How can carbon capture help propel the shipping industry forward?
Interview with Alisha Fredriksson, CEO of Seabound
Last week’s article explored how if shipping were a country, it would be the world’s eighth-biggest emitter of carbon dioxide (CO2). One highly promising option to help ships meet incoming regulation is an onboard carbon capture device built by the team at Seabound. I caught up with Alisha Fredriksson, CEO, to learn how shipowners might save on carbon and costs.
💨 Why is carbon capture a promising solution for shipowners?
Shipping is very hard to decarbonize because you need enormous amounts of energy to transport such large volumes of cargo over long distances.
Electrification would mean sacrificing much of the cargo space to hold batteries. New fuels such as ammonia and methanol are promising, but realistically won’t be available for at least 1-2 decades. Energy-savings devices are feasible and often no-brainers, however they cannot reduce a meaningful amount of CO2 emissions nor the volumes required to be compliant with regulations. Additionally, it is unrealistic for all ships to ‘slow steam’ (travel slower to burn less fuel) as this would lead to major supply chain disruptions.
So ships are stuck with today’s dirty fuels, and are soon going to pay for every single tonne of carbon they emit. Capturing carbon emissions before they are released is the only way to avoid a carbon tax right now.
🚢 How do you explain Seabound’s solution?
We retrofit a ship to install our device adjacent to a ship’s funnel to trap up to 95% of the CO2 in its exhaust.
We capture the carbon using pebbles of quicklime, which chemically react with the CO2 to turn into limestone pebbles. In addition to selling the carbon capture equipment, we also provide an ongoing “pebbles subscription”, whereby we supply the shipowners with the quicklime pebbles needed to capture CO2 and collect the limestone pebbles post-capture (you can think of this approach like the razor blade model or perhaps like the Sodastream).
Finally, we sell the captured carbon - whether in the form of limestone pebbles to be used in building materials or pure CO2 to be reused or sequestered - and we then share this CO2 revenue stream with our shipowner customers.
📈 How do you explain Return on Investment for your installation?
Shipowners can benefit financially in multiple ways:
To reduce their tax burden by having a lower carbon footprint (e.g. via the Emissions Trading Scheme in the EU and/or via a pending global carbon levy for the shipping industry)
Making more of their ships compliant with the IMO’s Carbon Intensity Indicator A or B standards, and therefore able to continue servicing customers like Amazon
Sharing in the captured CO2 revenue. For example, alternative fuels such as methanol use captured carbon dioxide as an ingredient.
This last one is exciting because we can use one waste product from the shipping industry to create a new product for the shipping industry, so it goes full circle. If we continue capturing CO2 onboard ships that are burning electro-methanol, we could create a circular fuel system.
Additionally, if the original source of CO2 that is used to produce electro-methanol is bio-based (e.g. bioenergy with carbon capture) and we then capture the CO2 onboard and store it underground, we could turn ships into carbon-negative machines, which is pretty unheard of given it’s one of the world’s dirtiest sectors today.
Finally, Seabound’s technology can also capture sulfur emissions, and we’re currently studying whether or not we can capture the amount required to meet the IMO’s sulfur regulations. If we can, then there’d be a 1-2 year payback period for shipowners who install our carbon capture technology because they can save money on fuel by burning a cheaper high sulfur kind (more on this below).
💸 Are there any examples of how making environmental improvements can save shipowners money?
Yes, this tactic has already been in use for a few years with ‘Scrubbers’ which remove sulfur oxides sulphur oxides (SOx), and nitrogen oxides (NOx) from ship exhausts.
In 2020, new regulations from the IMO slashed the sulfur content of shipping emissions. Ships with scrubbers can continue to burn a cheaper fuel which has 3.5% sulfur content, known as high sulfur fuel oil (HSFO). Ships without scrubbers have to use an expensive Very-Low Sulfur Fuel Oil (VLSFO) with a 0.5% sulfur content. The cost savings on the fuel alone show a scrubber to be an economic investment.
Here’s a quick case study from July 2022 which illustrates this:
The average price of VLSFO at one point was $420.50 per ton higher than the average price of HSFO
Ships with a scrubber who could burn HSFO were paying $22,000 less per day for fuel
Given a scrubber cost around $2-$3 million to install on a ship, that creates the potential to make the investment back in under 140 days (5 months)
Reducing sulfur is critical for improving air quality we breathe and preventing the increase of acid rain: ship-related pollution is responsible globally for about 400,000 premature deaths from lung cancer and cardiovascular disease, especially around ports.
It is important to mention that sulfur in the atmosphere plays a key role in countering the effects of global heating by reflecting solar radiation. Therefore the IMO’s immediate reduction of sulfur dioxide has in the short-term contributed to global warming because the carbon dioxide hasn’t also been reduced. This creates even more of an impetus to speed up carbon regulations so the two rules complement each other, and don’t inadvertently create more adverse effects.
🟢 And how can environmental changes affect financing for shipping?
We’re starting to see a green premium appearing in the industry. Either this is in loans specifically to retrofit ships to be compliant or to finance new ships which are fossil-fuel free. Shipping finance is increasingly linked to maritime decarbonisation targets which means that interest rates on the debt could potentially be reduced if sustainability-linked key performance indicators are met.
Over 30 banks are now signatories of the Poseidon Principles, which means they need to align their ship finance portfolios with responsible environmental behaviour. For example making sure their ships meet the IMO’s 40% reduction in carbon intensity by 2030. Only about half the banks have got there right now but it shows they are starting to hold themselves to account.
Interested in learning more? Seabound is currently hiring for a Controls Software Engineer. Check out the role here.
Thanks Alisha!
Other exciting innovations in development for the shipping industry focus on:
🌊 Resistance reduction
Adding anti-friction paint to hulls on ships can reduce the friction between the hull and the water, allowing more efficiency as they move
Switching in composite materials which are designed to be stronger and lighter than traditional materials. Aluminium can be used to create lighter frames, while carbon fibre is highly durable.
🧭 Logistics and efficiency
Implementing vessel performance tracking systems to ensure that ships are operating at maximum efficiency
Utilising big data to optimise cargo hauls, identify the best cargo routes, and select the most cost-effective ports of call
Autonomous vessels are being designed, which would reduce the need for crew on board, while still providing a safe and efficient way to transport goods and passengers.
⛵ Harnessing wind energy
Adding wind power will in future reduce costs of fuel. Some of the largest shipping companies like Maersk and Cargill are already trialing these innovations:
Via parafoil kites like by Airseas, founded by former engineers at aerospace giant Airbus SE
Using Rotor Sails (large, cylindrical mechanical sails) which use the Magnus Effect to propel the ship forward
Cargo ships powered by wind are in design, such as the Oceanbird which is 200m long with the potential to carry 7000 cars
🛢️ New fuels
Alternative fuels for shipping include biodiesel, liquefied natural gas (LNG), methanol, hydrogen, and ammonia.
Whereas biodiesel and LNG, are already commercially available in some areas, hydrogen and ammonia, are still in the early stages of development and may not be available for commercial use for several years.
Recent fundraises to develop new fuels have included $139million for US-based Amogy which is focused on ammonia development
🪸 Fun ocean fact:
Ever heard of a seagrass meadow? These are a type of marine ecosystem, composed of flowering plants (seagrasses) and supporting many other lifeforms such as fish, shellfish, and crustaceans. It has now been discovered that seagrass meadows can make the right type of sand for building and maintaining the shorelines of coral reefs, and protecting them from sea-level rise.