Decarbonizing the high seas

While aviation may be converging on one main pathway to decarbonization — sustainable aviation fuel — maritime shipping may require a more diverse set of solutions: a portfolio of fuels, energy efficiency, and on-board carbon capture and storage.

But each technology has operational and capital challenges. So what will it take to scale them up?

In this episode, Shayle talks to Dr. Lynn Loo, CEO of the Global Centre for Maritime Decarbonisation. Ocean-going shipping consumes about 300 million tons of fuel per year, accounting for 3% of global emissions. But with significant regulatory pressure from bodies like the International Maritime Organization, shipping companies are exploring a range of options. Shayle and Lynn cover topics like:

• Conventional fuels, like heavy fuel oil and marine gas oil
• The inadvertent climate impact of cutting sulfur emissions
• The pros and cons of lower-carbon fuels, like LNG, biofuels, methanol, and ammonia
• The challenges for infrastructure and operations, especially involving the low volumetric energy density of new fuels 
• On-board carbon capture and storage
• How energy efficiency reduces the impact of low volumetric energy density

Recommended resources

• International Maritime Organization: Fourth Greenhouse Gas Study 2020
• Catalyst: Heavy duty decarbonization
• Catalyst: Putting a halt to geoengineering — by accident

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Transcript

Tag: Latitude Media, podcast at the frontier of climate technology.

Shayle Kann: I'm Shayle Kann, and this is Catalyst.

Lynn Loo: The Future of Maritime, it's not going to be single fuel. So we're moving from one multi fuel scenario to a different multi fuel scenario, I would say.

Shayle Kann: This week, we talk Singapore, we talk Rotterdam, we talk decarbonization of shipping.

I am Shayle Kann. I invest in revolutionary climate technologies at Energy Impact Partners. Welcome.

Okay, so we did an episode a little while back on sustainable aviation fuel where I really wanted to walk through the mechanics of the structure that has led to their appearing to be real buyers at real, albeit early scale with a real green premium for sustainable aviation fuel.

So now let's turn to the other heavy duty non ground transport market, which is maritime or shipping. Taken compared to SAF, my sense is that it's a little different, but equally interesting. You don't quite have the same dynamic as the SAF market where the airlines are very much consumer brands. In contrast, the large shipping companies are not really consumer brands. They're not names that everybody knows. So those Oscar the Grouch posters that I see in the United Airlines jetways telling me all about all the bio SAF that the company is purchasing probably don't translate into the maritime market. And yet because of a combination of regulation and some voluntary corporate actions, stuff is actually happening there. Some regulatory stuff, some tech stuff, some procurement stuff.

In aviation beyond short-haul, I actually think it seems pretty clear the path we're headed down, which is a path of blending of largely bio SAF, followed eventually by drop in fuels, probably e-fuels someday in the future. In maritime, it's not quite clear yet. There are sort of competing decarbonized fuels that are not entirely compatible with each other or in some cases not entirely compatible with existing infrastructure. And so there's a bit of a race between them. And it may end up being some combination. We may end up having more different types of shipping fuel in the future than we do today.

So anyway, it's different and it's interesting. So let's dig in. For this one, we talked to Lynn Loo. Lynn is the CEO of the Global Center for Maritime Decarbonization. So obviously she's the person to talk to about how we are going to decarbonize the shipping industry. Here's Lynn.

Lynn, welcome.

Lynn Loo: Thanks for having me, Shayle.

Shayle Kann: Excited to have you and talk about shipping. Let's start with the high level context. Can you place shipping in the broader context of decarbonization? Or I guess before we get to decarbonization, in the broader context of emissions, how much of global emissions is ascribed to shipping and to maritime, and how big a problem do you view it in the broader context?

Lynn Loo: Yeah, sure. I mean, so shipping as a sector contributes about 3% to global emissions. And so in the large scheme of things, that's not a lot, right? It's 1 gigaton compared to about 40 gigatons, but shipping plays an integral role in the global supply chain. So if we don't decarbonize shipping, you wouldn't be able to get green products, you wouldn't be able to get green solutions. Shipping is responsible for transporting 90% of goods around the world. So this means that what you own probably came on a ship and if it didn't, the raw materials of what you own probably came on a ship, right? So this is how important shipping is, and yet it's I would say mostly an invisible industry. At least that's how I'd seen it before I came into shipping. And shipping only comes into the limelight when something bad happens or when we don't receive our Amazon boxes, right?

Shayle Kann: Or something crashes in Baltimore or whatever.

Lynn Loo: Correct.

Shayle Kann: Yeah, I mean, this is jumping ahead, but one of the observations that I've had is I've watched how the decarbonization paths have gone or are going in aviation and in shipping. It had not occurred to me until I started looking at it more directly. Aviation is full of consumer brands. It is something that many of us interact with directly regularly by flying. Shipping is not like that. There aren't very many consumer brands who are pure shipping companies. People probably know Maersk's name for example, but couldn't tell you a whole lot about it relative to American Airlines or United or Delta or something like that.

Lynn Loo: Well, I mean I guess there are cruise lines and those you think of, right?

Shayle Kann: Yes. That's a good point. Yep, yep.

Lynn Loo: But that's a small segment of shipping. And there are parallels between maritime and aviation. I mean aviation also contribute about 3% of global emissions. They're both, I would call them, global industries or international industries in the sense that if you look at global emissions, it's basically individual country's NDCs, plus the emissions of shipping and then the emissions from aviation that gives you the global emissions. So in that sense, the industrial emissions are sort of counted by themselves, right? It's not part of any country's NDCs in that sense.

Shayle Kann: Right. That's a good point. Okay, so sticking to shipping then. Let's just talk about the status quo before we talk about how to get rid of that 3% of global emissions or that gigaton. I think probably everybody listening will automatically know that the emissions in shipping comes from burning fuel.

Lynn Loo: Yes.

Shayle Kann: Talk to me about what fuel we use today in global shipping and how that's changed over time.

Lynn Loo: Well, I mean, propulsion of shipping basically relies on fossil fuel. And so this is heavy fuel oil mostly. It's really the bottom, the stuff that you can't distill when you refine fossil fuels and oil. And that's what's used in shipping. Although when one think about fossil fuels for shipping, there are different grades. So because of the sulfur regulation that caps the sulfur emissions for shipping, there are different grades of fuel oil that's being used. There's the heavy sulfur fuel oil. There's the VLSFO, so low sulfur fuel oil and very low sulfur fuel oil. And then of course there's a marine gas oil. So that's the light distillate, right? So depending on if you look at the cost alone, then of course you would use the heavy fuel oil because that's the cheapest of them all. But there are other functions that ship owners and operators use to determine what fuel oil they use. So when they go into countries where there are stricter regulations, then they have to switch to higher grade fuel oil, if you will, where the sulfur content is lower.

Shayle Kann: So we did an episode a while back where we talked about geoengineering and talked about the sulfur, low sulfur regulations in the shipping industry, which is sort of an aside for our topic today, but I think it's an interesting one nonetheless, which is basically as a recap, we had all this high sulfur fuel oil that we were using. We were burning it, it was putting sulfur into the atmosphere, which was acting as a form of accidental geoengineering and reflecting sunlight, which we have now stopped doing as much. And there's a bunch of academic research that's trying to determine exactly how much warming that has caused. Within the shipping industry, is there a view on that? Are people saying like, "Hey, maybe we should go back to high sulfur because look at the impact that we're having on global warming by removing it"? Or what's the view there?

Lynn Loo: So ironically, this was a conversation that I had at an advisory board meeting last week and we discussed this extensively, but I mean, look, Shayle, I think climate science is complicated. There are intended and unintended consequences. There are consequences after consequences. There are interdependencies that we don't quite understand. So I mean, net-net, I think if you look at the sulfur regulation, it's brought a lot of good not only to emissions, but also I would say from a pollution standpoint, right? So from a health standpoint, it's brought a lot of good. So if you're using heavy sulfur fuel oil, what you need to do on your ships is to put a scrubber to scrub the sulfur. So that's one alternative. Or you can opt to instead of installing a scrubber which is high on CapEx, you buy the low sulfur fuel oil. So I think net-net, it's been good for the world from an emission standpoint, but also from a health standpoint.

Shayle Kann: Right. Which is the reason to do it in the first place, to be fair.

Lynn Loo: Right.

Shayle Kann: Okay. So then let's talk about decarbonization. So given that basically all the emissions comes from the burning of fuel oil of one kind or another, the obvious thing to do to decarbonize the shipping industry is to replace that fuel with a fuel that does not contain a carbon or fuel that contains the carbon, but that carbon came from the atmosphere. And so you're net neutral. There's a bunch of different ways to do that. So I want to talk through... And one thing that I think is interesting is that it does not seem to be a settled question in shipping yet what the fuel of the future is going to be. And there's a few different camps that seem to be emerging. So I'm sort of interested to talk through them individually and think through the pros and cons of each.

Lynn Loo: Shayle, can I interrupt and just say that I think the future of maritime, it's not going to be single fuel? So we're not going to, for example, move into one single fuel. I think as a contrast to aviation where I think there's a convergence that we need sustainable aviation fuel, for maritime, it's not going to be like that. Already I was trying to point out, even with fuel oil, there are different grades of fuel oil. So we're moving from one multi fuel scenario to a different multi fuel scenario, I would say. That's how we should look at it.

Shayle Kann: Is it true today that are those different forms of fuel oil today very low sulfur fuel oil, high fuel oil, whatever it is, are they drop in replacements for each other? Can the same ship with the same engine burn any one of them? Or is that not true?

Lynn Loo: So they're drop in replacements when you think about the engine. But I mean when you bunker them, they're in different tanks on onboard vessels, right>.

Shayle Kann: Right.

Lynn Loo: And then there's of course liquefied natural gas. It's not considered a drop in fuel, right? You have a dual fuel engine that either uses heavy fuel oil or it uses liquefied natural gas. So it's either/or. It's the same engine, but it's a dual fuel engine, right? So it's been retrofitted so that you can do that. There's biofuels that's a drop in fuel that's currently being used. So there's an existing portfolio of fuels is my point. And we're moving from an existing portfolio of fuels to a different portfolio of fuels.

Shayle Kann: Right. Okay. Well you mentioned a couple of the options kind of up at the start. Before we move on from fossil fuel world, let's talk about LNG for a second in this context. There's obviously LNG for the purpose of transcontinental energy transport. In other words, LNG that is not powering the ship but rather being transported from the US to Europe, for example. But as it pertains specifically to powering the ship, how far along are we in LNG powered vessels and how do you think about that in the context of decarbonizing shipping?

Lynn Loo: Sure. So I mean LNG is being transported in LNG carriers and increasingly these LNG carriers are being retrofitted so that they can burn the cargo that they carry. And so that motivation is really from an economic perspective, less so from a decarbonization perspective. That said, I mean burning LNG can reduce emissions by about 25%. So it's a good thing provided, provided that we take care of methane slip, right? So there's fugitive methane slip upstream. So in the refining process, in the transport process, that one needs to take care of. And then of course when you're burning methane, I was told that it's less of a problem with the bigger vessels and the two-stroke engines. Nonetheless, there's some. And because methane is a more warming gas than CO2, we want to eliminate methane slip. And so if you can eliminate methane slip, the emissions reduction is approximately 25% compared to heavy fuel oil. And so that's a good thing. And it could be a transition fuel. It doesn't get us to zero. It gets us partway there.

Shayle Kann: Okay, so that's LNG. And then you mentioned biofuels too. I mean, again, to harken back to aviation, bio SAF is the most readily available form of sustainable aviation fuel today. It's small scale still relative to all aviation fuel, but what seems to be the emergent path in aviation is to sort of max out your bio SAF as much as you can and then transition over time to things that don't have the same kind of a input ceiling as bio SAF does. Is it the same in shipping world? And relatedly to that, are they the same inputs and so you're competing with, for example, sustainable aviation fuel for feedstock?

Lynn Loo: So I mean, I think right now we're in the transition, so the feedstocks are the same. We're looking at whether there are opportunities to expand the feedstock library. So for example, at the Global Center for Maritime Decarbonization, we have a pilot that we're looking at crude algae oil. And so the idea is that it's a crude processing. It takes you partway there. You don't have to purify it all the way. The thing with SAF is it needs to be really high quality, right? I mean it needs to mimic Jet A-1 fuel. With shipping, you don't need that. So are there other opportunities to look at other feed stocks to be able to use those for marine fuel replacements? So certainly there are folks out there who are looking at different kinds of feedstock in evaluating the option to be able to do that.

And so we're going to test, for example, crude algae oil in test engines, working closely with engine manufacturers, et cetera. And then provided that the crude algae oil producer can scale in volume, then we'd like to test it on vessels itself. In fact, we've got seven ship owners who sign up and said they would be interested in trialing this on commercial roots. So we're excited about this, but we're progressing slowly just in case there are any incompatibility just in case there are any unintended consequences on the engine side of things, right? So those are the kinds of things that we're thinking about.

Shayle Kann: That's interesting. Setting aside the more novel ideas like crude algae oil for more like, I don't know, I guess traditional biofuel types, is there an existing supply chain today? Are there ships that are burning biofuels already today? And if so, what volume and where?

Lynn Loo: Yeah, I mean there are, but in small volumes, right? So I can tell you about our trials. So we've done four supply chain trials where we put tracers in biofuels at the production facility and then followed the biofuels down the supply chain and then bunkered it on board vessels and then have it combust. This tracer provides assurance on quality, quantity and therefore the emissions abatement of the biofuels, right? And so these supply chains, some come from China, others come from Malaysia, we follow them. We've bunkered in Singapore. We've bunkered in Rotterdam. We've bunkered in Vlissingen. The whole point of doing this is so to make sure that we can do this pilot as much of a commercial basis as possible because when we step away, that these kinds of commercial transaction can continue to happen.

So there are existing supply chains. I think the question is not whether there are existing supply chains, more the volumes, right? So the most recent supply chain that we've done is 4,500 metric tons of biofuel blends that we've used. So in the large scheme of things, I suppose it's not a lot, but I mean it's growing. And just to give you additional numbers, so Singapore and Rotterdam, I think collectively now have bunkered a million tons of biofuels this year. And so that's grown from almost zero just a couple years ago.

Shayle Kann: Can you contextualize that? Do you happen to know how many tons of overall of fuel they use?

Lynn Loo: Yes, so it's very small. So Singapore bunkers 50 million tons a year of fuel. And so it's very small in context.

Shayle Kann: But if you assume Singapore and Rotterdam are similar size roughly, we talk about a hundred million tons a year, that's 1%. I mean, again, it's not nothing.

Lynn Loo: Sure. I mean, so worldwide bunkering volumes is about 300 million tons.

Shayle Kann: Okay.

Lynn Loo: So it's growing.

Shayle Kann: Okay, so that's biofuels. And I think we probably appreciate the opportunities and challenges there. It's generally drop in plus or minus depending on what you're using. I think it's interesting that you can potentially use some feedstocks that you couldn't use in sustainable aviation fuel because you don't need as much purity. Moving on from that, I guess I want to talk about the next two options in comparison to each other. And you can tell me if this is wrong. But my sense is that in the great question of how are we ultimately going to fully decarbonize shipping, there's a kind of race in some ways. As you said, there's no one winner, but in some ways there's kind of a race between methanol and ammonia where there are shippers who are buying methanol already ships right now and procurement happening, and then there's others talking about ammonia. So I'd be interested in your sort of quick overview of what are the pluses and minuses on each side of using methanol versus using ammonia in ships?

Lynn Loo: Yeah. Yeah, certainly we can focus on the fuel side, but I think to understand why shipping appears schizophrenic, if you want to use that word, is because of the heterogeneity of shipping. I mean even with biofuels, it's really to understand the complexity of the supply chain. So different from aviation and different from other, I would say, industries, shipping, supply chain is very fragmented. I mean the fuel changes hands many times before it gets to the ship owner or the ship operator. An individual ship owner and ship operator actually source their own fuel. This is very different from aviation where the airport gets the same fuel and so all the airplane that refuels there get the same fuel. So having that context will allow one to better understand why there are so many different kinds of fuels that we're looking at.

So coming back to ammonia and methanol, I think ultimately it depends on whether you think production is going to be the bottleneck or infrastructure is going to be the bottleneck. Methanol is a liquid, right? We can handle that pretty easily. So if you think infrastructure is the bottleneck, one tends to go with methanol, we can handle it. There are supply chains. It's being produced at about 100 million tons a year. And there are, I mean, bunkering of methanol has actually begun in 2015 in very, very small volumes, very bespoke, but it's been demonstrated.

Now, if you think production is the bottleneck, then I think one tends to think about ammonia because for every three equivalents of hydrogen, you generate two equivalents of ammonia and you only generate one equivalent of methanol. And not to mention that methanol needs that carbon source that's either a biogenic form or from direct air captured, right? So I think it depends on how one thinks about it. And ship owners, depending on where they bunker, could think about this a little differently. I would say that ammonia is not as far along as methanol. Like I said, methanol, the first bunkering of methanol was in 2015 on Stena ferry. So things are progressing. And I guess in the long term, if you look at the projections and the numbers, I think if costs were the driver, then the cost of ammonia is going to be cheaper than the cause of e-methanol.

Shayle Kann: So who are the big players here who... As you said, it's interesting, I hadn't realized that every individual operator and ship can procure their own fuel, but there are some large players in this market who presumably have a lot of market power to start to push in a particular direction here in terms of methanol or ammonia or something else. So who are the big players that sort of have the most heft and where are they leaning so far?

Lynn Loo: Well, I mean I think the ones that you're seeing in the headlines would be Maersk, right? So it's a large container shipping company, and it's been building methanol dual fuel vessels. And so now it's actually going up the supply chain trying to invest in projects that actually produce methanol so it can source its own methanol. But again, I mean the amount of methanol it needs is humongous compared to what we're producing today, right? So this is a challenge that is going to take decades to solve. It's not going to be solved tomorrow. And already you're seeing Maersk kind of saying that they're going to also look at alternatives because the scale with which we can access methanol. And by the way, when we say methanol, I'm assuming that we're talking about the green version or the blue version, the low carbon variants of methanol.

Shayle Kann: Right. Otherwise, what's the point?

Lynn Loo: Yes. Yes, exactly.

Shayle Kann: Otherwise, you're just burning another hydrocarbon. So yeah, so I was thinking of Maersk because they seem to have... As you said, they're not saying at the expense of all other things, but they certainly have placed an affirmative vote on scaling up ethanol. Are there others who've done the same on the ammonia side?

Lynn Loo: I would say we're beginning to see some of that. We're seeing ship owners ordering ships. So these would be the ammonia carriers that have a dual fuel propulsion capability burning their own cargo. Again, following the same route as liquefy natural gas. I mean ammonia, one thing we didn't talk about when we spoke about ammonia is safety concerns. Ammonia is a toxic gas. So I think the safety, how do you think about the emergency response? How do we get the ecosystem ready for using ammonia is critically important. How do we train the crew and the operators, those are all important. So that's all sort of coming along. And GCMD's playing a part in trying to do this as well through our safety studies and through scoping pilots to demonstrate that you can transfer ammonia safely. So yeah, I mean I think it's coming. We see ship owners, they're ordering ammonia carriers. So about, I think it's been 20 ammonia carriers have been ordered thus far.

Shayle Kann: You've mentioned a couple of these, but are there other technical challenges that we should be thinking about with either methanol or ammonia, probably more likely with ammonia that are yet to be fully solved, to really scale up like an industry that could be dependent on either of those fuels?

Lynn Loo: Yes, I mean I think energy density is a big one, right? And so whether we're talking about ammonia or methanol, the volumetric energy density is significantly lower than heavy fuel oil. And so you would need approximately two and a half times, whether we're talking about ammonia or methanol, compared to heavy fuel oil to go the same distance. So then ship owners now are forced to think about whether they're going to have to carry more fuel at the expense of carrying cargo or they have to bunker more frequently.

So ships don't bunker at every port they stop at. But now they need to think about where bunkering needs to happen. In fact, we did a survey with BCG, and the survey showed that ships actually, the bunkering patterns are very, I would call them centralized. So more than 50% of the ships on the water today have a favorite port, and the favorite port is defined as bunkering at that port more than 50% of the time. So they do their thing, they come back to that port for bunkering. It could be because they're doing services there as well, or it could be because the fuel's cheap, whatnot.

And so that model I think will break down and we will see more distributed bunkering because of the low volumetric density of these future fuels. And I say that because there's another data point from the survey, which is when we ask our ship owners and operators whether they would bunker more frequently or whether they would carry more fuel, 60% of the respondents said they would rather bunker more frequently. So I think we would see emergent of new ports. And again, because bunkering is so centralized today, I mean, so Singapore bunkers 50 million tons when the global bunkering volume is 300 million tons. So the bunkering volume in Singapore is greater than the bunkering volumes of the next nine largest bunkering hubs all combined, right? So that pattern may change a little bit depending on where ammonia and methanol are being produced, whether you can develop ports that then bunker these kinds of fuel. So I think the conversation of energy and fuel production is intimately linked with transport via maritime, and that interface needs to be carefully looked at.

Shayle Kann: It's interesting, it harkens in some ways to the infrastructure challenge of electric vehicles. And you're with limited range in an electric vehicle, then the question is, do you build a bigger battery and pay more or can you charge more frequently on a longer road trip, for example? And then it's a question of infrastructure. In that case, the cost of charging more frequently is one, both of infrastructure itself — are the chargers there? But also the time that it takes. And I guess next to the question-

Lynn Loo: Yes. Bunkering too.

Shayle Kann: Right. That would assume that why is it you wouldn't want a bunker more frequently? Presumably there's a time impact on your journey. And so it sounds like what those shippers are telling you in that survey is like, "Look, if I have to choose between a little bit less cargo or a little bit more time, I'm probably taking a little bit more time because the cargo is precious." Is that basically right?

Lynn Loo: Yeah. Yeah. And I mean I think some of these ships, so for example, the Iron Ore route between Australia and North Asia, ships come into Australia and then they sit at Anchorage for 10 days before they pick up Iron Ore because that's just sort of the operations at the port dominates. And so they sit out before they come in and pick up cargo. So are there opportunities to think about bunkering then when ships are sitting out at Anchorage waiting to pick up cargo or waiting to unload cargo? So there are opportunities there, I think.

Shayle Kann: I want to talk for a minute about the sort of market structure. For the procurement that we're seeing, or at least the emergence of whether it's methanol dual fuel ships or ammonia or anything like that, what is driving the demand side of this? Are there regulatory requirements to decarbonize that are the primary drivers? Are we seeing shareholder pressure on shipping companies? What's happening there and how much have we seen in terms of willingness to pay the green premium that inevitably is there in the early days of any of these new fueling options?

Lynn Loo: There's no willingness to pay for the green premium. I would say two things. I mean, I think we can see the carrot and the stick, right? And so I think we see regulation pressure coming down the pike. I mean already there are regulations like the CII that basically is dialing down the emissions that is allowed. And beyond that, your ships get graded, right? And so that may impact who actually then hires your ship.

Shayle Kann: Who is the CII's... Yeah. Tell me more about the CII.

Lynn Loo: It's from the IMO, so the International Maritime Organization. And so it's really looking at the operations side of things. So the emissions then measures the emissions per ton mile. And so you're looking at that. And IMO has just revised its greenhouse gas strategy. So previously, before July 2023, IMO has greenhouse gas strategy was 50% emissions reduction by 2050. Now they've upped that ambition to net-zero near 2050 with interim targets of 20%, striving for 30% reduction by 2030, and then 70% striving for 80% by 2040. And they've said that they're going to articulate what this means and the detail of the regulation that comes along with these ambition and to have this be implemented by 2027. Considering how long the ship life is and considering how long it takes to build a ship, you kind of have to start now. So there's of course that regulatory pressure. I mean the details aren't out yet, but I think that's coming. And of course, if the ships apply to Europe, there's already the EU ETS that one needs to consider, right?

Shayle Kann: 20% to up to maybe 30% by 2030 seems kind of like remarkably ambitious to me, given exactly what you just said.

Lynn Loo: Yes, it is.

Shayle Kann: Like the timeline of these lifetimes of the ships and so on. Is that practically speaking, if I'm a shipping company and I'm told I need to reduce my emissions by 20 to 30% by 2030, what am I doing? I'm obviously not procuring enough new ships in any given year to say, "All my new ships are going to be ammonia and it solves my problem." So what are the incremental but near term steps that they're taking?

Lynn Loo: Yeah, you're right. 20% emissions reduction by 2030 is very ambitious. Just to put this into perspective, I mean in order to reach that number, the Global Maritime Forum has done some calculations and show that the sector needs to adopt 10% green fuels by then. 10% green fuels, we already said that shipping bunkers 300 million tons, 10% of that is 30 million tons. And then if you take the volumetric energy density into consideration, this is approximately, what is it, 50 million tons of green fuels.

Shayle Kann: Or more, yeah.

Lynn Loo: Or ammonia or methanol. Ammonia is being produced about 200 million tons a year today. Only 20 million tons is being shipped around for trade. Most is used locally, right? And so 10% of that is 40 to 50 million tons. So that's already double what's being shipped around. So I mean, those numbers are incredibly large. And so this is going to be hard, and so it's going to take the whole sector moving together.

So in the meantime, what is the sector looking at? I think energy efficiency measures are really important. And there too, I would say that we're not doing enough, right? I mean, so if you look at the sector, from 2008, we've already reduced emissions by improving fuel savings and energy efficiency to the tune of 30%, yet because the trade volumes have gone up so much, net-net, we've not really reduced emissions. We're looking at needing to reduce emissions another 30% between now and 2030 to meet the 2030 targets. So where is that going to come from? It's going to have to come from advance energy efficiency solutions such as wind propulsion, such as air lubrication and things of that sort. And that's not being adopted quite at the clip it needs to be for us to get there. And so again, I mean GCMD is doing a pilot. We're trying to pilot this PSU safe financing scheme, taking inspiration from the building sectors, to try and encourage adoption of these kinds of energy efficiency technologies.

Shayle Kann: What about the other thing that you hear glimmers of here and there right now that also theoretically could be a solution for existing ships rather than needing new ones is doing some version of onboard carbon capture?

Lynn Loo: Yeah. Yeah.

Shayle Kann: Tell me about what's happening there, what are the challenges with it and how big a solution is that?

Lynn Loo: Yeah, I mean, we have a pilot there too. Again, I would say first of all, that carbon capture in itself, even on the landside is expensive. So doing carbon capture on board vessels has no economies of scale. You're essentially building little factories, chemical factories on board vessels, right? So certainly you're not doing this for cost.

But we see this as an important interim solution to explore. And I use the word explore because it's not very mature because if you just look at the numbers and you look at how many vessels are on the water today, which is 65,000, and how 80% of them are going to be still on fossil fuel by 2030 and probably about 30% in 2050, they need to decarbonize as well. So carbon removal needs to be part of the portfolio solution. So for us to think about onboard carbon capture, we think as long as technologies that are demonstrated on land can be miniaturized, they can put on vessels, they're going to be expensive from a CapEx perspective, they're actually going to be expensive on an OpEx perspective too because you have to burn more fuel to capture CO2 because the scrubbers and the strippers all take energy to operate.

More importantly is really that carbon value chain. What happens downstream to the captured CO2, right? You have to store it onboard vessels. So for every ton of fuel you burn, you generate three tons of CO2, you need to store that onboard vessels. And then when you are at port of calls, you need to offload that CO2. And there are currently no guidelines or regulations on how you can offload that CO2. Then finally, what do you do with that CO2? At the end of the day, you need to sequester it or I suppose find a way to use it so that it doesn't end up in the atmosphere. So maybe infrastructure materials or concrete or something like this, but there needs to be pathways to that.

And then finally, it's to think about the volumes. Onboard carbon capture, the volumes are always going to be small compared to landside capture. So it's looking at what's happening on the landside and seeing whether you can dovetail this to landside activity so that you can share common infrastructure. If there are CO2 hubs that are being built up, whether those are places that can take the CO2 that's being scrubbed onboard vessels as well. So those are the kinds of challenges one needs to think about when we think about onboard carbon capture.

Shayle Kann: All right. I think we've run through most of the different pathways here. I guess just as a means of wrapping up, what are you personally most excited about in terms of technologies or opportunities that are on the horizon for shipping decarbonization? What do you think could be most disruptively beneficial?

Lynn Loo: I mean, none of these are going to be. I mean, of course disruptively beneficial would no question be future fuels, right? Zero carbon fuels. That's not going to happen immediately. So we need to work on all these different things simultaneously. I think we need to do what we can with what we have now. So that means adopting biofuels, that means looking at liquefy natural gas, but keeping an eye on methane slip. It means adopting energy efficiency technologies. And by the way, this is... I think energy, we can't say enough about energy efficiency technologies because these EETs, not only are they good for your pocket today, they would be good for the future because you know again with a significantly lower energy density of future fuels, you want to see how you can use as little fuel as possible while still accomplishing transporting cargo, right? So I think it's really, really important to look at energy efficiency.

So it's doing all we can with what we have now and then exploring what we can do in the interim. And that's onboard carbon capture before we look at future fuels. And of course, with these future fuels, we can't sit around and wait for the future fuels to come, so we need to ready the ecosystem. So 800,000 seafarers need to be trained to be able to use these future fuels. So can training happen now? BUN green guidelines need to be in place, infrastructure needs to be built. The projection is we will see about 600 to 700 million tons of ammonia by 2050. Today it's only about 200 million tons that's being produced, right? So significant infrastructure needs to be built. And so that's not going to happen overnight. So that needs to happen as well. So I mean, at the end of the day, I think regulation is an important piece. That's the nudge that we need to move forward, but we need to move forward on all these fronts as quickly as possible.

Shayle Kann: Lynn, thank you so much for your time. This was a lot of fun. And I now realize why Singapore is so important from a global shipping industry perspective. I didn't realize how dominant it was in bunkering.

Lynn Loo: Yeah, yeah. Thanks for your time. I enjoyed it as well.

Shayle Kann: Dr. Lynn Loo is the CEO of the Global Center for Maritime Decarbonization. This show is a production of Latitude Media. You can head over to latitude media.com for links to today's topics. Latitude is supported by Prelude Ventures. Prelude backs visionaries accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more about their portfolio and investment strategy at preludeventures.com. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Marquand. Theme song by Sean Marquand. Steven Lacey is our executive editor. I'm Shayle Kann, and this is Catalyst.

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