Back in the saddle after a travel-related hiatus last week (these will blemish the record of consistency from time to time, unfortunately). Over the last week a couple of announcements related to shipping caught my eye. Microsoft led a series B into Nautilus Labs, investing for the first time through both its Climate Innovation Fund and M12, its general tech venture fund. Nautilus optimises ship utilisation in a way that saves fuel. Also Carbon Ridge, a company developing on-board carbon capture for ships, announced an MoU for collaboration with Scorpio Tankers to roll out their technology (no small irony that this will be on oil tankers, so the captured CO2 will be dwarfed by the emissions of the cargo when combusted!). Shipping is one of those, along with aviation, that we seem a long way off from fully decarbonising, with the industry yet to settle on alternative fuels. This Climate Now episode with Canary Media’s Maria Gallucci provided some high-level context, on ammonia in particular, and I checked out this MCJ episode with FleetZero, who are riding the dark horse in the low-carbon shipping race - electrification. I found the latter conversation particularly compelling as the founders have really thought outside the box to tackle this issue.
Shipping accounts for almsot 3% of CO2 emissions and are also large emitters of particulates and other pollutants (SOx, NOx), using 300 million tonnes of “fuel oil” (the thick, residual fuel that ships use, also known “bunker fuel”) per year.
Particularly difficult to decarbonise because of long range and the amount of energy they need. Large ocean vessels will carry up to 4.5 million gallons of fuel oil.
Another challenge is that ships have traditionally used the cheapest fuel, the bottom of the cracking stack, so that by comparison everything is way more expensive.
The IMO (International Maritime Organisation) is the international regulatory body, and has set a target to reduce emissions by 50% by 2050 and net zero by 2100.
Alternative fuels:
LNG - enables compliance with new-ish IMO regulations on sulphur content and somewhat lower carbon emissions, but still fossil fuel
Ammonia - seems to be a leading candidate over the long term, more energy dense than hydrogen and can be stored more easily, can be zero carbon if using green hydrogen. The downside is that you have additional conversion from hydrogen (combining with nitrogen) so incurs extra energy losses, also it is toxic so needs to be carefully handled.
Hydrogen - avoids additional conversion losses and toxicity of ammonia but less energy dense and hard to transport / store
Methanol - the route that Maersk is betting on, having ordered 12 ships that will be able to burn it and securing supply of 700k tonnes / year of green methanol (a mixture of bio-based and e-methanol) by 2025
How price sensitive in shipping to fuel prices? Shipping prices fluctuation will effect the end price to the customer generally only at the margins, only a tiny fraction of cost of finished / delivered goods (to developed markets at least)
Progress on green ammonia production today: very, very little, being made in tiny (think in the 10s of kgs per day) demonstration units in UK and Japan. But things are moving. Yara (a big fertiliser producer) is working to convert a production facility in Norway to green ammonia (eventually 400,000 tonnes per year) and Acwa Power and Air Products have a project in development in Saudi Arabia (1.2mm tonnes per year).
To convert all of shipping would require 500-600mm tonnes of ammonia, which compares to about 175mm tonnes of production today, which is mostly (80%) used for fertiliser and is the largest emitting chemical accounting for 0.5GT of CO2 emissions. [Of course the question always needs to be asked of these green H2-based, alternative fuel pathways - why are we even talking about creating new uses for green ammonia when we haven’t cleaned up the existing 175mm tonnes of production we have today?]
Tackling toxicity: would be a very bad outcome for the fuel to leak ammonia into the ocean. Engine manufacturers are developing ammonia-based engines now, e.g. Wartsila, MAN / Samsung Heavy Industries, that include additional ventilation and warning systems if there are leaks on ship.
Wind-assisted propulsion: There are 20 vessels operating today that are wind-assisted, which is set to double by the end of the year. Small number, but up from zero a couple of years ago. The technologies vary between rotary sails, different types of fixed sails and high-flying kites.
Batteries: (ostensibly) unsuitable for long distance shipping - transatlantic voyage would require so many batteries that there wouldn’t be room for cargo. However…
FleetZero envisage a route to electrify shipping by reimagining the structure of the global shipping networks and using swappable batteries.
The way ships are used today is that they go out of their way to pick up cheap fuel, which will last them for a huge amount of time, both at sea and multiple stops. If journeys can be broken down into smaller sections with more modest sized boats, this would enable much fewer batteries to be used than with just two distant points.
This way of operating would also allow ships to access a much wider array of ports. Ship sizes have been increasing over time to optimise for fuel consumption, but the large ships can only dock in a few ports. [One of the things I love about this idea is that it leverages existing, under-utilised infrastructure. To make the transition happen in a timely and affordable manner we need to use as much of what we already have as possible, e.g. repowering old coal plants with nuclear or, eventually, geothermal.]
Whilst batteries do take space, electrification removes a lot of other equipment that is required to run on fuel oil - pipes, storage tanks, ballast tanks (because sea water needs to be taken on to compensate for consumed fuel normally; additionally, removing these would also address issue of invasive species picked up in one part of the world and dumped into another)
Electrification also means that there are fewer things to break and less maintenance costs, e.g. lubricating oil normally makes up 5% of opex on current ships.
FleetZero is in the early days, but have some pretty fancy investors in their seed round including John Doerr, Sam Altman (who achieved particular climate tech fame by recently putting $500mm into fusion start-up Helion) and David Rubenstein (founder of Carlyle Group), as well as Y Combinator and MCJ Collective.
They are starting by designing the battery to make it safe for shipping, using lithium iron phosphate chemistry and putting them into shipping container form, which port and shipping infrastructure is (obviously) already to handle.
FleetZero are working towards getting their first demonstration ship on the water by the middle of next year. They plan to start by retrofitting existing ships, but intend to build electric ships from the ground up.