Economic Assessment of Maritime Fuel Transformation for GHG Reduction in the International Shipping Sector

Yanfang Zhao, Feng Liu, Yuanyuan Zhang, Zhanli Wang, Zhen Song, Guanjie Zan, Zhihuan Wang, Huiru Guo, Hanzhe Zhang (), Jia Zhu and Penghao Su ()
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Yanfang Zhao: China National Petroleum Corporation Natural Gas Sales Branch, Beijing 100028, China
Feng Liu: China National Petroleum Corporation Natural Gas Sales Branch, Beijing 100028, China
Yuanyuan Zhang: China National Petroleum Corporation Natural Gas Sales Branch, Beijing 100028, China
Zhanli Wang: PetroChina Planning & Engineering Institute, Beijing 100083, China
Zhen Song: PetroChina Planning & Engineering Institute, Beijing 100083, China
Guanjie Zan: PetroChina Planning & Engineering Institute, Beijing 100083, China
Zhihuan Wang: Ship Energy Efficiency Data Center, Shanghai Maritime University, Shanghai 201306, China
Huiru Guo: Ship Energy Efficiency Data Center, Shanghai Maritime University, Shanghai 201306, China
Jia Zhu: Ship Energy Efficiency Data Center, Shanghai Maritime University, Shanghai 201306, China
Penghao Su: Ship Energy Efficiency Data Center, Shanghai Maritime University, Shanghai 201306, China

Sustainability, 2024, vol. 16, issue 23, 1-14

Abstract: This study aims to predict the economic transition pathway for alternative fuels in accordance with the 2023 IMO GHG Strategy goals. The assessment considers the impact of alternative fuel transition on fuel costs (∆ COST Fuel , t ), carbon emission costs (∆ COST CO2 eq , t ), and ship new/retrofit costs (∆ COST ship ). The parameters and boundary conditions were set based on the current status and trends in the international shipping industry, as determined from previous research, to predict the economic transition pathway for alternative fuels. The results show that in 2050, with a standardized economic efficiency of 130%, profit will reach its maximum value, approximately −54,000 million USD. The study standardized fuel Δ COST j , normalized , and Δ NPV % j , normalized as a basis for adjusting penetration rates. At this time, considering fuel costs and NPV%, the composition of alternative fuels is as follows: bio-LNG, bio-Methanol, e-LNG, e-Methanol, e-Ammonia, BD, and Fossil-LNG, with shares of 18.56%, 4.00%, 25.64%, 6.00%, 10.00%, 28.00%, and 0%, respectively. Compared to conventional marine fuel HFO, the increase ranges from 23.54% to 69.50% in the 2030s, 0.52% to 0.55% in the 2040s, and decreases by 6.88%–14.69% in 2050. Using more LNG and BD in the 2040s and 2050 is an alternative way to achieve a better economic fuel transition. Moreover, the economic penetration rate combination set in this study can achieve sufficiently small ∆ COST T , t and sufficiently large NPV Δ t under specific assumptions and boundary conditions, rather than an absolute minimum ∆ COST T , t or the absolute maximum NPV Δ t . The results revealed that no single alternative fuel has a comprehensive advantage in reducing carbon intensity and economic performance at all times. Given the uncertainties in the supply chain, cost-effectiveness, and infrastructure for Methanol and Ammonia, LNG and BD play a crucial role in the transition of international shipping fuels. Our work provides a fundamental and comprehensive prediction of fuel transition based on the current status and trends in the international shipping industry.

Keywords: IMO GHG Strategy; decarbonization; technical requirement; alternative fuel (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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