The eighth episode of our podcast is a conversation with Professor Andrei Belyi, CEO of consulting energy firm Balesene and Adjunct Professor in Law and Policy at the University of Eastern Finland.
The interview, led by SGS INSPIRE Business Development Manager Claire Couet, covered the expected use of renewable and low-carbon fuels to reduce greenhouse gas emissions from the shipping sector.
Professor Belyi explained that very low sulfur fuels, namely cryogenic fuels like hydrogen or natural gas, are still very expensive. The price can limit their use in spite of the 2020 International Maritime Organization (IMO) push for a reduction of sulfur content of fuel oil from 3.5% to 0.50%.
According to him, the use of liquefied biomethane (bio-liquefied natural gas or bio-LNG) in the shipping sector is set to increase, pushed by the EU Fuel Maritime legislation in Europe. However, he regretted that there is not yet an EU market for biomethane because guarantees of origins (GO) issued at national level are not recognized at EU level. He noted that the price of carbon via the EU Emission Trading System ( EU ETS) will be a key discussion for the next European Commission, once it officially takes office in the autumn. A higher carbon price, which may stimulate investments in green technologies, has cumulative effects on the providers of materials for the green transition, which can in turn slow down the roll out of certain technologies. He expects the shipping sector to pass on the new ETS costs to customers, starting in 2025.
With regards to blue and green ammonia, he explained that their use in the shipping sector depends on the price of hydrogen, which is still relatively high, and on the availability of electrolyzers to produce that hydrogen. Blue ammonia requires carbon capture and storage (CCS) and green ammonia requires more generation of green electricity. Both types of ammonia are facing roadblocks.
Finally, he noted that the demand for fossil fuels beyond the Organization for Economic Co-operation and Development (OECD) countries over the last 10 years has increased by 30%. So while the post-industrial economies saw a decline in carbon intensity and a decoupling between the economic growth and the use of energy, the rest of the world is not on that path and will continue burning more fossil fuels in the next decade. However, he believes that we may see a further reduction of the carbon intensity in other parts of the world as well, as has been seen in the OECD area.