E-fuel subsidies and a greenhouse gas (GHG) emissions tax is needed for e-fuels to compete as a bunkering fuel before 2044, said a study by maritime consultancy University Maritime Advisory Services (Umas) and the UCL Energy Institute.
The study found that adding a multiplier of the GHG intensity credit given to e-fuels could help to make e-fuel use financially competitive, but it would have to be set at high levels at the start. Using a multiplier of two, where one ship running on zero emissions e-fuel could generate credits to offset three other similar ships operating on conventional fossil fuels, was not able to make e-fuels more competitive before 2041. The multiplier would have to be set initially at 15 in 2030, falling to 10 by 2035, to enable the competitiveness of e-fuels, concludes the study.
Additionally, levying a GHG tax or fee of $150-$300/t of CO2-equivalent would also make e-fuels more competitive. A tax of $30-$120/t CO2e is close to the aggregate level of subsidies, and would not create a sustained promotion of e-fuels.
Under the current marine fuel standards, a combination of fossil fuels, including LNG, biofuels and carbon capture and storage systems would be most competitive up until 2036. After, blue ammonia dual fuel ships would be the lowest-cost solution until 2044. Ships that were more competitive from 2027-2035 would have at least 25pc higher operating cost from 2040 onwards. Thus, if ship owners order newbuild vessels to maximize short-term competitiveness, the sector is at a "major risk of technology lock-in" and will not be as cost-effective for reaching net zero by 2050.
The study models a 2027-build, 14,000 twenty-foot equivalent unit container ship. The vessel sails between Asia and Latin America using different marine fuels such as bio-methanol, e-methanol, LNG, bio-LNG, e-LNG, bio-marine gasoil (MGO), e-MGO and very low-sulphur fuel oil.
