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Research and Innovation, Position Paper 05 - 2010

Assessment of measures to reduce future CO2 emissions from shipping

Research and Innovation in

DNV The objective of strategic researchis to enable long term innovation and business growth through new knowledge and services in support of the overall strategy of DNV. Such research is carried out in selected areas that are believed to be particularly significant for DNV in the future. A Position Paper from DNV Research and Innovation is intended to highlight findings from our research programmes.

This isDNVDNV is a global provider of services for managing risk. Established in 1864, DNV is an independent foundation with the purpose of safeguarding life, property and the environment. DNV comprises 300 offices in 100 countries with 9,000 employees. Our vision is making a global impact for a safe and sustainable future.

Contact details:Magnus Strandmyr Eide – magnus.strandmyr.eide@dnv.com

Øyvind Endresen – oyvind.endresen@dnv.com

SummaryLimiting CO2 emissions is a great challenge being faced by society today. Society, through the United Nations Framework Convention on Climate Change (UNFCCC), and actors like the EU, is applying pressure on all industries, including the shipping industry, to reduce CO2 emissions. Thus, rules and regulations that safeguard the interests of society, i.e. that limit climate change, are likely to emerge in the years ahead, resulting in the need for implementation of effective measures. Given the range of measures available for reducing CO2 emissions from ships, there is a need for a consistent and rational system for decision making and selection of measures. This applies both to individual ship owners, and also to policymakers and regulators.

In this paper, a comprehensive overview of the available measures is presented, and the measures are assessed from a cost-effectiveness perspective. A new integrated modelling approach has been used, combining fleet projections with simulated implementation of CO2 emission reduction measures towards 2030. The resulting emission trajectories show that stabilising fleet emissions at current levels is attainable at moderate costs, in spite of the projected fleet growth up to 2030. However, significant reductions beyond current levels seem difficult to achieve. If an absolute reduction in shipping emissions is the target, a significant boost in research, development and testing is needed to overcome barriers, to accelerate the process of bringing novel technologies to the market, and to find those solutions that are yet to be imagined. This study discusses three wild card technologies, all of which have the potential to play some part in the future pathway to low carbon shipping.

It is important to recognise that the reduction potential, as outlined above, cannot be realised without a robust and effective policy instrument that ensures that steps are taken to implement the necessary measures on a large scale in the years ahead.

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Global temperature increases exceeding 2°C above pre-industrial levels are likely to result in severe global consequences. To avoid such a development, the target of limiting temperature increases to 2°C was included in the Copenhagen Accord emerging from the COP15 meeting in December 2009, organised by the United Nations Framework Convention on Climate Change (UNFCCC). In order to reach this target, it has been estimated that global greenhouse gas (GHG) emissions in 2050 need to be 50-85 % below current levels according to the Intergovernmental Panel on Climate Change (IPCC, 2007). However, all IPCC scenarios indicate significant increases in GHG emissions up to 2050. This means that achieving the necessary reductions will be very challenging.

Shipping is responsible for approximately 3 % of global CO2 emissions (Buhaug et al., 2009; Endresen et al., 2008; Dalsøren et al., 2009), and future scenarios indicates that CO2 emissions from ships will more than double by 2050 (Buhaug et al., 2009; Endresen et al., 2008, Eyring et al., 2005b) (Figure 1). Given the expected growth, achieving emission reductions will be difficult. The global target of 2°C will affect maritime transportation, and the extent to which the maritime sector should be expected to reduce emissions and how this reduction might be achieved are the subjects of an ongoing debate. The International Maritime Organization (IMO) is currently working to establish GHG regulations for international shipping (IMO, 2009), and is under pressure, from bodies such as the EU and UNFCCC, to implement regulations that will have a substantial impact on emissions. The major policy instruments under consideration by IMO are technical, operational, and market-based.

Although the outcome of the IMO process is currently unresolved, it seems clear that within a few years CO2

emissions from shipping will be regulated. This, along with an expectation of high fuel prices in the long run, will provide incentives for the shipping industry to focus on new ways to achieve greater cost- and energy-effectiveness, and better environmental performance (Figure 2).

Over the years, DNV has been actively involved in developing the scientific foundation for understanding emissions from shipping. In collaboration with leading experts on atmospheric transport and chemistry (University of Oslo and CICERO), DNV has investigated past, present, and future emissions and their impacts. DNV has recently contributed to international assessments on shipping

Introduction

Figure 1: Projected CO2 emissions from the future fleet from various studies; Purple – Buhaug et al. 2009 (high-low). Blue – Endresen et al. 2008 (high – low). Green – Eyring et al. 2005b (high – low). Black – This study (Baseline – see section 5 and 6). Note that the respective studies have published point values, and the lines have been fitted for the purpose of this article. Also, differences in modelling approach between studies and between the assumptions made, means that direct comparison of the presented studies is difficult and not advisable.

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emissions including the IMO GHG study (Buhaug et al., 2009), the European Assessment of Transport Impacts on Climate Change and Ozone Depletion (ATTICA) (Eyring et al., 2010), and an OECD study on international transport (Endresen et al., 2008). DNV has also contributed significantly to the scientific literature on the topic with several peer-reviewed publications (Endresen et al., 2003; 2004; 2005; 2007; Dalsøren et al., 2007; 2009; 2010; Eide et al., 2009a; 2009b; 2010a; Longva et al., 2010). Two studies considering Pathways to low carbon shipping have also been published recently (DNV, 2009a; 2009b).

In this paper, an overview of the available measures for CO2 reduction is presented, and these measures are assessed from a cost-effectiveness perspective. Using a model developed by DNV, CO2 trajectories for different reduction cost levels are derived. Furthermore, new technologies, wild cards, that have not yet been assessed

for costs-effectiveness are identified, and the reasons why such technologies are still needed are described. The results presented build primarily on Eide et al. (2010a), but also on the Pathways studies (DNV, 2009a; 2009b), and Eide et al. (2009b).

This position paper is divided into ten sections. Section 1 is comprised of this introduction. Section 2 presents a mapping of available measures for CO2 reduction in shipping towards 2030, while Sections 3 and 4 detail a selection of measures. In Section 5, an approach to rating and prioritising CO2 reduction measures from a cost-effectiveness perspective is provided. Section 6 presents trajectories for future CO2 emissions from ships and evaluates the achievable emission reduction potential at different cost levels. Section 7 discusses limitations to the presented results, and presents a set of “wild card” technologies for further reducing emissions. Section 8 provides an overview of policy instruments for enforcing reduction in CO2 emissions, through the application of the measures discussed. Section 9 discusses the challenges of considering CO2 in isolation, and reminds the reader of the climate effect of other emissions. Finally Section 10 concludes, and presents recommendations.

Figure 2: Illustration of some factors that will drive technology development in shipping.

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a number of measures to reduce CO2 emissions are available to the shipping industry (see Figure 3). The emission reduction measures can be divided into four main categories:

• Technical measures generally aim at either reducing the power requirement to the engines or improving fuel efficiency. These measures are linked to the design and building of ships (e.g. hull design), to optimisation of the propulsion system, to the control and efficient operation of the main and auxiliary engines, and to retrofits on existing ships. These measures generally have a substantial investment cost and potentially very significant emission reduction effects. Many technical measures are limited to application on new ships, due to the difficulties or high costs of retrofitting existing ships.

• Alternative fuels and power sources form another set of technical measures. The alternatives range from supplementary measures (e.g. wind & solar) to a complete switch of fuel (e.g. to gas, bio-diesel, or nuclear), and generally require significant investments upfront, both onboard and in new infrastructure.

• Operational measures relate to the way in which the ship is maintained and operated, and include measures such as optimised trim and ballasting, hull and propeller cleaning, better engine maintenance, and optimised weather routing and scheduling. Operational measures do not require significant investment in hardware and equipment. The measures generally have low investment needs and moderate operating costs. Implementation of many of these measures requires execution of programmes involving changes in management and training. Many of these measures are attractive for purely economic reasons.

• Structural measures impose changes that are characterised by two or more counterparts in shipping working together to increase efficiency and reduce emissions by altering the way in which they interact. Structural changes are believed to have a significant potential to reduce emissions beyond that which is achievable with the above measures, but are generally hard to develop and implement. For instance, Alvarez et al. (2010) suggest CO2 reduction potentials in the order of 6-10 % from adopting tailored port berthing policies, instead of using a ‘first-come, first-served’ approach.

Although not the main topic of this paper, it is noted that measures intended for reduction of NOx and SOx emissions may interact with the CO2 reduction measures and sometimes limit their applicability or potential. For instance, NOx reduction measures typically have a negative effect on fuel consumption. Upcoming regulation of NOx and SOx emissions from shipping will result in the introduction of measures to decrease these emissions.

In the following section, some of the available solutions for CO2 reduction are discussed in greater detail.

Abatement technologies

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Figure 3: Overview of CO2 abatement measures available in shipping.

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the ‘technical measures’ and ‘alternative fuels’ categories include measures that typically require significant upfront investments, but usually have a significant potential for emission reductions. In the following paragraphs, natural gas, wind propulsion and marine fuel cells are presented as examples of such measures.

natural Gas as main fuel source Natural gas consists mainly of methane (CH4), and is naturally abundant, with rich reserves worldwide. Natural gas as fuel produces more energy per unit of carbon released than traditional bunker oil. Therefore, a switch to natural gas potentially yields a reduction in the CO2 emissions of more than 20% from a combustion engine. However, emission of non-combusted methane (a potent GHG) is a problem when operating outside the optimised load-spectra. This means that the effective reduction in CO2 equivalent units is lower then 20%, and engine builders are working to improve this. A switch to natural gas also eliminates SOx and particulate matter emissions, as well as significantly reducing NOx emissions. In recent years, natural gas in the form of Liquefied Natural Gas (LNG) has been used in some smaller vessels, mainly in Norwegian waters. At present, approximately 20 LNG-powered ships are in operation in Norwegian waters, the majority of which are supply ships and coastal ferries.

One major drawback to installing an engine system that runs on natural gas is the price; at present it costs 10 – 20 % more than a similar diesel system. One of the main cost drivers is the storage tank for natural gas, as pressurised or insulated tanks are generally more expensive than diesel oil tanks.

The standard LNG storage tanks currently used are spherical and insulated. These occupy more space than

traditional bunker tanks, which fit easily into a steel ship structure. LNG storage requires additional space since natural gas, both pressurised and liquefied, takes up roughly twice the space occupied by diesel oil and various safety constraints also have to be fulfilled.

Bunkering locations and infrastructure are further concerns. With few ships currently running on natural gas, the incentives for developing the necessary infrastructure are limited. However, experiences from Norway show that as ships fuelled by natural gas are built, the bunkering infrastructure is also developed, demonstrating that when the need arises then the suppliers will meet it. The price difference between natural gas and diesel oil is expected to increase in the years to come (favouring gas). This, together with new, stricter requirements for emissions to air, will result in natural gas becoming a more appealing option for use by ships. The introduction is expected to start in short sea shipping , and in emission control areas (ECA)defined by IMO.

An emerging option is retrofitting vessels to run on LNG. By modifying the engine, auxiliary machinery, piping networks, and tank configuration, existing vessels can be adapted to use LNG.

Wind assisted propulsionWind assisted propulsion involves using rigid or soft sails, kites, or Flettner rotors to convert energy from the wind to thrust forces. Of these options, kites are currently the most advanced wind propulsion concept. Wind energy has experienced a recent revival due to increased fuel prices and environmental concerns. A number of different arrangements have been tested over the years, and presently four commercial ships have kites installed for testing.

Some forms of wind assisted propulsion, e.g. kites, can

Technical measures & alternative fuels

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be installed on standard ship designs and this might lower the threshold for widespread use of wind assisted propulsion. However, in order to optimise the effect, it will be necessary to adapt current designs, both technically and operationally. As the effectiveness of wind assisted propulsion is directly linked to the prevailing wind conditions (strength and direction), there is some uncertainty regarding the efficiency of the equipment. Additionally, wind assisted propulsion equipment is often relatively complicated to operate and adjust for changing wind conditions, and therefore many ship owners may be reluctant to install wind assisted propulsion.

Other concerns include the influence on cargo capacity, and problems with accessibility to ports due to the installation of wind assisted propulsion equipment, such as Flettner rotors and sails on masts. These installations can potentially come into conflict with bridges and cargo handling equipment. However, new material technologies will enable installation of designs and ideas that used to be regarded as fiction. This might lead to wind assisted propulsion being introduced into new shipping segments.

marine fuel cellsA fuel cell converts the chemical energy of the fuel directly to electricity, through electrochemical reactions. The process requires supply of a suitable fuel such as LNG, tomorrow’s renewable biofuels, or hydrogen, and a suitable oxidiser such as air (oxygen). CO2 emissions from fuel cells are significantly lower than those from diesel fuels, and there are no particulate or SOx emissions, and negligble NOx emissions.

However, significant barriers associated with the commercial use of fuel cells onboard ships remain to be overcome. At present, fuel cells must be operated in fairly constant loads, accepting only very slow load changes,

in order to avoid overheating. Further obstacles are the relatively high installation and maintenance costs, and the requirement for crew expertise. Additionally, the initial investment cost is 2-3 times higher than for that of a comparable diesel engine. As a result of these barriers and current size of installations, the first marine-related market for fuel cells is expected to be within auxiliary power. In the longer term, fuel cells might become a part of a hybrid powering solution for ships.

DNV has coordinated the FellowSHIP project, run in partnership with Eidesvik and Wärtsilä and supported by the Norwegian Research Council and Innovation Norway. This project is the first to test large-scale marine fuel cells onboard a merchant vessel (see Figure 4).

Figure 4: Fuel cell equipment being installed on Eidesvik’s Viking Lady.

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operational measures often amount to relatively small changes in the operation and maintenance of the vessel. The implementation of many of these measures requires execution of programmes involving changes in management and training, but also computerized decision support tools and reliance on external information sources.

speed reduction Speed reduction has been increasingly common in the shipping market in recent years. Speed reduction or slow steaming has yielded significant reductions in operational expenses, especially in the container segment. The main principle that makes speed reduction interesting, is that hull resistance increases exponentially with speed. Thus, even a modest speed reduction can substantially decrease required propulsion thrust. Less required thrust means lower fuel consumption and reduced emissions to air.

However, speed reductions may come at a cost, when the volume of cargo to be transported within a given time frame (say 1 year) remains unchanged. One way of implementing speed reduction is to decrease the speed on all ships, which, in turn, will increase the number of ships required to freight the same volume of cargo. Another way is to improve efficiency in port, and utilise the time saved to decrease the speed of the ships. In the present market conditions, the first option is obtainable, given the decline in world economy and the resulting availability of excess tonnage.

Either way, a speed reduction will increase the transit time between ports, and thus is likely to increase the total cargo delivery time. Therefore, speed reduction is dependent on customer acceptance and on the additional cost to the cargo owner. The profit for the ship owner must balance the cost for the cargo owner.

The high potential for fuel saving will make speed reduction an interesting option for many ship owners. Market differentiation, into high and low speed service for some segments (e.g. container), will probably emerge. It can be envisioned that cargo owners with high value cargo would be willing to pay a premium for shorter transit times.

Operational measures

Figure 8: Operational measures greatly impact on emissions.

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Most ships are optimised for a certain speed, and steaming at lower speeds might have unforeseen consequences in terms of engine maintenance and fuel consumption. Future ships will probably be designed for an optimal speed range, allowing for a wider variation in speed than today. This will lead to both more flexible engine system solutions and better optimised hulls.

The cost of this measure is difficult to quantify, as it depends on volatile factors, such as market conditions and fuel prices. However, in many cases this measure has proven to be attractive purely from an economic perspective.

adjustinG trim and draftThe trim and/or draft of a ship influence hull resistance and therefore the fuel consumption. In general, trim and draft are not routinely optimised when loading a ship and therefore the design conditions will frequently not be achieved. By actively planning cargo loading to optimise trim and draft, fuel savings can be made and emissions reduced accordingly. Optimising trim and draft has been estimated to be able to reduce fuel consumption by 0.5–2 % for most ship types. However, for ships that often trade in partial load conditions (e.g. container, Ro-Ro, and passenger), the effect can be up to 5 %. These numbers are based on full-scale tests and on detailed calculations performed on a number of different ships in different trades.

Full-body ships, in which the resistance from viscous friction is higher than wave resistance (e.g. tank and bulk), will achieve a smaller fuel consumption reduction by optimising trim and draft, and this will be similar for ships with limited ballast flexibility (e.g. cruise). In order to be able to optimise trim and draft, additional equipment is required (such as a better loading computer) and the crew

must be trained in the use of such equipment. The very low cost of this measure makes it an appealing option, despite the relatively low efficiency gains.

Weather routinGWeather conditions (wind and waves), together with ocean currents, influence the propulsion power demand of a ship at a given speed. Therefore, it is important that these factors are considered when planning a voyage, and attempts should be made to minimise the negative effects.

The longer a ship voyage, the greater the route choice flexibility for avoiding adverse weather conditions. In addition, longer voyages usually include time spent in unsheltered waters, where the influences from the weather are more important. Therefore, the greatest potential from weather routing could be realised in intercontinental trades.

All ships have the potential for installing weather routing systems, which will include subscriptions to observed and forecasted data on weather, waves, and currents. Some ship segments (e.g. large container and Ro-Ro) have

Figure 9: Avoiding adverse weather can save fuel and emissions.

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already implemented weather routing to some extent, and, therefore, the potential for emission reduction for these ships is lower. This is also assumed to be the case for new ships coming into service. Weather routing potential has been assessed to between 0–5 %, depending on ship size and type, and the typical trade of the different ship segments.

In addition, weather routing might provide benefits by decreasing fatigue and weather damages, but these have not been included in this study. The cost of implementing this measure is relatively low. However, depending on the nature of the trade, and parameters such as ship size, the investment may not always repay itself.

The high potential for fuel saving will make speed reduction an interesting option for many ship owners.

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the Wide ranGe of solutions available for CO2 reduction means that comparing solutions and prioritising among them provides a challenge, and requires a consistent and flexible methodology. One such approach is marginal abatement cost comparison.

The marginal abatement cost of a specific measure (e.g. weather routing) is the monetary cost of avoiding 1 tonne of CO2 emissions through application of that measure, considering any other measures previously applied. It is the cost of reducing the next unit of emission, and can be defined by the CATCH parameter (Cost of Averting a Tonne of CO2-eq Heating) [USD/tonne] as suggested by Skjong (2009) and described by Eide et al. (2009b). The costs of each measure (including installation and operation) and the expected economic benefits (including fuel saving) are aggregated over the expected operational lifetime of a vessel or measure (whichever is shortest), and discounted to a present value. The net cost is then divided by the expected volume of emission reduction; CATCH = (cost-benefit)/emission reduction.

Measures that achieve CATCH levels below a given threshold are termed cost-effective. This means that they deliver a sufficiently large emission reduction relative to their cost.

A model has been developed that can be used to assess the marginal cost of all available measures applied to the world fleet. This model has been applied in the previous ‘Pathways publications’ from DNV (2009a; 2009b) and is described by Eide et al. (2010a). The overall modelling approach is to develop the world fleet iteratively, by adding and removing ships from the fleet. Moderate growth rates have been assumed, based on the current order book and long-term trends for each ship type.

A baseline CO2 emission level for the fleet is determined by an activity-based approach using 59 separate ship segments to represent the fleet. Then, for a given year, the cost, benefits, and potential emission reduction effect are calculated for all available emission reduction measures for the entire fleet, thus giving the marginal abatement cost. This is achieved by applying a comprehensive database of emission reducing measures (including the measures described in the previous section). By gathering data on the measures described above, and many more, and by applying them in the fleet model combining the fleet development and the technology development towards 2030 (Figure 7), an overview of the reduction potential in the fleet can be obtained, along with the associated cost levels.

Cost effectiveness –How to navigate between measures?

Figure 7: Expected developments in the price and reduction effects for CO2 abatement measures are combined with expected fleet development.

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In Figure 8, the marginal cost shown is the average cost for all ship segments. The curve summarizes the technical and operational opportunities to reduce emissions from the shipping fleet sailing in 2030. The width of each bar represents the potential of that measure to reduce CO2 emissions from shipping, relative to the baseline scenario for 2030. The height of each bar represents the average marginal cost of avoiding 1 tonne of CO2 emission through that measure, assuming that all measures to the left are already applied. The graph is arranged from left to right with increasing cost per tonne CO2 averted. Where the bars cross the x-axis, the measures start to give a net cost increase, instead of a net cost reduction.

The methodology, applied here for policy considerations on a fleet level, is also applicable as a tool for ship owners when applied to smaller fleets or individual vessels. It must be stressed that, on a fleet level, these values hide significant differences in the performance of the various measures from one ship segment to another. Measures that do not have low marginal costs on average may still perform very well for certain ship segments (e.g. waste heat recovery). Caution should thus be applied when using these results to make statements about the effectiveness of specific measures, or for prioritising among them. However, when tailored to a single ship, or to a limited fleet, such figures are extremely useful to ship owners who wish to prioritise among the potential measures for their own ships. Specialised tools have been developed by DNV for this specific purpose.

Figure 8: Average marginal abatement cost per reduction measure for the fleet in 2030. The marginal abatement cost of a specific measure is the monetary cost of avoiding 1 tonne of CO2 emissions through the application of that measure, considering any other measures previously applied (DNV, 2009b; Eide et al., 2010a).

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By producing marginal cost curves (such as in the previous section) for a sequence of years, emission trajectories can be derived that show by how much the fleet CO2 emissions can be reduced into the future, and the associated cost levels. Thus, a series of ‘snapshots’ for successive years, as shown in Figure 8, can be used to produce scenarios for future development. This links the marginal abatement cost curves to the emissions trajectories shown in Figure 9.

Figure 9 shows the resulting cost scenarios for CO2 emissions. The baseline is shown as the highest stippled line, and the resulting emission levels at increasing marginal cost thresholds are plotted below. Note that the baseline is the same as that shown in Figure 1, and represents the growing emission levels for the fleet, under the assumption of moderate fleet growth and without implementation of any of the reduction measures. The bottom line illustrates the resulting emission level, provided that all the measures analysed in this study are applied to the fleet, irrespective of cost. These results show that 19 % of the baseline emissions in 2010 can be reduced in a cost-effective manner. For 2020 and 2030 the corresponding numbers are 24 % and 33 %, respectively. By increasing the marginal costs level to USD 100/tonne results in a reduction potential of 27 % in 2010, 35 % in 2020, and 49 % in 2030. Additionally, it is evident that further increases in the cost level yields very little in terms of increased emission reduction. Note that the term ‘cost-effective’ potential is used here to mean emission reduction potential with marginal costs below zero (0). The term is relative and is used in relation to a predefined threshold, which then will vary depending on the viewpoint of the decision maker. For a ship owner, the threshold will naturally be zero. For a regulator, acting on behalf of society at large, the threshold should reflect the adverse effects of these emissions, and therefore the threshold should be higher

(e.g. USD 50/tonne as suggested by Eide et al. (2009b)). In principle, the thresholds could be equivalent, provided that external costs are internalised (i.e. damage costs from global warming caused by CO2 emissions are charged to the polluter). Figure 9 indicates that stabilising emissions at current levels is possible at moderate costs, thereby compensating for the predicted fleet growth. However, significant reductions beyond current levels seem difficult to achieve.

By considering alternative input data to the model, a sensitivity analysis shows that fuel price is the main driving parameter on the cost per tonne CO2. The above conclusions are based on a low fuel price estimate. As the sensitivity analysis shows that higher fuel prices will significantly increase the cost-effective reduction potential, the conclusions appear to be robust. The same analysis shows that the results are more sensitive to changes in the emission reduction effect of these measures, than to the costs of the measures. Changes to the costs alone result in only small impacts.

CO abatement cost: How low can you go?

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Figure 9: CO2 emission scenarios for the world fleet resulting from applying all emission reduction options below a given marginal cost level (CATCH) , USD/tonne. From Eide et al. (2010a).

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the precedinG analyses show that, in absolute terms, it will be difficult for shipping to reduce emissions below current levels. Hence, it will be difficult to contribute to absolute reductions and to the temperature stabilisation target of 2°C above pre-industrial levels. However, although the current study contains more measures than any previous study, it should be noted that not all conceivable abatement measures have been included in the analyses. Those measures that were included in the current study were limited to those that were judged to be mature (or very close to mature) at the present time, and therefore feasible for installation onboard. The measures omitted in the analysis of the 2030 potential include some presently known technologies, but other solutions, currently undiscovered, could also emerge, that may well have a significant impact in 20 years.

If the aim is to achieve an absolute reduction in shipping emissions, then a significant boost in research, development and testing is needed to overcome barriers and to accelerate the process of bringing novel, promising technologies to the market, and to find other solutions, yet to be imagined. It is also noted that stronger fleet growth than assumed herein will exacerbate the difficulty in reducing emissions in absolute terms, such that the need for new options becomes even more pressing (Eide et al., 2009a).

In the following paragraphs, three wild card technologies are presented, all of which have the potential to play some part in the future pathway to low carbon shipping.

nuclear poWered shipsNuclear powered ships use the heat created from a nuclear reactor to generate steam, which in turn drives a steam turbine. The turbine can be either coupled

directly to a propeller or can generate electricity in an electric propulsion concept. Nuclear power is an enticing technology as, during operation, nuclear powered ships will have no emissions to air. The first nuclear powered merchant ship was launched in the 1960s, and there are currently about 150 nuclear powered ships in operation, most of which are military vessels.

There are currently several new designs for nuclear powered merchant ships in progress. The land-based revival of nuclear power has led to the development of many “small” reactors. These reactors are more suited in size to merchant ships, and it is therefore predicted that nuclear powered ships will emerge. The lengthy process of obtaining appropriate permissions and conducting tests means that next generation nuclear powered ships can only become a reality by 2020-2030, at the earliest.

The main barrier for nuclear powered ships is related to the risks from radioactive waste and the proliferation of nuclear material. Public concerns also have the potential to limit the number of ports at which these ships can call. Another issue is the decommissioning and storage of radioactive material, as well as the need for specialized infrastructure for serving the ships. This infrastructure is virtually nonexistent at present and would have to be developed. Another significant barrier is the high upfront investment costs.

A feasibility study of nuclear powered ships conducted by DNV indicated that, at today’s fuel prices, nuclear power is economically feasible for large container ships and bulk carriers (DNV, 2010).

Wild cards

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carbon capture and storaGe on shipsIn general, Carbon Capture and Storage (CCS) is the process of capturing CO2 from large point sources, such as fossil fuel power plants, and storing it in such a way that it does not enter the atmosphere. Storing CO2 in geological formations is currently considered the most promising approach.

Today, there are several ongoing CCS pilot projects worldwide, but a full-scale, end-to-end CCS chain does not yet exist. There are various key challenges associated with CCS in general. One is the cost, which is currently very high, although expected to drop in the future as the technology matures. Another issue is whether leakage of stored CO2 will compromise CCS as a climate change mitigation option. Hence, there is a requirement to fill knowledge gaps and to investigate the issues involved in the development of a fully integrated CCS system.

While the main sources of CO2 are expected to be fossil fuel power plants and large-scale process industry, CCS is, in principle, also applicable to smaller sources of emissions, such as commercial ships. In order for CCS to be a suitable technology for the maritime industry, novel designs are needed for onboard capture and temporary storage of CO2 emissions for ships in transit. The ships can then store the CO2 until discharge into CO2 transmission and storage infrastructures at the next suitable port, or to a specialised discharge facility. The CO2 can then be stored in a common storage reservoir shared with other CO2 sources.

In addition to the challenges related to CCS in general, there are challenges that are specific to its use in maritime applications. These include the space limitations onboard, the marine environment, and the fact that this will be

small-scale facilities. As CCS technology is not yet mature, implementation of such systems onboard ships remains a possibility of the future that requires considerable further investigation. However, the technology might be an option for some of the larger ocean going ships.

DNV currently participates in a research consortium that is developing and screening alternative CCS processes in order to derive a front-end design for a CCS solution onboard ships.

Figure 10: CO2 capture

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radical ship desiGns The conventional designs of the major ship types, e.g. bulk carriers and oil tankers, have remained largely unaltered for many years. Notable exceptions are the ever larger and faster container ships and cruise ships, as well as special purpose vessels serving in niche markets. There are well-proven concepts for all these ship types, and as these have performed well there has been little interest and incentive for radical changes in design.

However, due to consistently high fuel costs and the cross-industrial emphasis on environmentally friendly technologies, this is no longer the case. The increased focus on operational flexibility in design, speed, and cargo, energy efficiency and reduction in emissions, creates a potent driver for creating “radical” designs. New technologies within drag reduction, propulsion, and materials are entering the market, enabling novel designs to become reality. Innovative designs replacing conventional ballast tank systems are being developed, and hybrid power systems are emerging. A new mix of technological, operational, and regulatory triggers results in an entirely new specification framework, in which radical designs can provide satisfactory solutions.

Many shipyards have been organised for the production of fairly standardised ships, in assembly line style production

facilities. Thus, having a new design built will almost always be more expensive than a standard design. Radical designs will emerge first in the specialised ship segments, before more traditional ship segments can follow. The X-BOW® hull design by Ulstein that emerged in the offshore supply fleet a few years ago is an example of a radical, fully operational design with the potential to be used in other segments as well.

With new designs comes the necessity for new construction methods, as well as for rules and regulations. Today, these are focused on traditional designs and methods, and new developments are needed in order to facilitate novel radical designs (Papanikolaou, 2009; Denmark, 2009; DNV, 2001). The move towards a holistic, multi-objective, and multi-constrained ship design will require greater utilisation of computational modelling tools and formal optimisation methods. A collective lift in the shipping industry will be necessary in order to facilitate this process, and the participation of some first-mover ship owners is critical.

In recent years DNV has explored new radical designs in several internal projects, such as ‘Containerships of the Future’ (see picture) and ‘Project Momentum’ both of which aim at improving the energy efficiency of standard designs.

Figure 11: Radical ship concepts; DNV’s ‘Containership of the Future’.

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other impactinG factorsThe fleet size, or rather the fleet growth rate, has been identified as a factor that will impact on the baseline emissions of the fleet, and hence on the achievable emission levels. However, there are numerous other factors with the potential to affect emission levels. Some of these could be considered as emission reduction measures in their own right, while others are more naturally labelled as framework conditions. Such factors include the opening of new sea routes, e.g. in the Arctic. The diversion of traffic from southern routes to shorter Arctic routes has the potential to reduce global shipping emissions (Eide et al., 2010b). The expansion of the Panama Canal is another example of how traffic flows may be altered by removing physical obstructions to trade.

This is also linked to the increase in ship size due to economy of scale. As larger vessels have less emissions per unit of transport work, a significant shift in size from the current average could make a considerable contribution to reducing emissions.

A very different factor is related to new business models in shipping. Alvarez et al. (2010) have shown that CO2 emissions can be reduced by adopting tailored port berthing policies, instead of using the ‘first-come, first-served’ approach. Although perhaps limited in themselves, combinations of such factors could make a substantial contribution to reducing emissions from shipping beyond that which has been indicated in this publication.

The diversion of traffic from southern routes to shorter Arctic routes has the potential to reduce global shipping emissions

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the results of this study indicate that economics is of limited effect as a driving factor for emission reduction. The indication that there is a substantial potential for cost-effective reduction in the present fleet (see Figure 9), demonstrates that potentially profitable measures for emissions and fuel reductions are currently not fully exploited. Thus, regulatory means are necessary to ensure that there is full implementation of the available measures.

The lack of response to economic incentives can, to some extent, be explained by the division between ship owners and ship charterers. Whilst a ship owner typically pays for the investment in a new ship, the charterer pays for the fuel. The contract between charterer and owner will usually result in the profit from fuel saving being gained by the charterer, while the bill for the more expensive ship must be met by the owner. Further studies are warranted to investigate this issue in more detail. When designing regulations and incentives aimed at reducing the emissions, it is essential that the barriers to implementation (e.g. non technical, training) are understood. Regulations should assist in overcoming barriers, and care should be taken to ensure that new barriers are not unintentionally constructed by the introduction of new regulations.

The IMO is working to establish GHG regulations for international shipping (see e.g. IMO, 2008). While the form of regulations is still under debate, it seems clear that some form of CO2 regulations in shipping will be implemented in the near future.

In the second IMO GHG study (Buhaug et al., 2009), the most relevant policy options have been assessed with regard to environmental effectiveness, cost-effectiveness, incentive for technological change, and practical feasibility of implementation. Technical policy options, operational

policy options, and market-based instruments have also been assessed.

Specifically, the technical option is limited to a mandatory limit on the energy efficiency design index (EEDI) for new ships. The main drawbacks of this option are the environmental effectiveness (not all ships covered) and also the cost-effectiveness (only technical measures are ‘allowed’). The operational policy options evaluated are mandatory limits on the energy efficiency operational indicator (EEOI) and the adoption of a mandatory or voluntary ship efficiency management plan (SEMP). The SEMP scores poorly on environmental effectiveness, while the EEOI has a low rating regarding the practical feasibility of its implementation, due to the challenges in establishing an appropriate baseline. The market-based mechanisms include the maritime emission trading system (METS) and an international GHG fund sustained by a fuel levy. The main drawback to market-based mechanisms seems to be related to the practical feasibility of implementation, due to the need for extensive administration.

Regardless of the regulatory mechanism, there is a need to determine the required emission reductions from shipping, i.e. the target level. As a rational and transparent approach to determining such a target, Skjong (2009) and Eide et al. (2009b) suggested using a cost-effectiveness criterion as a link between global reduction targets and shipping reduction targets. This approach can be pursued regardless of regulatory mechanism. Longva et al. (2010) provide examples of how this can be done.

Regulation of CO emissions 2

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While debating how the shipping industry can reduce its CO2 emissions, it is important to recognise that CO2 is not the only emission of relevance from a climate change perspective. Other emissions from shipping, such as NOx and SOx, not only impact on health and environmental issues, but also have an effect on the climate. While CO2 emissions result in climate warming, emissions of sulphur dioxide (SO2) cause cooling through effects on atmospheric particles and clouds, while nitrogen oxides (NOx) increase the levels of the GHG ozone (O3) and reduce methane (CH4) levels, causing warming and cooling, respectively (Fuglestvedt et al., 2009). The result is a net global mean radiative forcing from the shipping sector that is strongly negative (Eyring et al., 2010; Fuglestvedt et al., 2008), leading to a global cooling effect today (Berntsen et al., 2008). However, this is about to change. New regulations on shipping emissions of SO2 and NOx have been agreed (IMO, 2009), and these will, as an unintended side-effect, reduce the cooling effects due to emissions from the shipping sector (Skeie et al., 2009).

Nevertheless, the warming effect of CO2 emissions is undisputed. Lower levels of SOx and NOx emissions mean that future shipping emissions will have a more pronounced warming effect on the Earth’s climate, adding to the urgency of addressing this problem.

Warming or cooling from shipping emissions?

Figure 13: Global mean temperature changes due to emissions from shipping of CO2 and SO2, and NOx-induced changes in O3, CH4, and O3PM, and the total temperature change (ΔT TOT). Plots show (a) the response to a scenario with all emissions kept constant at year 2000 levels, and (b) the responses to a scenario with SO2 emissions reduced by 90 % with all other emissions kept at year 2000 levels. From Fuglestvedt et al. (2009).

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conclusions The shipping industry is under pressure to reduce CO2 emissions. Maritime rules and regulations that safeguard the interests of society in this respect, i.e. that limit climate change effects of emissions, are likely to emerge in the years to come. As a result, individual ship owners and operators will face pressures, both from the anticipated environmental regulations and also from high fuel prices, to reduce their fuel consumption and thus their CO2 emissions. Their main concern will be to comply with the new rules and to outperform competition. Thus, two issues arise in parallel regarding the climate impacts from shipping. These are: 1) technical and operational solutions for cutting emissions on individual ships, and 2) designing appropriate regulations that safeguard the interests of society as a whole.

The range of technologies and solutions that are available for reducing GHG emissions from ships creates the need for a consistent and rational system for selecting the most appropriate measures. This applies to individual ship owners, policymakers, and regulators. Cost-effectiveness is one such rational system for decision making. In this study, an overview of the available solutions has been presented, along with tools and methods for assessing the solutions from a cost-effectiveness perspective.

In addition, this study has assessed the cost and reduction potential for a range of abatement measures. The model used in the assessment captures the world fleet up to 2030, and the analyses include references to 25 separate measures. A new integrated modelling approach has been used, that combines fleet projections with activity-based CO2 emission modelling and projected development of measures for CO2 emission reduction. The world fleet projections up to 2030 are constructed using a fleet growth

model that takes into account assumed ship-type specific scrapping and building rates. A baseline trajectory for CO2 emission is then established. The reduction potential from the baseline trajectory and the associated marginal cost levels are presented.

The results demonstrate that a scenario in which CO2 emissions are reduced by 33 % from baseline in 2030 is achievable at a marginal cost of USD zero (0) per tonne reduced. At this cost level, emissions in 2010 can be reduced by 19 %, and by 24 % in 2020. A scenario with 49 % reduction from baseline in 2030 can be achieved at a marginal cost of USD 100/tonne CO2 (27 % in 2010 and 35 % in 2020).

The results also indicate that stabilising fleet emissions at current levels can be attained at moderate costs, compensating for the projected fleet growth up to 2030. However, significant reductions beyond current levels seem difficult to achieve. If an absolute reduction in shipping emissions is the target, then a significant boost in research, development and testing is necessary in order to overcome barriers and to accelerate the process of bringing novel technologies to the market, and also to discover solutions that are yet to be imagined. This position paper has discussed three such wild card technologies, all of which have the potential to play some part in the future pathway to low carbon shipping.

In addition to developing technical and operational measures that will enable ships to reduce emissions, work to establish international regulation of CO2 emissions from shipping is also in progress. Regardless of the regulatory mechanism selected, there is a need for rational determination of the required emission target level. A cost-effectiveness criterion, as a link between global reduction

Conclusions and recommendations

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targets and shipping reduction targets, has been suggested for this purpose.

Finally, it is recognised that CO2 is not the only significant pollutant from shipping that is of relevance from a climate impact perspective. Whilst the warming effect of CO2 emissions is undisputed, a reduction in the levels of SOx and NOx emissions will exacerbate the warming effect of shipping emissions on the Earth’s climate, adding to the urgency of addressing this issue.

recommendations The results of this study indicate that economics is insufficient as a driving factor for addressing this issue, and that change and enforcement through regulatory means are necessary to ensure full implementation of the measures. For designing regulations and incentives aimed at reducing emissions, further studies are warranted to understand the barriers to implementation (e.g. non-technical, training). Regulations should assist in overcoming barriers, and care should be taken to ensure that new barriers are not unintentionally constructed by the introduction of new regulations.

For these reductions to occur, a concerted effort from all parties of the ship transportation value chain is necessary, including yards, technology suppliers, owners, operators, cargo owners, and charterers. New ways of collaborating in the operational and commercial phase must be developed, with clear incentives for all parties to improve operations towards overall emission reduction (new contract types between parties, focussed environmental management, accurate monitoring systems, etc.).

In order to develop innovative solutions and to implement them in a rather conservative industry such as shipping,

large-scale demonstration projects are necessary. Development of tools and methods for assessing radical and novel designs, along with the complex ship systems, should be kept in focus. Improved tools for evaluating the performance of new solutions will ease their introduction into the shipping industry.

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Alvarez, J.F., et al., 2010. A methodology to assess vessel berthing and speed optimisation policies. 2010 Annual Conference of the International Association of Maritime Economists, Lisbon.

Berntsen, T. and Fuglestvedt, J. S., 2008. Global temperature responses to current emissions from the transport sectors. Proc. Natl. Acad. Sci. U.S.A. 105 (49), 19154–19159.

Buhaug, Ø., et al., 2009. Second IMO GHG study 2009; International Maritime Organization (IMO) London, UK, April 2009.

Dalsøren, S. B., et al. 2007, Environmental impacts of the expected increase in sea transportation, with a particular focus on oil and gas scenarios for Norway and northwest Russia, Journal of Geophysical Research, 112, D02310, doi:10.1029/2005JD006927.

Dalsøren, S., et al., 2009. Update on emissions and environmental impacts from the international fleet. The contribution from major ship types and ports. Atmos. Chem. Phys., 9, 2171-2194, 2009.

Dalsøren, S., et al., 2010. Impacts of the Large Increase in International Ship Traffic 2000−2007 on Tropospheric Ozone and Methane. Environ. Sci. Technol., 2010, 44 (7), pp 2482–2489. DOI: 10.1021/es902628e.

Denmark, 2009. Goal-based new ship construction standards - Guidelines on approval of risk-based ship design, MSC 86/5/3.

DNV, 2001. “Qualification procedures for new technology”, Recommended Practice DNV-RP-A203.

DNV, 2009a. Pathways to low carbon shipping. Public memo released at Norshipping, June 2009.

DNV, 2009b. Pathways to low carbon shipping - Abatement potential towards 2030. Public memo released at COP15, December 2009.

DNV, 2010. Nuclear Powered Ships – A feasibility study. External version of DNV Report no. 2010-0685.

Eide, M. et al., 2009a. Future CO2 emissions: Outlook and challenges for the shipping industry. Proceedings of the 10th International Marine Design Conference (IMDC), Trondheim, Norway.

Eide, M.S., et al., 2009b. Cost-effectiveness assessment of CO2 reducing measures in shipping. Maritime Policy & Management, 36:4,367 — 384.

Eide, M.S., et al., 2010a. Future cost scenarios for reduction of ship CO2 emissions. In print, Maritime Policy & Management.

Eide L. I. et al., 2010b, Ship transport over Arctic in 2030 and 2050, DNV Research & Innovation, position paper 3-2010. Available at http://www.dnv.com/resources/position_papers/shipping_arctic.asp.

Endresen, et al. 2007, A historical reconstruction of ships fuel consumption and emissions, Journal of Geophysical Research, 112, D12301, doi: 10.1029/2006JD007630.

Endresen, et al., 2003. Emission from international sea transportation and environmental impact, Journal of Geophysical Research, 108 (D17), 4560, doi:10.1029/2002JD002898.

Endresen, Ø., et al., 2004. Substantiation of a lower estimate for the bunker inventory: Comment on „Updated emissions from ocean shipping‟ by James J. Corbett and Horst W. Koehler, Journal of Geophysical Research, 109, D23302, doi: 10.1029/2004JD004853.

Endresen, Ø., et al., 2005. Improved modelling of ship SO2 emissions – A fuel based approach, Atmospheric Environment, 39, pp. 3621-3628.

Endresen, Ø., et al., 2008, The environmental impacts of increased international maritime shipping, past trends and future perspectives. OECD/ITF Global Forum on Transport and Environ. in a Globalising World, Guadalajara, Mexico. Also published in OECD (2010), Globalisation, Transport and the Environ., ISBN 978926407919-9.

Eyring, V, et al., 2005b. Emissions From International Shipping: 2. Impact of Future Technologies on Scenarios Until 2050. Journal of Geophysical Research, 110, D17306, doi:10.1029/2004JD005620.

Eyring, V. et al., 2010. Transport impacts on atmosphere and climate: Shipping. Atm. Env., 44, 4735 – 4771, doi:10.1016/j.atmosenv.2009.04.059.

Eyring, V., et al., 2007. Multi-model simulations of the impact of international shipping on atmospheric chemistry and climate in 2000 and 2030. Atmos. Chem. Phys., 7, 757–780.

Fuglestvedt, et al., 2008. Climate forcing from the Transport Sectors. Proc. Natl. Acad. Sci. U.S.A., 105, 454–458.

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Fuglestvedt, J., et al., 2009. Shipping Emissions: From Cooling to Warming of Climate—and Reducing Impacts on Health. Environmental Science & Technology 2009 43 (24), 9057-9062.

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