The increased environmental standards of operation in the Arctic region impose strict requirements on the quality of marine fuel used. This is a serious challenge for Russia and shipowners who will have to find a cleaner alternative, learn to use it and complete the transition.
Nikita Dobroslavsky is expert at the SKOLKOVO Moscow School of Management
Shipping in the Arctic is an important element of socio-economic development and, in most cases, the only way to import materials and component parts and export finished industrial products. As a result, industrial projects in the Arctic have a potentially high impact on the environment, not only directly at the project site, but also along the entire Arctic shipping route.
The International Maritime Organization (IMO) sets emission standards for acidic oxides (NOx, SOx) in shipping. Apart from that, there is an ongoing debate on the issue of regulating CO2 emissions, as well as so-called black carbon emissions, which are formed by the incomplete combustion of fossil fuels, wood and other fuels. These requirements apply in all regions of the world. However, for the Arctic region, the risks of fuel spills are to be considered with utmost attention, since their clean-up is obstructed due to the harsh climatic conditions and the low density of spill-response facilities.
For a long time, the regulatory mechanisms for shipping concerned only the quality of fuel and its sulfur content. At the same time, international and national emission control areas were identified, where more stringent requirements applied to fuels and emissions of acidic oxides.
For the Antarctic zone, a straightforward ban on the use of residual fuels was introduced. It is expected that from 2024 it will be introduced in the Arctic too, however, it may be postponed until 2029 for certain types of ships. Recently, the impact of black carbon on the climate and global warming processes has been actively discussed.
The most stringent requirements are set for emission control areas (ECAs). But there are no plans to establish an ECA in the Arctic seas. Instead, environmental safety will be ensured by controlling the types of fuel used by marine vessels. The prohibition of the use of residual fuels, including fuel oil and various heavy fuels (HFO), in shipping in this region is considered a priority measure.
At the same time, there are no plans to ban the transportation of oil and fuel oil in the Arctic, since oil products provide for the supply of essential goods and serve as the basis for the energy supply of local Arctic communities.
Based on this, the ban on the use of HFO will have a major impact not only on shipping and energy supply to consumers, but also on mining projects in the Russian Arctic. This is due to the fact that when exporting products, cargo ships cross the Arctic waters zone and, in the event of such a ban, they would need to undergo a full transition to the use of other types of fuels.
The ban on the use of HFO will certainly lead to an increase in costs for maritime transport, which will result in the reduction of disposable income of the population and increase costs for industrial enterprises. However, the ban can have a significant positive impact on the state of the environment, the quality and life expectancy of the local population, and the preservation of the traditional way of life of the indigenous population. At the same time, the environmental consequences of using alternative fuels are not fully understood, which creates greater uncertainty and risks when switching to alternative fuels.
Such a ban will also apply to fuel oil with low sulfur content — this is a residual fuel that does not serve as an environmentally friendly alternative to HFO. In this regard, the following scenarios can be identified for the Russian Arctic fleet in the context of increasing environmental requirements.
Shipowners and fleet operators in the Russian Arctic are facing a rather difficult strategic choice. The use of low-sulfur residual and distillate fuels will lead to an immediate increase in operating costs. At the same time, the installation of a scrubber — a special device used to remove various compounds from gases — will not allow for the use of fuel oil after the introduction of the ban on the use of residual fuels in the Arctic in 2024.
Even greater risks are faced by shipowners when building new vessels that require high capital investments. At the same time, converting to LNG or ordering a new fleet is the most capital-intensive investment solution. However, in this case, the fleet’s operations will be allowed in the Arctic zone for the long term, until 2050. Even the new strict environmental requirements will not affect the operational activities and will not lead to additional capital costs during the ship’s life cycle.
Since maritime transport is the most cost-effective means of delivering goods — today, more than 80% of world trade is carried out via sea — significant results in reducing global greenhouse gas emissions can be achieved through regulating the quality of fuel used in shipping. This can also be done by further tightening the emission standards for using fuel. In particular, IMO is expected to introduce additional emission restrictions and requirements with regards to the quality of fuel for shipping by 2050.
Reducing emissions along the production chain can be achieved in many ways. In particular, this can be done by reducing fuel consumption and improving the energy efficiency of marine engines through technological improvements, the use of fuels with a reduced carbon footprint (for example, LNG), as well as the capture and neutralization of emissions. Scrubbers and neutralizers can be used for this purpose.
Conversion to fuels with lower carbon footprint in their production and use is a key area for reducing greenhouse gas emissions from shipping.
The following types of fuels are considered as alternative fuels suitable for shipping in the long term:
Estimates of the potential of alternative fuels that need to be used to achieve the 50% reduction in greenhouse gas emissions by 2050 do differ. However, to achieve emissions reduction, by 2050 most fuels will be produced from natural gas — LNG, hydrogen, methanol, and ammonia. These fuels can also be produced in limited quantities using renewable raw materials or electrochemical technology. However, two types of fuel, LNG and methanol, are currently considered the most promising for use in the Arctic for various reasons.
Of all the possible types of alternative fuels, there is more practical experience with using LNG in shipping. This is due to the large volumes of LNG production in the world (more than 350 million tons a year), the high maturity of LNG storage and use technologies on board the ship, as well as the wide availability of LNG in various regions of the world.
Most estimates of the use of LNG as a fuel show a significant reduction in CO2 emissions into the atmosphere. This reduction is achieved both by reducing the relative carbon content of the fuel and by reducing its specific consumption.
However, LNG as a fuel has a number of disadvantages. They are associated with the so-called methane slips, the unburned methane residues in the engine exhaust gases. Methane slip contributes the most to the carbon footprint when using LNG, as methane has a high greenhouse potential. At the same time, the progress in the engine industry allows to reduce methane slip manyfold. In fact, we can say that in the near future, the issue of methane slip when using LNG will become significantly less acute.
When assessing the climate contribution of LNG, it is necessary to take into account the area of origin and area of use of LNG. The Russian Arctic is becoming a global LNG production hub. This is due to modern technologies in place and improved energy efficiency of production due to the use of external cold. The possibility to directly ship LNG for bunkering without the need for long-distance transportation results in a reduced carbon footprint and lower greenhouse gas emissions. In particular, the carbon footprint of LNG production at the Yamal LNG plant is significantly lower than the carbon footprint of most LNG plants in the world. The latter circumstance can play a key role for the development of Arctic shipping.
Methanol can become the second promising alternative fuel in the Arctic, after LNG. The technology for using it as a motor fuel for land transport is well developed and has been widely used for many years. In particular, there are many examples of mass use of methanol as an additive to petroleum fuels in the United States, China, and the Middle East. The use of methanol on ships is significantly less widespread.
The prospects for the use of methanol are based on:
In addition, methanol is easily decomposed by living microorganisms, which greatly facilitates the elimination of its spills. At the same time, unlike LNG spills, methanol spills do not result in GHG production.
Methanol has a high octane number, which allows for its effective use in spark-ignition engines. It is also characterised by a low cetane number, which does not allow for its direct use in compression-ignition engines. At the same time, it does not contain sulfur and the lower specific calorific value of methanol results in requiring more fuel.
Today, several projects are being implemented in the world to convert ships to methanol. In particular, the Green Maritime Methanol, Pon Power, and FASTWATER consortia are engaged in this work. Russia also has experience in using this type of fuel. In the fall of 2020, the first pilot project of a floating methanol plant of the Flotmetanol company was launched off the coast of Yamal. It is planned that its capacity will be 10 thousand tons per year.
In turn, methanol is used by Russian oil and gas companies in hydrocarbon production projects. Raw materials come from the Tazovsky oil and gas condensate field, which is being developed by Gazprom Neft. In the future, it is planned to develop the bunkering of ships, creating the infrastructure needed to service ships of the new type with engines running on methanol.