Alternative fuels, such as hydrogen and methanol, are a promising path for emissions-free shipping. However, there are challenges in the production of alternative fuels that limit their effectiveness in decarbonizing the global fleet.
The Challenge of Alternative Fuel Production
Shipping decarbonization is not achieved when alternative fuels are used to power a vessel. Decarbonization takes place in the production of alternative fuels. Because alternative fuels may be produced using traditional power sources, they are not inherently green. In order to become a green fuel, they must be produced using renewable electricity. Securing the offtake of renewable electricity to produce green fuels at scale is a major challenge for the industry.
Projections show that every existing renewable energy-generating asset would need to be solely dedicated to producing green fuels for the shipping industry to fully decarbonize.
The Potential of Nuclear Power
During a recent industry forum in New York City that focused on sustainable maritime fuels, the conversation moved to how nuclear power could be a potential solution. Nuclear power has been used to power naval ships and submarines for over half a century, and several startups are engaged in making the technology deployable onboard commercial cargo ships.
Next-generation nuclear power technology offers the potential for fully contained onboard systems that require no refueling or waste disposal during the life of the ship and substantially faster zero-emissions sailing speeds. However, these solutions would substantially increase vessel costs, as well as raise a number of safety, security, and other concerns.
Using Nuclear Power to Produce Green Fuels
Another idea that is gaining momentum is using nuclear power to produce green fuels. In this scenario nuclear would enable decarbonization of the industry without the complications of building and maintaining onboard reactors for each ship.
The Potential of Offshore Nuclear Reactors
Nuclear power does not emit carbon or other greenhouse gases and can produce electricity consistently and economically. Creative solutions such as housing nuclear reactors on offshore platforms and barges could also make them safer, less expensive, and easier to deploy. There are important risks to consider with nuclear, but technological developments have made it more feasible and promising than ever.
Government Investment in Nuclear Power
The European Union is in the process of making a policy into law that would deem hydrogen generated by nuclear energy fully renewable in designated regions. In the U.S., the Department of Energy is investing billions to help scale up and decrease the cost of clean hydrogen through existing energy assets, including nuclear power plants.
With alternative fuel production projects held up by the availability of renewable energy, utilizing nuclear power could become a catalyst for the growth of alternative fuel infrastructure projects and the ship orders to go with it. While there are important concerns to consider with nuclear power, its potential to help the shipping industry decarbonize is gaining attention from scientists, governments, and private enterprises.
ETFMG Breakwave Sea Decarbonization Tech ETF (NYSE: BSEA) provides exposure to many of the companies involved in alternative fuel production, including Aker Horizons (Norway), Alfa Laval (Sweden), Chart Industries (USA), GTT (France), Nel (Norway), New Fortress Energy (USA), OCI (Netherlands), Royal Vopak (Netherlands), Technip Energies (France), Wartsila (Finland) and Yara (Norway).
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