Technology pathway 1: ZEFs and propulsion technologies Hydrogen, ammonia and methanol produced using low-carbon hydrogen have up to 99% GHG emission reduction benefits compared to low-sulphur fuel oil (LSFO).179 The switch to alternative fuels will come at a cost. The ship owners’ total cost of ownership (TCO) is expected to be 40-80% higher for methanol-powered ships and 30-70% higher for ammonia-powered ships, compared to ships running on LSFO, based on future cost projections.180 Since methanol combustion generates CO2, it is important to mitigate these emissions, which can be done by using CCS technology. This could lead to overall negative emissions if biogenic CO2 is used for producing methanol, and the captured CO2 is stored permanently afterwards. At present, the production of clean hydrogen-based fuels for the shipping sector remains primarily in the demonstration phase, with full-scale commercial deployment yet to be realized. Advancements have been made with the expansion of green hydrogen production facilities in China and the US, but production is stalling in Europe. H-TEC SYSTEMS, a subsidiary of MAN Energy Solutions has established a manufacturing facility in Germany for PEM electrolysis stacks to produce green hydrogen in 2023.181 The development of a ZEF-powered shipping fleet is essential for the industry to meet its net-zero emissions targets. Methanol-powered vessels are in early adoption stage (TRL 9),182 and while they have already been commercialized, they have not been adopted at scale. Hydrogen- and ammonia- powered engines are in large prototype stage (TRL 5 and 6).183 Battery-electric ships, in which the power of propulsion comes from batteries, are in early adoption stage (TRL 9),184 and PEM fuel cells are in demonstration stage (TRL 8)185 for small and medium vessels.Technology pathway 2: Low-emission transition fuels While ZEFs are expected to lead the industry towards its net-zero targets, low-emission transition fuels like LNG and biofuels will be important to support emission reduction until the production and use of ZEFs reaches desired levels. LNG-fuelled ships have up to 21% GHG (well-to-wake) emission reduction benefits as compared to oil-based marine fuels.186 The ship owners’ TCO is expected to be only 0-8% higher for LNG-fuelled ships, and 10-30% higher for ships powered by biofuels, compared to ships running on LSFO, based on future cost projections.187 Advancements have been seen in expansion of biofuel production. Finnish biofuel producer Neste started commercial production at its renewable fuels’ expansion project in Singapore in 2023.188 Technology pathway 3: Energy efficiency Improving the energy efficiency of ships is a key lever for emissions reduction for the industry, and several technologies are being developed to optimize the energy consumption of ship engines. For example, the use of sails to harness wind power has demonstrated a 5-8% reduction in shipping power consumption, and this technology is currently in demonstration to early adoption stage (TRL 8-9).189 Another example is the use of rudder bulbs and ship propellers, which can prevent loss of energy by reducing drag. These technologies are expected to reduce ships’ fuel consumption by 10% and are in early adoption stage (TRL 10).190 The use of different types of fuel cells – such as high temperature proton exchange membrane fuel cells (HT-PEMFC), molten carbonate fuel cells (MCFC) and solid oxide fuel cells (SOFC) – is also being considered, since fuel cells are more energy efficient than internal combustion maritime engines and do not emit pollutants. Net-Zero Industry Tracker: 2024 Edition 57

Net Zero Industry Tracker 2024