The study says heavy fuel oil (HFO) will remain the dominant fuel choice for deep sea shipping, but just how big a share of the fuel mix it accounts for will vary according to three different scenarios used in the study.
It suggests that liquefied natural gas (LNG) could account for up to 11% of the deep sea bunker market by 2030. During a presentation of the study in London on Tuesday night, the researchers stressed that this was from a very low base, and the study did not include LNG used as fuel in local coastal trades.
“It is important to note that an 11% share in 2030 is the equivalent in volume of about 20% of the bunker market today,” said Dimitris Argyros, LRs Lead Environmental Consultant.
All the three scenarios see HFO use increase until 2025, then begin to drop off both as HFO’s share of the marine fuel mix declines. One scenario sees overall marine fuel demand increase until 2025, then declining, while two see overall fuel demand continuing to rise after 2025.
The study assumes that a high share of HFO will remain possible even after the global sulphur limit drops to 0.50% because of a high uptake of emissions abatement technology.
The three scenarios are called Status Quo, Global Commons and Competing Nations. Under Status Quo it is “business as usual” with the world continuing to pursue economic growth. The Global Commons scenario anticipates that concern over resource limitation and environmental degradation will put focus on a more sustainable world and fairness in wealth distribution. Competing Nations is a scenario were states act in their own national interest, leaving little cooperation for sustainable development and international norms.
The Global Commons scenario would lead to the highest growth in marine fuel use as it sees governments working together to promote growth in international trade, which boosts shipping. Under this scenario, the researches at UCL assumed that a global 0.50% sulphur limit would be introduced in 2020, explained Tristan Smith of UCL.
The study says HFO would account for 58% of all fuels in 2030 under Global Commons, after both HFO use and overall fuel use peaks in 2025. By 2030, it sees hydrogen accounting for 9% of deep sea fuel use by mass, because the Global Commons scenario favours the uptake of low carbon technologies stimulated by a significant carbon price. The remainder of the 2030 fuel mix would be marine distillates and LNG.
The Status Quo scenario assumes that the global 0.50% sulphur cap is delayed until 2025. This scenario would see marine fuel use continue to rise beyond 2025, but it sees the smallest share of HFOs at 47% of the fuel mix by 2030. The rest would be divided, in declining order, between low sulphur HFO, marine distillates and LNG. This scenarios has the highest LNG uptake at 11% by 2030.
HFO would have the biggest share of the 2030 fuel mix, at 66%, in the Competing Nations scenario, which has the smallest LNG uptake. The second most used fuel would be low sulphur HFO, followed by marine distillates.
Despite HFO making up the biggest part of the fuel mix, Competing Nations is the only scenario where HFO use in 2030 would drop to the same level as in 2010. This is because the Competing Nations scenario would see the least growth in marine fuel demand because it would mean a rise in protectionism, with less global trade, and slower economic growth.
The researchers assumed that the global 0.50% sulphur limit may not come into effect until 2030 under the Competing Nations scenario, which would be characterised by regulatory uncertainty and a lack of international cooperation.
“I think that the report underlines that any transition from a dependency on HFO will be an evolutionary process,” commented Argyros, who was leading the project.
“Technology will not be a barrier,” Argyros said. The carbon focused scenario, Global Commons, would make hydrogen emerge as a significant fuel, while it did not feature under the two other scenarios.
Summarising the study, Argyros said society’s response, or lack of response, to the threat of climate change will be the main driver of marine fuel demand and fuel choices.