A recent analysis by Maersk Mc-Kinney Moller Center has identified four key constraints that may hinder the supply of renewable electricity to the maritime industry in the 2030s and 2040s, potentially leading to a shortage of e-fuels.
The key constraints highlight the challenges that need to be addressed to ensure a smooth transition to decarbonization in the sector.
E-fuels are synthesized from e-hydrogen made from green electricity and water electrolysis.
They are attractive alternative fuels in the shipping industry because they offer significant GHG emission reductions compared to fossil fuels. From a well-to-wake perspective, e-ammonia and e-methanol emit just 3% of the emissions from low-sulfur fuel oil (LSFO). However, to achieve such low emissions, e-fuel production must use renewable electricity derived from naturally replenished sources such as solar, wind, hydroelectric, or geothermal energy.
To meet 50% of the industry’s energy demand with e-fuels by 2050, an estimated 1,100 GW of renewable electricity capacity needs to be installed. However, the global demand for renewable electricity across industries calls for approximately 25,000 GW of capacity by 2050, with wind and solar leading the way. Meeting these demands will require significant investment and technological advancements.
The first significant constraint revolves around the availability of copper, a crucial material for solar and wind installations. The slow increase in copper supply poses a concern for scaling up renewable energy infrastructure within the maritime industry.
Nickel, another essential element, is also a cause for worry as it is already in high demand. Electrolyzers, vital for producing hydrogen from renewable electricity for load balancing and e-fuels, heavily rely on nickel. Its scarcity could pose challenges in meeting the industry’s needs.
The third constraint pertains to rare earths, which could potentially limit wind installations. However, the use of geared rotors, which do not depend on rare earths, could help overcome this limitation.
Labor shortage across the supply chain is the fourth constraint identified. From installing and maintaining solar and wind capacity to increasing the manufacturing of transmission components, the industry may face challenges in finding skilled workers. One possible solution could be retraining workers from the oil and gas sector, although this process would require time.
The analysis also highlights limitations in the manufacturing of transmission components and installation vessels for offshore wind. While these limitations are unlikely to directly impact the maritime industry’s integration of e-fuel production at solar or wind farm sites, they could add pressure to global renewable electricity supplies and subsequently increase prices.
Based on the findings, Maersk Mc-Kinney Moller Center projects that renewable electricity supply will be limited in the 2030s and potentially even in the 2040s due to material and labor constraints. Consequently, the availability of e-fuels for the maritime sector may also be restricted during this period. This underscores the importance for shipowners to adopt a diversified approach to decarbonization rather than relying solely on e-fuels.
To mitigate the risk of a shortage in renewable electricity and e-fuels, the maritime industry is encouraged to secure long-term contractual agreements for renewable electricity supplies ahead of other sectors. Alternatively, during the transition period, the industry may need to explore alternative fuel pathways, such as blue fuels, fuels produced using nuclear power, batteries, or biofuels, depending on their availability.
Regulators play a crucial role in facilitating a smooth transition by supporting the use of transition fuels as stepping stones toward full decarbonization.
The center said that based on their analysis regulation and policy were not major barriers to increasing renewable electricity capacity.