IMO 2030 carbon intensity target can be achieved with adoption of amendments
The International Maritime Organization’s (IMO) 2030 carbon intensity target can be achieved with the adoption of the Energy Efficiency Design Index (EEDI) and Energy Efficiency Design Index for existing ships (EEXI) amendments at the Marine Environment Protection Committee (MEPC) 76 in June this year, according to a new report by Wood Mackenzie.
The MEPC 76 amendments are due to be enforced from 2023 onwards and will mandate greater efficiency improvements for some types of vessels, particularly very large newbuild containerships. Under the EEXI, existing ships above 400 gross tonnage will also need to comply with tighter fuel efficiency regulations.
“Adoption of the EEDI and EEXI amendments would result in IMO achieving its target of reducing carbon intensity by at least 40% by 2030,” said Wood Mackenzie Principal Analyst Iain Mowat. “This would cause a further decline in international marine bunker oil demand of around 370,000 barrels per day by 2030 compared to our current outlook.”
If the reduction in fuel consumption were to be fully met by Engine Power Limitation, an overall fleet speed reduction of over 6% would be required. For a typical product tanker traveling from Rotterdam to New York Harbor, this could add an extra day to the overall journey. Idle capacity in the tanker market ranges between 4% and 6%. This could tighten further with additional slow steaming, impacting freight rates.
“The use of marine LNG could ease growth in shipping carbon emissions, but LNG carbon content is still high relative to low carbon alternatives,” Mr Mowat said.
Marine LNG is expected to grow steadily through this decade, displacing nearly 0.7 million bbl/day of oil bunkers by 2030. However, it contributes 9% of overall shipping emissions, underlining its limited role in meeting future greenhouse gas targets. Still, growth in marine LNG will accelerate through the 2030s but slows post 2040 as zero-carbon fuels become more prevalent.
“A major shift towards low- and zero-carbon fuels by 2050 is absolutely required to reach IMO’s target to halve overall greenhouse gas emissions from international shipping by 2050,” Mr Mowat added. “And to meet the 2050 carbon intensity target, IMO needs to extend the EEDI regulations beyond Phase three with ambitious new targets. Achieving this 2050 target though would result in a further decline in international marine bunker oil demand of around 0.9 million barrels per day by 2050 compared to our current outlook.”
Wood Mackenzie’s base case assumes that improvements in fuel efficiency continue at an annualized rate of approximately 2.8% between 2030 and 2050 for newbuild vessels, so that the EEDI index falls from 0.7 in Phase three to 0.4 by 2050.
Low-carbon alternatives, such as biofuels, could play an important role in decarbonizing shipping, but supply availability is a key constraint. Priority goes to the road sector due to established government mandates, and secondarily to the aviation sector.
“Synthetic e-fuels could become more widespread by the end of the 2040s, supported by the increasing availability of green hydrogen capacity,” Mr Mowat said. “This could be the long-term solution towards decarbonizing the shipping industry.”