Technical readiness
New technologies create new opportunities. This section gives an outlook of technical development supporting the decarbonization of the maritime and heavy road freight sectors as well as ports.
The decarbonization of the maritime and transport sectors
In the following sections, the current state and outlook in the process of decarbonizing the maritime and transport sector are described, with a special focus on the heavy road vehicle sector and the commercial maritime sector. The aim is to explore when a fully decarbonized road freight sector might emerge and what type of fuels may limit the excessive CO2 emissions caused by maritime transport.
A fossil-free maritime sector – what are the different options to decrease emissions?
To significantly reduce emissions from the maritime sector, a rapid uptake of renewable fuels will be key. As for alternative maritime fuels, there are several emerging options, each with their distinct characteristics and pros and cons. In general terms, each shipping line will need to evaluate and decide on what alternative fuel that is the most feasible, depending on – among else – type and size of the fleet, type of operation and annual energy consumption. It will be a matter of retrofitting existing vessels or build new vessels. Also, it will be a matter of the level of ambition and the willingness to invest and be a frontrunner in the energy transition.
Similarly, each port that serves as a bunker-hub, will need to evaluate, and decide on what alternative fuels that are the most relevant be offered in the port in the future. For these fuels, the port needs to make preparatory work to be ready with safety regulations and port infrastructure. Also, storage facilities and bunker infrastructure (e.g. pipelines or bunker barges) must be in place to make bunkering of alternative fuels happen.
To significantly reduce emissions from the maritime sector, the rapid adoption of renewable fuels is crucial. In terms of alternative maritime fuels, various options are emerging, each with its distinct characteristics and pros and cons. Shipping lines, in general, must evaluate and choose the most feasible alternative fuel, based on factors such as fleet type and size, the nature of operations, and annual energy consumption. The decision may involve retrofitting existing vessels or building new ones, depending on the level of ambition and the willingness to invest in being a frontrunner in the energy transition.
Similarly, every port functioning as a bunker-hub must evaluate and decide on the most relevant alternative fuels to offer in the future. For these fuels, ports need to undertake preparatory work to establish safety regulations and port infrastructure. Additionally, storage facilities and bunker infrastructure, such as pipelines or bunker barges, must be in place to facilitate the bunkering of alternative fuels.
Milestones in the fuel transition so far
In 2012, the US shipping firm Totem Ocean Trailer Express (TOTE) contracted General Dynamics NASSCO shipyard in San Diego for the design and construction of two 3,100 TEU vessels. Upon entering service in 2015 and January 2016, these vessels became the world’s first container ships powered by liquefied natural gas (LNG). The environmental benefits were significant, including a 99% reduction in particulate matter (PM), a 98% decrease in sulfur oxide (SOx) emissions, a 71% cut in carbon dioxide (CO2) emissions, and a 91% reduction in nitrous oxide (NOx) emissions.
Since then, LNG has remained the preferred alternative fuel for ordering new vessels operating on alternative fuels. According to DNV’s Alternative Fuels Insight (AFI), LNG is used as fuel for approximately 75% of all vessels running on alternative fuels in operation today. The second most preferred alternative fuel is liquefied petroleum gas (LPG).
More recently, especially for container ships, methanol has gained increasing interest as an alternative fuel. As of early 2023, approximately 20% of all container ships using alternative fuels were constructed for methanol. In September 2023, Danish shipping line Maersk introduced the Laura Maersk, which is set to become the first container ship to operate entirely on green methanol. Additionally, hydrogen is anticipated to soon be in operation as an alternative fuel, according to DNV’s Alternative Fuels Insight (AFI). The HySeas III project aims to introduce the world’s first zero-emission, sea-going ferry powered by hydrogen derived from renewable sources.
For smaller vessels covering shorter distances, electric propulsion becomes a viable option. Notably, Asko Maritime, Norway’s largest grocery distributor, has invested in unmanned electric barges to traverse the Oslo fjord, providing an innovative and low-carbon transport solution.
In 2021, Alfa Laval and Wallenius jointly announced the formation of a venture, AlfaWall Oceanbird, dedicated to developing technology for fully wind-powered vessel propulsion. The Oceanbird concept demonstrates the potential to reduce emissions from vessels by up to 90% when all emissions-influencing factors are aligned. AlfaWall Oceanbird plans to have the first vessel with a full-scale wing sail prototype sailing in 2024, with the goal of deploying the first vessel featuring a full set (6) of Oceanbird wing sails in 2027.
These advancements mark promising milestones for the international shipping industry, which contributes around 3% of greenhouse gas emissions and aims to achieve net-zero emissions by 2050.
Different levels of maturity for different fuels
The Maersk McKinley Möller Center for Zero Carbon Shipping, based in Copenhagen, has published The Fuel Pathway Maturity Map, which presents an overview of readiness across the main alternative fuel pathways. It's important to note that the maturity map doesn't assess the commercial feasibility of the different fuel pathways.
Examining the maturity map reveals the varying levels of maturity for fuels concerning production, storage, safety, and regulatory aspects. Notably, fuel production at the best is considered to be at medium level, i.e. solutions exist, but there are some challenges for example on availability.
In terms of reducing greenhouse gas (GHG) emissions from vessels, the most mature fuel pathways are e-methanol and bio-methanol. It's important to note that while methanol combustion releases CO2 tank-to-wake, e-methanol produced with carbon sourced from a biogenic source can achieve close to net-zero emissions well-to-wake. Therefore, green methanol combustion is considered as a viable low-emission marine solution.
Bio-methanol combustion releases the same amount of CO2 as was captured and stored in the original biomass, making bio-methanol a CO2-neutral biofuel in a well-to-wake perspective.
Estimation on when alternative fuels will be available
Port of Gothenburg is the largest bunker hub in Sweden. Here, roadmaps for several different types of alternative fuels are explored to make the port ready for handling and offering the various fuels. At the Port of Gothenburg, methanol from truck was bunkered already in 2015 and in the same year LNG was first bunkered. LBG was first bunkered in 2018. Then, in January 2023, the first ever ship-to-ship bunker operation of methanol took place, when Stena Germanica was bunkered at the Port of Gothenburg.
The table below outlines the Port of Gothenburg’s estimations for the introduction and scale up of different alternative fuels:
The heavy road freight sector in 2050
“There is no silver bullet in the transition – all solutions are needed: the combustion engine with biogas and biofuels; battery-electric vehicles and fuel cell electric vehicles.”
To reach a carbon-neutral heavy road freight sector by 2050 will need a combination of several fossil-free solutions.
The commercial road vehicle industry has committed to achieving decarbonization by 2050 at the latest. Carbon neutrality by 2050 implies that by 2040, all new commercial vehicles sold must be fossil-free. However, achieving this goal is not solely dependent on vehicle manufacturers. Several enabling conditions must be fulfilled to make carbon-neutral trucks the preferred option. To truly achieve zero-emission transport, all the following four parameters must be in place:
- Vehicle availability in the market: For instance, the Volvo Group launched serial production of electric trucks in 2023.
- Electricity charging and hydrogen refueling infrastructure: Robust infrastructure for charging electric vehicles and refueling hydrogen-powered trucks is essential.
- Availability of fossil-free electricity and hydrogen: Ensuring a reliable and sustainable supply of fossil-free energy sources is crucial for achieving carbon neutrality.
- Viable business cases for transport operators: Developing profitable business models and economic considerations are essential to encourage transport operators to adopt zero-emission vehicles.
Failure in any of these parameters will hinder the transition to zero-emission road freight transport. Consequently, predicting the exact curve of the transition depicted in the graph above is challenging. Different segments within the heavy road vehicles industry may experience varying timelines. Local and regional transport operations will be first in becoming carbon-free, while long-haul road vehicles will be available at a later stage.
Financial aspects
Electrified transport and infrastructure solutions are aiding transport operators and their customers in significantly reducing emissions and noise. Electric trucks and other heavy-duty machines are currently viable options from a total cost of ownership perspective in specific segments and markets. This transformation will continue to evolve segment by segment and region by region, with the demand for electric trucks and machines expected to rise.
With advancements in battery and hydrogen fuel technology, along with the rapid expansion of charging networks, both Volvo Group and Scania are confident that the transformation of the entire transport industry is inevitable.
The national system demonstration REEL (Regional Electrified Logistics) is a public-private collaboration in Sweden that creates insights and real data from actual use cases, developing knowledge to be shared. The main goal is to ensure a smooth transition in the road freight sector from a dependence on fossil fuels to electrified operations.
Incentives to promote zero-emission road freight vehicles
The investment cost for zero-emissions vehicles is higher than that for conventional diesel vehicles. Well-designed incentive models are crucial, as a thoughtfully crafted incentives program can significantly expedite the transition.
Incentive models are primarily a matter for each member state and should be developed with a perspective on system change (similar to IRA in the USA). The industry needs prompt implementation across many, if not all, member states in Europe, without unnecessary delays and administrative burdens.
Investment incentives will play a particularly vital role in accelerating the transition. They not only improve the business case for customers but also send a crucial signal from society that this transition is underway. It is essential to avoid incentive programs that suddenly disappear. Transporters require straightforward models that they can trust and plan for, including a well-communicated phase-out ambition. This phase-out should occur when the market can continue the transition based on its own business merits, done professionally and segment by segment.
Supply and demand for the future electrification of terminals and hinterland transportation
To support the transition toward the electrification of port logistics, including road vehicles, equipment, and potentially maritime vessels, there is a need for an expansion in production and grids to facilitate the distribution of electricity. The overall transport system, with ports being a focal point, can prepare for the growing demand for electricity by:
Infrastructure Investments: Ports should invest in expanding and upgrading their electrical infrastructure to accommodate the increasing demand for electricity. This includes the installation of additional charging points, onshore power connection points, upgrading electrical substations, and expanding the capacity of the electrical grid within the port area.
Energy Storage: Implementing energy storage systems, such as battery storage or other emerging technologies, can assist ports in managing fluctuations in electricity demand and supply. Energy storage can also facilitate the optimization of renewable energy integration and enhance the overall reliability of the port’s electricity supply.
Smart Grid Technologies: Ports can leverage smart grid technologies to effectively manage electricity consumption, optimize energy distribution, and promote energy efficiency. Advanced metering systems, real-time data analytics, and demand response programs can be employed to ensure the efficient usage of electricity.
Autonomous Solutions: The potential for autonomous solutions to bring a wide range of benefits to society is evident. The introduction of self-driving vehicles and machines opens the way to transport systems that have a significantly reduced impact on the climate, are more productive, more energy-efficient, and safer. Although autonomous solutions are in relatively early phases, the belief is that they may offer a significant growth opportunity as they tap into substantial revenue pools that have not previously been addressed. Instead of selling a truck or machine, OEMs can provide customers with complete transport systems, driving productivity for them and revenues for the producers.
Connectivity: Today, most, if not all, sold vehicles are already connected. This connectivity provides the fundamental prerequisite to develop new services that enhance the experience. Digitalization will also play a crucial role when sites like ports, mines, logistic hubs, etc., become connected and providing new business models and solutions. A digital infrastructure to exchange information and data will open the door to a more efficient transport system. Several publicly funded initiatives, such as REEL driven by Closer at Lindholmen Science Park, provide valuable insights and learnings in this context.
