First featured on S&P Global
Author Surabhi Sahu, Editorial Lead LNG/Energy Transition at S&P Global Commodity Insights.
- Ammonia bunkering demand in Singapore seen at about 2 mil mt by 2035
- Third-generation biofuels, offloading LCO2 key aspects
- Eyes on MEPC 81 to tackle key environmental issues
Singapore-headquartered Global Centre for Maritime Decarbonisation is progressing its existing ammonia and biofuels projects as it plans for ship-to-ship ammonia transfers in Singapore and biofuels supply chain pilots in the US and the Port of Rotterdam while also advancing the deployment of energy efficiency technologies by piloting the Pay-As-You-Save model, GCMD Chief Technology Officer Sanjay C Kuttan said in an interview.
“What we hope to do in the next phase of our ammonia-related initiative is to demonstrate ship-to-ship transfer of an ammonia cargo, not because it fully represents bunkering but because it starts building confidence of the port ecosystem in transferring ammonia between vessels within the port waters, especially amid safety concerns within constrained operating conditions,” Kuttan told S&P Global Commodity Insights March 13 on the sidelines of the Asia Pacific Maritime 2024 conference in Singapore.
This comes as GCMD in a presentation recently noted that demand for ammonia bunkering is set to reach about 2 million mt by 2035 in Singapore, the world’s largest bunkering port, while also identifying potential sites for ammonia bunkering within Singapore.
For biofuels development, in August 2023, GCMD said that it had successfully bunkered the third supply chain of a biofuel blend as part of its pilot to articulate a quality, quantity and GHG abatement assurance framework for drop-in green fuels.
“We continue to build on that assurance framework with real world data and experience,” Kuttan said.
“We are also drawing upon the experience of our previous studies to conduct a pilot in the US to understand the supply chain there. We will do one more bunkering out of the Port of Rotterdam,” he added.
Another aspect GCMD hopes to complete is evaluating the potential use of third-generation biofuels—those produced from algae, Kuttan shared.
“The biofuel production yields can be 25 times higher. The use of algae can accelerate the production of biofuels and by the end of the year, and we hope to have enough data to pave the way for their adoption,” Kuttan said.
To spur the adoption of energy efficiency technologies in shipping and to overcome the problem of split incentives, the GCMD is forging ahead with the development of the Pay-As-You-Save, or PAYS, financing model.
“Until the development of alternative fuels such as green methanol and ammonia happens at scale, we will live in a fossil fuels world. But we need to do something with those emissions and onboard carbon capture is a big opportunity,” Kuttan said.
The Centre has recently completed the concept study for offloading liquefied CO2, with one of its key findings revealing a lack of port readiness in terms of infrastructure and supporting policies. Infrastructure constraints are relatively easier to address than policy issues, Kuttan said.
“Captured LCO2 from ships is accounted for in the International Maritime Organization bucket but when it comes on shore, it potentially enters the national budget. So, policy instruments need to address this,” Kuttan said.
“An idea to address this accounting challenge is for the offloaded LCO2 to be treated as a “transshipment” molecule e.g., you have free trade zones that don’t get taxed, so the LCO2 remains in the IMO bucket even though it is located onshore,” he said.
“Also, you can’t release the LCO2 once you have captured it. So, you have two major pathways—sequestration and/or utilisation,” Kuttan shared.
MEPC 81 ahead
A key IMO meeting—the 81st session of the Marine Environment Protection Committee— is scheduled in March.
The whole idea of adopting life cycle assessments, or LCAs, will be a key step forward, Kuttan opined.
“We will also likely see more discussion this year around onboard carbon capture, which is positive,” he said.
On the Carbon Intensity Indicator, it is also going to be important for the IMO to decide the implications for ships to be classified A, B, C, D, or E, Kuttan said.
“If it is just going to be a simple classification methodology, then I don’t think we will shift the needle sufficiently. I think there must be incentives to be C and above, and disincentives to go below C so that action can be taken and that is going to be an important point to be sought out [either] this year at MEPC 81 or by MEPC 82 so that vessel owners, shipyards, technology players can start gearing up and preparing their own production and support the industry,” Kuttan said.
Meanwhile, on the EU ETS’ success, “while it’s too early to tell, it’s a good way to get the ball rolling,” Kuttan said, adding that ship owners and operators are still adjusting to the implications including the mechanisms of the EU carbon credits.
The EU is a regulatory block and so, can collectively do something like this, Kuttan said. ASEAN might want to start pondering about taking similar collective action, Kuttan shared.
“It took a long time to get to where we [industry] are…We should think about the opportunity that the EU experiment can present to the other member states of the IMO to be more convinced that some of these mechanisms can be effective,” Kuttan said. “So, I think it’s a debate at the IMO that must include the experience from the EU.”
