QED: Decarbonising Shipping
In December 2023, representatives from nearly 200 countries reached an historic agreement to ‘transition away from fossil fuels’. This agreement adds to the momentum already underway in global energy markets, as policy makers, companies and investors worldwide work to accelerate the adoption of technologies that reduce greenhouse gas (‘GHG’) to avert the worst impacts of climate change and achieve net zero by 2050.
The world relies on shipping to transport 90% of traded goods. The shipping sector currently accounts for approximately 3% of GHG emissions, equivalent to those of Japan which is the world’s fifth largest GHG emitting country. The sector is under increasing pressure to decarbonise, with shipping operators and major freight customers calling for increased global regulation surrounding GHG emissions.
Major customers including Amazon, Nike and Philips have formed the Zero Emissions Maritime Alliance (‘ZEMBA’) with the mission to accelerate the commercial deployment of zero emissions shipping and help maximise emissions reductions.
The EU and IMO are currently at the forefront in the decarbonisation of shipping with several schemes already underway to incentivise ship owners and operators to switch to lower carbon fuel.
- The EU Emissions Trading Scheme (‘EU ETS’) came into force on 1 January 2024 and introduces carbon pricing for ship operators, who must buy credits to offset an increasing percentage of their carbon emissions, up to 100% by 2026. NOx and methane emissions will also be included in this scheme from 2026 onwards. It will therefore become increasingly expensive for ships entering EU ports to emit greenhouse gases, and companies are now seeking to avoid these costs by adopting new future-proof technologies.
- The Fuel EU Maritime scheme commences in 2025, and requires that for ships trading in the EU/EEA, the annual average GHG intensity of energy used on board (GHG emissions per energy unit) needs to be below a required level, which will reduce every five years. Ship operators that exceed the limit must pay a penalty corresponding to its compliance deficit, with the penalty incurred by the party responsible for operating the ship.
- IMO Carbon Intensity Indicator (‘CII’): This scheme commenced in 2023, and assigns a CII from A to E to all ships >5,000GT based on their carbon intensity. Freight customers can then choose which ships and operators to use based on this rating. The CII of a vessel can be reduced by switching to drop-in biofuels, which could result in a vessels rating being improved from D to A.
Shipping has already been impacted by Climate Change with drought conditions affecting the Panama Canal and reducing its operational capacity by 15 million tonnes and forcing ships to take longer and more expensive alternative routes.
The CEOs of leading global shipping lines, including MSC, Maersk, CMA-CGM and Hapag Lloyd issued a joint declaration at COP 28 which called for the International Maritime Organization (IMO) to create a regulatory framework to facilitate the shift to cleaner energy sources.
With 98.8% of the global shipping fleet still reliant on fossil fuels, shipping operators require transition fuel solutions which can quickly and affordably reduce emissions using existing vessels and bunkering infrastructure. Quadrise’s proven, unique MSAR® and bioMSAR™ technology meet this challenge.
MSAR® combines hydrocarbon streams, water and additives to produce a synthetic fuel oil which is stable over long periods of time and reduces CO2 emissions in large ship engines by up to 9%. bioMSAR™ incorporates renewable glycerine to produce a synthetic biofuel which reduces carbon emissions by over 20% compared to fuel oil, as well as demonstrating improved engine efficiency and significant reductions in other emissions , such as NOx, SOx and particulate matter.
Following successful engine testing with Wärtsilä Services in Switzerland, Quadrise are working with industry leaders MSC and Cargill on commercial trials of bioMSAR™ on board the vessel MSC Leandra. Vessell bunkering will take place at the MAC2 facility in in Antwerp, Belgium and the trial will consume around 10,000mt of bioMSAR™ over a rigorous test regime. Upon successful completion, bioMSAR™ will then be rolled out across additional vessels in the MSC fleet and will also be available to other global shipping operators.
bioMSAR™ offers considerable advantages when compared with other marine transition fuels as set out in an earlier Quadrise article: https://www.quadrise.com/biomsar-towards-a-net-zero-future/.
Additionally it provides a unique technology platform for reducing carbon emissions, whereby conventional biofuels, bio-residuals and water-soluble sugars (derived from woody material, waste or by-products) can be combined to offer a new lower cost sustainable marine fuel for the shipping sector. Quadrise aim to have a fully carbon-neutral ‘bioMSAR™ Zero’ solution commercially available by 2030 and we are well on our way in achieving this target.
The historic COP 28 agreement has focused attention on the world’s need to reduce GHG emissions and transition away from fossil fuel use, with this process now accelerating in the shipping sector. Transition fuels that can reduce GHG emissions immediately and affordably are required, with MSAR® and bioMSAR™ technology ready to play key roles in the energy transition to a net-zero future.
