the red list (though the latter two to no practical effect). And two months after welcoming back a lot of the port’s prior bunkers-only traffic, a further swathe of countries were added to the red list, including several reasonably common points of origin for ships such as Bangladesh, Cambodia, Malaysia, Sri Lanka, Thailand, the UAE and the US.


The move came too close to the time of writing to be sure of the impact on bunker sales – or even to know if the two months of a relatively open market improved things for local players (none of whom were willing to offer World Bunkering an assessment of the current state of affairs). However, it doesn’t seem unreasonable to expect another downturn, even if it’s hopefully a smaller one.


Competition even before the first quarantine measures came in had been particularly bloody, with low oil prices seeing some players reportedly dumping products below cost in order to clear inventory and heavy financial pressure on the sector.


NewOcean Energy was one such company feeling the squeeze, and looked for a time as though it would pull out of bunkering in Hong Kong altogether to concentrate on broader energy trading (assuming it wasn’t buried by its losses and accounting delays). However, after posting a loss of a staggering US$308 million for 2020, the company reported losses for the first half of 2021 to be a much more manageable US$21.8 million. It is pulling out of direct bunker sales in Hong Kong, though; in April, the company said it would now sell to other suppliers only.


“When the costs of refuelling business in Hong Kong are relatively high, the Group will step up its efforts to sell wholesale to our clients who are distributors, and to lease its existing oil tankers to wholesalers or list them for sale,” NewOcean said. The company was retaining a “certain extent of its marine bunkering business” in Singapore, and leasing off a large part of its floating storage capacity to other companies to save costs.


Latest government statistics suggest that Hong Kong’s economy is recovering sharply, if unevenly, from the worst of the pandemic, with goods exports in particular picking up across the first half of the year.

That being so, there should be some recovery in demand from ships taking on fuel at the same time as handling cargo – it’s just a lot harder to know if or when the quarantine restrictions that currently block bunkers-only calls will be lifted again.

Hong Kong’s bunker sector has been hammered by quarantine restrictions

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