Alternative Fuels

As one of the world’s leading P&I insurers, we are committed to helping our members and shipowners across the globe make a safe, sustainable and successful transition to greener energy solutions.

The 2015 Paris Agreement on climate change – agreed by the majority of United Nations members – sets challenging and far-reaching goals that require sizeable reductions in carbon dioxide (CO2) emissions and greenhouse gases (GHG).

The International Maritime Organisation (IMO) has made the urgent need to address climate change a prominent feature of its strategic plan, and sets out its own ambitious goals for the shipping industry between now and 2040 (all compared to 2008 levels):

By 2030

Reduce total annual GHG emissions by at least 20% striving for 30% compared to 2008 levels.

By 2030

Reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, compared to 2008

By 2040

Reduce total annual GHG emissions by at least 70% striving for 80% compared to 2008 levels

We are focused on a supportive role that, through the entire timeline, provides members and brokers with all the information needed to make an informed choice and decision along the journey to decarbonization.

Alternatives to fossil fuels

Despite the need for urgent action, there is some inertia in the industry. This is largely caused by the lack of clarity and direction about which alternative to adopt and the need for greater detail on the potential safety, cost of implementation, the emissions efficiency of each fuel on both ship and shore, and the ‘well-to-wake’ carbon impact.

Currently, the shipping industry is considering a number of alternative fuels as replacements for conventional fuels, all with their own unique set of benefits – and challenges.

The main alternatives to fossil fuels being considered are:

Ammonia (NH3)

Currently mass-produced worldwide by extracting hydrogen from hydrocarbon fuels and combining it with nitrogen extracted from liquified air.

Benefits

No CO2 emissions.
Conversion process is relatively cheap and uncomplicated.
‘Green’ production, using green hydrogen and renewable power for the conversion process, is possible.
Established commercial product, already produced in substantial volumes for the chemical industry and distributable using existing infrastructure.
Commonly transported as cargo, so issues around handling ammonia onboard are already understood.
Used for combustion in gas turbines.
Low fire risk.
Higher energy density than hydrogen.
Storage only requires refrigeration.

Challenges

Currently made using natural gas. The conversion process requires additional energy compared to green hydrogen.
Requires energy for refrigeration.
Less energy dense than heavy fuel oils (HFO) – requires 24x more storage to match HFO performance and/or more frequent refuelling.
Large fuel volume (almost 3x times HFO).
GHG impact of N2O emissions is 300x greater than CO2.
Highly toxic – requiring careful handling.
Technical challenges in combustion, such as low flammability (without pilot fuels) and difficulties in increasing engine output.
Large capital investment needed for storage and refuelling infrastructure for shipping
Increased corrosion risk of certain metals and alloys, such as copper, brass and zinc.

Biofuels

A term covering a range of liquids or gases derived from ‘biomass’, such as plant fibres, or ‘bio-waste’ – difficult to break down dry plant matter such as trees, bushes and corn stalks. Among others, biofuels include fatty-acid methyl ester (FAME) biodiesel, hydrotreated renewable diesel, bio-methanol and straight vegetable oil (SVO).

Benefits

Commonly used biofuels are hydrotreated vegetable oil (HVO) and biodiesel (FAME, fatty acid methyl ester).
Carbon neutral - derived from biologically renewable resources such as plant-based sugars, etc.
Usually blended with traditional marine fuels or used as a ‘drop-in’ fuel, compatible with current conventional marine engines
Non-toxic, biodegradable properties and reduced GHG emissions when burned.
Biodegradable in the event of a spill.
Potentially widely available through a variety of production methods.
Reduced fire risk.

Challenges

Higher cost compared to many fossil fuels.
Limited production capacity and availability, plus competition from existing industries such as agriculture.
Potential machinery breakdown including storage stability, biological growth (biofouling), acidity, plugging of filters, and increased engine deposits if not managed properly.
Larger storage required for long journeys, compared to petrochemicals.
Potential degeneration/deterioration of biofuel and possible compatibility issues with some conventional fuels.

Hydrogen (H2)

Commonly produced by converting natural gas or coal into hydrogen gas and CO2.

Benefits

No CO2 emissions
Suitable for use in fuel cells for small vessels
‘Green’ production by way of electrolysis powered by renewable energy is possible
Falling cost of renewable energy may lower green production costs.

Challenges

Does not exist naturally - produced mostly from fossil fuel sources (energy-intensive process). ‘Green’ production currently expensive
Low energy density
Large fuel volume (require 8 times more volume than fuel oils for equal power output) - consequent storage capacity issues
Fuel cells not currently capable of powering large vessels
Requires a temperature of -253C to stay in liquid state
Immaturity of bunkering technologies
Lack of bunkering infrastructure
Highly combustible and explosive, giving rise to safety issues
Combustion produces nitrous oxides (NOx emissions)
Large capital investment needed for storage and refuelling infrastructure for shipping

Liquified natural gas (LNG)

Consists of 96% methane and produced by cryogenically treating natural gas until it becomes a liquid.

Benefits

Already in practical use
Infrastructure being developed
Lower in cost as compared to traditional marine fuels
High energy density
Specific regulations for LNG in IMO’s International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code)

Challenges

Commonly known as a ‘transition fuel’ as reduction of CO2 emissions is limited
Requires a temperature of -162C to stay in liquid state
Low volumetric density (storage takes nearly twice the space of traditional marine fuels)
Bunkering, storage and handling requires much more care than traditional marine fuels
Methane slip (GHG impact 25 times greater than CO2 emissions)
Possible criticism for the use of fossil fuel

Liquified petroleum gas (LPG)

Either butane or propane, or a mix of the two, produced by refining crude oil or processing raw natural gas.

Benefits

Lower in cost as compared to traditional marine fuels

Challenges

Similar to LNG, reduction of CO2 emissions is limited
As with LNG, LPG storage requires larger tanks
Limited operational experience
Lack of bunkering infrastructure
Slippage factor (GHG impact 3-4 times higher than CO2 emissions)
Possible criticism for the use of fossil fuels

Methanol (CH3OH)

Produced from carbon, typically natural gas and coal, but can also be produced from a number of renewable sources including ‘biomass’ and waste products.

Benefits

Liquid at ambient temperatures, no need to heat or cool
Easy to store and handle
Low cost for conversion of existing engines
Minor modifications to existing storage and bunkering facilities
Widely traded, well understood and already available in some ports for bunkering
Biodegradable, with a lower impact on the environment in the event of spillage
More energy dense than hydrogen and ammonia
Clean burning fuel with low levels of SOx, NOx and particulate matter.

Challenges

Production mainly from natural gas or coal, as such reduction of CO2 emissions is limited
Lower energy density than fuel oil
Large fuel volume approx. 2.4 times that of fuel oil - requiring larger storage tanks and/or more frequent bunkering
Low flash point represents a fire risk
Toxic when inhaled, ingested or handled
Increased corrosion risks
Large capital investment needed for more widespread storage and refuelling infrastructure for shipping

Energy Efficiency Technology (EET)

Including electric propulsion, solar power, wind power, carbon capture technology, hydrogen fuel cells, hull form and propellor optimisation, exhaust heat recovery, and low friction hull coatings.

Benefits and Challenges

Electrical propulsion

Pure battery-electric propulsion using Lithium Ion (Li-ion) batteries has been successfully applied on small, short-sea vessels.
Potential to combine batteries with a two-stroke main engine in a hybrid system for larger ocean-going vessels currently under evaluation.

Solar power

Uncommon – some marine grade solar panels have been installed on certain types of ships, such as car carriers, bulkers, passenger ferries and smaller domestic vessels.
May not suit container vessels because of the space required.
Technology is in its infancy and though expected to become less expensive, panels are unlikely to become much more efficient or require less space.

Wind power

Readily available but considered as an auxiliary propulsion system – most wind-assisted systems require a second energy source to operate.
Operational costs (maintenance, spare parts, replacement of components, etc.) need to be considered vs potential fuel-saving.

Frequently Asked Questions

What are the main alternatives to fossil fuels being considered in the shipping industry?

In line with The Paris Agreement and the IMO’s goals, Standard Club are helping their customers and shipowners make a sustainable transition to greener energy solutions. We are considering various alternative fuels to help reduce the shipping industry’s carbon footprint. These are:

Ammonia (NH3)
Biofuels
Hydrogen (H2)
Liquefied natural gas (LNG)
Liquified petroleum gas (LPG)
Methanol (CH30H)
Energy Efficient Technology

You can read more about each alternative in our recent blog series on our alternative fuels articles & industry expertise website page.

What is the role of Standard Club's Alternative Fuels Advisory Panel?

As one of the leading P&I insurers, Standard Club is committed to making a safe and sustainable transition to greener energy solutions. This is why we have assembled an expert Alternative Fuels Advisory Panel. Their role is to provide guidance on minimising the risks associated with decarbonisation and alternative fuels. They provide members and brokers with all the information they need to make informed decisions, without bias. You can read more about our Alternative Fuels Advisory Panel on our website.

What is the importance of alternative fuels for the future of the shipping industry?

The use of alternative fuels is essential in future proofing the shipping industry, as set out by the 2015 Paris Agreement on climate change and by the International Maritime Organisation (IMO). There is an urgent drive to address climate change and reduce carbon emissions between now and 2050. A key strategy of this is by using alternative fuels. By 2040, IMO aims to reduce total annual GHG emissions from international shipping by at least 70% striving for 80% compared to 2008 levels, with an aim to phase them out entirely within this century. Standard Club are dedicated to playing a supportive role in this, by providing our members with accurate information to make a conscious decision to reduce their carbon footprint.