Shell endorses LNG amid criticism of fuel Hydrogen-powered fuel cells could be key to net-zero
Fuel cells will be a key instrument in decarbonizing the shipping sector, a Shell official said April 22 at an industry event. Grahaeme Henderson, the global head of shipping and maritime at Shell, also reiterated the oil and gas company's support for LNG as a fuel to meet medium-term climate goals and hydrogen to meet longer-term goals.
Henderson's speech followed a recent report by the World Bank stating that LNG will likely have a "limited role" in the decarbonization of the shipping sector and that countries should avoid new public policies that support LNG as a bunker fuel and reconsider existing support.
"We think that the key to unlocking net-zero emission fuels is fuel cell technology," he said. "And here, again, we see LNG playing a crucial role. As the lowest emission fuel available at scale today, with fuel cells, while we scale up production and infrastructure for the fuels for the future, we can develop the fuel cell technology while also reducing emissions now."
This is why Shell is joining a consortium of companies from across the value chain to trial fuel cells onboard a deepsea vessel, Henderson said.
"That trial will be using LNG to power the fuel cell. [It] can be replaced by hydrogen, or any other zero-emission fuel, when we have the capacity and scale to do so, as fuel cells can be used [in] all new fuel types."
In the longer term, Shell's analysis points to hydrogen with fuel cells as the zero-emission technology that has the greatest potential to help the shipping sector achieve net-zero emissions by 2050, Henderson said.
Compared with aviation, shipping is "behind the curve" on energy efficiency, Lloyd's Register decarbonization program manager Charles Haskell said April 20, adding that the impetus for change is being dampened by relatively low prices for heavy fuel oil used in shipping.
But even with efficiency measures in place "we need net-zero [CO2] vessels on the water by 2030 in order to reach our 2050 ambitions," Haskell said.
The marine sector is preparing for increasingly tougher environmental regulations, including a 40% reduction in CO2 intensity in the global fleet by 2030, compared with 2008, and a 50% reduction in greenhouse gas emissions by 2050, as mandated by the International Maritime Organization.
Many market watchers have said LNG will help with the 2030 target but not the 2050 target.
LNG's value as an interim fuel is reduced by pressing climate deadlines and because vessels being ordered now may still be in use in 2050, when LNG as used in its current form will not be compliant due to its potency as a greenhouse gas, sources said.
"We simply don't have the time [for LNG]," Lasse Kristoffersen, CEO of the shipping company Torvald Klaveness, said April 21 at a separate industry event.
LNG infrastructure costs are considerable. "The cost of LNG capable engines and associated storage and piping adds approximately $10-$15 million (or about 20%) to the cost of building larger vessels," S&P Global Platts Analytics said.
However, the operational cost of LNG is favorable to the currently prevalent 0.5% sulfur fuel oil, which will not meet either 2030 or 2050 environmental targets.
Platts assessed LNG as a bunker fuel at Rotterdam at $384/mt April 21 and 0.5%S fuel oil at $473/mt. This equates to LNG at $7.50/Gj and 0.5%S fuel oil at $10.84/Gj, according to Platts calculations.
Platts assessed the production cost of hydrogen by proton exchange membrane electrolysis (Netherlands, including capex) at Eur4.46/kg ($5.38/kg) April 21. The production cost via steam methane reforming with carbon capture and storage was Eur1.94/kg, including carbon.
Source: S&P Global Platts