Collaboration is key to accelerating the Energy Transition. That’s why events such as Nor-Shipping are so important – a forum where maritime leaders from around the world gather to engage and chart the future of the industry.
Remi Eriksen, Group President and CEO of DNV, spoke as the keynote speaker today at Nor-Shipping, discussed about the opportunities for the industry in the energy transition and the cooperation needed to tackle the challenges of decarbonization.
The transport sector – predominantly road, air, and sea – is responsible for 25% of energy-related CO2 emissions worldwide. The sector has unique challenges, including the fact that emissions are distributed and are challenging to capture.
The first priority should be to electrify what you can. Electricity is relatively easy to decarbonize. In fact, by 2050 it will be close to 90% decarbonized. What can be electrified will also become cheaper owing to electricity’s superb efficiency. But not all sub-sectors in transport can electrify and this is especially true for shipping, where it will be limited to port operations and short-sea shipping.
The main alternatives to fossil fuels in maritime are biofuels and hydrogen-based fuels. That does not mean we should not also be pursuing breakthroughs in onboard carbon capture, nuclear (molten salt reactors), and wind-assisted propulsion.
Sustainable biofuels – made from biowaste and residues – are scarce today and will also be limited in the future. There will be uptake in maritime, but shipping must fight with aviation on availability and willingness to pay. That leaves hydrogen and hydrogen derivatives (methanol, ammonia, e-MGO) as the most promising alternative for shipping. There is limited availability now, and that will persist while renewable electricity is prioritized for direct electrification of end use. But in the 2030s we are likely to see significant scaling of hydrogen-based fuels, and by mid-century they will constitute about half of maritime energy consumption.
As an industry we need to prepare ourselves for the reality that both sustainable biofuels and hydrogen fuels will be more expensive than fossil fuels. The industry will need support, incentives, and inducement by forward-leaning policies.
Therefore, the policy priorities are clear. Everything that can feasibly be electrified should be electrified. Transport that cannot be electrified should be incentivized to switch to sustainable biofuel in the short to medium term – before a hydrogen-based fuel ecosystem can scale from national to regional and global by the mid-2030s.
By working with our customers and partners, and collaborating through forums such as Nor-Shipping, we can develop and scale solutions to tackle the great fuel switch.
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