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DNV GL STRATEGIC RESEARCH & INNOVATION POSITION PAPER 03-2015

THE FUEL TRILEMMA: Next generation of marine fuels

SAFER, SMARTER, GREENER


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THE FUEL TRILEMMA: Next generation of marine fuels

Lead authors: Christos Chryssakis, Christos.Chryssakis@dnvgl.com Hendrik Brinks, Hendrik.Brinks@dnvgl.com Tobias King, Tobias.King@dnvgl.com Acknowledgements: The authors would like to thank all those who contributed with their comments: Toril Grimstad Osberg, Rolf Skjong, Fenna van de Merwe, Johan Vedeler, Bjørn Johan Vartdal, Eirik Nyhus, Per Holmvang. Contact Details: Christos Chryssakis, DNV GL Christos.Chryssakis@dnvgl.com


THE FUEL TRILEMMA: Next generation of marine fuels

CONTENT

EXECUTIVE SUMMARY

4

INTRODUCTION

6

AFFORDABILITY

8

The cost of using conventional fuels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SUSTAINABILITY, AVAILABILITY AND ENVIRONMENTAL FOOTPRINT

10

Setting the baseline .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Biomass availability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SAFETY AND RELIABILITY

14

Study the fuel properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Risk mapping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Barrier analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Safety assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

CASE STUDIES: SOME FUELS OF INTEREST

20

LNG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Shore-based electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Biofuels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Hydrogen.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

CONCLUSIONS

36

REFERENCES

37

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THE FUEL TRILEMMA: Next generation of marine fuels

EXECUTIVE SUMMARY

Over the next few decades it is likely that the energy mix for shipping will be characterized by a much higher degree of diversification than today. Natural gas will soon be an established fuel type, while liquid biofuels could gradually replace fossil-based fuels, provided that sustainable production is achieved. Electricity from the grid will be used more frequently for charging batteries for ship operations in ports, and also for short sea propulsion. Renewable electricity or reforming of natural gas could also be used to produce hydrogen, which can be used to power fuel cells. Other types of fuel, such as methanol, will be used in certain geographical areas and ship segments, and, given the right conditions, could develop to play a major role in the future.

In selecting the fuel for a new vessel, there is no “silver bullet” solution. In most cases, selection will be based on a compromise between benefits and drawbacks of various fuel options. The final decision will vary for different ship types, operations, and strategic directions of each ship owner. In all cases, the cost associated with machinery, as well as the expected fuel prices, will play the dominant role. Safety will also be a primary concern and can also be translated into monetary terms once a design has been established and the necessary safety measures identified. Sustainability will be a parameter of increasing importance in the future, both for reasons related to corporate social responsibility, but also because there may be a price tag attached, perhaps in the form of a carbon price, or through other schemes based on the “polluter pays” principle.


THE FUEL TRILEMMA: Next generation of marine fuels

y lit

Safet y

Af f or

ilit y b da

Sustain a bi

In this Position Paper it is argued that for any fuel or energy source to play an important role in the future, three main conditions should be fulfilled: ¾¾ Affordability ¾¾ Sustainability ¾¾ Safety and Reliability

These three aspects are discussed here, and a few case studies covering LNG, electrification, biofuels (including pyrolysis oil and biomethanol), and hydrogen are presented to illustrate the benefits and challenges for each option.

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THE FUEL TRILEMMA: Next generation of marine fuels

INTRODUCTION Exhaust gas emissions from shipping are significant contributors to global atmospheric emissions and to local pollution in harbour areas. As the demand for transportation grows, the challenge of achieving reductions in emissions is mounting. This subject receives significant attention from all stakeholders, including regulators, ship owners and operators, shipyards, and Non-Governmental Organizations (NGOs). The IMO (International Maritime Organization), the EU, and the US EPA (Environmental Protection Agency) are, among others, currently developing regulations and strategies to limit air pollution from ships. The implemented and upcoming requirements for NOx, SOx (MARPOL conventions and EU regulations) and intended reduction of emissions of fossil CO2 (Energy Efficiency Design Index) will push the limits of emission reductions that are achievable with conventional fuels by energy efficiency and exhaust gas-cleaning measures. At the same time, fuel prices are characterized by high volatility, adding to the difficulty in decision-making. The price differential for high quality fuels, such as those required for complying with upcoming sulfur regulations, is expected to play an important role in decisions regarding new technologies or the introduction of new fuels.

as well as focusing on new ways to operate and manage ships using alternative fuels, while maintaining costs at acceptable levels. The introduction of new technologies and fuels must be performed such that safety for the personnel, the vessel and any infrastructure, and the environment is not compromised.

These developments emphasise the importance of developing, demonstrating, and implementing innovative technologies for reducing emissions,

Alternative fuels can be promising for shipping by complying with environmental regulations, being essentially free of sulfur, and offering the potential

The alternative fuel options available today or in the foreseeable future include liquefied natural gas (LNG), liquefied petroleum gas (LPG), methanol, ethanol, biodiesel, dimethyl ether (DME), biogas, synthetic fuels, grid electricity, nuclear propulsion, and hydrogen. New fuels often require new onboard systems and machinery, and shifting from one fuel (heavy fuel oil (HFO), marine diesel oil (MDO)) to another (e.g. LNG) will take time, and may lead to unforeseen technical issues and delays for pioneers. Thus, a fuel that can be introduced without significant modifications to the machinery and storage facilities has the advantages of simplicity and low capital costs. Such a substitute fuel could be a liquid or gas fuel that can be used in existing engines with minor modifications. Several types of biofuels could be appropriate, including, among others, biodiesel, biogas, hydrogenated vegetable oil (HVO – a drop-in fuel), biomethanol, and upgraded pyrolysis oil.


THE FUEL TRILEMMA: Next generation of marine fuels

for a smaller carbon footprint. One of the key deciding factors is the price of these fuels. Other questions that need to be addressed are related to local and global availability, production techniques, and safety and reliability concerns. In this Position Paper it is argued that for any fuel or energy source to play an important role in the future, three main conditions should be fulfilled: ¾¾ Affordability: the cost of producing and using a fuel is the single most important parameter for a fuel choice decision. Emerging fuel technologies are often at a disadvantage in comparison with well-established conventional fuel sources. The cost of a fuel is closely related to its availability, and this may vary according to geographical area. However, other expenses, such as the cost of carbon emissions, should also be taken into account in the future. ¾¾ Sustainability: this can be described as the environmental footprint of using a certain fuel from a lifecycle perspective. Fuel production and utilization should be as environmentally friendly as possible, in quantities that can meet demand, and without compromising our future ability to use this fuel.

¾¾ Safety: While safety considerations are usually not the primary concern when new fuel or energy types are being considered, ensuring an acceptable safety level can increase the complexity of the systems and elevate costs. If a fuel is considered unsafe, it will not be widely adopted. Major accidents during the early phase of using a new fuel can have a detrimental impact for the future of the fuel. Both sustainability and safety often have a direct or indirect impact on the affordability of fuels. The cost of using a fuel typically reflects the production process (related to sustainability) and safety measures implemented. This cost is the single most important decision parameter for fuel selection, and therefore it is considered here as a separate aspect. The three aspects are discussed in this Position Paper, and a number of case studies, covering LNG, electrification, biofuels (including pyrolysis oil and methanol), and hydrogen, are presented to illustrate the benefits and challenges for each option.

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THE FUEL TRILEMMA: Next generation of marine fuels

AFFORDABILITY When deciding on the fuel choice for a new vessel, the single most important parameter is the cost of the fuel over the expected lifetime of the vessel. Until a few years ago alternative fuels were not even an option for newbuildings. This was due to a combination of low oil prices and the lack of regulatory pressures for cleaner shipping. The introduction of NOx Tier II regulations for the global reduction of NOx emissions was met by engine manufacturers introducing internal engine modifications, but without affecting the fuel quality. Sulfur content regulations that started gradually being introduced in 2010 for the Emissions Control Areas (ECA), and globally in 2012, incentivised the introduction of cleaner and more expensive fuels. Maximum 0.1 % sulfur content requirements have entered into force in North America, the North Sea and the Baltic in January 2015; remaining EU waters will have 0.5 % requirements in 2020, and a similar global limit will follow in 2020 or 2025, subject to the outcome of an IMO fuel availability review. Complying with these regulations requires either using low sulfur fuels, or installing Exhaust Gas Cleaning Systems (EGCS) – so called scrubbers - for the removal of SOx from the air emissions. In both cases there is a significant additional cost, in the form of capital investment (scrubbers) or increased operating cost (use of distillates). In this environment, it is worth considering the alternatives that could reduce the overall financial burden for ship operators.

Oil and gas prices are highly volatile and are affected by technological developments (such as advanced oil extraction methods or fuel economy measures), geopolitical events (e.g. Iran sanctions), and the policy decisions of key producers (e.g. Saudi Arabia switching from price to market share focus). Thus, projections of future price developments are very uncertain. However, it can safely be said that emerging fuel technologies are often at a disadvantage in comparison with well-established conventional fuel sources. When the prices of conventional fuels are high, alternative fuel sources can be developed and offered at competitive price levels. In contrast, in periods of low prices of conventional fuels, investments in alternative fuel sources also tend to wane. A main challenge for any emerging alternative fuel is developing production technologies that can compete with the relatively low prices of oil and gas. This is crucial for fuel production processes and technologies, but is also essential for the equipment required for utilizing the fuel, such as fuel cells for hydrogen. Local conditions can often play an important role in this development process: fuel availability in a particular location can lead to technological developments when the conditions are right. If these prove successful, use of the new alternative may increase, provided that there is sufficient availability in other parts of the world.


THE FUEL TRILEMMA: Next generation of marine fuels

This has already been demonstrated for LNG and could also occur with other fuels in the future.

using low sulfur fuel. The price differential between HFO and low sulfur alternatives has to be such that the investment will be worthwhile for the expected lifetime of the vessel.

The cost of using conventional fuels Conventional fuels generally tend to be available at lower prices compared with alternative ones, partly due to the existing infrastructure for production and distribution. The adoption of conventional, oil-based fuels is a straightforward solution in an environment of low oil prices and lack of regulatory pressure. This is not only because of the low fuel price, but also a result of the high technical maturity for conventional fuels and the relatively low cost of installing the necessary machinery and equipment. The introduction of new NOx and SOx emission standards is now changing this picture. Decisions on whether to install scrubbers or switch to low-sulfur fuels must be taken, based on the operating profile and trading pattern of the vessel, its expected remaining lifetime, and the predicted future fuel prices. With current prices, it can be expected that for engines of less than 5,000 kW a scrubber system would cost approximately $370/kW, for engines of 10,000 kW output this falls to around $250/kW, and for larger engines the cost can be as low as $120/kW, as illustrated in Figure 1. Thus, the cost is higher for a small engine, which also typically uses less fuel, and therefore the return on investment is longer for small vessels. For large vessels, the relative investment is smaller, but the amount of time spent operating in Emissions Control Areas should also be considered. The alternative to installing scrubbers is

Access to capital and long payback times can often be challenging for ship operators. In order to mitigate ship owners’ energy costs and ensure compliance with upcoming emissions regulations, investment schemes have been created that enable ship owners to use future fuel cost savings for full or partial payment for the upfront capital required in order to be ECAcompliant. Using such financial schemes can help to remove the barriers confronting ship owners who want to ensure that their ships are compliant. As an alternative to using scrubbers or expensive distillate fuels, several suppliers have released new hybrid fuel products that contain a maximum of 0.1 % sulfur and thereby meet the MARPOL Annex VI requirements. Many of these fuels are currently being tested by a number of ship operators. These fuels can have considerable potential if suppliers can ensure low production costs and availability in ECAs. In the future, concerns regarding greenhouse gas (GHG) emissions could lead to an additional cost for conventional fuels, in the form of a carbon price. This could be introduced in the form of market-based mechanisms or as a carbon tax, and could increase the price of oil-based fuels. This would increase the attractiveness of alternatives, but such schemes are not expected to be established before well into the 2020s.

Scrubber price ($/kW)

400

300

200

100

0

0

10

20

30

40

50

60

Engine size (MW) Figure 1.  Range of scrubber prices in USD/kW for various marine engine sizes. Some of the largest ones on offer have not yet been installed on ships.

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THE FUEL TRILEMMA: Next generation of marine fuels

SUSTAINABILITY, AVAILABILITY AND ENVIRONMENTAL FOOTPRINT Sustainable energy can be defined as energy that meets the needs of the present without compromising the ability of future generations to meet their needs. The environmental footprint of a fuel can be evaluated by assessing certain characteristics of the fuel throughout its lifetime; these include production, transportation, storage, and use in an engine for generating useful power. These characteristics can include many parameters, such as GHG emissions, local pollutant emissions (NOx, SOx, particulate matter, etc.), and also the land, water, and energy required for fuel production. A more complete comparison can be performed by including in the lifecycle assessment the equipment that is required for producing and using the specific fuels. One example could be the environmental footprint from producing and disposing of a battery or a fuel cell, compared with an internal combustion engine. The environmental footprint of a fuel, assessed from a lifecycle perspective, indicates whether or not a fuel can be characterized as sustainable. The use of biofuels can contribute to reducing GHG emissions, but only if these fuels are produced such that reproduction of the plants is enabled to ensure that they continue to absorb GHG. Such a calculation can be useful for determining the quantities of various fuels that can be produced sustainably, which, in turn, determines the potential availability of various types of fuels.

The production and transportation footprint of a given fuel will largely determine its degree of sustainability, and will provide constraints related to its availability. The energy efficiency and environmental footprint of various processes, production, and transportation methods depend heavily on parameters related to local conditions, such as the local energy mix, the quality of existing feedstock, and transportation conditions due to geography. The same parameters also influence the cost of production of each fuel, but often in completely different ways. For example, a coal-based electricity mix can be much cheaper than a renewable one.

Setting the baseline LNG and other alternative fuels are often compared with existing marine fuels (such as those with 1.0 % and 3.5 % sulfur content) when performing a lifecycle assessment or “Well-to-Propeller” analysis. This approach can only be complete if it accounts for the upcoming IMO regulations that limit the level of sulfur emissions in ships’ exhaust by setting equivalent sulfur limits for marine fuels. Apart from switching from high-sulfur HFO to another fuel like LNG, the two main options that enable compliance are switching to low sulfur liquid fuels or installing SOx scrubbers. Both options have environmental and cost implications that must be considered in lifecycle assessments for alternative fuels.


THE FUEL TRILEMMA: Next generation of marine fuels

There are many uncertainties related to additional energy, emissions, and costs required for fuel desulfurization. These depend on the original and required fuel quality, the technology involved, and the electricity mix used in the refinery. Different estimates for the impact of desulfurization on total GHG emissions increase over the lifecycle of the fuel range, from 2 % to 4 %, when compared with HFO (Avis & Birch, 2009; Verbeek et al., 2011). For scrubber technologies, additional emissions occur during operation of the exhaust gas treatment system (mostly from pumps), but also in order to produce the consumables used in some scrubber types. Whereas an open-loop seawater scrubber does not require any technical consumables other than the surrounding seawater, other scrubber technologies require consumables, and, depending on the ship’s operational/load profile and the scrubber’s real-world performance, significant additional burdens might be imposed on the vessel in terms of weight, onboard storage capacity, and logistics. In addition, the carbon footprint of the consumables, namely NaOH and Ca(OH)2, should be included for completeness. The energy demand of scrubber operations is estimated to correspond to an efficiency drop of 1-3 % (Danish Ministry of the Environment, 2012). A US EPA study assumes a 2-3 % additional power

demand for open-loop scrubbers and only 0.5 % for closed-loop scrubbers (US EPA, 2011). Open-loop seawater scrubbers typically discharge acidic scrubber water to the open sea. The neutralization of this “acid” leads to release of CO2 from reactions with bicarbonates and other carbonic compounds that occur naturally in seawater. The molar ratio between CO2 released from seawater and SOx from fuel has been suggested to be 1.7:1 (Williams, 2009). Hence this contribution from a 2.7 wt % S-HFO will increase baseline CO2 emissions by approximately 2 %, depending on the type of scrubber. It is apparent that there are significant potential impacts of 2-5 % increase of GHG when scrubber technology is employed. Hence, analyses that do not fully account for these impacts are likely to underestimate the total emissions of the reference systems.

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THE FUEL TRILEMMA: Next generation of marine fuels


THE FUEL TRILEMMA: Next generation of marine fuels

350

Biomass potential [EJ]

300 250 200 150 100 50 0 Energy crops

Forestry

Waste

Agricultural residues

Forestry residues

Figure 2.  Range of estimates of the potential contribution of energy crops, wastes, and forest biomass to the future energy supply; adapted from Slade et al., 2014. For comparison, the current global energy supply is approximately 550 EJ, while shipping consumes 12.5 EJ per year.

Biomass availability One of the key issues related to sustainability, particularly of biofuels, is related to the availability of biomass for producing these fuels. Questions that need to be addressed are related to the amount of biomass available, the logistics for collecting biomass and supplying fuel production facilities, and fuel distribution to the end user. The potential contribution from biomass to the global energy supply, particularly to renewable transport fuels, is a very controversial topic. The wide range of estimates on the potential of biomass, its competing uses, and the lack of standardized methodology is confusing for both policy-setters and decision makers. A review paper published last year (Slade et al., 2014) systematically analysed 90 individual studies. The most important potential sources of biomass were found to be energy crops, agricultural residues, forestry and forestry residues, and waste. Biomass potential estimates vary widely depending on the assumptions and the constraints in each study. In order to be able to compare different studies directly, estimates are presented on the basis of the gross energy content of the biomass (assuming a calorific value of 18 GJ per oven dry tonne (odt)). For comparison, the total human utilization of biomass production is around 320 EJ, of which 220 EJ is consumed and 100 EJ discarded as residues

or otherwise destroyed during harvest. The current global primary energy supply is approximately 550 EJ. All studies of biomass potential assume that food production demand will be satisfied. The main uncertainty is related to the potential of energy crops and improvements in yields. Studies that assume that increasing food crop yields will keep pace with population growth and the trend for increased meat consumption, while limited good quality agricultural land is made available for energy crop production, give estimates of up to 300 EJ for energy crops. Some studies suggest higher potential (up to 1200 EJ), but these are deemed extremely optimistic. More conservative studies, driven by scenarios in which there is a high demand for food and limited productivity gains in food production, yield estimates of up to 100 EJ. An overview of these results is provided in Figure 2. Fresh water scarcity is a growing concern, and crop choice can play an important role in water availability. Crops such as maize, miscanthus and sugarcane use less water than temperate crops like wheat. The extent to which energy crops can deliver sustainable biomass on a global scale remains poorly understood. This requires a minimum level of regulatory competence and a well-defined legal framework. Most biomass potential assessments tend to be optimistic, but the real potential must be evaluated in practice.

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SAFETY AND RELIABILITY Some fuels may not represent a significant added risk compared with conventional oil fuels, while others, such as natural gas, methanol, LPG, biofuels, ethane, and hydrogen, introduce additional risks. This is either because of their physical and chemical properties, or due to degradation of their properties over time, which is a concern for certain biofuels. Shipping segments, such as tankers and platform supply vessels, have experience with handling these fuels as cargo. The cargo is stored on the vessels in dedicated spaces that are entirely separate from the rest of the ship and are equipped with additional safety barriers. LNG vessels were the first in which the cargo (boil-off) was supplied to the engine room for combustion in the boilers. This involved a fuel associated with an additional risk compared with conventional oil fuel being handled in a high fire-risk space on a ship with a constant presence of personnel. Since then, the world LNG fleet has been proven capable of managing major accident risks related to combustion of an alternative fuel. This track record needs to be continued by other segments that are considering using cargo as fuel. The majority of the world fleet, however, does not have experience with handling large quantities of flammable, cryogenic, and/or toxic substances. This part of the industry is considering alternative fuels as an opportunity for cost-saving and reducing air

emissions, but at the same time is faced with new challenges in managing risk. Some alternative fuels will increase the complexity of managing safety barriers that are related to hazards such as fire/explosion, cryogenic spillage on the hull structure, intoxication, loss of power generation, and nitrogen handling. In addition to managing risk with a direct focus on loss of life, loss of assets, environmental damage, and correlated financial risk also have to be managed. One example of financial risk is the risk of public opinion and regulators turning against further development. These are plausible consequences of a major accident. Another financial risk correlates with the loss of power generation; novel design solutions that introduce complexity compared with conventional oil fuel, may affect system reliability. This may, in turn, affect cost of downtime, repairs, maintenance, and non-compliance with regulations on air emissions. DNV GL advocates that the risks are manageable within a reasonable cost, but one of the premises is that safety should head the agenda from the very beginning of a ship design project. A joint development design project for introducing an alternative fuel on a ship should involve a multidisciplinary team that includes ship designers, ship owners, engine makers, yards, fuel system designers, ship operators, classification societies, flag state authorities, and port state authorities. It is vital for the


THE FUEL TRILEMMA: Next generation of marine fuels

success of the project that all parties have a common understanding of the risks involved in the ship operations based on a particular fuel type, and the purpose of the implemented safety barriers.

¾¾ Auto-ignition temperature (ºC): The lowest temperature at which the fuel will spontaneously ignite in a normal atmosphere without an external source of ignition, such as a flame or spark.

In the following parts of this chapter we share some thoughts on how to manage the risks of alternative fuels, starting at the early design and decision-making phases where the following steps are essential:

¾¾ Lower heating value (MJ/kg): Energy concentration of the fuel. Together with density it will affect the necessary tank size, which, in consequence impacts on the risk that collision may lead to loss of containment (leakage from tank) and fire/explosion. The larger the fuel tank, the more likely it is to be damaged by energy impact from, e.g., collision, grounding, or dropped objects.

1. 2. 3. 4.

Study of fuel properties Risk mapping Barrier analysis Safety assessment

Study the fuel properties Knowledge and understanding of the physical and chemical properties of the alternative fuel are essential for all parties involved in the design and decision-making process. Listed below are some properties that are related to fire and explosion risk: ¾¾ Flash point (ºC): The lowest temperature at which the fuel will vaporize to form an ignitable mixture in air. ¾¾ Boiling point (ºC): The temperature at which the vapour pressure of a liquid is exactly one atmosphere. The fuel starts to boil and pressure will begin to build up in a confined space.

PROPERTY

UNIT

DIESEL

METHANE*

¾¾ Explosive limits (%): Volume percentage of fuel vapour in air needed for combustion. Expressed by a lower explosive limit and an upper explosive limit. ¾¾ Detectability: How is the fuel detected? Fuels that are liquid at ambient temperature have the benefit of being detectable by level switches. For gas and vapour: which gas detection methods exist on the market? At what concentrations will humans detect the odour? ¾¾ Is the fuel vapour lighter or heavier than air? ¾¾ What are the properties of a fuel fire? How can it best be extinguished?

ETHANE

HYDROGEN

LPG**

METHANOL

ETHANOL

CH3OH

C2H5OH

-

C8 – C20

CH4

C2H6

H2

C3H8 and C4H10

Mass Density

kg/m3

860 - 900

422 (Liquid)

544 (Liquid)

0.08

505

790

790

Lower heating value

MJ/kg

41.4 - 43.3

50.02

48

120

47

19.9

28.4

Boiling point

°C

180 - 360

-162

-89

-253

-42

64.6

78

Flash point

°C

>60

-187

-150

Lower explosive limit

Vol % in air

0.5

4.4

3

4

2.1

6

3

Upper explosive limit

Vol % in air

7.5

15-17

12

59

9.6

36.5

19

°C

250-300

595

515

585

457

470

362

Molecular formula

Auto-ignition temperature

-60

* Properties for 100 % methane. Natural gas as fuel has components of other chemicals. **Based on an average composition Table 1.  Fire/explosion related properties of selected alternative fuels

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THE FUEL TRILEMMA: Next generation of marine fuels

Threat

Unwanted event

Barrier function

Barrier function

Consequence

Figure 3.  The setup of a bowtie

Ovefilling

Fire / explosion

Energy Impact

Cryogenic damage to ship structure or safety systems

Fatigue and corrosion Failure of component, connection or support

Loss of containment

Barrier function

Overpressure

Barrier function

16

Loss of fuel supply Fuel exposure to personnel/passengers

Brittle failure cryogenic fuel

Fuel release to sea

Breaking into containment

Contamination of other systems

Roll-over of fuel Figure 4.  Loss of containment bowtie for alternative fuels

Other relevant properties to consider are related to:

The bowtie consists of the following elements:

¾¾ the combustion process ¾¾ toxicity – detectability, exposure limits over time ¾¾ corrosiveness - compatibility with relevant materials ¾¾ lubrication

¾¾ Unwanted event: a point in time that describes the release or loss of control over a hazard.

Risk mapping

¾¾ Consequence: A potential event resulting from the Top Event, which directly results in loss or damage

DNV GL uses bowties to obtain logical and intuitive mapping and visualization of the risks associated with the use of an alternative fuel. Further development for safe and reliable design is simplified if all involved parties have a good understanding of the relevant risks. A bowtie has the general structure shown in Figure 3. A generic bowtie mapping the risks associated with alternative fuels in shipping is illustrated in Figure 4.

¾¾ Threat: a cause that will potentially produce an unwanted event

¾¾ Barrier Function: A function that prevents or influences a real chain of events in an intended direction


THE FUEL TRILEMMA: Next generation of marine fuels

Unwanted event

Detect and shutdown

Contain fuel within secondary containment

Prevent ignition

Protect against fire/explosion

Fire / explosion

Figure 5.  Barrier functions in the scenario of loss of containment leading to fire/explosion

The bowtie with Loss of Containment (i.e fuel leakage) as Unwanted event captures most of the risks related to alternative fuels. Not all threats and consequences are relevant for all fuels; e.g., some are only relevant to cryogenic liquids. It may also be useful to make a bowtie for Loss of Power Generation, especially for single fuel systems or for fuels where there is a known risk of breakdown of the supply system. Another relevant Unwanted event may be Loss of Inert Gas Containment. This is applicable to fuels for which inert gas is needed for purging and/or padding of tanks, and where suffocation of personell could be a consequence. The bowtie is a flexible tool. In addition to making bowties with different Unwanted events, it may also be useful to make separate bowties for certain threats or consequences. Through quantitative risk analysis DNV GL has shown that there may be a significant added risk for some LNG-fuelled ships from collision leading to tank penetration and ignition (Hoffmann et al., 2012). In order to map the associated risks in this accident scenario, it may be useful to analyse separate Unwanted events for Collision and for Fire/Explosion. The bowtie tool was initially used for accident investigations (i.e., which barriers failed? Why did they fail?) and was later adopted for developing safety barrier management systems in industries such as nuclear, aviation, and offshore oil & gas. Understanding the bowtie contributes to a better comprehension of the risks involved and may also be a basis for more detailed risk analysis, e.g. by quantifying the bowtie elements.

Barrier analysis Once the fuel properties have been studied and the risk mapping is completed, the knowledge gained should be incorporated into the ship design process. This is done by systematically addressing all barrier functions that are defined in the bowtie. Figure 5 shows examples of barrier functions in the accident scenario of loss of fuel containment leading to fire/ explosion. For each of the barrier functions, the ship design project needs to ask the following questions: ¾¾ How will the design ensure that the quality of this barrier function is sufficient? ¾¾ How can the integrity of this barrier function be affected by human performance? ¾¾ Which procedures must be in place in order to support human performance for this barrier function? ¾¾ What training must be provided in order to support human performance for this barrier function? ¾¾ Will the properties of the fuel affect the integrity of the barrier function, and if so, how? ¾¾ How is this barrier function managed in other industries? ¾¾ How is the survivability of the barrier function ensured?

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THE FUEL TRILEMMA: Next generation of marine fuels


THE FUEL TRILEMMA: Next generation of marine fuels

Safety assessment • Barrier analysis • Risk analysis

Economics • Building cost • Operating cost • Required freight rate • Profitability

Performance • Resistance • Propulstion • Hull structure • Machinery • Outfitting

Mission • Transport logistics • Route • Capacity • Speed • Restrictions

Function • Payload systems • Ship systems • DWT / • Power-Speed • Gross tonnage

Form • Main dimensions • Hull lines • Space balance • Weight balance • Time and stability

Figure 6.  System Based Ship Design methodology, adapted for alternative fuels

Safety assessment At the time of writing, the draft IGF code (the International Code of Safety for Ships using Gases or other Low flashpoint Fuels) requires that a ship using an alternative fuel demonstrates by risk analysis that the safety level is equivalent to that of a conventional oil-fuelled ship. A bowtie should give complete risk mapping and is thereby a starting point for such a risk analysis. For fuels associated with high risk, it may be challenging to reach an equivalent safety level within the constraints of traditional ship design. The level of risk reduction needed to reach equivalence may lie in measures that significantly alter the ship design, such as tank location with regards to likely zones for collision and grounding, or hazardous zones created

from ventilation opening. DNV GL recommends that a safety assessment is performed at an early phase of any ship design project as a proactive approach to optimizing design according to safety requirements. Based on the methodology ”System Based Ship Design”, defined by Professor Kai Levander at the Norwegian University of Science and Technology (NTNU) (Levander, 2006), Figure 6 illustrates how a safety assessment may be integrated into a ship design process in order to achieve the necessary safety level.

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THE FUEL TRILEMMA: Next generation of marine fuels

CASE STUDIES: SOME FUELS OF INTEREST The elements of the fuel trilemma are illustrated here by considering a number of alternative fuels that already play a role in shipping or are expected to be among the available fuel choices in the future. The discussion covers aspects related to cost elements associated with different fuels, as well as their sustainability characteristics. Safety could be included by quantifying the cost of developing equivalent safety levels, but this is outside the scope of this Position Paper. The fuels considered here are LNG, electricity, pyrolysis oil and methanol as examples of biofuels, and hydrogen.

LNG LNG was first utilized as a fuel by LNG carriers in the 1960s. This was to take advantage of the fuel available onboard as boil-off gas and was enabled by virtually zero fuel costs when the vessels were loaded. This contributed significantly towards developing the technology and know-how for utilizing LNG as a fuel. The first LNG-powered vessel (excluding LNG carriers) was a ferry built in Norway in 2000. In the following decade, another 20 LNG-powered ships were built, many of them operating in Norwegian waters. Since 2010, the growth in LNG-powered ships has accelerated, resulting in 59 ships in operation today (April 2015), as well as another 80 under construction, with planned deliveries within 2018. The size of LNG-powered ships has increased with

experience gained, and the first orders for two-stroke engines were recently placed. Many of the newly built or projected ships will operate in various locations in Northern Europe and North America, but are also scheduled to operate in China and South America. The reasons behind the emergence of LNG-powered ships in Norway include a combination of readily available natural gas, eagerness to explore new technical solutions, and a financial support scheme called the Norwegian NOx fund. The NOx fund is incentivised by a governmentally imposed NOx tax, and provides financial support to participating enterprises who want to implement NOx reduction measures. This financial support acted as a boost for technology development and gaining experience, which, in turn, has helped the commercial viability of LNG technology in other parts of the world. Recent developments in shale gas extraction have resulted in very competitive natural gas prices in North America, while also improving energy security. The stricter requirements of the North American and North European SOx ECA, in January 2015, and the North American NOx ECA, in 2016, requires switching fuels to expensive distillate fuels or the installation of scrubbers, in combination with NOx abatement technologies for newbuildings, such as selective catalytic reduction (SCR) or exhaust gas recirculation (EGR) systems. This makes LNG a much


THE FUEL TRILEMMA: Next generation of marine fuels

more attractive fuel option, especially for new ships that will be operating for prolonged periods in North American waters and will have to comply with NOx Tier III standards. Similarly, the adoption of a 0.5 % sulfur limit in all European waters in 2020 could also act in favour of LNG in other parts of Europe, such as the Mediterranean. Fuel availability and pricing will be decisive factors for its widespread adoption as a fuel. The development of LNG bunkering infrastructure is already under way in many parts of the world and this will also gradually allow large, ocean-going ships to use LNG as a fuel. This may be particularly interesting in the light of the global sulfur limit that is to be enforced in 2020 or 2025. Natural gas fuelled engines are already offered for the full range of required engine capacities. Most of today’s marine fuel demand relates to ships with engine capacities ranging from 5 MW to more than 50 MW. In the lower capacity range, engines from most engine manufacturers are available. These are 4-stroke, medium speed engines, operating on the Otto cycle ignited by pilot fuel or by spark ignition. For the highest capacity range, natural gas fuelled, Diesel-cycle, 2-stroke engines are also offered. The cost of installing a gas or dual-fuel engine, LNG tanks, appropriate piping and related equipment can increase the price of a new vessel by up to 30 %

compared with conventional propulsion technology. The size of fuel tanks, roughly three to four times bigger than oil tanks, can also impact on the cruising range or the carrying capacity of the vessel. The size of the tanks is affected both by the energy density of LNG, but also by the additional insulation required, and by the cylindrical shape of existing tanks, which make suboptimal use of the space. It is anticipated that prismatic tanks, when they become commercially available, will drive down the space requirements to some extent. For retrofitting a vessel, the logistics of taking the vessel out of service for a few months must be included in the calculation along with the cost of the equipment. In order to help ship owners prepare for such a solution, DNV GL offers the LNG Ready service, which allows ships to be designed in such a way that LNG can be easily introduced at a later stage, when the market conditions are more mature. Recent reports in both the scientific literature and the popular press create confusion regarding the climate implications of using natural gas. Natural gas is promoted due to its CO2 emission intensity being lower than that of coal or oil, but, on the other hand, methane, the prime constituent of natural gas, is 25 times more potent as a GHG than CO2. Therefore, methane leakage during production, transportation, and use of natural gas may, in principle, offset the benefits gained from fuel

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THE FUEL TRILEMMA: Next generation of marine fuels

switching. US EPA estimates the leakage at 1.3 % (US EPA, 2014), whereas other researchers suggest leakage rates of up to 3 %, in particular from shale gas production. It appears that emissions related to hydraulic fracking wells have fallen significantly in recent years due to improved practices. While this is a challenge, it should be noted that a similar situation exists in oil production in US, where it is estimated that approximately 0.5 % of natural gas leakage is related to oil extraction. DNV GL recently launched an Extraordinary Innovation Project to explore technological solutions for capturing and utilizing this gas (DNV GL, 2014b). For comparison, the methane leaks from underground coal in North America are estimated at 0.8 %, while the IPCC guidelines for national GHG inventories use a global reference value of 1.37 %. Most natural gas engines currently operate using the Otto cycle, a principle of engine combustion that premixes combustion air with natural gas before entering the engine. It has been proven that this means of combustion often results in elevated methane concentrations in the exhaust, commonly called methane slip. Published data related to this are lacking, but it is acknowledged that a range between 3-6 gCH4/kWh of engine power output for this type of engine concept is typical, corresponding to fuel losses of 2-3 %, depending on engine efficiency. A 3 % slip is equivalent to a 24 % increase in GHG emissions. Our calculations show that a total methane leakage of 5.5 % (including both production/transportation, and combustion) would bring GHG emissions from LNG to a level equivalent to those from diesel fuel.

Well-to-Propeller GHG Emissions (% of baseline)

22

Therefore, the problem must be addressed by reducing leakages both at the production phase and during combustion in the engines. Despite the lack of regulatory drivers to reduce methane slip in marine engines, various technologies can be employed for tackling this problem. For Otto cycle engines, unburned methane can be reduced by using EGR, which improves combustion stability, or by exhaust gas after-treatment with methane oxidation catalysts using special catalytic materials, such as palladium or platinum (CIMAC, 2014). In diesel cycle engines, a high-pressure injection, dual-fuel concept can be used, which comes at the cost of a smaller reduction in NOX emissions. In this approach, the natural gas is not premixed with air before entering the engine. Instead, it is injected directly into the combustion chamber during the compression stroke following a diesel pilot injection. Engine manufacturers claim that this technology limits methane slip to 0.2 gCH4/kWh (or about 0.1 % slip), practically eliminating the problem. Finally, it is noteworthy that, in some cases, natural gas engines show a slight efficiency benefit over diesel engines of 1-3 %, as can be ascertained from engine manufacturer data. In conclusion, it can be said that use of LNG has the potential to reduce GHG emissions by up to 25 %, provided that methane leaks can be eliminated in the production and combustion phases. In practice, some leaks should be expected, and best practices and appropriate technologies for minimizing them should be utilized. This can lead to realistic reductions of GHG by 10-20 % compared with conventional oil-based fuels, as shown in Figure 7.

120 100 80 60 40 20 0 HFO Baseline

Low Sulfur MGO

HFO w/scrubber

LNG Average

LNG without slip

Figure 7.  Well-to-Propeller assessment of GHG for conventional marine fuels and LNG under various scenarios.


THE FUEL TRILEMMA: Next generation of marine fuels

Shore-based electricity Electrification in shipping can have two distinct forms: as a hybrid propulsion system, or as a pure electrical propulsion system. Hybrid propulsion architectures are typically used in order to improve the energy efficiency and reduce emissions, and cannot be considered an energy source. In this Position Paper pure electric propulsion systems are considered, in which electricity is produced onshore, stored on board, and used for propulsion and auxiliaries. Batteries are the most common storage facilities today, where electrical energy can be stored and utilized at a later time to power the ship.

Although a number of hybrid ships have been built and are being used for testing batteries in shipping, purely electric ships have now started to be developed. The first fully electric ferry will enter service in Norway’s Sognefjord during 2015, in a cooperative effort between Siemens and the Norwegian shipyard Fjellstrand. It has a capacity of 360 passengers and 120 cars, and produces no direct emissions as the power is generated from the shore-based grid. Ships powered by shore-based electricity can offer significant benefits in terms of improved energy efficiency and reductions in emissions. The benefits in energy efficiency arise from eliminating combustion engines, which are associated with significant efficiency losses. The most efficient marine engines today are not more than 50 % efficient, whereas a battery may have a charge/ discharge efficiency of more than 95 %. Hence, depending on the method of power generation in the grid, energy losses can be decreased. The potential for reducing emissions depends largely

Photo: Š Fjellstrand – ZeroCatTM 120

It is obvious that fossil-based LNG cannot be classified as a sustainable fuel, but it has the advantage of reducing SOx, NOx, and particulate matter emissions, while offering some reductions in GHG when used properly. It could act as a bridging fuel towards a future in which air pollution from shipping is significantly reduced.

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THE FUEL TRILEMMA: Next generation of marine fuels

1000 900 800 Carbon intensity of electricity mix [g CO2 /kWh of baseline]

700

Typical emissions of diesel generator

600 500 400 300 200 100

Norway

France

Sweden

Brazil

Finland

Canada

Belgium

Spain

Portugal

Denmark

Italy

Japan

Netherlands

Mexico

Ireland

Germany

UK

USA

Singapore

Malaysia

Russia

Greece

Indonesia

China

India

0 Australia

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Figure 8.  Carbon intensity of electricity mix in various countries, expressed in kg CO2 equivalent per kWh produced, compared with typical emissions from a diesel generator. Source (IEA, 2012).

on the electricity mix: in regions with high utilization of renewable sources or nuclear energy, both GHG and other pollutant emissions will be low. In Figure 8, the carbon intensity of the electricity mix in various countries is presented, expressed in g of CO2 equivalent emitted per kWh electricity produced. Other emissions, such as NOx, SOx, and particulate matter, will have similar tendencies. The differences between countries can be explained by the degree of penetration of carbon-free energy sources in each country’s electricity mix. In the same diagram, typical emissions from a diesel generator are provided for comparison. The exact emissions will depend on the engine load used, and the efficiency of the generator. It is obvious that while in some parts of the world electrification could contribute significantly to the reduction of emissions, in areas that rely heavily on coal it may be preferable to use oil or gas for propulsion. Using shore-based electricity also offers substantial reductions in local emissions, which is an advantage for vessels operating close to densely populated areas, such as local ferries. The cost of operation can be kept low provided that the electricity price is competitive with marine fuel prices.

The main barrier for introducing batteries in shipping is their high capital cost, which is in excess of $1000/ kWh. This initial high outlay has to be recovered through operational savings, due to reduced costs of energy and lower maintenance requirements. In areas with low electricity prices, such as Norway, the capital costs can be recovered relatively rapidly, ranging from a few months to a few years, depending on the particular ship and its operations. The capital costs can also be expected to drop in the future, due to increased production, as has been observed in other industries where economies of scale have resulted in significant price reductions. Another potential barrier for implementation is the safety of batteries on board. Different battery chemistries have different challenges with respect to safety. Lithium-ion (Li-ion) batteries are most commonly used today in commercial applications, due to their energy and power density, and their lifetime characteristics. As long as risks are properly addressed, Li-ion batteries are safe to use on board ships. Experience in safe operations with Li-Ion batteries has been gained through applications in shipping and other industries (automotive, aerospace), and, based on this, DNV GL has issued rules to ensure safe operation of Li-ion batteries in ships.


THE FUEL TRILEMMA: Next generation of marine fuels

Figure 9.  Alongside charging of batteries for the concept ship, ReVolt. Source: DNV GL ŠToftenes Multivisjon AS

Changes in port infrastructure should also be expected if batteries become widely used. The electricity grids in ports, where battery charging occurs, will have to be upgraded. Moreover, energy storage systems, such as shore-based batteries, could prove a good solution for avoiding very high peaks in electricity demand when ships charge their batteries. Finally, standardization of the systems and equipment required is important to ensure compatibility between different port installations, so that a ship can use cold ironing at all ports without additional requirements. In addition to using onboard batteries for propulsion, shore-based electricity can also be used to power ships at berth (cold ironing). There are a few ports around the world where cold ironing is already established, with significant benefits to the local air quality and noise levels. Benefits in terms of reduction of GHG emissions can also be achieved, depending on the local electricity mix. Cold ironing can also have financial advantages for ship operators, contingent on the cost of required onboard equipment, local electricity prices, and the fuel quality requirements at port.

The costs of building the port electrical infrastructure for charging batteries can be a barrier for many ports. These include equipment for high voltage electrical power supply, frequency converters, transformers, control panels, switchboards, and underground cable conduits. A possible solution would be to incentivise ports to invest in this infrastructure by offering emission reduction credits. The cost of electric energy could be another barrier to the spread of cold ironing, especially in Europe. The Port of Gothenburg has estimated that a break-even price for a cold ironing system to be commercially viable would be around $900/tonne of fuel; if the electricity tax could be excluded, then the system would be attractive even at a price of $650/ tonne of fuel (Port of Gothenburg, 2009). Given that only low-sulfur fuels can be used in European ports, this can be an appealing case, even at relatively low oil prices. In places with low electricity prices, such as California, the business case could be even stronger. If a vessel calling in California is charged at the industrial rate of approximately $0.12/kWh, the expense is 20 % lower than using MGO priced at $650/tonne, and the relative benefit increases for higher fuel prices (Sisson & McBride, 2010).

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Figure 10.  Illustration of the fully electric, short sea shipping concept ReVolt, with the battery pack at the stern. Source: DNV GL ©Toftenes Multivisjon AS

Vessels calling at the berth will also need to be equipped with the necessary electrical infrastructure to take advantage of shore power. This includes installing power transformers, switchboards, control panels, and cable reel systems.

Biofuels

The challenge with respect to shore-based electricity for powering ships is related to the energy density of batteries and other storage solutions, limiting the range of the ships. Until recently it was assumed that it was applicable only for ships travelling over very short distances. However, with the development of the concept ship ReVolt (DNV GL Maritime Impact, 2014a), DNV GL has demonstrated the potential of a fully electric, short sea shipping, cargo vessel operating over large distances. In Figure 9 charging batteries in port is illustrated, while Figure 10 shows how the ship architecture can change if electriconly propulsion is chosen. Development of energy storage technologies may offer new applications in the future.

Pyrolysis Oil A relatively simple method for converting biomass into liquid fuel is through flash pyrolysis, i.e., heating without oxygen with a short retention time of typically less than 2 seconds at around 500°C. This may yield up to 65 % of a liquid known as fast pyrolysis oil or bio-oil. On a volumetric basis, the energy content of pyrolysis oil is about half that of diesel and the oil has high oxygen content, typically 25 % water content, and a pH of 2.5-3. Pyrolysis oil may be used directly in boilers and turbines if corrosion resistant materials are used, but in order to use it as an engine fuel and to be able to store it for long periods, upgrading (typically using hydrogen) is required.

There are many possible ways of converting biomass or biomass residues into liquid fuels. Two different approaches are considered here as case studies, namely pyrolysis oil and methanol.

In order to assess the potential for using pyrolysis oil for shipping, a study was undertaken that considered logging of round wood from Canada or Finland, conversion into pyrolysis oil in a local plant, and subsequent transport to the Netherlands in a


THE FUEL TRILEMMA: Next generation of marine fuels

10.4 kg CO2/GJ

19 $/GJ

Pulpwood Harvesting Hauling wood Chipping Pyrolysis plant Hauling oil Tank CA Ship transport Tank NL

Figure 11.  Emissions and costs for pyrolysis oil derived from wood, produced in Canada (CA) and transported to Rotterdam (NL).

Pulpwood Harvesting

7.8 kg CO2/GJ

23 $/GJ

Hauling wood Chipping Pyrolysis plant Hauling oil Tank FI Ship transport Tank NL

Figure 12.  Emissions and costs for pyrolysis oil derived from wood, produced in Finland (FI) and transported to Rotterdam (NL).

chemical tanker (Cremers, M. et al., 2014). The costs and emissions for the crude pyrolysis oil delivered in Rotterdam were determined, as shown in Figure 11 for wood from Canada and in Figure 12 for wood from Finland. For comparison, typical emissions of MGO are in the order of 88-90 kgCO2/GJ; thus a 90 % reduction in GHG emissions seems possible. The cost of crude pyrolysis oil produced in Canada and delivered in Europe is comparable to low-sulfur MGO at the relevant prices when this study was performed in the first half of 2014, while the cost of upgraded pyrolysis oil that can directly be used in an engine will be somewhat higher. By using biomass residues instead of round wood, the costs can be significantly decreased, making upgraded pyrolysis oil a viable alternative fuel for shipping. Pyrolysis oil produced in Finland has lower emissions, mostly because of the difference in the electricity mix between Canada and Finland, and also due to the shorter transportation distance to the Netherlands.

However, the cost of production is higher in Finland, mainly as license costs for harvesting pulpwood are higher. It is also interesting to note that transportation costs from Finland to the Netherlands are only slightly lower than transportation costs from Canada to the Netherlands; this is due to fuel prices for tankers operating in the North European ECA being higher than in the North Atlantic. This example illustrates how the costs of producing a fuel can lead to decisions with negative environmental impact. It is also noteworthy that more than a third of the production costs in both cases are related to harvesting and hauling the biomass. If these costs can be decreased, for instance by using waste biomass and improving the logistics of harvesting and hauling, there is significant potential for cost reduction. Another major contributor to the overall cost is related to the pyrolysis plant. Economies of scale could prove to be a game changer in this area, provided that scaling up of existing demonstration plants is successful.

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THE FUEL TRILEMMA: Next generation of marine fuels

Methanol Interest in methanol as a shipping fuel increased after Stena Line’s decision to retrofit one of its vessels for using methanol, as a solution to low sulfur fuel requirements. This decision was driven by economic considerations: the fuel is readily available in Sweden where the vessel is bunkering, and the cost of retrofitting for methanol is much lower than the cost of retrofitting for LNG, due to the properties of the fuel. A number of chemical carriers are also being designed to be able to run on methanol, so that they can use their own cargo as fuel in ECAs. These projects are currently in progress, and focus is particularly directed towards the safety of the new systems in order to account for the particular properties of methanol, which is a low flashpoint liquid fuel. Methanol is mainly produced from natural gas or coal, but can also be made from black liquor in pulp and paper mills as a biofuel. When produced from natural gas, a combination of steam reforming and partial oxidation is typically used, with up to about 70 % energy efficiency (Olah et al., 2009; Statoil, 2014). This corresponds to production emissions of about 24 kgCO2/GJfuel and 68.8 kgCO2/GJfuel for the use of fossil methanol, resulting in a total of 92.8 kgCO2/GJfuel, which is similar to diesel fuel emissions. Methanol produced from gasification of coal relies upon a cheap, widely available resource,

but the GHG emissions are about twice as high as from natural gas at 182-190 kgCO2/GJfuel (Bromberg & Cheng, 2010). The baseline use for black liquor is combustion to generate energy and recover chemicals. However, it is possible to perform gasification in an oxygen atmosphere and produce methanol from the resulting syngas, without compromising the recovery of the chemicals. This process may be integrated into the pulp and paper mill process. A techno-economic assessment was carried out in the Altener-II project (Ekborn et al., 2003) for a major rehabilitation project, comparing replacement of old equipment with state-of-the-art equipment of the same kind by using black liquor to produce methanol via gasification. For such a scenario, the Internal Rate of Return for methanol production was 26 % with the expected methanol price in Sweden. The feasibility study showed a deteriorating energy balance for the pulp mill, with 15 % additional biomass demand and 2.1 MWh/tMethanol greater electricity demand. GHG emissions depend on where and how the project is implemented, but, e.g., in Finland, by using the average emission factor from IEA (IEA, 2012), the production footprint would be about 25.5 kgCO2/GJ. Hence, the emissions for production of methanol from black liquor are only

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THE FUEL TRILEMMA: Next generation of marine fuels

200 180 Greenhouse Gas Emissions [kg CO2 eq/GJ]

30

160 Methanol use Methanol production

140 120 100 80 60 40 20 0 Methanol from NG (Norway)

Methanol from coal

Methanol from black liquor and electricity (Finland)

Methanol from black liquor and electricity (Russia)

Methanol from black liquor and diesel (Finland)

Figure 13.  GHG emissions in various scenarios of methanol production, showing the impact of local conditions and production methods.

slightly higher than the production process from natural gas, without contributing to GHG emissions during the combustion phase. On the other hand, in a country like Russia the emissions for methanol production from black liquor would be about 67.6 kgCO2/GJ due to the carbonintensive electricity mix, and therefore considerably less favourable. A similar situation would also occur if the biomass supply was limited and fuel oil consequently used as a replacement to supply heat, where this contribution would be 45.5 kg CO2/GJ and a total, even in Finland, of 71.0 kgCO2/GJ. These estimates, summarised in Figure 13, show that for special cases, like in major refurbishments of chemical pulp and paper mills in countries with low emissions related to electricity use, as in Finland, Sweden, Portugal, and Spain, it is possible to produce methanol with a low CO2 footprint. Another interesting possibility for producing methanol with a low footprint is directly from hydrogen by electrolysis run on geothermal electricity and CO2 from the same geothermal source. This is currently being tested in Iceland. There are many other processes, including different biomass or waste biomass feedstocks and various production pathways, which can be used to produce

biofuels. The main challenge is currently related to economies of scale. In most cases biofuel production occurs in relatively small demonstration or pilot plants, and it often proves difficult to scale-up these plants in practice. This is due to a number of reasons, including technical issues, availability of biomass, and the necessary market demand for the final product. As new emerging technologies mature, the most promising techniques will be established and will become cost-competitive in the future. This can take several years, depending on conventional fuel prices and investments in developing the technology. Various types of biofuels will probably become available for testing in shipping in the next few years. Depending on the cost and availability of these fuels in the future, the markets will decide upon the best use for these fuels. High-quality, expensive fuels are more suitable for use in segments such as road transportation where fuel costs are high, while lower grade, less costly fuels could potentially be used in shipping. The relatively limited availability of some of these fuels in the foreseeable future implies that they are likely to remain niche fuels, suitable for regional markets. This may be an important part of the evolution towards a more diversified fuel mix in the future.


THE FUEL TRILEMMA: Next generation of marine fuels

Hydrogen Hydrogen has been investigated as a potential energy carrier for several decades. The benefits include: an energy carrier that is independent of energy sources like electricity, virtual elimination of local emissions, and, when used in combination with renewable or nuclear energy, an energy system with significantly reduced GHG and other pollutant emissions. On the other hand, hydrogen is challenging to store efficiently, there are significant safety considerations, and, without renewable energy, the real environmental gains may be questioned. The hydrogen storage tanks can be an additional limitation, due to their size and the related loss of cargo space. It is estimated that, depending on the pressure, the tank size must be 10-15 times larger than required for oil. The two main elements contributing to the cost of using hydrogen are related to hydrogen production and storage, and the cost of fuel cells required in order to use hydrogen on board a vessel. In principle, internal combustion engines and turbines can also be used for combustion of hydrogen. This has been demonstrated in various small engines suitable for automotive applications, but fuel cells have superior efficiency. Commercial engines for combustion of hydrogen are unavailable, and focus is primarily directed towards pilot projects, including fuel cells.

In assessing hydrogen as a fuel, the energy use of hydrogen production processes has to be considered. There are two main pathways for producing hydrogen: a. Electrolysis of water: emissions associated with this source are related only to power generation. If renewable power is available, hydrogen can be produced emission-free, but for a typical electricity grid mix, emissions are significant. b. Reforming of natural gas: hydrogen is removed from methane and steam, and CO2 is produced as a by-product. An advantage of this method is that the CO2 can be captured at its source. In order to evaluate the potential environmental gains and energy efficiency from its use, technoeconomical assessment spreadsheets have been prepared by US Energy Information Administration (DOE, 2005), containing information on energy consumption for production, transportation, and delivery of hydrogen in USA. These calculations are based on investments (by equity) with an internal rate of return of 10 % after tax. Separate calculations are used for the production facilities, transportation by trucks and filling stations. The energy efficiency of the electrolysis process is approximately 66 % in comparison with the amount of electricity required for the process with the energy contained in the produced hydrogen. For a typical energy mix based on fossil fuels, this can result in significant emissions that are, in most cases, equivalent or higher than those of oil-based fuels.

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THE FUEL TRILEMMA: Next generation of marine fuels

Normalized cost of hydrogen delivery (USA)

Filling station Distribution Production 120 % 100 % 80 % 60 % 40 % 20 % 0% Reforming Central

Reforming Distributed

Electrolysis Central

Electrolysis Distributed

Figure 14.  Cost of hydrogen delivery for reforming of natural gas compared with alkaline electrolysis of water. Both central and distributed production are considered and normalized to central production by electrolysis (8.8 $/kgH2).

Normalized CO2 emissions of hydrogen delivery (USA)

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Filling station Distribution Production 120 % 100 % 80 % 60 % 40 % 20 % 0% Reforming Central

Reforming Distributed

Electrolysis Central

Electrolysis Distributed

Figure 15.  Emission of hydrogen delivery for reforming of natural gas compared with alkaline electrolysis of water. Both central and distributed production are considered and normalized to central production by electrolysis (36.5 kgCO2/kgH2 or 304 kgCO2/GJ).

The costs for producing hydrogen and the associated GHG emissions have been estimated for both electrolysis of water and reforming of natural gas. In both cases, central production and distribution by trucks to filling stations were considered, and compared with distributed production at the locations where hydrogen is needed. The costs and emissions for the two production methods are shown in Figure 14 and Figure 15, respectively.

Distributed production, i.e., production at the filling station, has significantly lower costs than production at a large central facility followed by truck transportation under pressure to filling stations. This is because the cost of transportation by trucks more than outweighs the gains in a cheaper filling station. Furthermore, the emissions of distributed production are only slightly higher than from centralized production. Therefore, distributed production is more favourable.


THE FUEL TRILEMMA: Next generation of marine fuels

Cost

Emissions

150 %

125 %

100 %

75 %

50 %

25 %

0% Hydrogen 6$/MMBTU

Hydrogen 4$/MMBTU

LSMGO

Hydrogen 6$/MMBTU

Hydrogen 4$/MMBTU

LSMGO

Figure 16.  Normalized Cost (A) and emissions (B) of hydrogen produced from natural gas at different prices compared with LSMGO (at 775 $/tonne)

Reforming of natural gas is much more attractive than alkaline electrolysis, as shown from the production costs being approximately halved, while GHG emissions are reduced to about one third. Electrolysis by polymer electrolyte membrane (PEM) fuel cells is even more expensive and less energy efficient than alkaline electrolysis. Although the marginal emissions from electricity in USA are relatively high, at 0.69 tCO2e/MWh, there are few countries with sufficiently clean electricity generation, where that electrolysis is less polluting than reforming. Hence, distributed production close to the harbour by reforming of natural gas would be the most likely delivery option for hydrogen, should hydrogen be used for ships. Calculations on the costs and emissions for using hydrogen (produced by distributed reforming) compared with low-sulfur marine gas oil (LSMGO) have also been performed. It was assumed that the efficiency of the fuel cell is 50 % higher than of a marine diesel engine. The cost of producing

hydrogen is strongly linked to natural gas price. The results in Figure 16 show that hydrogen is somewhat more expensive than LSMGO for natural gas prices typical in North America, and results in a modest reduction in GHG emissions of approximately 10 %. The cost of hydrogen would be higher if European or Asian natural gas prices were used. On the other hand, GHG emissions can be eliminated if the CO2 produced is captured at its source as part of the reforming process. While reforming of natural gas appears to be a more cost-effective and less polluting approach, electrolysis can be a pollution-free alternative, provided that a renewable electricity supply is available. In this case, it is useful to compare the energy efficiency of this process with the alternative of using electricity directly by charging a battery. The overall energy efficiency of producing hydrogen through electrolysis and using it in a fuel cell to produce electricity and power an electric motor appears to be substantially lower than the efficiency

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THE FUEL TRILEMMA: Next generation of marine fuels

of the charging a battery and using this electricity to power the same electric motor. Charging a battery is associated with small energy losses, in the order of between 5 and 10 %. Producing hydrogen through electrolysis has an efficiency of approximately 65 %, while additional losses of at least 30 – 35 % should be expected from a well-performing fuel cell. As illustrated in Figure 17, the energy losses associated with the use of batteries are significantly lower than those of producing hydrogen and using it to power a fuel cell. Hence, from an energy utilization point of view, the use of hydrogen cannot be recommended. However, hydrogen could be a viable solution in applications where a long cruising range does not allow the use of existing battery technologies due to space and weight limitations, provided that the size of the hydrogen tanks is not prohibitive.

Although hydrogen can, in principle, be used for ships, the increased costs of the fuel and the limited gains in CO2 emissions, combined with challenges regarding storage of hydrogen, safety, and the cost of fuel cells, mean that it is unlikely to play a major role in propulsion in shipping in the next ten to twenty years.


THE FUEL TRILEMMA: Next generation of marine fuels

Losses Distribution

Available electricity

100 % 80 % 60 % 40 % 20 % 0% Electricity directly from batteries

Electricity via hydrogen and electrolysis

Figure 17.  Comparison of energy losses when charging a battery compared with using electricity to produce hydrogen and run a fuel cell.

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THE FUEL TRILEMMA: Next generation of marine fuels

CONCLUSIONS Over the next few decades it is likely that the energy mix for shipping will be characterized by a much greater degree of diversification than seen today. Natural gas will soon be an established fuel type, while liquid biofuels could gradually replace fossil-based fuels, provided that they can be produced sustainably. Electricity from the grid will be increasingly used to charge batteries for ship operations in ports, but also for short sea propulsion. Renewable electricity or reforming of natural gas could also be used to produce hydrogen that can be used to power fuel cells. Other types of fuel, such as methanol, will be used in certain geographical areas and ship segments, and, given the right conditions, may develop to play a major role in the future.

When selecting the fuel for a new vessel there is no “silver bullet� solution. In most cases the selection will be based on a pragmatic compromise between the benefits and drawbacks of various fuel options. The final decision will vary according to different ship types, operations, and the strategy of each ship owner. In all cases, the costs associated with machinery, as well as the expected fuel prices, will play dominant roles. Safety and reliability will also be primary concerns and can be translated into monetary terms once a design has been established and the necessary safety measures have been identified. Sustainability will be a parameter of mounting importance in the future, both for reasons related to corporate social responsibility, but also because there may be a price tag attached to it, in the form of market-based mechanisms or as a carbon tax. This could increase the relative price of fossil fuels, thus making alternatives more attractive.


THE FUEL TRILEMMA: Next generation of marine fuels

REFERENCES Avis, M.J., Birch, C.H. (2009) “Impacts on the EU Re-fining Industry and Markets of IMO Specification Changes & Other Measures to Reduce the Sulfur Content of Certain Fuels”, Purvin & Gertz Inc., Report Prepared for the Directorate General Environment of the European Commission, Brussels Bromberg, L., Cheng, W.K. (2009) “Methanol as an alternative transportation fuel in the US: Options for sustainable and/ or energy-secure transportation”, Massachusetts Institute of Technology, Cambridge MA 02139, 28 November 2010

International Energy Agency (2012) “CO2 emissions from fuel combustion – Highlights”, 2012 edition. Levander, K. (2006) “System Based Ship Design”, NTNU Olah, G.A., Geoppert, A., Surya Prakash, G.K. (2009) “Beyond oil and gas: The methanol economy” 2nd Ed., Wiley-VCH 2009 Port of Gothenburg (2009) “Examining the Commercial Viability of Cold Ironing”, Presentation

CIMAC, “CIMAC Position Paper: Methane and Formaldehyde Emissions of Gas Engines”, CIMAC WG 17, Gas Engines, April 2014

Sisson, M., McBride, K. (2010) “The economics of cold ironing”, available online: - http://www.porttechnology.org/technical_ papers/the_economics_of_cold_ironing/

Cremers, M., Koetzier, H., Heesink, B. (2014) “Greener Shipping Fuel – Pyrolysis”, DNV GL Research & Innovation, Technical paper 14-2604, September 2014

Slade, R., Bauen, A., Gross, R., “Global bioenergy resources“, Review Article, Nature Climate Change, Vol. 4, February 2014, DOI: 10.1038/NCLIMATE2097

Danish Ministry of the Environment 2012: Assessment of possible impacts of scrubber water discharges on the marine environment; Environ-mental Project No. 1431, 2012

http://www.statoil.com/no/NewsAndMedia/News/2004/Pages/ RecordYearForMethanol.aspx, last accessed 5 December 2014

DNV GL (2014a) “Maritime Impact 02-2014”, p. 18-23, September 2014

U.S. Environmental Protection Agency (EPA), “Inventory of US Greenhouse Gas Emissions and Sinks: 1990-2009” (EPA Publication 430-R-11-005), 2011

DNV GL (2014b) “Natural Gas Capture – Clean and Economic”, Extraordinary Innovation Project

US EPA, April 2014: U.S. Greenhouse Gas Inventory Report: 1990-2012

DOE H2A analysis (2005) http://www.hydrogen.energy.gov/ h2a_analysis.html

U.S. EPA (2011) “Exhaust Gas Scrubber Washwater Effluent”, EPA-800-R-11-006, Washington DC 20460, November 2011

Ekbom, T., Lindblom, M., Berglin, N., Ahlvik, P. (2003) “Technical and commercial feasibility study of black liquor gasification with methanol/DME production as motor fuels for automotive uses – BLGMF”, Altener II project, December 2003

Verbeek, R., Kadijk, G., van Mensch, P., Wulffers, C., van den Beemt, B., Fraga, F. (2011) “Environmental and economic aspects of using LNG as a fuel for shipping in the Netherlands”, TNO-RPT-2011-00166

Hoffmann, P., Skogtvedt, J.E., Hamann, R., Pewe, H. (2012) “Collision Risk Assessment of LNG Fuelled Vessels”, DNV GL submission to IMO Sub-committee on Stability and Load Lines and on Fishing Vessels Safety, 55th Session

Williams, P.J.le B. (2009) “The natural oceanic carbon and sulfur cycles: implications for SO2 and CO2 emissions from marine shipping”, International Journal of the Society for Underwater Technology Vol. 29, No. 1, pp. 5–19

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SAFER, SMARTER, GREENER

DNV GL AS NO-1322 Høvik, Norway Tel: +47 67 57 99 00 www.dnvgl.com

DNV GL Driven by its purpose of safeguarding life, property and the environment, DNV GL enables organisations to advance the safety and sustainability of their business. DNV GL provides classification and technical assurance along with software and independent expert advisory services to the maritime, oil & gas and energy industries. It also provides certification services to customers across a wide range of industries. Combining leading technical and operational expertise, risk methodology and in-depth industry knowledge, DNV GL empowers its customers’ decisions and actions with trust and confidence. The company continuously invests in research and collaborative innovation to provide customers and society with operational and technological foresight. DNV GL, whose origins go back to 1864, operates globally in more than 100 countries with its 16,000 professionals dedicated to helping their customers make the world safer, smarter and greener. DNV GL Strategic Research & Innovation The objective of strategic research is through new knowledge and services to support DNV GL's overall strategy. Such research is carried out in selected areas that are believed to be of particular significance for DNV GL in the future. A Position Paper from DNV GL Strategic Research & Innovation is intended to highlight findings from our research programmes.

The trademarks DNV GL and the Horizon Graphic are the property of DNV GL AS. All rights reserved. Illustrational images: iStockphoto.com Cover image: iStockphoto.com ©DNV GL 05/2015 Design and print production: Erik Tanche Nilssen AS

The Fuel Trilemma  

Next generation of marine fuels

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