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Cement emissions: GCCA’s Claude Lorea sets out concrete plans

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INTERVIEW

Cement emissions: GCCA’s Claude Lorea sets out concrete plans

by Mike Scott, May 3, 2019

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Sydney Opera House, Australia: one of the many reasons we love concrete

Concrete is, after water, the most consumed resource on the planet and no other man-made material is more widely used. Without it, there are no buildings, bridges, dams or roads – no Sydney Opera House, no Hoover Dam or Golden Gate Bridge, no Pantheon in Rome.

It is no surprise, then, that it has significant environmental impacts. More than 4bn tonnes of cement, the main ingredient of concrete, are produced every year according to the think tank Chatham House, leading to around 8% of the world’s man-made greenhouse gas emissions (other figures estimate somewhere between 5% – 8%).

At the same time, concrete is essential to global development – to house a growing population and build the infrastructure the world needs. Cement production will have to rise by 25% by 2030, say Chatham House researchers.

But at the same time, “to bring the cement sector in line with the Paris Agreement on climate change, its annual emissions will need to fall by at least 16% by 2030,” the think tank says in a report, Making Concrete Change: Innovation in Low-carbon Cement and Concrete. Steeper reductions will be required if assumptions about the contribution from carbon capture and storage (CCS) technologies prove to be optimistic – as they have consistently over the last 10 years.

“How can we provide the world with the concrete it needs in a sustainable way?” Claude Lorea, Cement Director, GCCA

But while other sectors looking to cut their impact can simply reduce the amount of fossil fuels used in their production processes, things are more complicated for cement.

Claude Lorea, Cement Director, GCCA

Only about 40% of the sector’s emissions come from energy consumption, with the remainder being released during the production process, principally from the chemical reaction when limestone is heated to about 1,450C. “It’s a very important point,” says Claude Lorea, cement director at the Global Cement and Concrete Association (GCCA). “The industry has a unique emissions profile. Solving the energy issue will not solve the whole problem.”

The GCCA is a CEO led initiative of the cement manufacturing sector. It builds on the sustainability work of the World Business Council for Sustainable Development’s Cement Sustainability Initiative, and has taken on the body’s work on reducing the industry’s environmental impacts while adding a key communications and advocacy role to highlight the full benefits of concrete. “There is a lot of confusion about what cement is and what concrete is. Concrete is the end product that people see in their lives. Cement is what glues together that end product,” Lorea adds.

The key issue facing the industry is: “How can we provide the world with the concrete it needs in a sustainable way?” she says. The sector has reduced its emissions per tonne of product by 18.4% since 1990, and it has a target to reduce emissions by 32% in absolute terms by 2050. This is a battle it is fighting on a number of fronts.

The first step is to use more renewably-generated electricity, but power use only accounts for about 5% of emissions, while 40% come from heating the kilns used to create the cement. Here, there is considerable potential to cut emissions and reduce the use of fossil fuels and primary raw materials by fuel-switching. “Cement kilns are the perfect tool for using waste from other sectors, especially biomass,” Lorea says. These waste products include paper and packaging, coffee and rice husks, animal waste and used car tyres. It is also possible to heat kilns using electricity, but unless the electricity is renewable, the benefit of this is minimal.

“Clinker substitution is not only a very effective solution, but also one that can be deployed cheaply today, as it does not generally require investments in new equipment or changes in fuel sources” Chatham House

Worthwhile as these efforts are, they do nothing about emissions from the process of ‘calcination’, which is crucial in making clinker, the main ingredient of cement. From a chemical point of view, the point of the calcination is to remove the CO2 from limestone, producing significant emissions. It is possible to reduce the impact by replacing part of the clinker in cement with other materials such as fly ash or slag – waste products from burning coal and making steel, respectively. Huge amounts of these materials are available in the two biggest cement markets, China and India, so there is great potential for a “quick win” cut in emissions. In Europe, some plants have replaced 90% of the fossil fuels they used to use, but eventually supplies will reduce as power generation and steel production are decarbonised.

“Clinker substitution is not only a very effective solution, but also one that can be deployed cheaply today, as it does not generally require investments in new equipment or changes in fuel sources,” Chatham House says. “It is, therefore, especially important to scale up clinker substitution in the near term while more radical options, such as the introduction of novel and carbon-negative cements, are still under development.”

Carbon capture utilisation and storage (CCUS) is another option – most efforts to introduce carbon capture have focused on power generation and have had limited success. But companies such as CarbonCure and Solidia Technologies are using CO2 to make concrete that both locks up the carbon and, they claim, is stronger than conventional concrete. Some novel cements can cut emissions by up to 90%, but at the moment they are only used in niche applications and have yet to reach large-scale commercialisation.

Concrete does not seem an obvious area for the application of circular economy principles, but there are a number of possibilities, Lorea adds. Fuel substitution and the use of captured CO2 have obvious circular applications, as do efforts to replace clinker. But concrete is also fully recyclable and can be reused in products such as aggregate for use in further concrete production and as a base layer for roads. Another huge opportunity is to make use of the heat produced in the cement production process.

“There is also a lot of thinking going on about building to last and building to recycle, with a focus on designing in efficient use of concrete,” Lorea says. “If we build smartly, then when, say, an office building comes to the end of its life, it can be repurposed as accommodation.”

There is no silver bullet when it comes to decarbonising the cement and concrete sector, Chatham House warns. Rather, “Shifting to a Paris-compliant pathway, with net-zero CO2 emissions by around 2050, will require going further and moving faster on all available solutions, as well as making sure that the next generation of innovative technology options is ready as soon as possible”.

Lorea is optimistic, “the sector is committed to taking climate action, spreading best practice across the globe, increasing the speed and adoption of innovation, and working across the built environment value chain to make myriad efficiencies and improvements – it’s why the GCCA was created!”

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New “Gas for Climate” scenarios: can green gas and hydrogen save gas pipelines?

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New “Gas for Climate” scenarios: can green gas and hydrogen save gas pipelines?

by Mike Scott, 27, March, 2019

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Gas has a key role to play in decarbonising the energy sector. Until a comprehensive clean energy network can accommodate variable renewables using storage, baseload power will be needed. Natural gas is a lower carbon option than coal, so there is a strong case for it to be the first-choice bridging fuel towards a net-zero energy economy. However, exactly how much gas, what type of gas and how existing infrastructure can store energy in the form of green gas are all crucial questions. The new “Gas for Climate” report from global energy consultancy Navigant suggests two scenarios in answer to those questions. Mike Scott has the analysis…

The energy industry used to be a monolithic entity, with all the different components making up one coherent that had the same aims and concerns – the perpetuation of the fossil fuel energy system.

But a new report from Navigant shows that these aims are starting to diverge, and not just along the obvious lines of fossil fuel and renewable energy producers.

The study, Gas for Climate. The optimal role for gas in a net zero emissions energy system, was produced on behalf of Gas for Climate, a group of European gas transmission system operators (TSOs) and biogas-producing organisations that joined forces in 2017 to explore the future of gas and gas infrastructure in a decarbonised EU energy system.

Their conclusion – there may be a diminishing role for gas in a decarbonising world, but that does not mean Europe’s gas pipeline infrastructure should disappear as well.

Many observers say that there is only a minimal role for gas in a low-carbon economy as the world increasingly relies on renewable energy sources, improved energy efficiency and electrification for its energy needs. “Gas is frequently referred to as low-carbon, but it’s not,” says Andrew Grant, senior analyst at the Carbon Tracker Initiative. “If we’re serious about decarbonising the energy system, we need to phase it out.”

The average global gas-fired power plant has emissions of 440g/kWh while in a carbon-constrained scenario this figure needs to drop to 70g/kWh, he adds. “The amount of gas needs to be very limited unless something else is done such as carbon capture and storage or hydrogen.”

The nine members of Gas for Climate – gas TSOs from Spain, Belgium, the Netherlands, France, Germany and Italy, along with the European Biogas Association and the Italian Biogas Consortium, say that “gas and its infrastructure will play an indispensable role in the future decarbonized energy system,” because “biomethane and green hydrogen will play a major role in a smart combination with renewable electricity” and ‘blue hydrogen’.

Yes, a 100% reduction in greenhouse gases implies a big increase in renewable energy, says the group, but, happily for the owners of large swathes of Europe’s gas infrastructure, “the new Gas for Climate study shows that gas and its infrastructure will play an indispensable role in the future decarbonised energy system”.

The study compares two scenarios for decarbonising – a “minimal gas” scenario and an “optimised gas” one. It finds that, while both scenarios achieve net-zero emissions in the EU by 2050, the optimised gas pathway will be €217bn cheaper than minimal gas. This is a significantly higher saving than in the equivalent study last year, which predicted €138bn of savings, because there is scope for greater production of biogas and hydrogen than last year (2,900 TWh versus 1,000 TWh) “following a more extensive analysis into hydrogen supply and into energy demand in industry and transport”.

In the “minimal gas” scenario most energy use comes from renewable electricity, with a small amount of biomethane being used to produce high temperature industrial heat, while the group’s preferred route sees a bigger role for renewable and low-carbon gas (which it defines as ‘blue’ hydrogen, produced from fossil fuels with CCS, or natural gas combined with CCS).

The “optimised gas” scenario foresees renewable and low-carbon gas providing flexible electricity production, to provide heat to buildings in times of peak demand, to produce high temperature industrial heat and feedstock, and to fuel heavy road transport and international shipping.

This gas is needed, the group says, because “strong growth in wind and solar PV requires dispatchable electricity production by either solid biomass or gas. Battery seasonal storage is unrealistic even at strongly reduced costs.”

“CCS technology works, but it is difficult to do economically and at scale…to meet our targets, we need to be opening three to five plants every week, rather than the 21 or so that exist at the moment.” Andrew Grant, Carbon Tracker Initiative

To fully decarbonise high temperature industrial heat requires gas in both scenarios, they add, and existing gas grids can be used to transport and distribute renewable methane and hydrogen.

Gas for Climate are definitely on to something – the UK’s Climate Change Committee (CCC) has said that “hydrogen can make an important contribution to long-term decarbonisation if combined with greater energy efficiency, cheap low-carbon power generation, electrified transport and new ‘hybrid’ heat pump systems”.

But it relies on a lot of assumptions – not least about the development of CCS, whose development has been painfully slow, and much slower than is needed to meet decarbonisation targets, as Energy Post has previously pointed out. “CCS technology works, but it is difficult to do economically and at scale,” Grant says. “And to meet our targets, we need to be opening three to five plants every week, rather than the 21 or so that exist at the moment.”

The study’s statement that battery storage over seasonal time frames is unrealistic holds true at the moment but given the current pace of change in the battery market there is no guarantee this will remain the case. It also ignores other developments such as demand-side management and assumes that nations will trade energy in the form of gas rather than electricity.

The report also envisages a significant proportion of future offshore wind resources being devoted to hydrogen production rather than electricity generation but it is not clear why this would happen, certainly not without significant government support.

Crucially, it also seems to run counter to current regulatory efforts, such as the recent UK announcement that gas heating would be banned in new homes from 2025.

As the CCC says, switching the gas grid to 100% hydrogen is impractical for zero carbon heat. Producing bulk hydrogen from renewable electricity is expensive and hydrogen from fossil fuels (which is likely to be imported natural gas) is not zero-carbon even when using CCS.

Hydrogen can be a strong complement to electrification, particularly in heating buildings, providing industrial heat and fuelling heavy transport, as well as back-up seasonal power storage, but it is not a silver bullet and, as the CCC says, “If hydrogen is to play a substantial long-term role, progress towards deployment of low-carbon hydrogen at scale must start now”.

Hydrogen is best used selectively, the CCC concludes, where it adds most value alongside widespread electrification, improvements to energy and resource efficiency, and use of CCS in industry and on bioenergy. This means using hydrogen where the alternative is continuing to burn unabated fossil fuels or where there are limits to feasible electrification.

And in relation to Gas for Climate’s primary aim of keeping gas grids running, it finds that “the sunk costs of having an extensive gas grid do not automatically mean that it will be lower cost to switch it over to hydrogen. The costs of a range of pathways for heat decarbonisation are similar, including those in which the gas grid has a much-reduced role or is decommissioned.”

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Sails make a comeback as shipping heads for complete decarbonisation by 2035

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Sails make a comeback as shipping heads for complete decarbonisation by 2035

by Eric Marx, February 19, 2019

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Maersk Pelican replete with Norsepower Flettner rotary sails

Last year’s ITF report asserts that an almost complete decarbonisation of shipping could be achieved by 2035 using currently known technologies. Whilst LNG is gaining momentum, hydrogen, ammonia and biofuels could be more sustainable means of delivering much of the required reductions, complemented by a mix of electronic propulsion and wind assistance. The message, according to independent journalist Eric Marx, is “Hold on. There’s a decade of experimentation ahead”. He counsels against becoming locked-in to any one solution with so many alternatives about to come to market. One, the power of the wind, is already making waves.

The commercialisation of various wind propulsion technologies, underway in Europe since 2018, is set to take off this year as looming carbon targets generate renewed interest in one of the world’s oldest means of travel – catching and harnessing the wind.

The future of shipping could see automated kites deployed from 40-foot containers. Fixed wing sails hoisted atop 35-meter-tall rigs are also being taken seriously, as is the recent deployment of Flettner rotors on a Greek-owned dry bulk carrier, a Scandinavian passenger ferry and the Maersk Pelican, a 100,000 ton tanker vessel.

Flettner rotors were first trialled in the 1920s, but only now have been brought into commercial use with the advent of modern composite materials and software automation, explained Jarkko Väinämö, the CTO of Finland’s Norsepower, which added its Rotor Sail Solution technology to the Pelican in August, a world’s first for a tanker vessel.

It took all of 24 hours to install the two 30-meter-high spinning cylinders, which don’t resemble sails but which create a similar vertical force that can be used as an “auxiliary system” to a ship’s main engines.

“Without any integration, we can bring from five to 20 percent fuel consumption savings,” said Väinämö.

Integration in this case would include new-build ships that take into account wind propulsion together with innovative hull designs, and the use of alternative fuels such as hydrogen, ammonia, LNG and second- and third-generation biofuels, alongside engines powered by electricity or fuel-cell technology.

Each has its drawbacks and advantages. There’s no single solution, warn experts, and yet there’s much that can be done quickly by retrofitting existing ships.

Carbon regulations

Wind propulsion took on greater urgency after the International Maritime Organization (IMO) reached an agreement in April to slash emissions by 50 percent by 2050.

This helped prod Maersk, the world’s largest container shipping company, to announce in December a pledge to cut its emissions to zero by 2050 – going beyond the IMO targets, but in line with a report issued by the International Transport Forum (ITF), an intergovernmental organisation with 59 member countries which acts as a think tank for transport policy.

“We will have to abandon fossil fuels,” Soren Toft, Maersk’s chief operating officer, told the Financial Times. “We will have to find a different type of fuel or a different way to power our assets. This is not just another cost-cutting exercise. It’s far from that. It’s an existential exercise, where we as a company need to set ourselves apart.”

For Maersk to meet its targets, carbon-neutral vessels will have to be sailing by the early 2030s, say experts.

As well as all the new fuelling options, The ITF report authors also point to a list of efficiency measures, such as “slow steaming”, which could yield a substantial part of the needed emission reductions. Over the past two years, for example, Maersk has discovered it could cut fuel use by as much as 30 percent by slowing down ship speed.

LNG-fuelled hybrid could be dead-end

Why then commit to LNG-powered vessels if zero-carbon shipping is just on the horizon?

“LNG can reduce air pollutants significantly, but it’s carbon footprint is more or less the same as with Diesel/HFO [residual fuel oil],” e-mailed Dietmar Oeliger, head of transport policy at NABU, a German environmental group that monitors shipping.

Some LNG ships claim a reduction in CO2 emissions of 15 percent, though that depends crucially on keeping leakage of the greenhouse gas methane to a minimum in ships and bunkers.

“If we are serious about decarbonisation mid-century, that [LNG] is wasted money,” Dr. Lucy Gilliam, T&E

Investing massively in LNG infrastructure might cause lock-in effects, said Dr. Lucy Gilliam, an aviation and shipping expert with Transport & Environment, which campaigns for cleaner transport in Europe. “Why not instead switch to diesel, install emission abatement technology, and wait for a decarbonized fuel?”

That’s the course many are now taking – in light of a global sulphur cap due to take effect next year and owing to the high cost of new LNG engines.

“If we are serious about decarbonisation mid-century, that [LNG] is wasted money,” added Gilliam.

Diesel engine manufacturer Man Energy Solutions is one of those in the LNG camp.

“Switching ship engines to LNG as a fuel not only reduces harmful emissions at a first step, but also enables the engines to use fully decarbonized e-fuels as soon as these are available on a large scale at a later time,” e-mailed Jan Hoppe, a Man spokesperson.

E-fuels are the result of transforming electrical energy from renewables into CO2-neutral synthetic fuels.

But backing e-fuels – by, for example, producing synthetic methane or synthetic diesel through electrolysis from water using cheap renewable energy – would require a massive build-up in solar and wind deployment, noted Gilliam. Moreover, it would necessitate advanced isotope analysis in order to ensure proper regulatory oversight.

“It’s useful to actually reduce the amount of fuel you need to burn,” she added. “We are very much saying we need to do both – alternative fuels and new propulsion systems.”

Transport & Environment, which represents the environmental community on matters before the European Union in Brussels, favours hydrogen made from natural gas in land-based industrial processes. Ammonia is also top on an efficiency basis and is easier to transport and store, though large scale ammonia usage does present health and safety issues that still need to be worked out.

Electric power with battery storage could also play a role, especially on short haul, regularly scheduled ferry passage. Norway’s parliament certainly thinks so – having adopted a resolution last April that would halt emissions from cruise ships and ferries in the Norwegian world heritage fjords “as soon as technically possible and no later than 2026.”

The assumption is that the fjords will only service electric ships in just 8 years time, bringing about what would be the first zero emissions zone at sea.

Wind sails ahead

As for wind propulsion, shipping companies are waiting to see what can actually be delivered.

A total of 14 Flettner rotors are currently sailing on six commercial vessels, according to Gavin Allwright, secretary of the International Windship Association (IWSA), a trade body that represents the wind propulsion sector.

Generally, retrofit wind propulsion rigs can deliver between five to 20 percent fuel savings, with an upwards potential of 30 percent, and 30 percent and above for new build optimized systems, meaning a renewable energy source with free and abundant delivery at the point of use, said Allwright.

In addition to Norsepower, the British company Anemoi Marine Technologies has four rotors spinning on the MV Afros, a 64,000 ton bulk carrier operating in the Pacific. Magnus, a US company, has developed a retractable rotor that acts like a telescope, while the interregional project fund Marigreen has seen German and Dutch partners recently launch a commercial vessel in the North Sea.

The sector is also expecting announcements this year from other hard and soft sail developers.

The next step is to establish regional hubs, said Allwright, in order to bring down costs and bring further integration to the sector.

Yet, all eyes are on Flettner rotors, for now at least, given the recent announcements from Maersk and Viking.

Norsepower alone has another six to seven rotor sails launching in 2019, with its first new-build project in hand and set for installation in 2020, according to Väinämö. In five years the company forecasts annual revenue exceeding €100 million, a projection that would see upwards of 60 to 70 installations a year.

“That’s where the market is currently focused,” said Allwright. “Rotor sails are on the water and have opened the market.”

A vision for shipping’s net zero-emissions future is rapidly coming into focus. The industry should hold off from making any sudden moves as we enter a decade of experimentation which will reveal the optimum cost/benefit result using the best combination of all the solutions on offer.

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Can nuclear compete for a bigger role in the transition?

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Can nuclear compete for a bigger role in the transition?

by Paul Evans and River Bennett, February 15, 2019

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With plans to phase out coal-fired generators in most of Europe, nuclear is trying to compete with gas to become the most viable baseload power source to accompany renewables on the path to net-zero emissions. Both technologies have their advantages. Gas is competitively priced while nuclear generates power with almost no emissions. Right now, gas’s cost advantage is evidently great enough to tip the balance.

If nuclear advocates are to distill the debate down to a straight-up contest they must first demonstrate that nuclear generation can be competitive on cost. River Bennett and Paul Evans believe there are significant opportunities for savings which could do just that.

The lesson from Hinkley Point is that nuclear power must supply cheaper electricity in order to compete with natural gas. In 2012 prices, the plant delivers electricity at a strike price of £92.50 per megawatt hour – significantly higher than even expensive offshore wind projects and natural gas in the UK. Dieter Helm, a professor of energy economics at Oxford University, estimates that if Hinkley Point were financed through government borrowing rather than private capital it would have been roughly half the cost. This may seem a brazen subsidy, but since the public is already footing the bill through electricity prices and other direct subsidies, such a strategy would effectively save the British-taxpayer billions. Simply changing the financing model would have reduced the Levelized Cost of Energy (LCOE) to a cost in line with natural gas, but with 40 times lower carbon emissions.

Cost of baseload technologies with 3%, 7%, & 10% cost of capital:

However, allocating more taxpayer cash to nuclear projects is not necessary to reduce costs.

A 2018 report by the Energy Technology Institute, a government-backed research body, showed that huge savings are possible with simple modifications. Kirsty Gogan, the report’s author, commented that, “just by implementing best practices and achieving economies of scale it would be possible to obtain cost reductions of 30-40%”. This cost reduction is not a project manager’s spreadsheet-built fantasy either. The construction of similarly designed nuclear power plants in South Korea can deliver an LCOE of $51.37 (£39.61) per megawatt hour, even when financed with private capital at 10%.

Perhaps the most important takeaway from the ETI report is that the main cost determinant for nuclear new build is whether the plant design is complete before breaking ground. Design modifications that take place during construction have proven to significantly increase construction length and overall cost. New builds for similar designs to those experiencing overruns in the UK are being delivered at competitive prices in countries like the UAE and China. Costs came down further when the companies constructing those plants had more experience. Adopting these best practices can also improve the financing conditions of a power plant through reducing costs and risk – allowing “the borrowing of less capital, at a better rate, and with a shorter payback time” according to Gogan.

Finally, the majority of existing light water reactor designs, including Hinkley Point, are capable of operating far past their originally-licensed 35-40 year life spans: these extensions can vastly improve the economics. In the United States a number of plants are already obtaining 20 year extensions to keep generating into their 50s and beyond. Dominion Energy, the utility that manages Surry Nuclear Power Plant in Virginia, has already filed to extend the plant’s life to 80 years.

In the medium-term new technologies known as small modular reactors (SMRs) show promising cost reduction potential without compromising safety. One such technology designed by the Oregon-based company NuScale Power has already made it through the first stage of licensing at the U.S. Nuclear Regulatory Commission. NuScale also has interested utility customers in the state of Utah and most recently The Kingdom of Jordan. Modular reactors have promise since they are designed in part to reduce the length, risk, and costs associated with large-scale infrastructure projects, accomplishing much of the reactor construction as a manufactured product. Producers hope to capture similar economies of scale as the aircraft industry where Boeing and Airbus mass produce complex engineering projects.

Whilst the cost reductions with SMRs are important, they are far from revolutionary. We are not going to see electricity ‘too cheap to meter’. NuScale Power estimates they can provide electricity at an LCOE of $99 per megawatt hour for private investors and $67 per megawatt hour for a state or municipal client, with further cost reductions of up to 20% for multiple reactors. This also assumes a plant life-cycle of 40 years, which in most cases is extended. In the best-case scenario this is at a cost as low as coal when considering the whole life-cycle of the plant, and even before taking into account negative externalities from carbon emissions. Compared with gas though this is more economical, particularly in Europe. NuScale CMO Thomas Mundy commented that “beyond $5/MMBTU our technology is competitive with Combined Cycle Gas Turbines”. At the National Balancing Point, Europe’s most liquid gas exchange, natural gas has been traded at a spot price above $5/MMBTU since August 2017.

Nuclear power becomes even more economically interesting if you factor in a carbon price. Carbon prices in the European Union, measured via the Emissions Trading System (ETS) effectively tripled in 2018 – outperforming any other commodity. Research by Mckinsey Energy Insights shows that even low carbon prices will encourage the use of gas over coal, but prices above $30 per ton could make gas less attractive. With a higher carbon price and the use of best practices for plant construction, nuclear energy might just stay in the race.

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  • River Bennett is a researcher for the Nuclear Innovation Alliance and currently pursuing graduate studies in nuclear engineering (twitter: @riverbennett)
  • Paul David Evans is a graduate student of International Energy at SciencesPo Paris. (twitter: @_pauldevans)

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Shipping: the rise of LNG

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Shipping: the rise of LNG

by Arasan Aruliah

January 25, 2019

The Aida Nova

How do we solve shipping’s “chicken-and-egg” dilemma: LNG producers wait for enough ships to run on LNG, while shipping companies wait for producers to increase their supply? The ‘virtuous circle’ of steady growth in LNG shipping in the North Sea/Baltic Sea area can provide an important case study for the rest of the world, according to a reportby the Oxford Institute for Energy Studies. It concludes that LNG will grow as a shipping fuel globally. But ship replacement rates spanning decades and the cost of new infrastructure means there will be no sudden rush.

In December, German shipbuilder Meyer Werft delivered the world’s first cruise ship to be powered solely by LNG. The AIDA nova, of AIDA Cruises, welcomed its first guests aboard in Tenerife on December 19. The 180,000 tonne ship can carry 6,600 passengers. It’s an impressive achievement for LNG ship propulsion. There is surely more to come, thanks to the new emission rules.

The emissions rules are tightening

Between 2006 and 2015, several rounds of increasingly stringent environmental targets regulating sulphur oxide (SOx) emissions were applied in the Emissions Control Areas (ECAs) of Northern Europe and North America, driven by the International Maritime Organization (IMO). The North Sea/Baltic Sea are two of four ECAs. Similar, though less stringent, IMO restrictions of SOx emissions were established at a global level in 2005 and tightened in 2012. In a highly significant development, substantially more stringent global regulations of SOx emissions will enter into force in January 2020.

On top of this, last year the IMO adopted a greenhouse gas (GHG) strategy for international shipping. Called the “Initial IMO Strategy on Reduction of GHG emissions from ships”, it plans to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008. Although burning LNG emits carbon, it is far less than traditional marine fuels, and its potential for further energy efficiencies make it an important part of the solution.

Emission Control Areas are leading the way

In those designated ECAs, the regulation of SOx emissions is the tightest. There are currently four ECAs, where most of the progress in emissions reduction is happening:

  • the Baltic Sea
  • the North Sea
  • the Pacific and Atlantic coastal areas of North America (the USA and Canada)
  • the Caribbean Seas of the USA

An LNG “value chain” is being built in the Baltic and North Seas

In the Baltic and North Seas the tightening regulations, as well as help from government subsidies, have incentivised the construction of the LNG infrastructure. It started with the development of truck-loading facilities in the region’s LNG terminals coincided with the development of technology enabling flexible LNG bunkering direct from trucks to ships. This avoided the necessity of investing in fixed shore-to-ship bunkering infrastructure, which was perceived as more of a commercial risk in the early stages of market development.

As the availability of LNG as a bunker fuel increased, some owners/operators of ships began to choose LNG propulsion for their newbuild vessels. As the market developed further, and demand for LNG as a bunker fuel grew, commercial suppliers felt confident enough to invest in bunker vessels and shore-to-ship bunkering infrastructure. Thus, a virtuous circle began to develop, as more substantial bunkering infrastructure enabled the supply of LNG bunker fuel to a greater number of larger vessels.

“The bulk LNG infrastructure is largely built. What remains is the last mile, in which the industry is showing a growing appetite to invest.” – Chairman of SEA/LNG, Chris Keller

Policy push meets infrastructure’s pull

This virtuous circle has been helped along by the development of large-scale LNG import terminals, the ramp-up of small-scale Norwegian LNG exports and the launch of break-bulk facilities in the region’s large-scale LNG terminals to provide a supply of small-scale LNG deliveries to the growing number of small-scale regional LNG import terminals. Add to that the opening of LNG bunkering facilities in the region’s large and small-scale LNG terminals, and the launch of truck-loading facilities at these terminals (and the loading of new LNG bunker vessels), this has made it commercially feasible to deliver LNG to maritime ports near to those terminals, for provision to vessels as bunker fuel.

Existing LNG bunkering facilities in the North Sea/Baltic Sea ECAs. Note: LNG terminals with bunkering facilities are depicted as circles, while ports with LNG bunkering facilities are depicted as squares. The LNG terminals without LNG bunkering facilities are Dragon/South Hook, Isle of Grain, Dunkerque, and Nynäshamn.

LNG for new ships, but old ships are still using “scrubbers” or low-sulphur gasoil

The report also shows that while LNG propulsion is proving attractive to ship owners investing in newbuild vessels that will operate in the North Sea/Baltic Sea ECAs, owners of existing vessels are still investing in scrubbers or (more often) simply switching to the more expensive low-sulphur marine gasoil. “This latter option – with lower capex and higher opex costs – is essentially a ‘wait and see’ response,” says the report.

The rules may tighten further

But shipping sector environmental regulations can change several times during the life of a vessel, given that vessels have operating lifetimes of several decades. In the North Sea/Baltic Sea region, SOx emissions were introduced and then tightened twice between 2005 and 2015. Restrictions on NOx emissions for newbuild vessels were introduced in 2000, were tightened in 2010, and are set to tighten substantially in 2021. Further tightening of the rules will force ship owners to consider how to ‘future proof’ their vessels. “Therefore, when considering existing vessels, we may expect a surge in demand for low-sulphur marine gasoil and IMO-compliant low-sulphur fuel oil blends in 2020/21, as a result of the ‘wait and see’ approach adopted by many ship owners/operators. Then, over time, this may give way to a gradual uptake of LNG propulsion as new vessels are phased into the fleet,” the report predicts.

Globally the LNG fleet is still small, but growing steadily

Up until 2017 the global LNG fleet was under 100. In 2017-18, 47 more LNG-fuelled vessels were launched, bringing the total in operation to 143. They include a number of world firsts: two LNG-fuelled dredgers (for operation in Northern Europe), a retrofitted container ship (also for operation in Northern Europe), a cruise ship (the Aida Nova), a ferry to operate in the Mediterranean, and Asia’s first LNG-fuelled cargo vessel. 139 LNG vessels are on order.

Of the 143, 98 are ‘dual fuel’, 29 are ‘pure LNG’, and 15 are ‘pure gas + diesel’, leaving just one with ‘dual-fuel turbine’ propulsion. Ships that cross in and out of ECAs switch between the fuel types to keep within the rules.

These figures show that LNG propulsion remains a minority choice. However, they reveal two important observations: the potential for growth in alternative fuels, and the scale of adaptation necessary from January 2020 to comply with the new rules.

LNG definitely has a future, according to DNV GL, the global quality assurance and risk management company. According to their report Energy Transition Outlook 2018: Maritime Forecast to 2050 their model predicts that by 2050, 23% of global shipping energy will be from LNG.

LNG is not carbon free, but can smooth the transition

The caveat remains that LNG still emits carbon, though far less than traditional marine fuels. However, when combined with improvements in energy efficiency, it provides a pathway to compliance with CO2, SOx, and NOx emission rules. Given that marine vessels usually have working lives of two or three decades, the increasingly efficient LNG-fuelled vessels launched in the 2020s may remain in service until the late 2040s, at which point technological advances in alternative fuels may render zero (or near-zero) options for carbon shipping a realistic aim by 2050.

A global LNG shipping transition will be gradual

The global tightening of restrictions on SOx emissions will provide a further policy ‘push’ worldwide. The lessons of the North Sea/Baltic Sea ECAs suggests that LNG may be attractive for newbuild vessels, particularly if the cost of LNG is substantially below that of low-marine gasoil and low-sulphur fuel oil. But it will happen only if sufficient supplies of LNG bunker fuel are available. In other words, building up even more LNG infrastructure is key.

Creating a virtuous circle of infrastructure and LNG ships takes time. So it is unlikely that the substantial tightening of IMO restrictions on SOx emissions at a global level from 2020 will trigger a huge surge in LNG supply and ship owners racing to retrofit their vessels. However, demand for LNG bunkering may grow steadily over the coming decade, as the number of ship owners choosing LNG for their newbuild vessels rises, while at the same time bunkering services become more widely available. To achieve this, marine sectors across the world will be looking at the North Sea/Baltic Sea ECAs to learn important lessons.

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Buildings emissions 2050: triple renovations rate today, avoid stress tomorrow

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ENERGY WATCH #1 - December 20, 2018

Buildings emissions 2050: triple renovations rate today, avoid unnecessary stress tomorrow

by Arasan Aruliah

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Buildings are responsible for 39% of total energy-related global emissions. More action is required from governments, cities and business if the buildings and construction sector is to reach net zero by 2050. Renovations to existing stock are vital but at the current rate of 1% we won’t get there – it needs to triple. Any delay in upping the rate will just increase pressure on the sector down the line. EPW takes a look at what hurdles must be overcome to make it happen.

According to a new report released at COP24 by the Global Alliance for Buildings and Construction,  some progress has been made. Their 2018 Global Status Report – Towards a Zero-Emission, Efficient and Resilient Buildings and Construction Sector emphasises that emissions from buildings and construction have peaked, thanks to energy efficiency gains in areas such as heating, lighting and cooking, and with more offices and homes being powered by cleaner forms of energy. Shifts towards energy saving technologies like heat pumps, improved windows and insulation, the use of less energy-intensive materials, and buildings design, are all paying off.

However, the report underlines that the buildings sector – a huge engine of the global economy – still accounts for a significant 39% of total energy-related CO2 emissions and 36% of final energy use. Net zero by 2050 is still a long way away.

The report was written in collaboration with the International Energy Agency (IEA) and UN Environment. Dr Fatih Birol, Executive Director of the IEA, warns: “Developments within the sector such as the growing uptake of air conditioners are having a big impact on energy and environmental trends at the global level… If we don’t make buildings more efficient, their rising energy use will impact us all, whether it be through access to affordable energy services, poor air quality or higher energy bills.” In other words, the global growth in buildings and population is outpacing the gains from energy efficiency improvements, meaning final energy demand in buildings has risen by 5% since 2010 (Figure 2).

Efficiency gains across the board, except in space cooling

Energy intensity per unit of floor area is another way of measuring energy efficiency. The data shows that space heating and lighting have improved the most since 2010 (Figure 3). The shift to energy‐efficient technologies, such as light‐emitting diodes (LEDs) and heat pumps in some markets, has played a role in those energy intensity improvements. Building envelope measures have also helped to improve heating and cooling energy intensities per square metre, through improved thermal performance (e.g. material choice) and better building design and orientation. All this has helped overcome growth in population and increases in wealth to achieve important energy savings per floor area in recent years. In fact, only space cooling has grown in energy intensity per unit floor area.

Emissions are levelling off, but that’s not good enough

Buildings sector emissions appear to have stabilised at around 9.5 gigatonnes of carbon dioxide (GtCO2) annually in 2015‐17, or 28% of the global energy‐related CO2 emissions. When energy‐related emissions from buildings construction (i.e. manufacturing of building materials) are included, total buildings‐related CO2 emissions amounted to more than 11 GtCO2 in 2017, or 39% of the global energy‐related emissions. That also remains unchanged from 2016. “This is potentially an indicator that buildings sector emissions have capped, but they are still well below the necessary reductions to achieve the global Sustainable Development Goals (SDGs),” says the report.

Energy efficiency investment in buildings is slowing

More investment is needed. Total energy efficiency spending for buildings increased by 4.1% (2.5% adjusted for inflation) in 2017 to $423bn (Figure 9). That means it slightly outpaced the 3‐4% annual growth rate of the total investment in buildings construction and renovation, but that is still a slowdown when compared to the 6‐11% annual growth rates in energy efficiency spending from 2014 to 2016. And whatever the growth rate, energy efficiency remains a small portion of the overall spending on buildings.

Europe has the tools, we’re just not using them

Net zero by 2050 is a steep hill to climb for the world, and that includes Europe. But the tools to succeed are already available, according to a study commissioned by Eurima, the European Insulation Manufacturers’ Association. The study looks at all the opportunities, including the building envelope (efficient design and insulation of roofs, walls, floor, windows), heating and control systems, and renewable energy heating solutions. Eurima Director General, Jan te Bos, says “solutions that are already commercially available can take us 75% of the way to net zero, if deployed at scale. The remaining 25% can be achieved based on known approaches and technologies, if efforts to scale up and commercialise are made.”

The message is slowly getting through. For new builds, France’s building code requires all new construction to fall under its definition of an nZEB (nearly zero-energy buildings). In Austria, Belgium and Italy, more than 20% of residential new constructions in 2017 were nZEBs. For renovations, Denmark’s renovation rates are between 1.5%–2%, well above the EU average, but still not high enough: the Eurima study concludes that 3% of buildings need to be renovated every year, up from just 1% today, for the EU to reach net zero.

Residential buildings hold the key

A report by Climate Action Tracker (CAT), published in November, identifies residential buildings as one of three areas (the other two are electricity supply, and passenger road transport) the EU should focus on to scale up climate action to meet the Paris targets. “The reductions in these three sectors alone are enough to reduce EU28 total greenhouse gas emissions by up to 52% below 1990 levels in 2030,” says their report. But following the current trend in reducing buildings emissions won’t reduce them to zero. Even following the “best in class” nations, like Denmark, will only get us half way there. The report concludes: “Paris Agreement-compatibility requires the renovation rate of the building sector to increase significantly from the current 1%—ideally to around 5%—with the energy demand per square meter decreasing by between 75% and 100%.”

The policies are being put in place

In the summer of this year the EU amended and strengthened the Energy Performance in Buildings Directive (EPBD). EuroACE heralded it as a big step forward. EuroACE is the European Alliance of Companies for Energy Efficiency in Buildings, with members ranging across the commercial buildings sector. In November they published their “EuroACE Guide to EPBD Implementation” to help decision-makers understand and take action following the new rules.

The detailed guide is specifically targeted at the government officials in the EU Member States and “stakeholders in the whole construction value chain from the owner, through the design teams to the site and to all associations that represent this value chain.“

EuroACE Secretary General Adrian Joyce said: “[The new EPBD] is one of the most important changes that has occurred in the EU buildings sector in the last 15 years. At last, EU legislators have recognised that our biggest problems are not the standards we use for our new buildings but the ones we use to renovate our existing ones. “

In 2005, total energy consumption in the EU was around 1,800 million tonnes of oil equivalent (mtoe). So, by hitting the new EPDB targets alone the EU can reduce overall energy consumption by 360mtoe by 2050. At the same time, given most of the energy used in buildings comes from burning fossil fuels, particularly gas for heating, the EU can reduce its reliance on imported gas by around 60%.

“Just treating the building sector will reduce energy demand in the overall economy by 32% if we achieve our goals,” says Joyce. In fact, this sector is ripe for rapid transition. Joyce concludes: “The Buildings sector is the most readily accessible for achieving dramatic cuts in emissions”.

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CCS – how can we make it happen?

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ENERGY WATCH #3 - December 20, 2018

CCS - how can we make it happen?

by Mike Scott

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CCS plant, Abu Dhabi

Carbon capture, utilisation and storage (CCS) has an important role to play in reducing GHG emissions as long as it is not seen as licence to withdraw from the common goal of pursuing a future based on clean fuel. The International Energy Agency (IEA), considers it essential if we are to limit the worst effects of climate change, and highlights it is a technology that has failed to live up to its potential over the years. The solution is there but how it should financed – and who pays the bill – is not clear but it needs to be rolled out as soon as possible so investors benefit from the cost-learning curve. Otherwise it will just get left behind.

chart: SDS

In May this year, it said that “with only two large-scale carbon capture, utilisation and storage power projects in operation at the end of 2017, with a combined capture capacity of 2.4 million tonnes of CO2 per year, CCUS in power remains well off track to reach the SDS target of 350 million tonnes per year by 2030.

And yet there is a palpable sense of optimism in the sector as 2018 comes to an end. Has the technology’s time finally come?

The Global Carbon Capture and Storage Institute argues that the case for CCS is now “irrefutable” and a vital lifeline to beat climate change, in a new report, The Global Status of CCS, 2018. The world cannot meet its climate targets without CCS, it says. “It has become increasingly clear that the world will need all the technologies, mechanisms and approaches available,” says CEO Brad Page.

He adds that for the first time in many years, the past year has seen significant developments on CCS from a number of governments, including the US, the UK, the Netherlands, Norway and China. Many of them are reviving CCS programmes that were abandoned a number of years ago.

There are currently 18 large-scale CCS facilities operating around the world, with another five under construction and 20 more at various stage of development, he points out.

In 2018, more and more people started to recognise CCS for its cumulative capacity to mitigate climate change, the report says. “In the past year, countries have been incentivising investment, industry has accelerated deployment, new innovations have been unveiled, and new energy economies have emerged. CCS has proven itself as real, happening and here to stay.”

At the same time, the IPCC’s 1.5C report highlights the importance of the technology in helping to meet our climate targets. And that’s all great, up to a point.

But these same arguments were being made over a decade ago and nothing happened because governments and industry couldn’t agree on who should pay for it. Governments cancelled CCS projects because of the cost as the financial crisis started to bite, and the sector entered the doldrums.

There remains a certain amount of ambivalence about CCS, in part because in the past fossil fuel industry analysts have suggested it would obviate the need to roll out renewable energy. CCS technology should not be used to justify less effort elsewhere. It is needed as part of the solution.

Carbon Tracker says that CCS is important, but not a get out of jail free card, not least because to limit temperature rises to 2C, we would have to open one CCS plant every other day, and to get to 1.75C, it would have to be five a week – something that is patently not going to happen in the near term.

DNV GL agrees that “scale projects are needed now if CCS is to stand any chance of benefiting from the cost-learning curve rates enjoyed by other rapidly-advancing elements of the low carbon economy, like renewables and storage.”

But it adds that “our projection is that CCS will capture only 1.5% of emissions in 2050. That is another way of saying that CCS will not advance meaningfully without an extraordinary shift in commercial incentives”.

One of the main reasons for the lack of progress in CCS is that it is more expensive and more difficult than energy efficiency initiatives and renewable generation.

The failure of CCS to advance to date has been enormously frustrating. CCS is the only mitigation technology able to decarbonise large industrial sectors, particularly the steel, cement, fertiliser and petrochemical industries.

The scaling up of CCS needs to happen but progress remains glacial. For things to change meaningfully now requires a significant change in attitude and urgency from both governments and carbon emitters. It’s possible that fossil fuel producers will see a case to act in the existential threat from the rapidly falling costs of renewables and EVs – but most of them seem focused on investing in the latter technologies rather than CCS. Governments may be reviving projects, but they don’t seem much more prepared to incentivise the technology than they were a decade ago.

CCS won’t gain scale until costs come down, and costs won’t come down until more projects are built. But it won’t happen until governments commit to the technology. “Sufficient investment in CCS simply will not happen without strong and sustained government policy,” says the Global CCS Institute.

CCS requires investment in long-lived capital-intensive assets, and that won’t happen unless companies and investors are sufficiently confident in current and future policy to be prepared to commit to investing in the technology.

As the Institute says: “Policy must not only support the business case for investment in CCS, it must win the confidence of investors. Once policy confidence is in place, long-term capital investments can be made and the virtuous cycle of investment and cost reduction will accelerate.”

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RES market share to reach almost 80% to achieve 1.5 degrees

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ENERGY WATCH #4 - December 20, 2018

RES market share to reach almost 80% to achieve 1.5 degrees

by Tom Idle

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The European Commission has just published its annual scenarios report including its projection as to when greenhouse gas emissions need to drop to net zero. For the past four years, the average global de-carbonisation rate showed a 2.6% per year drop. Even the best performing economy in 2017 in terms of carbon intensity reduction – China – only achieved a drop of 5.2% (source: PwC). This won’t get us to 1.5 degrees. What’s needed is a strategy that includes the implementation of renewable energy sources on course for 78% of total power. That will enable the de-carbonisation rate to rise to 9% per year, which is required. EPW considers the implications to the power sector of staying within the scientifically preferred 1.5 degrees of average temperature rise.

Tensions were running high even before the latest UN climate talks had started following the publication of the Intergovernmental Panel on Climate Change’s (IPPC) latest scientific report challenging the current ambition of global efforts to reduce greenhouse gas (GHG) emissions.

For many years, limiting global warming to within no more than a 2 degree rise in average temperatures, based on pre-industrial levels, was a de-facto target for negotiators to work towards.

Now, the IPPC – backed up by the views of 70 scientists – says that 2 degrees of warming is not a “guardrail up to which all would be safe”. Instead, the world should “push the defence line as low as possible” and aim to limit warming to 1.5 degrees.

The special report highlighting the likely impacts of 1.5 degrees warming, received short shrift from the US, Russia, Kuwait and Saudi Arabia, among others, whose negotiators merely ‘noted’ its existence, refusing to ‘welcome’ it. Saudi Arabia’s senior negotiator Ayman Shasly said: “We all know it will cost the world a great deal of cost and all elements to achieve 1.5 degrees. The storyline of the entire report shows that it is achievable, it’s doable, let’s all do it together, which is not fair. What is the equity in this? Where is history in this?”

The European Commission’s Joint Research Centre’s (JRC) latest analysis, also launched at COP 24, provides some of the answers in assessing the likely differences between meeting a 2 degree and a 1.5 degree rise.

Right now, emissions and energy consumption trends show we are not on track to meet either of the goals. But JRC’s Global Energy and Climate Outlook 2018 predicts that to hit the 1.5 degree goal, global GHGs have to drop to net zero by 2065, and by 2080 to meet the 2 degrees target – both of which are technically possible and at relatively low cost to the overall economy. “While this clearly would come with increased investment needs, the overall costs would be equivalent of less than one week of economic activity lost for a given year. The economy would grow, decoupled from greenhouse gas emissions,” it claims.

Comparisons made as to the economic impacts across regions between the Nationally Determined Contributions (NDC) and the 2 degrees scenarios it lays out shows that long-term decarbonisation goes hand-in-hand with high, yearly per capita consumption growth rates in fast-growing, low and middle-income countries.

Achieving higher ambition levels than the NDCs – which leaves the likes of Saudi Arabia and the US so nervous – “can be done at relatively low costs,” argues the report. “While GDP and consumption are expected to decline relative to the NDC scenario in 2050, investment will increase to build the capital stock required for a low emission economy.”