Study Finds Future-Fuel Demand for Shipping Industry Equal to Entire Current Global Production of Renewables

(Green Car Congress) Huge and immediate need for renewable-based fuels in shipping represents opportunity for investors, according to ‘Fuelling the Fourth Propulsion Revolution’ report released today (My 20, 2022). Investment in green infrastructure key, as shipping will carry more than half of the world’s net-zero fuels by 2050, report estimates. Particular opportunity for the Global South identified as net-zero fuel production costs expected to be up to 20% lower in Latin America and Africa.

A new study, commissioned by the International Chamber of Shipping and prepared by Professor Dr. Stefan Ulreich from Germany’s University of Applied Sciences, finds that the global shipping industry will require the equivalent of the world’s entire current renewable energy demand in order to replace fossil fuel use.

The report—Fuelling the Fourth Propulsion Revolution— highlights the enormous opportunity for investors and governments represented by the global shipping industry’s need for new, green fuels.

To reach the industry’s 2050 (net) zero goal, shipping’s fuel needs would require electricity from renewable sources to increase by up to 3,000 TWh, the report shows. This is the equivalent of the entire world’s current renewable energy production.

It finds that to achieve the IEA’s Net Zero Emissions by 2050 scenario, the world would need an 18-fold increase in existing renewable production capacity.

The cost range reflects the abundance of renewable potential, such as solar and wind power, in many African and Latin American countries, which can generate the electricity needed in the production of hydrogen fuels at much lower cost.

Yet by 2050, at least half of (net) zero fuels traded globally are expected to be moved by ships, according to the International Renewable Energy Agency (IRENA). The report indicates that this makes maritime a key enabler of the decarbonization of land-based industrial sectors. READ MORE

Excerpt from Transport Energy Strategies: The figure below summarizes scenarios from other organizations discussed in the report and shows that hydrogen (or synfuel-based derivatives) play a strong role in net-zero scenarios. However, biofuels, electricity and natural gas do as well.

The study also notes that the shipping sector will compete with other fuels for net zero carbon fuels with other sectors. It’s not a slam dunk. Moreover, and as the study notes, using and transporting these new fuels comes with significant operational and safety challenges that need to be addressed. One is the need to define and agree global safety and sustainability standards for hydrogen-based fuels and strong safety standards for the transport and use of (net) zero fuels must be developed quickly.

Another is that production facilities for new bunkering fuels need to be within easy access of ports, unless future technologies and bunkering systems permit otherwise. Investment needs to increase, but actually declined $2.7 billion in 2017 to $1.6 billion in 2019.

What about biofuels? The study notes that “with annual fuel consumption of 330Mt for maritime fuels and 220Mt for aviation fuels – i.e., 550Mt in total – biofuels could in slightly optimistic scenarios cover the fuel demand of maritime transport and aviation. However, this also means that biofuels would not be used for other purposes such as road transport, heating/cooling and electricity production.” The study finds that biofuels could play an important role in maritime transport but would not be a single fuel for decarbonization unless the following solutions were deployed: