Sustainable energy for the shipping industry by GREEN SHIP OF THE FUTURE

The maritime industry facing a fundamental shift and shaping the future of sustainable energies

The Head of Green Ship of the Future, Frederik Schur Riis joined us to share his views on the decarbonization of the industry. Green Ship of the Future was established in 2008 and gathers 60 members. The members are from all the shipping industry going from ship owners to suppliers of mechanics to the industry. They work together towards a future where shipping relies on sustainable energy:

We are working towards a future where the shipping and maritime industry is completely sustainable and emission free.

Today’s main topic is decarbonization, but this is not the only issue the industry is currently facing in terms of sustainability. Green Ship of the Future works on all aspects with its members, including production and operations. The goal for them is to collaborate with everybody to generate innovation, by looking at an issue from different perspectives and solving it in the best and financially sustainable way. The shipping and the maritime industry have been a driver of growth and globalization. 90% of all trade is transported by water, from commodities to cars, including people as well. While being the most environmental mean of transportation, it still has a lot of issues as it accounts for 3% of carbon emissions in the world for a sector that does not produce anything.

*Maersk Line is comprised of 660 owned and chartered container vessels

Reducing Greenhouse Gas: towards neutrality and sustainable energy

Now states and the European Union, are starting to move towards a greener system, with a goal from the International Maritime Organization of reducing the total annual greenhouse gas emissions by at least 50% by 2050 (compared to 2008). MAERSK is even more ambitious with the goal of going towards sustainable energy. They made the commitment of being “net-zero CO2 emissions by 2050”. This means we need to act fast.

Regarding “green” shipping, there are many factors to look at:

  • Sustainable production: producing the vessels
  • Sustainable operation: fuel, everything operating the ship
  • Sustainable on shore operation: loading cargo, containers, all the liquids…
  • Optimal utilization: same issue with car. Sharing vehicles e.g. issue with Uber, bring the utilization up.

When you place this on a spectrum of innovation, you have the degree of novelty over time. To innovate, Green Ship of the Future is looking at the retrofit series, ECO feeders, 3D printing, all the tools of digitalization, circular economy and of course future fuels.

Energy as the problem and solution

The largest climate sinner is the energy vectors. First, we had sail, then steam vessels which were great but horrible for the climate. Now we are relying on some sources that are fossil-based and that are not sustainable. If we continue to use energy in the quantities we do, the climate will simply not regulate itself. The need is for the energy vectors  to go back to their renewable origins. There are different issues for each.

Solar energy, wind power and hydropower are the most in use, but they all fluctuate. Then there are other forms of “sustainable” energy such as nuclear but they face other issues and it’s not that promising right now. Biomass is another option, but we don’t have enough data at the moment of how much we have and if it can be really sustainable, so we might come back to it later. If we look at Denmark, on some days they can produce more than a 100% of their energy through windmills, but on average it’s only about 50%. We need to find a way to stabilize this.

Renewable energy can be produced at the place of consumption, with sails or solar cells, which are good contributors but not totally reliable. There are nuclear powered vessels but this is mostly for the military. But some fuels can be centrally produced, stored and transported for consumption such as batteries.

A new sustainable & storable energy

There is a new idea, which is called E-fuels. It is being considered by the maritime industry and the rest of society since it can be stored. It is either power-to-gas or power-to-liquid. Through electrolysis, it separates water into Hydrogen and Oxygen where hydrogen is an energy carrier. It is hard to store, but it is changing the way society uses energy. Hydrogen could be a new oil but we need hydrogen carriers. It could be combined with carbon, or nitrogen.

The issue is that, even though we find sustainable sources of energy like green carbon, they all have their problems. Is there enough green carbon? How do we make sure that we don’t destroy a forest, that we don’t take out land? And obviously, we are not the only ones thinking about this. The airline industry will also need green carbon. Plastic factories as well, and so will the chemical industry and many more.

Vector of the future

Energy production as well as the related infrastructure and trade fall under a spectrum of innovation that is very radical.

“It will disrupt the entire industry around energy. We have built our society around oil and around fossil energies. So a change away from that towards hydrogen or other sustainable energy vectors is an amazing opportunity, for the maritime industry but also for society in general. There will be a lot of value created.”

The problems to be solved are first, achieving better energy efficiency for the shipping vessels, then reaching an optimal level of utilizing the ships by digitization with IoT and Machine learning. The goal is to scale up electrolysis, battery energy storage capacity, fuel cell technology and carbon capture and storage. Finally, we need increased transparency and a classification of sustainable biomass.

Q&A

We talked about these goals to achieve carbon neutrality and sustainable energy by 2050. What about this timing? 2020 to 2050, are there concrete actions already taking place?

There are a lot of concrete actions, there are a lot of partnerships taking place within the industry. We’re seeing the “Getting to zero” coalition, with a lot of energy producers and ship owners, coming together with the goal of getting the first carbon-neutral vessel in the waters by 2030. And then there are the Poseidon Principles. It is a partnership of loan givers and capital providers for the maritime industry, that have come together to set standards. It’s 20% of the entire loan book for shipping, coming together to say how companies should be efficient and communicate for them to get access to financing.

You mentioned that a vessel can last for 28 years and in 2 years we must already have some solutions. When you mention solutions, are you talking about the early incremental innovation?

Within the next couple years we need to have the first testing ships on the water. We are already seeing ships that are able to use some of the matters that are close in characteristics to what we need to achieve. It’s going to be a transition, acting retroactively as well.

Are you aware of any trials with multi energy sources? And harvesting energy while at sea?

They are looking a lot into that. There are a lot of interesting solutions. For instance, in terms of wind harvesting, there are different concepts. Some have installed a roller on top so that no matter in what direction the wind blows, you can use the energy created to propel the vessel. Some other are trying to put sails on the side of the vessel, or some with the same principle of kite surfing. And once you have installed this, it is basically free.

You also mentioned the on-shore operations, does the goal for 2050 also takes it into account?

From the IMO perspective, they haven’t put any guidelines. But given the fact that they say GHG emissions, yes. But the operations are by far the largest contributor so it has to be addressed.

You said that there is a lot of room for optimization of the resources in shipping. Is it possible to imagine an application, where myself as a consumer I could order which boat and route I could take?

There are already some startups, targeting at least small companies, where they can have all the information including the carbon emission. Creating that transparency is definitely something that is needed. It’s the first step before the consumer starts pushing the market. Companies such as IKEA, H&M are starting to push the transportation into becoming more sustainable, and actually clarifying how much they emit. I think that’s a tendency we’ll see more and more and this will be the opportunity for other companies to come out.

“This will be the opportunity to create transparency in this value chain. I believe that a lot of people, if given the choice, will make the best one for the planet and the environment.”

Are you aware of any specific funds in Europe supporting startups in the maritime sector or circular economy, maritime oriented?

First it depends on the location in Europe. But there are indeed, in the large projects such as Horizon 2020 a lot of circularity, in the maritime or production. Also, a lot of countries have their own innovation activities. We have been collaborating with the Danish maritime foundation, which is a private foundation, and there must be others looking into this. Good advice is to not only look at public funding but to strongly consider impact investors.

From your presentation, Hydrogen seems to be the right way to go. Are there any competing solutions?

The industry is very diversified. Within shipping, we have everything, from the smallest vessels coming from a small harbour to the largest at 400 meters long. Different boats have different needs. Batteries, fuel cells can work with small ones for instance. But the large vessels that take an extreme amount of energy and don’t go to port that often would require something such as one of the hydrogen carriers, like methanol, ethanol, would be preferable. The real question right now is to find a sustainable energy vector for large vessels.

 

About the speaker

Frederik Schur Riis is Head of Green Ship of the Future (GSF) – a non-profit collaboration of more than 50 leading organizations from the maritime industry. The aim of GSF is to facilitate collaboration and innovation, and work towards a sustainable impact free maritime industry. Frederik has a background in entrepreneurship and impact investing, and has founded, consulted and invested in companies from various industries, all with the common denominator of being for profit, while aiming to solve one or more of the UN Sustainable Development Goals.

World Energy Investment 2020: Tracking and Accelerating Clean Technologies

One of the main challenges within the innovation sector is to manage our World Energy Investment. The International Energy Agency observes the developments in world energy investment and tries to bring an expert point of view to its urgent topics. Dr. Simon Bennett, technology analyst, came to explain the issues that he considers the most essential to our society.

What is the International Energy Agency (IEA)?

The International Energy Agency (IEA) is an intergovernmental agency providing authoritative analysis, data, policy recommendations, and real-world solutions to help countries provide secure and sustainable energy for all. Created in 1974, the IEA originally helped co-ordinate a collective response to major disruptions in the supply of oil. Nowadays, oil security remains a key aspect of its work. In addition, the IEA advocates policies enhancing the reliability, affordability and sustainability of energy – taking an all-fuels, all-technology approach that included renewables, oil, gas and coal supply and demand, energy efficiency, clean energy technologies, electricity systems and markets, access to energy, demand-side management, and much more.

IEA is well known for the World Energy Outlook. Simon Bennett explains that they have started the modelling for this year’s outlook, and it has already revealed a number of uncertainties and challenges relating to the crisis arising from the Covid-19 pandemic. The major developments in the modelling over the last decade include outcomes of technology innovation, such as the costs of renewable energy coming down, as well as policy developments. This modelling helps IEA generate different scenarios that can be used by governments and investors to understand how energy futures might unfold.

The History of the World Energy Investment

To understand world energy investment, Dr. Simon Bennett suggests first to look back in time as “it’s good to remind ourselves where we have come from.

In 1919, societies relied mainly on two resources, wood and coal. Oil was not really in the picture as it was mainly used for lighting. In 1950, there was a rise in motor car use which raised the demand for oil, while petrochemicals were still under development. Coal continued to provide electricity but wood went down. This trend really accelerated up to 1974, which is when the IEA was formed in the time of the first oil crisis. At the same time, natural gas started to show its worth as well, especially from the aviation sector’s gas turbines which led onto more large-scale power generation. But we had to wait until the year 2000, just 20 years ago, before we started to notice the introduction of modern renewables like wind and solar.

If you look then at 2018, the breakdown of our sources of energy is quite similar compared to the time of the oil crisis, with only an increase in renewables which don’t have a big impact. But the most impressive observation is the massive increase in the amount of energy use, over a century. Global energy use is ten times higher than in 1919, the global economy is 20 times bigger and the world population grew from 2 billion to 7 billion.

Future World Energy Investment depends on investments in innovation

According to the IEA’s projection, this trend is going to continue to grow under governments’ stated policies and without additional policy change it is unlikely that the world will meet the climate challenge. This increase in energy demand also affects other critical policy goals: energy security, but also air pollution, and full access to energy for the developing world. There is a large number of challenges, and new technologies can help to meet them.

There is a need for innovation across the energy sector and for cost reduction. This is not just about brand-new technologies. It is a gradual improvement of the technologies we already have to squeeze out the energy needs that we have. There has been tremendous progress, especially leading to improvements in energy efficiency.

World Energy Investment by sector and region

Energy investments do not happen in a vacuum. If they did then many models would prefer to invest in nuclear power because the costs per unit of energy can be low despite the large upfront capital cost and political challenges. But anticipating how investments can unfold in future requires an understanding of how new technologies fit with economic, social and political contexts.

In aviation, there is a need to produce sustainable biofuels that would not have a negative impact while having the right attributes to fulfil energy needs. This requires innovation in the biotech sector, but also in crop production and crop processing. Also, if we want to bring more electric power to airplanes, we need batteries that have higher specific energy densities and lighter airplanes. The innovation needed to deliver these technologies varies considerably between these sectors, and the contexts in different regions is not the same.

World Energy Investment: Reducing the cost

The IEA has been looking at indicators like small unit scale technologies that can be modular and mass produced, and for which you might go through multiple generations of designs in the time it takes to deploy one generation of a large-scale engineering solution. In solar PV, the price lowered considerably when it started to be mass produced. Unsurprisingly the amount of energy produced by those means have gone up. Policies that supported the private market to invest in PV created the business case for investors to take risks in larger and larger factories over the past 50 years.

If you can bundle up smaller projects in order to attract funding, the business model is different and you can reduce the cost of capital. In time we could have something that allows us to reward people for charging their car at the right time of the day and create value for all these small decisions in aggregate. Governments can address some of the barriers and encourage companies to try and find the best business models, compete with others, and work with companies, governments, investors to get the best solutions to customers. In this way, regulation can support innovation by pressing companies to move towards sustainability and efficiency.

Innovation: who should lead the way?

Innovation is an inherently uncertain process. A small company could be the next Tesla. But they could also be absorbed by a large group and create a better future. It is hard to know where the next step is going to come from. Currently, a lot of investment is going into start-ups from the energy sector, including companies that hope to store energy in the form of hydrogen. This investment activity shows where people perceive the next big opportunity to be. This is coming a lot from the transport and the digital industry.

In this field of innovation, it can be necessary and actually productive to compress time, and instead of thinking “how long will it take”, reverse the situation and ask how long do we have?

Today, digital technologies tend to have much more turnover, so we might see some true breakthroughs that we didn’t expect.

Covid-19: what does the crisis hold for clean technologies?

Covid-19 raises a lot of questions. Clean energy investment has remained at 40% of total energy investment in the past few years. This share will likely increase in 2020, but it is not necessarily a good sign as the share of clean energies is only increasing because the absolute amount of investment in fossil fuels is going down. The uncertainty brought on by the crisis carries a lot of risks and this has displaced fossil fuels where clean energy technologies have remained somewhat more resilient. All eyes are on the way governments respond to the Covid-19 challenge.

In a disrupted world, could we actually replace fossil fuels faster with the help of technology? A lot of governments are announcing that they want to invest in green recovery plans, this sounds a little bit like after the economic crisis, except that this time, they have more experience. In response to Covid-19, R&D spending is likely to suffer without additional stimulus. Companies are signalling commitment to clean energy goals and R&D can be expected to be much less affected than capital expenditures, but corporate R&D is likely to be cut nonetheless.

Governmental action & World Energy Investment

Governments make the market rules that shape all of the investments. They set the agenda and they can change the incentives. Particularly in innovation they have long helped to correct for market failures by investing in Universities and Research Centres but their actions to stimulate innovation can take many other forms.

The IEA has published their “sustainable recovery plan”, which looks at sectors that could absorb capital and create jobs. Energy efficiency and construction manufacturing could get 9 million additional jobs in the energy sector to displace all the 5 million jobs that we think are at risk.

Hydrogen-based technologies: what role for them in the future energy scenarios according to the IEA?

Something that is surprising everybody is the scale of interest and investment in hydrogen, just compared to 5 or 10 years ago. But it continues to face uncertainties, especially in the current context. Everybody looks at Hydrogen as a really sustainable source of energy, but for now it is a source of emissions. To what extent is it a real solution? And who are the competitors going to be? We do see resilient investment in hydrogen though. Signals from countries like Germany, Australia and the European Union this year. But the speed of deployment and the speed with which hydrogen production contributes to sustainability remain uncertain. Good energy policy can incentivise innovation and more sustainable values chains.

 

About the speaker

Dr. Simon Bennett is Technology Analyst at the International Energy Agency. After working as a researcher for various structures, including the European Commission, he is now acting within the IEA. With a strong background of a decade of international experience working on technical and policy aspects of energy, he now co-leads work on energy technology innovation policy and investment. His position makes him responsible for tracking investment in demand side topics and new technologies. During this Impact Week, he came to give a talk highlighting his work and the related challenges we have in the next 50 years.

Interview with John Suh, Hyundai CRADLE

John Suh, Vice president and founding Director of Hyundai Center for Robotic-augmented Design in Living Experiences (CRADLE) is one of the Future Shaping Innovator eager to empower disruptors through Open innovation. John Suh will join INPHO® Venture Summit on the 11th and 12th of October in Bordeaux looking for open discussion and collaboration with participants.

INPHO Venture Summit: Industry leaders insights on emerging new economies and opportunities in our fast-changing digital world

The face-off between investors and global industry players on key market issues in datacom/telecom, mobility, energy management, and personalized medicine, as well as disruptive technologies.

The largest European business enters into Smart Innovation

he largest European business is entering into Smart Innovation and digitization. More than 35 products addressing the digital and smart market are currently under validation for the first market introduction by 2017.

Those new generation smart products are addressing the 54B€ connected devices market expected in 2020 (source Yole Développement) in targeting more than 7 different industrial fields from the consumer market to security, digital medicine, energy efficiency, smart manufacturing, smart cities and also the agriculture industry. With the first investment of 1,3 M€ funded directly by the European Commission, 200M€ cumulative sales are expected in the 5 years to come.

Better production environment

BLUMORPHO enables the digitization of any kind of industry in addressing key challenges such as cybersecurity, pyrotechnics or bearings