Market Report: Hydrogen’s essential but limited role in ports’ path to Net Zero

Every day, ports worldwide orchestrate the movement of millions of tonnes of cargo, from seeds to food, technology to heavy machinery, ports are the cornerstone of global trade.

According to the International Energy Agency (IEA), international shipping accounted for approximately 2% of energy-related CO2 emissions worldwide. Despite the International Maritime Origanization’s revised greenhouse gas (GHG) strategy, the complexity of maritime decarbonisation has resulted in slower than anticipated progress, with the IEA classifying the maritime sector as ‘not on track’ to meeting targets. Therefore significant focus and effort has been placed on innovation and solutions to decarbonise the shipping sector.

With IMO measures coming into force within the shipping sector, ports must also follow suit in decarbonisation efforts in the coming years. This article will discuss port energy ecosystems in relation to decarbonisation, and where hydrogen may play its role.

Ports are generally regarded as hard to decarbonise due to the complexity of their operations. Each port’s configuration is unique, influenced by the size and types of vessels they accommodate, and subsequent port machinery and vehicles required to service and maintain their operations.

In addition to the ‘moving parts’, site buildings are often tenanted, meaning that much of the daily operations are conducted by tenants in addition to the port’s own operations. This leads to a large number of internal stakeholders and energy consumers within the port, complicating the transparency of energy use and the allocation of responsibility for reducing overall carbon emissions.

As mentioned, the complexity of a port’s energy system stems from its operations that greatly differ between each site. Broadly, there are four types of ports:

Inland ports: ports located on inland bodies of water such as lakes or rivers. Often smaller ports accommodate various shipping activities on a smaller scale.

Seaports:ports used for commercial shipping located directly to the sea. These are the most common type of port and accommodate various methods of shipping such as cargo, cruise, and passenger transport.

Dry ports:terminals located near a seaport designed to reduce congestion and act as a multimodal logistics centre for the import and export of cargo to and from the seaport to inland.

Fishing ports:as the name suggests, these ports are dedicated to both commercial fishing activities as well as recreational. Often smaller scale and can be located within an inland port or seaport.

Shoreside energy consumers

To understand where hydrogen could contribute to decarbonisation within a port system, it is important to understand its current and potential demands for energy consumption. Despite the large variation in port activity and size, typically, a port includes more than one or up to several of the following that require energy:

On-site machinery & mobility: including non-road mobile machinery (NRMM), heavy goods vehicles, port vehicles, port vessels, staff, and guest vehicles.

Maritime traffic:including commercial, recreational, passenger traffic and service vessels.

Electricity consumption:including port consumption and any other consumers.

Port infrastructure:includes power infrastructure, gas and fuel infrastructure, land and buildings, and developable land.

Future options of energy – where does hydrogen fit?

When it comes to low-carbon fuels for shipping, the research points to ammonia, but the investment headlines shout methanol. It’s expected that in the long-term ammonia will win out for long-distance cargo, though with the low flame speed and toxicity issues, there are still many technology hurdles that will take a significant time to solve. Hence the disconnect comes from the level of development in the fuel and propulsion technology, with methanol providing better bridging opportunities while the market is developing.

Ships can be bought as ‘methanol-ready’ to run on conventional fuels to be later converted and there is little difference in ship design to accommodate methanol. These ships can operate on biomethane-based methanol as a substitute for e-methanol for a near-term decarbonised solution.

Hydrogen and e-fuels were born as a solution due to the resource constraints of biofuels. The same resource constraints exist with the feedstock for e-methanol with sustainably sourced carbon dioxide (CO2)

Whilst methanol adoption makes sense now, it is important to consider why it’s a difficult fuel for long-term compatibility with Net Zero. Hydrogen and e-fuels were born as a solution due to the resource constraints of biofuels. The same resource constraints exist with the feedstock for e-methanol with sustainably sourced carbon dioxide (CO2). Ammonia production utilises nitrogen captured from the atmosphere, where it represents 78% of air composition, in comparison, CO2 represents 0.04% of air composition, and therefore the technology must work harder to extract it.

In most cases, hydrogen is unlikely to be the predominant fuel for shipping – the age-old challenge of volumetric energy density and shear amount of stored energy required to propel the very large vessels across the oceans removes compressed hydrogen as an option, and liquid hydrogen is overly difficult to handle, store and still requires significant space. The exception could be smaller or niche applications such as cruise ships.

We are already seeing moves to accelerate requirements for zero emissions in more sensitive areas and with the onboard power demands being multiple megawatts it’s not just the propulsion system that needs decarbonising. Ricardo is part of the sHYpS Project that is investigating hydrogen fuel cell power and liquid hydrogen storage for passenger ships, though whether retrofit or new build the challenge is space – so significant work has been undertaken by Ricardo designing a multi-stack fuel cell capable of being containerised for megawatt power generation.

Liquid hydrogen as a fuel is already being demonstrated by Norled’s MF Hydra ferry in Norway where the hydrogen powers two fuel cells, alongside a battery and diesel generators. The liquid hydrogen is stored atop the ferry in an 80 cubic meter tank. Whilst liquid hydrogen is used in these two applications, more widely in maritime fuels it is unlikely that we’ll have fuel bunkering for ammonia, methanol, hydrogen (gas and liquid) as well as carbon fuels (until phased out) in each port; the footprint, logistics and capital investment costs would all lean towards a simplification – yet as we stand today it’s clear there is no single solution.

Most ports around the world are currently utilising high-emission fuels/electricity to meet their energy needs, though many are beginning to trial low-carbon options in a bid to start decarbonising. In terms of shoreside solutions to meet demand, the main contenders are poised as hydrogen and electrification, with the applicability of each remaining unique to specific ports dependent on size and type of operation.

ports are currently facing somewhat unknown territory when it comes to decarbonisation options for their machinery, particularly as the hydrogen equipment industry is still relatively nascent

Within a port’s energy ecosystem, the main opportunity for hydrogen lies with port equipment and mobility. As an example, many NRMMs could be converted to hydrogen. This, however, will only likely be the most suitable case in ports with electricity constraints, given that the length of journeys conducted by NRMM, and most other port mobility, could be achieved through electrification.

There are examples of hydrogen-powered vehicles being developed and demonstrated, such as Ricardo’s turnkey project to design and build a prototype fuel cell-powered Kalmar terminal tractor for Toyota Tsusho. However, ports are currently facing somewhat unknown territory when it comes to decarbonisation options for their machinery, particularly as the hydrogen equipment industry is still relatively nascent. It is difficult to gain true visibility of CAPEX and OPEX in addition to clouded policy and regulation regarding emissions abatement of NRMM outside of the construction sector.

What are the drivers of port decarbonisation?

From Ricardo’s extensive work in the maritime industry, we are seeing increased push and interest from ports to begin their decarbonisation journey. Though each reasoning can differ, the overarching reason points to increasing pressure from governments with escalating policy and regulations, given that 2030, 2040, and 2050 decarbonisation targets creep closer. As mentioned above, the IMO has recently revised its GHG strategy to align with goals set out in the Paris Agreement, bringing a new sense of direction for ports.

One of the most significant movements toward decarbonisation in recent years is the announcement of the shore power mandate. The FuelEU Maritime Regulation (2023/1805) places requirements on vessels to reduce the GHG intensity of the fuels used on board. One way vessel operators can comply with the standards set for GHG intensity, which lowers over time, is to make use of zero GHG shore power.  Article 6 FuelEU Maritime Regulation also sets requirements for the mandatory use of shore power in the following circumstances [Article 6]:

From 1 January 2030:if a ship is moored at an EU port covered by Article 9 of the Alternative Fuels Infrastructure Regulation (AFIR).

From 1 January 2035:If a ship is moored at an EU port not covered by Article 9 of AFIR but where shore power connections are available.

From 1 January 2030 until 31 December 2034:If a ship is moored at an EU port not covered by Article 9 of AFIR and if the member state mandates the use of a shore power connection.

The above requirements apply to container ships and passenger ships above 5,000 gigatonnes. However, the regulation includes a separate definition for cruise ships, which would also come into the requirements placed on passenger ships of Article 6. The imminent mandate will and has resulted in an increasing number of ports now acting in planning its energy transition and implantation of shore power.

Despite the UK being exempt from the mandate, some UK ports are implementing shore power, demonstrating efforts to begin the sector’s decarbonisation. For example, following a successful final business case, its shore power initiative carried out by Ricardo, Southampton Port has now commissioned its shore power facility for cruise ships.

Additionally, new and improved innovation and demonstration funding opportunities are being rolled out globally with the aim of supporting ports in minimising the investment risks associated with trailing low-carbon solutions, which will certainly be a convincing driver for early movers in the near future.

Turning mandates into action

To effectively plan for decarbonisation, a port must understand its whole energy system and its associated stakeholders. Additionally, ports will need to have the ability to anticipate their future energy demands (which will include, besides the port’s own operations, demand from vessels and industrial hinterland) and other stakeholder-reliant factors that may play a role in the overall operations of the port. This holistic current and future overview can be achieved through energy system modelling, an exercise Ricardo is proud to be undertaking for Shoreham Port and others.

While much attention is paid to the decarbonisation of vessels, the impact of such a process in on-ground operations taking place at ports is as important

While much attention is paid to the decarbonisation of vessels, the impact of such a process in on-ground operations taking place at ports is as important both from an infrastructure development point of view (shore power connections, new bunkering services, etc.) and from an energy management standpoint. To decarbonise, ports of the future will most likely electrify most of their energy uses, while hydrogen and other green fuels will play a role in covering the last mile of the road to zero emissions.

This transformation process entails changes in the infrastructure, operations, and management of all activities at a port, requiring informed decision-making for future planning. To achieve this, port authorities need a thorough understanding of the energy systems represented by a port, its multimodal nature, and its future prospects.

Energy system models will help ports answer what technologies/transformations are required (self-generation, heat processes transformations, new grid connections, etc.) and when to do so, which directly impacts the economic and financial sustainability of the port.

One of the key challenges associated with such a transition is how ports will optimise operations under the new decarbonised paradigm; energy models will also help ports in managing an ever-increasing complex system of self-owned assets (electricity supply, battery systems, electrolysers, flexible demands) versus the varying demand from their main customers (vessels and tenants) and the challenges associated to largely increased grid connections, both in terms of capacity (having enough access to the grid) and in terms of increased energy payments.

To conclude, ports have a long and complex journey ahead to Net Zero, and whilst hydrogen holds merit for a few applications, it is unlikely that it will play any major role in terms of shoreside solutions. However, upstream in the fuel supply chain, low-carbon hydrogen is a critical ingredient in alternative fuel(s) production. Closer to the ports, hydrogen is most likely to have higher utilisation in industrial areas adjacent to the ports.

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