Maritime Forecast – DNV’s Energy Transition Outlook 2022

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DNV urges cross-industry collaboration to help overcome “ultimate hurdle” of fuel availability in its latest decarbonization report

A key component of DNV’s Energy Transition Outlook (ETO) suite of reports, the 84-page forecast is the sixth edition of its kind. This year’s publication considers the comprehensive production, distribution and bunkering infrastructures required to enable the maritime industry’s shift to carbon-neutral fuels.

The report also presents an updated outlook on regulations, drivers, future technologies, and costs for decarbonizing shipping. It models two different decarbonization pathways: ‘Current IMO ambitions to 2050’ and ‘Full Decarbonization by 2050’. DNV’s modelling points to a diverse future energy-mix comprising both fossil and carbon-neutral fuels, with fossil fuels gradually phased out by 2050.

“The search for the best alternative carbon-neutral fuel options and technologies is underway as the entire world seeks to decarbonize,” said DNV Maritime CEO Knut Ørbeck-Nilssen. “No industry can decarbonize in isolation so global industries need to make the right choices together, and sustainable energy should be directed to where it has the biggest impact on reducing GHG emissions. The ultimate hurdle is fuel availability and to overcome it, supply chains must be built through cross-industry alliances.

“Carbon-neutral fuels must be made available for ships already within this decade, in decarbonization pathways assessed. By no later than 2030, 5% of the energy for shipping should come from carbon-neutral fuels. This will require substantial investments in both onboard technologies and onshore infrastructure,” he continued.

Coordinated plans by all stakeholders, including major energy and fuel providers and ports, is crucial while public incentives must encourage first movers to participate in a nascent global network of green shipping corridors.

The report’s new and extended fuel-mix scenario library for shipping can be applied to DNV’s updated Carbon-Risk-Framework to help shipowners find the most efficient and cost-effective fuel strategies, while focusing on fuel flexibility and energy efficiency remains key to easing the transition and minimizing the risk of investing in stranded assets. 

In terms of fuel choice, uncertainties around future price and availability means that a clear winner among the many options – ammonia, methanol, diesel or methane, produced from sustainable biomass, renewable electricity or fossil fuels with carbon capture and storage – cannot be identified yet or in the near future. The report outlines under what conditions each option will proliferate. DNV’s enhanced GHG Pathway Model estimates the investment costs of implementation of new fuel supply chains and fuel technologies as well as energy efficiency measures onboard the world fleet.

“Our findings add to the body of research evidence that owners need to take confident, robust long-term decisions on the investments needed for their existing fleet and newbuilding projects,” said Eirik Ovrum, DNV Maritime Principal Consultant and Maritime Forecast to 2050 lead author. 

“We probe variations on three fuel families in which we simulate the availability of sustainable biomass to produce biofuels, renewable electricity to produce e-fuels, and fossil fuels in combination with carbon capture and storage (CCS) to produce blue fuels. We also explore variations for specific fuel types, in which key input factors impacting the relative cost differences between fuels within each family are scrutinized. In total we explore 24 decarbonization scenarios.” 

The fuel transition has already started, with 5.5% of ships (gross tonnage) in operation and 33% of gross tonnage on order today able to operate on alternative fuel (largely dominated by LNG today). The future market will be reliant on multiple energy sources, integration with regional energy markets, energy production and industries, and on the availability and price of energy sources.

DNV forecasts that onboard technology investments required for the ‘Decarbonization by 2050’ pathway scenarios will range from USD 8 to 28 billion per year (depending on which fuel type has the largest uptake) between 2022 and 2050. Investments of between 30 and 90 billion USD per year to 2050 are needed for the onshore fuel supply chains. 

“Two thousand ships are expected to be ordered annually to 2030 but there is still no silver-bullet fuel solution available,” said Ørbeck-Nilssen. “Against this uncertainty, the new Maritime Forecast to 2050 report can serve as a beacon of expert advice and smart solutions to ensure vessels stay commercially competitive and compliant over their lifetimes, underpinned throughout by the enduring need for safety,” he concluded.

Download the full 2022 Maritime Forecast to 2050 here.

Source: DNV