Article | Peng Xiaozhao, Institute of Financial Development and State owned Assets and Enterprises, China (Shenzhen) Comprehensive Development Research Institute
On November 22nd, the world’s largest C-type tank type liquefied natural gas (LNG) refueling ship, the “Xin Ao Putuo”, and a dual fuel container ship under Dafei completed refueling operations in the Yantian Port area of Shenzhen. Shenzhen Port has become the fourth port in the world to have LNG refueling service capabilities, following Singapore, Rotterdam, and Shanghai ports. At present, the world has entered the “double carbon” era. In addition to the impact of the Russia-Ukraine conflict on the global energy supply pattern, the selection of ship fuels and the development of the bunkering industry have become the key factors that determine the future of the global shipping industry, as well as an important indicator to measure the internationalization of ports and the level of maritime services. It is timely and possible for Shenzhen to finish the first LNG bunkering operation of international navigation ships first.
1、 The global shipping industry is accelerating its green and low-carbon transformation, with LNG becoming the preferred short-term alternative fuel for ships. Methanol and ammonia have the greatest potential for application in the medium and long term
Under the carbon and sulfur reduction requirements of the International Maritime Organization (IMO), low sulfur fuel and LNG are currently the main sources of power for existing ships worldwide. In the future, there may be a trend of “combination substitution” in the development path of ship fuel. LNG is the preferred short-term substitute, followed by methanol and ammonia, which have the most promising application prospects in the medium and long term. If hydrogen breaks through the technological bottleneck, it can become the ultimate alternative energy. In response, major ports around the world are actively carrying out the construction of new energy facilities, with LNG facilities having the largest number under construction, and other alternative fuel facilities are also accelerating research and development or construction.
1. LNG: It has a significant carbon reduction effect, the most mature refueling technology, and is widely recognized as the preferred alternative fuel. LNG has the advantages of high technological maturity, high energy density, and complete regulations, making it the most feasible alternative fuel for ships in commercial applications and operations. Compared with traditional fuels, LNG produces almost no particulate matter pollution and does not have sulfur emissions issues. It can also reduce nearly 80% of nitrogen oxide emissions and 40% of carbon dioxide emissions. In the transition stage of the shipping industry towards complete decarbonization, it is recognized by the industry as the preferred low-carbon energy source. The disadvantages of LNG are low temperature, flammability and explosiveness, easy evaporation, and the accumulation of static electricity, which require high requirements for refueling technology. The “Natural Gas Fuel Powered Ship Specification” and “Liquefied Natural Gas Fuel Refueling Ship Specification” formulated by the China Classification Society (CCS) have come into effect in 2013 and 2015, respectively. The number of LNG powered transport ships worldwide is showing an explosive trend, with 104 new shipbuilding orders for LNG transport ships signed in the first half of 2022 alone, exceeding the total number in any previous year. In addition, there are relatively few ports worldwide with LNG refueling capabilities, most of which are under construction or planning.
2. Methanol: It has a significant carbon reduction effect, high technological maturity, and huge potential for medium and long-term development. Methanol has significant advantages as a ship fuel, reducing 99% of sulfur oxides, 60% of nitrogen oxides, and 95% of particulate matter emissions compared to traditional fuels. At the same time, it is only 40% cheaper than low sulfur marine diesel and does not require low-temperature storage and insulation treatment. The construction cost of fuel tanks is lower than that of LNG, ammonia, and hydrogen fuels. The International Maritime Organization (IMO) has adopted safety technical guidelines for methanol as a ship fuel, making it the second approved alternative ship fuel after LNG. The “Guidelines for the Application of Methanol/Ethanol Fuel in Ships” developed by the China Classification Society (CCS) came into effect in July 2022, providing a basis for the design, drawing review, and inspection of methanol/ethanol fuel for ship applications. Methanol has been widely transported across oceans, and due to its liquid fuel nature, the refueling system is interoperable with LNG. At present, methanol refueling for ships mainly relies on tank trucks. Shanghai has completed the first domestic methanol fuel vehicle and vessel refueling business. There are already cases of ship to ship and port to ship refueling internationally, but it has not yet been popularized.
3. Ammonia: It belongs to the category of zero carbon energy, and the injection technology is not yet mature, with great potential for medium and long-term application. Ammonia has the advantages of high combustion heat value and low energy storage density, making it one of the most promising alternative fuels for achieving zero carbon shipping. Ammonia is a synthetic substance that cannot be naturally obtained, mainly including gray ammonia produced from fossil fuels, blue ammonia produced from carbon capture fossil fuels, and green ammonia generated by electrolysis, among which green ammonia belongs to the true zero carbon energy. Ammonia, as a fuel with high loading rate and large refueling capacity, is more convenient for storage and transportation than liquid hydrogen and LNG at the technical level. The “Guidelines for the Application of Ammonia Fuel in Ships” formulated by the China Classification Society (CCS) came into effect in July 2022, and specific requirements are put forward for ammonia fuel ships from three aspects: design, manufacturing, and inspection technology. At present, there is no use of pure ammonia fuel engines. It is expected that the first batch of ammonia powered ships will be put into operation in 2025, and the large-scale popularization will be later than 2030. There are already ammonia storage facilities built in ports around the world, but as a distribution system for ship fuel, there is a lack of fuel supply facilities, and related supporting facilities are still being explored and constructed. In addition, 80% of the global ammonia production is used for fertilizers, which has a substitutability for ammonia fuel input into the shipping industry, and its application prospects still need to be examined.
4. Hydrogen: It belongs to the category of zero carbon energy and has low potential for short-term applications. If technological bottlenecks are overcome, it can become the ultimate alternative energy. Hydrogen has the smallest volumetric energy density among various alternative fuels, with the advantages of high combustion heat value and low storage density, and is regarded as one of the ultimate directions for zero emission solutions in the shipping industry. There are two main ways for hydrogen to be used as marine fuel: one is hydrogen fuel cells, which are currently only suitable for low-power applications and difficult to use for large ship propulsion; The second is the hydrogen internal combustion engine, which has been piloted in inland and offshore vessels. However, considering the high sensitivity of the shipping market to fuel prices, it is unlikely to be applied to large ocean going vessels in the short term. Hydrogen exceeds 90% of on-site production, and transportation conditions are limited by pipelines, making it easy to escape from enclosed spaces. Low temperature storage is difficult and requires appropriate ventilation, detection sensors, and large capacity storage compartments. Marine hydrogen fuel is mainly supplied through customized pipelines by trucks or trailers, and there are no refueling ships or terminals available for ocean going vessels. The China Classification Society (CCS) has formulated three inspection guidelines for hydrogen fuel cell systems, namely “Hydrogen Fuel Cells,” “Hydrogen Bottles,” and “Reforming Units,” which came into effect in April 2022.
2、 Suggest that Shenzhen accelerate the layout of the new ship fuel refueling industry and build an international bonded fuel center
In addition to completing LNG refueling operations for international vessels, Shenzhen has issued the first batch of bonded fuel oil operating licenses for international vessels and started business operations. Multiple cities such as Shanghai, Ningbo, Guangzhou, and Hainan are also promoting the development of the ship fuel refueling industry. Looking ahead to the global trend of green and low-carbon energy consumption in the shipping industry, it is recommended that Shenzhen accelerate the layout of the new marine fuel refueling industry according to the characteristics and technological maturity of different alternative fuels, extend and expand the oil and gas industry chain in the Greater Bay Area, amplify the synergistic effect of “bonded+port”, and strengthen the comprehensive service capabilities of the international shipping center.
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