Toward Achieving Net Zero GHG
Emissions from International Shippingby 2050

March 2022
Shipping Zero Emission ProjectThis document was originally written in Japanese. This English version is provided for reference
purposes only.

Foreword
Amid globally growing momentum for decarbonization since the Paris Agreement came into effectin 2016, further reduction of greenhouse gas (GHG) emissions has become an urgent issue ininternational shipping, which currently accounts for approximately 2% of global GHG emissions
and is expected to significantly grow in the future. In April 2018, the International Maritime
Organization (IMO) adopted the “Initial Strategy on reduction of GHG emissions from ships”, aimed
at reducing the GHG emissions from international shipping by at least 50% by 2050 and phasing
them out as soon as possible in this century. Currently, in accordance with the Strategy, discussion
and consideration on GHG emissions reduction measures are underway at the IMO.
Japan is one of the major players in global shipping and shipbuilding sectors. In order to actively
contribute to international actions to address the climate change while ensuring the sustainablegrowth of maritime transport and related industries, Japan established the “Shipping Zero Emission
Project”, in collaboration with the industrial, academic, and public sectors, in August 2018. The
Japan Ship Technology Research Association (JSTRA) and the Ministry of Land, Infrastructure,
Transport and Tourism (MLIT) are taking the lead in organizing this project with the support fromthe Nippon Foundation.
This report contains the outcome of the studies conducted by this Project in 2021.

＜Institutions and organizations participating in the Shipping Zero Emissions Project＞

Shipping Zero Emission Project<Steering Group Members>
Hiroaki
Project Manager, International Shipping GHG Zero Emissions Project
Sakashita
President & CEO, Nippon Kaiji Kyokai (ClassNK)
Hideaki Saito

Vice Project Manager, International Shipping GHG Zero Emissions ProjectVice President, Japan Craft Inspection Organization
Chair, Marine Environment Protection Committee (MEPC), International
Maritime Organization (IMO)

Ken Takagi

Professor, Department of Ocean Technology, Policy, and Environment,
Graduate School of Frontier Sciences, The University of Tokyo

Akira Okada

Associate Professor, Environmental Management and Sustainability, Facultyof Environmental Studies, Tokyo City University

TatsumiKitahara

Associate Professor, Department of Mechanical Engineering, Graduate
School of Engineering, Kyushu University

Koji Takasaki

Professor Emeritus, Kyushu University

Akihiko Azetsu

Specially Appointed Professor, Department of Mechanical Engineering,
School of Engineering, Tokai University

SeijiroMorimoto

Senior Researcher, Planning and Research Department, Japan Maritime
CenterKoichi HIrata

Director, GHG Reduction Project Team, National Maritime ResearchInstitute, National Institute of Maritime, Port and Aviation Technology

Hayato Suga

Corporate Officers, Director of Plan Approval and Technical Solution
Division, Nippon Kaiji Kyokai (ClassNK)

Toshiyuki
MatsumotoExecutive Director, Planning and Design Center for Greener Ships (GSC)

Yuji Mori

Senior Director, Joint Construction of Ship Assistance Department, Japan
Railway Construction, Transport and Technology Agency (JRTT)

Hiroshige
Tanioka

Direcotor, General Manager of Environment Management Group, Kawasaki
Kisen Kaisha, Ltd. (“K” Line)

Hirohiko Oyabu

Assistant to Director of Technical Division, Mitsui O.S.K. Lines, Ltd.

Masahiro
Takahashi

General Manager, Environment Group, Nippon Yusen Kaisha (NYK Line)

Norihiro
Wakiyama

Senior Staff Officer, Ship & Offshore Structure Business Division, Energy
Solution & Marine Engineering Company, Kawasaki Heavy Industries, Ltd.

Tsuyoshi
IshiguroTechnical Executive, Design Division, Japan Marine United Corporation

Takashi Unseki

General Manager, Ship & Ocean Engineering Department, Marine
Engineering Center, Mitsubishi Shipbuilding Co., Ltd.

Atsushi Majima

Director, General Manager of Business Development Group, Sumitomo
Heavy Industries Marine & Engineering Co., Ltd

Shuichi Ikeda.
Design Division, Asakawa Shipbuilding Co., Ltd.

HideakiNagasawa

General Manager, Research & Development Department, Engineering &Technology Center, IHI Power Systems Co., Ltd.

Kazutaka
ShimadaDeputy General Manager, Diesel Design Department, Diesel Engine
Division, Mitsui E&S Machinery Co., Ltd.

Organizer: Japan Ship Technology Research Association (JSTRA) and
Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
Support: The Nippon Foundation

This project has established the Task Force on ship design and the Task Force on ship operationand has been carried out with the participation of more than 50 experts from related industries andorganizations.

Toward Achieving Net Zero GHG Emissions from International Shipping by 2050

Table of Contents
Chapter 1: Introduction ............................................................................................................................. 2
Section 1.1: Background ...................................................................................................................... 2
Section 1.2: Purpose ............................................................................................................................. 3
Section 1.3: Outline of the Project ..................................................................................................... 3
Chapter 2: GHG Reduction from International Shipping ................................................................. 4
Section 2.1: Targets Set by the Strategy .......................................................................................... 4
Section 2.2: The Movement for Net Zero GHG emissions in 2050 ............................................ 5
Chapter 3: Measures to Achieve at Least 40% Improvement in Average Energy Efficiency by2030 ................................................................................................................................................................ 8
Section 3.1: Improving the Energy Efficiency of New Ships (EEDI Regulations).................. 8
Section 3.2: Improving the Fuel Efficiency of Existing Ships .................................................... 8
Chapter 4: Information on Zero-Emission Fuel Supply.................................................................. 10
Section 4.1: Future Projections for Achieving Net Zero GHG Emissions ............................. 10
Section 4.2: Outlook for Domestic Alternative Fuel Supply...................................................... 13
Section 4.3: Trends in Alternative Fuel Production Projects for Marine Use ....................... 15
Chapter 5: Information on Technological Development and Related Technical Issues for
Zero-Emission Ships ............................................................................................................................... 16
Section 5.1: Technical Development Issues for Zero-Emission Ships................................... 16
Section 5.2: Trends in Zero-Emission Ship Technology Development .................................. 19
Section 5.3: Major CO2 Reduction Technologies other than Fuel........................................... 24
Section 5.4: A Summary Table of Domestic and International Technology Development
Trends ...................................................................................................................................................... 26
Chapter 6: Simulation for GHG Emission Reduction Pathways towards Net Zero by 2050 . 29
Section 6.1: How to Proceed with the Discussion on Simulation for GHG reduction........ 29
Section 6.2: The Data Used for the Simulation ............................................................................. 30
Section 6.3: Assumption applied commonly for Ship Types .................................................... 33
Section 6.4: Differences by Scenario .............................................................................................. 38
Section 6.5: Results and Discussion .............................................................................................. 39
Chapter 7: Regulatory Developments ................................................................................................. 47
Section 7.1: Mid- and Long-Term Measures at IMO..................................................................... 47
Section 7.2: Concept of Market-Based Measures (MBMs) to be Introduced In IMO ........... 48
Section 7.3: Regulatory Approach ................................................................................................... 51
Section 7.4: LCA (Life Cycle Assessment) of GHG Emissions ................................................ 52
Section 7.5: Rules on Ship Safety and Seafarers ........................................................................ 53
Chapter 8: Concluding Remarks .......................................................................................................... 54

1

Chapter 1: Introduction
Section 1.1: Background
According to the study on greenhouse gas (GHG) emissions from international shipping
conducted by the International Maritime Organization (IMO) in 2020, total CO2 emissions frominternational shipping as of 2018 was approximately 920 million tons, around 2.5% of global
CO2 emissions. Demand for maritime transport is forecasted to increase amid the growth of
the world economy.
Measures for tackling the climate change in a global manner are being discussed under theUnited Nations Framework Convention on Climate Change (UNFCCC). However, GHG
emissions from international shipping and aviation sectors operating beyond national borders
are difficult to be separated and allocated to countries, by nationality of the ship or aircraft, orby the country that operates them. Thus, actions to reduce emissions from these sectors are
not compatible with the country-specific reduction measures of the UNFCCC. For thesereasons, the Kyoto Protocol states that the control or reduction of their respective GHG
emissions will be pursued through activities conducted through the IMO and the International
Civil Aviation Organization (ICAO), which are specialized agencies of the United Nations.
The IMO adopted the initial IMO Strategy on Reduction of GHG emissions from Ships(hereafter “the IMO Strategy”) to reduce GHG emissions from ships in April 2018. The IMO
Strategy sets GHG reduction targets: (1) to reduce carbon intensity (i.e. CO2 emissions pertransport work) of international shipping by at least 40% by 2030 compared to 2008, (2) toreduce the total annual GHG emissions from international shipping by at least 50% by 2050
compared to 2008, and (3) to phase out GHG emissions from international shipping as soon
as possible, in this century.
Against this background, in 2018, Japan established the “Shipping Zero Emission Project”(hereinafter referred to as "this project") in collaboration with industry, academia, government,
and public sectors. A "Roadmap to Zero Emission from International Shipping" was developedin 2020, mainly summarizing the following.
-

Regulatory measures necessary to achieve the 2030 target (40% improvement inaverage fuel consumption) set in the IMO strategy-

Fuel mix scenarios to achieve the 2050 target (50% reduction in total emissions)-

Roadmap for R&D and practical application required to achieve post-2050 goals-

Conceptual design of zero-emission / ultra-low carbon ships

The IMO strategy is to be revised in 2023. Since the adoption of the strategy in 2018, global
interest in combating climate change has been increasing, and international shipping isrequired to make further efforts to reduce GHG emissions. At the 77th session of the Marine
Environment Protection Committee (MEPC 77), the Committee, in view of the urgency for all
sectors to accelerate their efforts to reduce GHG emissions as emphasized in the recent IPCC
reports and the Glasgow Climate Pact, recognized the need to strengthen the ambition of thestrategy during its revision process. In Japan, the Government of Japan and shipping industry
announced in October 2021 that they would aim for net zero GHG emissions from international
shipping by 2050, and such initiatives to reduce GHG emissions at the government or industry
level are spreading worldwide.
As one of the world's leading shipping and shipbuilding countries, it is important for Japan tolead the way in reducing GHG emissions from international shipping, both in terms ofestablishing an international framework at IMO and in technological development, and to2

actively contribute to achieving net zero GHG emissions from international shipping in 2050.
Section 1.2: Purpose
Based on the above background, in this report, we collected and organized the latest
information on the forecasted diffusion of zero-emission fuels, organized domestic andinternational technology development trends and issues for the realization of zero-emission
ships, conducted GHG emission reduction simulations based on various scenarios, andsummarized regulatory developments that are considered necessary to achieve net zero
emissions in 2050.
Based on the findings obtained through this review work, Japan will discuss the revision of the
IMO strategy and mid- and long-term measures at IMO.
Section 1.3: Outline of the ProjectThis report outlines the results of the Project in the structure mentioned below.
(1) GHG reduction from international shipping (Chapter 2)(2) Measures to achieve at least 40% improvement in average fuel efficiency by 2030
(Chapter 3)(3) Trends in zero-emission fuel supply (Chapter 4)(4) Organizing technology development issues and trends for zero-emission ships (Chapter
5)(5) GHG emission reduction simulation (Chapter 6)(6) Regulatory developments (Chapter 7)3Chapter 2: GHG Reduction from International Shipping
Section 2.1: Targets Set by the Strategy
In April 2018, the Initial IMO Strategy on reduction of GHG emissions from ships (“the IMO
Strategy”) was adopted at the 72nd session of the IMO’s Marine Environment Protection
Committee (MEPC 72). Figure 2.1-1 gives an overview of the IMO Strategy. The IMO Strategy
sets the following GHG reduction targets1:-

To reduce carbon intensity (i.e. CO2 emissions per transport work) of international
shipping by at least 40% by 2030, compared to 2008-

To reduce the total annual GHG emissions from international shipping by at least 50%
by 2050, compared to 2008-

To phase out GHG emissions from international shipping as soon as possible, in thiscentury

In addition, the IMO Strategy specifies candidate measures for the reduction of GHG emissions
for achieving the targets mentioned above. They are classified into three types as follows:-

Short-tern measures: To be agreed between 2018 and 2023 (e.g. Fuel efficiency
regulations for existing ships)-

Mid-tern measures: To be agreed between 2023 and 2030 (e.g. the introduction ofmarket-based measures (MBM))-

Long-tern measures: To be agreed beyond 2030 (e.g. Promoting the introduction of
zero-carbon fuels)

Figure 2.1-1: Overview of the Initial IMO strategy
The IMO Strategy is to be revised in the spring of 2023. Discussions on the revision were
initiated at the 77th session of the Marine Environment Protection Committee (MEPC 77) held
1 International Maritime Organization [IMO]. (2018). Adoption of the initial IMO strategy on reduction of GHG emissions

from ships and existing IMO activity related to reducing GHG emissions in the shipping sector.
https://unfccc.int/sites/default/files/resource/250_IMO%20submission_Talanoa%20Dialogue_April%202018.pdf
4

in November 2021, and as a result of the deliberations, the Committee, in view of the urgency
for all sectors to accelerate their efforts to reduce GHG emissions as emphasized in the recent
IPCC reports and the Glasgow Climate Pact, recognized the need to strengthen the ambitionof the strategy during its revision process. Discussions will continue with the aim of agreeing
on a revised draft at MEPC80, scheduled to be held in July 20232.
Section 2.2: The Movement for Net Zero GHG emissions in 2050
Since the adoption of the Strategy in 2018, global interest in combating climate change has
been growing, and international shipping is required to make further efforts to reduce GHG
emissions. Around the world, governments, industry groups, and individual private companies
have begun to set even more ambitious goals to achieve carbon neutrality and net zero GHG
emissions by 2050. One of the main reasons for this is “the Special Report on Global Warmingof 1.5°C” compiled by the Intergovernmental Panel on Climate Change (IPCC) released in
October 2018. In the report, the following is mentioned3:-

At the current rate of progress, global warming will reach 1.5°C in 2030-2050.

-

It is not impossible to limit global warming to 1.5°C. However, it will require an
unprecedented transition in all aspects of society.

-CO2 emissions must be reduced by 45% by 2030 and reach net zero around 2050.

The 24th session of the Conference of the Parties (COP24: December 2-15, 2018, Katowice,
Poland) to the UNFCCC also adopted a decision document that included a request for parties
to use the information contained in the Report in all agenda items under the UNFCCC
subsidiary bodies4, which is considered to be the background for each country to become moreaware of the net zero goal in 2050.
In April 2021, U.S. President Biden, who took office in the same year, hosted a climate summit,
and at this side event, Kerry, the US Special Presidential Envoy for Climate, announced that
the US would work with other countries to establish ambitious reduction targets and measuresto achieve them in IMO, so that international shipping can achieve zero emissions by 20505.
In Japan, in 2020, Prime Minister Suga (at that time) set a goal to be carbon neutral by 2050,
targeting all domestic industries, and on October 26, 2021, Minister of Land, Infrastructure,
Transport and Tourism Saito expressed that Japan aims to achieve net zero GHG emissions
from international shipping by 2050. On the same day, the Japanese Shipowners' Association
also announced its "Challenge to achieve net zero GHG emissions by 2050”6. In MEPC77, anumber of delegations stressed the need for the Organization to send a clear signal on its
commitment to reduce GHG emissions from ships to achieve zero emissions by 2050, as
stated by many, or net zero emissions by 2050, as stated by others.
In order to achieve net zero emissions by 2050, it is essential to promote the use of zeroemission ships that do not emit GHGs. As a move to establish shipping routes where zeroemission ships operate (called "Green Shipping Corridor" etc.), the Clydebank Declaration was
2 IMO. (2021). MEPC 77/16, Report of the Marine Environmental Protection Committee on its seventy-seventh session.
3 IPCC. (2018). Global warming of 1.5°C.

https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_Low_Res.pdf
4 United Nations. (2018). Report of the Conference of the Parties on its twenty-fourth session, held in Katowice from 2 to 15
December 2018.
https://unfccc.int/sites/default/files/resource/10a1.pdf
5 Volcovici, V. (2021, April 21). U.S. to join effort to curb climate-warming emissions from shipping. Reuters.
https://www.reuters.com/business/environment/us-join-global-effort-decarbonize-shipping-industry-kerry-2021-04-20/
6 The Japanese Shipowners’ Association. (2021). Japanese Shipping Industry Announces “Challenge of 2050 Net Zero GHG.”.
https://www.jsanet.or.jp/e/pressrelease_e/2021/pdf/20211026e.pdf
5announced at the 26th Conference of the Parties to the UNFCCC in 2021 (COP26: October
31-November 12, 2021, Glasgow, UK), led by the UK Department for Transport. 22 countries
including Japan participated as signatories7.
<Reference: Signatory countries to the Clydebank Declaration>
Australia, Belgium, Canada, Chile, Costa Rica, Denmark, Fiji, Finland, France, Germany,
Ireland, Italy, Japan, Marshall Islands, Morocco, Netherlands, New Zealand, Norway, Spain,
Sweden, United Kingdom, United States
On September 24, 2021, a summit of the four countries "QUAD" by Japan, the United States,
Australia, and India was held, and the joint statement included a commitment to promotedecarbonization of shipping and port operations. The attachment (fact sheet) of the jointstatement states that the four Quad countries are in a position to develop green port
infrastructure and use of clean marine fuels on their own large scale and have launched a
Quad Shipping Task Force and to decarbonize the shipping value chain. It specifies theformation of a network dedicated to greening and decarbonizing and the establishment of two
to three low-emission or zero-emission shipping corridors by 2030 as a Quad8.
In addition to the above, there is Mission Innovation (Zero Emission Shipping Mission) as aninternational framework to which Japan is not a member. Mission Innovation is a framework
established in 2016 under the leadership of the United States and France to promoteinternational cooperation in various fields, and as of March 2022, 13 fields, including the Zero
Emission Shipping Mission, have become targets of cooperation. The Zero Emission Shipping
Mission is led by Denmark, Norway, and the United States, with 10 other countries including
the United Kingdom and South Korea and 2 organizations, as members. The Zero Emissions
Shipping Mission is very ambitious, with the goal of having at least 5% (based on fuelconsumption) of the world's ocean shipping fleet powered by zero-emission fuels throughout
their life cycle by 2030, including green hydrogen, green ammonia, green methanol, andadvanced biofuels, and having at least 200 ships primarily using these fuels on major ocean
shipping routes. In addition, at COP26 (November 2021), the Prime Minister of Denmark
announced the "Declaration on Zero Emissions Shipping by 2050," which was signed by 14
countries, including the United Kingdom and the United States. Signatories to the Declaration
are urged to act in the IMO’s international negotiations and strengthen international
cooperation to achieve zero emissions from international shipping by 2050, so that the IMO's
2050 GHG reduction targets are revised to be more ambitious and the 2040 and 2030 targets
are adopted as a path to achieving them.
There are various movements at the private level as well. For example, the Getting to zero
Coalition hosted by the Global Maritime Forum has 230 member companies and organizations,
including some of the world’s leading shippers in global energy development, resource
development, grain trading9. In September, 2021, the coalition declared “Call to Action for
Shipping Decarbonization” urging national governments to do the following10.
-

Commit to decarbonizing international shipping by 2050.

-

Support projects to achieve zero-emission shipping.

7 GOV.UK. (2021b). COP 26: Clydebank Declaration for green shipping corridors.

https://www.gov.uk/government/publications/cop-26-clydebank-declaration-for-green-shipping-corridors/cop-26-clydebankdeclaration-for-green-shipping-corridors
8 The Ministry of Foreign Affairs press release:https://www.mofa.go.jp/mofaj/fp/nsp/page4_005424.html
9 Getting to Zero Coalition. (2021). Ambition Statement.
http://www.globalmaritimeforum.org/content/2019/09/Getting-to-Zero-Coalition_Ambition-statement_230919.pdf
10 Global Maritime Forum. (2021). Call to Action for Shipping Decarbonization.
https://www.globalmaritimeforum.org/content/2021/09/Call-to-Action-for-Shipping-Decarbonization.pdf
6-Take policy measures to ensure that zero-emission ships are the default option by 2030

From Japan, shipping companies, trading companies, ClassNK, etc. are also participating in
Getting to Zero Coalition.
In October 2021, 9 companies including Amazon.com in the US, IKEA, the world’s largest
furniture company in Sweden, Unilever in the UK, and Michelin, a major French tire company,
launched an organization called Cargo Owners for Zero Emission Vessels (coZEV) andannounced that it aims to decarbonize international maritime transport by major shippers by
2040 and to achieve net zero GHG emissions by 2050 in order to achieve the goals of theParis Agreement, and has stated that only ships using decarbonized fuels such as hydrogenand ammonia will be used to transport their goods11.
Shipping companies are also launching net zero GHG emissions goals one after another. In
October 2021, the International Chamber of Shipping (ICS) announced its support for the
shipping industry to achieve net zero CO2 emissions in international shipping by 2050 12 .
Maersk, the world's largest shipping company, announced in January 2022 its goal of achieving
net zero GHG emissions in 204013. Mitsui O.S.K. Lines (MOL), NYK Line, and Kawasaki Kisen
Kaisha (K Line), Japan's leading shipping companies, also announced net zero GHG
emissions targets by 2050 in June, September, and November 2021, respectively141516.

11 Cargo

Owners for Zero Emission Vessels [coZEV]. (2021). Leading Cargo Owners Stand Together for Maritime
Decarbonization.
https://www.cozev.org/img/FINAL-coZEV-2040-Ambition-Statement_2021-10-18-144834_uorz.pdf
12 ICS. (2021). MEPC 77/7/22, Comments on a proposed draft MEPC resolution on zero emission shipping by 2050, andrevision of the IMO GHG Strategy.
13 Maersk. (2021). A.P. Moller - Maersk accelerates Net Zero emission targets to 2040 and sets milestone 2030 targets.
https://www.maersk.com/news/articles/2022/01/12/apmm-accelerates-net-zero-emission-targets-to-2040-and-sets-milestone2030-targets
14 Mitsui O.S.K. Lines. (2021). - Aiming at Net Zero GHG Emissions by 2050 - Introducing 'MOL Group Environmental
Vision 2.1'. https://www.mol.co.jp/en/pr/2021/21052.html
15 NYK Line. (2021). NYK Announces Target of Net-Zero Emissions by 2050 for Oceangoing Businesses.
https://www.nyk.com/english/news/2021/20210930_03.html
16 Kawasaki
Kisen Kaisha, Ltd. (2021). The Challenge of Achieving Net-Zero GHG Emissions.
https://www.kline.co.jp/en/news/ir/auto_20211102423677/pdfFile.pdf
7Chapter 3: Measures to Achieve at Least 40% Improvement in Average Energy Efficiency
by 2030
Section 3.1: Improving the Energy Efficiency of New Ships (EEDI Regulations)
The EEDI regulations impose a standardized energy efficiency index17 to mandate new ships
to ensure that their energy efficiency is equivalent or superior to a predetermined requirementlevel (the required EEDI). In July 2011, the IMO adopted amendments to MARPOL Annex VI
which entered into force in 2013. The required EEDI is set for each ship type, and theConvention stipulates that the required EEDI is basically strengthened by 10% every 5 years,
as shown in Table 3.1-1.

Phase 0Phase 1
Phase 2Phase 3

Table 3.1-1: The Level of Required EEDI under MARPOL Annex VI
Year of application
Required EEDI
(on the basis of the
shipbuilding contract)
2013Average EEDI of ships built between 1999 and 2008
201510% better than Phase 0202020% better than Phase 02022- / 202530% to 50% better (determined by ship type and bysize) than Phase 0

Section 3.2: Improving the Fuel Efficiency of Existing Ships
In order to achieve the target for 2030 included in the GHG Reduction Strategy (to improveaverage fuel efficiency by at least 40% by 2030 (compared to 2008)), it is necessary to takemeasures to improve fuel efficiency for existing ships that are not subject to EEDI regulations(Ships contracted for construction before 2013).
For this reason, a draft amendment to MARPOL Annex VI was adopted in June 2021 tointroduce fuel efficiency regulations (EEXI regulations18) and Carbon Intensity Indicator ratings(CII ratings19) for existing ships, and is expected to be introduced in January 2023 (see Figure
3.2-1).

17 EEDI: stands for Energy Efficiency Design Index.
18 EEXI: stands for Energy Efficiency Existing Ship Index.
19 CII: stands for Carbon Intensity Indicator8Figure 3.2-1: Fuel efficiency improvement measures for existing ships(EEXI regulations and CII rating)9

Chapter 4: Information on Zero-Emission Fuel Supply
Section 4.1: Future Projections for Achieving Net Zero GHG Emissions
In May 2021, the IEA issued "Net Zero by 2050 A Roadmap for the Global Energy Sector20,"
which presents future projections (NZE scenario) for the entire world to achieve net zero GHG
emissions in 2050.
The outlook for primary energy supply under the IEA NZE scenario is shown in Figure 4.1-1.
While the share of fossil fuels is expected to decline compared to today, renewable energy is
expected to account for two-thirds of the total energy in 2050, a significant change from thecurrent energy mix.

Figure 4.1-1: Primary energy supply outlook under the IEA NZE Scenario
In the IEA NZE scenario, it is expected to be important how electric power produced byrenewable energy, which is expected to expand toward 2050, and zero emission fuels to which
gaseous hydrogen generated from that electric power be applied, will be deployed in each field.
The fuels shown in Figure 4.1-2 can be considered as alternative fuels with the potential to be
used more widely in the marine industry.

Figure 4.1-2: Alternative fuel options
The IEA NZE scenario also shows the outlook for energy consumption in each industrial sector,
20 International Energy Agency (2021), Net Zero by 2050 A Roadmap for the Global Energy Sector

10and for the shipping sector, as shown in Figure 4.1-3, hydrogen, ammonia, and biofuels are
the main energy sources. In addition, it is analyzed that ammonia and biofuels are considered
to be the most promising sources based on energy density and quantity, the development
schedule of large engines and so on. As shown in the figure, it is predicted that some fossil
fuels will remain used in the shipping sector as of 2050, resulting in 122 Mt CO2 emissions. In
the IEA NZE scenario, this CO2 emission is expected to be offset with applications of BECCS(bioenergy with carbon capture and storage) and DACCS (direct air capture with carbon
capture and storage).

Figure 4.1-3: Energy consumption in the transportation sector under the IEA NZE scenario
According to the IEA, the costs and demand for zero-emission fuels to achieve net zero GHG
emissions globally in 2050 are shown in Table 4.1-1 below.

11

Table 4.1-1: IEA targets for zero-emission fuels2122

21 Prepared by the secretariat based on the following:
IEA Net Zero by 2050 A roadmap for the Global Energy Sector
IEA Global Hydrogen Review 2021
22 Global ship fuel consumption (energy equivalent) in 2050 will be 9.9 EJ, of which 1.5 EJ is expected to remain using heavyoil

12Section 4.2: Outlook for Domestic Alternative Fuel Supply
In June 2021, the Government of Japan announced the "Green Growth Strategy ThroughAchieving Carbon Neutrality in 2050”, which lays out its policy for future efforts to achievecarbon neutrality by 2050, as well as a process chart for key technologies in each field by 2050.
In the process chart, specific measures are presented with an awareness of (1) the "R&D
phase" that is promoted by the fund established by the government and private R&D
investment, (2) the "demonstration phase" that is promoted by the public- and private-sector
co-investment on the premise of inducing private investment, and (3) the "introduction
expansion phase," in which demand will increase through the development of public
procurement, regulations, standardization, and other systems, and costs will be reduced
through mass production accompanying this, and (4) the "independent commercialization
phase," in which commercialization will proceed independently without public support, basedon regulations, standards, and other systems. Table 4.2-1 summarizes the process chart
related to the supply of alternative fuels based on the Green Growth Strategy ThroughAchieving Carbon Neutrality in 2050 and other factors.

13

Table 4.2-1: Process chart related to alternative fuel supply in the Green Growth Strategy
Through Achieving Carbon Neutrality in 205023

23 Prepared by the secretariat with reference to the followingA) Green Growth Strategy Through Achieving Carbon Neutrality in 2050 (June 18, 2021)
B) Information on open call for participants of the Green Innovation FundC) Hydrogen Roadmap (Ministry of Economy, Trade and Industry, June 8, 2020)D) Technology roadmap for the gas sector regarding "Transition Finance" (Ministry of Economy, Trade and Industry, February
2022)
E) Interim Report of the Public-Private Fuel Ammonia Promotion Council (Ministry of Economy, Trade and Industry, February
8, 2021)F) NEDO Technology Strategy Center (TSC), Report Toward the Development of a Technology Strategy for the NextGeneration Biofuels (Bio jet Fuel) Field
14

Section 4.3: Trends in Alternative Fuel Production Projects for Marine Use
Table 4.3-1 shows trends in alternative fuel production projects for marine use. In addition toprojects related to zero-carbon fuels derived from hydrogen (hydrogen and ammonia), efforts
related to carbon-neutral fuels24 are also underway in the maritime sector.
Table 4.3-1: Trends in alternative fuel production projects for marine use25

24 Carbon Capture and Reuse (CCR), (Project No. 18 in Table 4.3-1), etc.

https://ccr-tech.org/
25 Prepared by the secretariat using Getting to Zero Coalition, Mapping of Zero Emission Pilots and Demonstration Projects
https://www.globalmaritimeforum.org/news/new-mapping-of-zero-emission-pilots-and-demonstration-projects-shows-an-increasing-focuson-hydrogen-based-fuels

15

Chapter 5: Information on Technological Development and Related Technical Issues for
Zero-Emission Ships
Section 5.1: Technical Development Issues for Zero-Emission Ships
Toward zero-emissions in international shipping, it is necessary to introduce and promote zeroemission ships.
Since zero-emission ships will use new fuels such as hydrogen and ammonia instead of heavy
oil, which is the existing marine fuel, there are technical development issues in terms ofengines, onboard storage, auxiliary equipment, fittings, bunkering, etc.
In this project, we have summarized the current technical development issues and other issues
that can be considered for zero-emission ships (See Table 5.1-1).

16

Table 5.1-1: Technical development issues for zero-emission ships

17

Table 5.1-1 (Cont.): Technical development issues for zero-emission ships

18

Section 5.2: Trends in Zero-Emission Ship Technology Development
5.2.1 Initiatives in Japan (Green Innovation Fund)Japan is promoting the "Development of Next-Generation Ships" project for the world’s firstpractical use of zero-emission ships, by utilizing the "Green Innovation Fund" created by the
New Energy and Industrial Technology Development Organization (NEDO), a national
research and development agency.
In October 2021, four themes and implementers were selected for the "Development of NextGeneration Ships" project. The details are as follows (See Table 5.2.1-1 and Figures 5.2.1-1
to 5.2.1-4).
Table 5.2.1-1: Projects adopted by the Green Innovation Fund
Theme Title
Implemented by
Development of marine hydrogen engine
Kawasaki Heavy Industries, Ltd.
and MHFS*.
Yanmar Power Technology Co., Ltd*MHFS: Marine Hydrogen Fuel Tank andJapan Engine Corporation
Fuel Supply System
Development of ships with ammonia fueled
NYK Line Co., Ltd.
domestic engines
Japan Shipyard Co., Ltd.
Japan Engine Corporation
IHI Motor Co., Ltd.
Integrated project for development and
ITOCHU Corporationsocial implementation of ammonia fueled
Japan Shipyard Co., Ltd.
ships
Mitsui E&S Machinery, Co., Ltd.
Kawasaki Kisen Kaisha, Ltd.
NS United Kaiun Kaisha, Ltd.
Development of methane slip reduction
Hitachi Zosen Corporation
technology from LNG fueled ships by
Yanmar Power Technology Co., Ltd
catalyst and engine modification
Mitsui O.S.K. Lines, Ltd.

Figure 5.2.1-1: Project adopted by the Green Innovation Fund
(Development of marine hydrogen engine and MHFS)

19

Figure 5.2.1-2: Project adopted by the Green Innovation Fund
(Development of ships with ammonia fueled domestic engines )Figure 5.2.1-3: Project adopted by the Green Innovation Fund(Integrated project for development and social implementation of ammonia fueled ships)

20

Figure 5.2.1-4: Project adopted by the Green Innovation Fund
(Development of methane slip reduction technology from LNG fueled ships by catalyst andengine modification)
5.2.2 Domestic and International Trends
The following is a summary of domestic and international technology development trends
related to zero-emission ships.
5.2.2.1 Hydrogen Fueled Ships
Technology Development related to Hydrogen Combustion:
Engine development is underway for the introduction of hydrogen fueled ships. In thedevelopment of engines, the control of abnormal combustion (knocking, misfire, and premature
ignition) in the case of the Otto cycle, and the development of high-pressure fuel supply
systems in the case of the Diesel cycle are issues to be addressed.
The development status of hydrogen engines by domestic and overseas engine manufacturers
is shown in Figure 5.2.2-1. Only one domestic engine manufacturer (J-ENG), theaforementioned Green Innovation Fund recipient, has announced the development of a large
output 2-stroke hydrogen engine. On the other hand, many engine manufacturers aredeveloping 4-stroke hydrogen engines with small to medium output.

21

※ The target years indicates the completion of onshore testing prior to installation on ship.
Figure 5.2.2-1: Development trends of hydrogen engine in Japan and overseas
Other Technology Development:
Since hydrogen is approximately 4.5 times the volume per calorific value of heavy fuel oil C in
its liquefied state, and the tank volume is bulky, it is necessary to develop hydrogen tanks thattake into account volumetric efficiency during storage, and development is being promoted by
the Green Innovation Fund.
In addition, it is necessary to develop fittings that are resistant to low temperatures andhydrogen embrittlement, and to develop bunkering technology that takes safety into
consideration, and these developments must also be promoted in the future.
5.2.2.2 Ammonia Fueled Ships
Technology Development related to Ammonia Combustion:
Engine development is underway for the introduction of ammonia fueled ships. In developing
engines, the treatment of unburned ammonia and the development of pilot fuel reduction
technologies are issues to be addressed. In addition, since the combustion of ammonia emits
more N2O than conventional heavy fuel oil combustion, which has a greenhouse effect about
300 times greater than that of CO2, it is important to understand the actual situation in detail(clarification of the generation mechanism and the amount of N2O generated) and develop
technologies to reduce emissions (such as after-treatment using a catalyst).
The development status of ammonia engines by domestic and overseas engine manufacturers
is shown in Figure 5.2.2-2. Development is underway with the aim of completing development
22

around 2025.

Figure 5.2.2-2: Development trends of ammonia engine in Japan and overseas
As for measures to reduce N2O emissions, one Japanese manufacturer (Hitachi Zosen) is
currently developing an N2O decomposition catalyst.
Other Technology Development:
Since ammonia is corrosive and highly toxic, it is necessary to develop fittings that take thischaracteristic into account. In addition, it is necessary to develop treatment technology forleaked ammonia and bunkering technology that takes safety into consideration, and thesedevelopments must also be promoted in the future.
5.2.2.3 Fuel Cell Ships
As for fuel cell ships, demonstration projects are already underway in Japan and overseas asshown in Figure 5.2.2-3.

Figure 5.2.2-3: Demonstration projects of fuel cell ships in Japan and overseas
Although there has been no activity regarding ammonia fuel cell ships in Japan, a project isunderway in Europe to install a 2 MW ammonia fuel cell on the LNG fueled ship "Viking

23

Energy," with plans to test operate the ship in 202426.
5.2.2.4 Other Technologies
Methane (Bio/Synthetic) Fueled Ships:
LNG technology that has already been in practical use can be used, and LNG fueled ships andfuel supply infrastructure can be converted without modification. However, there are concerns
about unburned CH4, which has about 30 times the greenhouse effect of CO2, leaking(methane slip) during combustion, and methane leaks from compressors, etc., which need tobe identified and addressed.
Hitachi Zosen and Yanmar are developing a methane slip reduction technology by combining
the development of methane oxidation catalysts with engine improvements as part of a Green
Innovation Fund project to reduce methane slip emissions. After completing the onshore testat the end of FY2024, the PJ will move on to the actual ship demonstration with MOL, aiming
for completion of the PJ in FY2026.
Diesel Oil (Bio/Synthetic) Fuel Ships:
While it has the advantage of being able to be used directly in existing heavy fuel oil fired ships,
it should be noted that the following issues exist among biodiesel oils, particularly with respect
to FAME (Fatty Acid Methyl Ester).
1. control of NOx increase
2. ensuring compliance with NOx regulations
3. corrosion preventions
4. measures against deterioration during onboard storage
5. sludge control when mixed with other fuels (* This issue is also common to HVO)
Cases where Retrofit Technology is Utilized to Become Zero-Emission Ships (e.g.,
from LNG Fueled to Ammonia Fueled Ships):
One possible means of transitioning to zero-emission ships is to retrofit ships that use
conventional fuel. In this case, from the viewpoint of minimizing the cost and time required for
retrofitting, it is considered necessary to develop engines that can burn the new fuel with only
partial conversion, and auxiliary equipment that can be partially converted or used for both.
Section 5.3: Major CO2 Reduction Technologies other than Fuel
Whereas Sections 5.1 and 5.2 focus on alternative fuels, this section summarizes thecharacteristics of the main CO2 emission reduction technologies other than fuel, including windpropulsion, battery propulsion, and onboard CO2 capture, as shown in Table 5.3-1.

26 https://shipfc.eu/about/24

Table 5.3-1: Major CO2 reduction technologies other than fuelEfficiency
Pros
Cons
improvement
potential
Wind propulsion
Depends on natural
Zero CO2 emissions Not the primaryconditions, etc.
propulsion energy
source at this time
due to its scale, but
contribution rate canbe increased
Solar battery
Depends on natural
Zero CO2 emissions Not the primaryconditions, etc.
propulsion energy
source due to its
scale
Air lubrication
Improved by 2-6%
Can be implemented Effect depends on
with existinghull shape, draft,technology
and weather/sea
conditions
Low friction paintImproved by 2-5%
Can be implemented Effect depends on
with existinghull shape andtechnology
speed
Energy saving duct
Improved by 2-5%
Can be implemented Effect depends on
with existinghull shape and stern
technology
shape
Bow shape change
Improved by 2-5%
Can be implemented Effect depends on
with existinghull shape and bow
technology
shape
Waste heat recovery Improved by 1-5%
Can be implemented
power generator
with existing
technology- Low weight andBattery propulsion
Depends on the- Zero emissions onvolumetric energy
degree and methodboard
densityof utilization- Proven as a main
- High-voltage
propulsion engine
for some small ships charging
infrastructure not yet
and as an auxiliaryin place
propulsion engine
for some large ships - Longer refuelingtimes (than normal
refueling)- Assuming a large
oceangoing ship, asignificant increase
in weight is expected
due to theinstallation ofbatteries.
- Exhaust gas preOnboard CO2
Capable of- (Theoretically)
capturerecovering 85% toregardless of fuel oil treatment is required
for some fuel types
95% or more of CO2 - (Theoretically)(denitration,
in exhaust gas
large reduction rate
desulfurization, etc.)(theoretical value)- Onboard testing isbeing conducted at a - Large volume andweight of CO2 after
demonstration plant
capture- CO2 storage near25

the triple point- Need to improve
CO2 capture rate
- Need to develop
onshore CO2
receiving facilities
and to have abusiness operator to
inject and store CO2
in geologicalformations- Capacity to store
CO2 in geologicalformations must also
be considered(according to IEA, in
2050, the demand
for storing CO2 ingeologicalformations will be
1.9 Gt, while theamount that can be
stored will be 0.9
Gt).
In addition, with respect to on-board CO2 capture, Mitsubishi Shipbuilding Co., Ltd, Kawasaki
Kisen Kaisha, Ltd. (K Line), and ClassNK have been working on the "CC-Ocean (Carbon
Capture on the Ocean project)," a project to verify CO2 capture equipment for offshore use,
and in August 2021, a small CO2 capture demonstration plant was installed on a coal carrier.
It was installed and successfully captured CO2 with a purity of more than 99.9%. It is also being
considered in other countries, and feasibility studies of similar projects are being conducted byGerman and Dutch companies27, and oil companies28.

Figure 5.3-1: Project by Mitsubishi Shipbuilding, Kawasaki Kisen Kaisha, and ClassNK
View of the CO2 capture system that has been installed on board the ship
Section 5.4: A Summary Table of Domestic and International Technology Development
Trends27 https://www.conoship.com/wp-content/uploads/2020/06/200513-CO2ASTS-Public-Concise-Report.pdf
28 https://www.ogci.com/wp-content/uploads/2021/11/OGCI_STENA_MCC_November_2021.pdf

26

Table 5.4-1 summarizes domestic and international technology development trends.
The "Roadmap to Zero Emissions from International Shipping," compiled in 2020, sets theperiod from 2028 to 2030 as the start of zero-emission ships, but the Green Innovation Fundis currently developing technologies to complete the demonstration operation of hydrogen
fueled ships by 2030 and to achieve commercial operation of ammonia fueled ships as earlyas possible, by 2028.
In addition, according to media reports, a Japanese company has announced plans tocomplete the construction of an ammonia fueled ship by the end of 202529, and there are also
moves to further accelerate zero-emissions.

29 https://www.sumitomocorp.com/ja/jp/news/release/2021/group/15330

27

Table 5.4-1: A summary table of domestic and international technology development trends

28Chapter 6: Simulation for GHG Emission Reduction Pathways towards Net Zero by 2050
Section 6.1: How to Proceed with the Discussion on Simulation for GHG reduction
In this section, we established multiple GHG reduction scenarios with different assumptions,
simulate how GHG emission could be reduced towards net zero by 2050, and by comparing
the results of the simulation, we assess what kind of measures and regulatory developments
are required to achieve net zero GHG emissions by 2050 in the international shipping sector.
Simulations were conducted for three ship types, bulk carriers, tankers, and container carriers,
which are the three major and representative ship types accounting for 84.77% of the world's
shipping tonnage (deadweight tonnage base) as of 202030, in addition to these three types,
Car Carriers (Ro-Ro cargo ships’ for CII category), which is one of representative ship types
operated by Japanese shipping companies, was selected as the fourth ship type.
Specifically, six reduction scenarios were set up for each ship type under the assumptions
shown in Figure 6.1-1 to calculate how GHG emissions would change by 2050.

Figure 6.1-1: Common condition settings for simulations and differences between simulations
Four assumptions were applied for all the ship types: 1. the scrapping rate, 2. assumptions forthe retirement of elder ships, 3. assumptions for the performance of new ships, and finally 4.
assumptions for future mitigation technology for the other GHGs than CO2. The detail of thefour assumptions are discussed in section 6.3. The six reduction scenarios were made withthe matrix of two viewpoints, the first viewpoint is when all new built ships will be changed tozero-emission ships (2030 and 2033), which is defined as ships navigating with an Annual
30 United Nations Conference on Trade and Development. (2021). Review of maritime transport 2021.

https://unctad.org/system/files/official-document/rmt2021_en_0.pdf
29

Efficiency Ratio (AER) of zero CO2 emissions per ton-mile per year. The second viewpoint iswhether or not the existing ships will improve their AER after 2030. See also section 6.4.
Figure 6.1-2 shows the schematic flow of this simulation.

Figure 6.1-2: Simulation implementation flow
Section 6.2: The Data Used for the Simulation
6.2.1 Future Projections of Marine transportation
Future projections of maritime transportation is based on the maritime transportation (tonmiles/year) for each socio-economic scenario presented in the IMO 4th GHG Study31, RCP2.6
for the Representative Concentration Pathways (RCP), and the Shared Socioeconomic
Pathways (SSPs) selected SSP2 (however, the OECD’s GDP Growth was selected insteadof SSP2 in some GDP projections).
Future projections of the marine cargo volumes for each ship type are shown in Figures 6.2.11 through 6.2.1-4. Note that car carriers are not shown in the IMO 4th GHG Study as anindividual future projection but are included in the "other dry cargo ships (general cargo ships,
RORO ships, and car carriers)" category. Therefore, based on the actual transportation of carcarriers in 2018, we estimated the transportation of car carriers in 2019 and beyond, assumingthat the ratio of transportation of car carriers to marine cargo volumes of other dry cargo ships
in 2018 estimated in the IMO 4th GHG Study will be maintained in the future.

31 IMO, 4th IMO GHG Study, 202030

Figure 6.2.1-1 Projection of marine transportation for bulk carriers

Figure 6.2.1-2 Projection of marine transportation for tankers

31

Figure 6.2.1-3 Projection of marine transportation for container carriers

Figure 6.2.1-4 Projection of marine transportation for car carriers
6.2.2 AER Distribution of Global Fleet in 2018
In this simulation, the AER distribution of the global fleet in 2018 was used as the initial value.
The figure below shows the schematic AER distribution of the global fleet in 2018. The
horizontal axis represents annual CO2 emissions per unit transport volume (ton-miles), andthe median value is set to 1 to make the size of the ship (deadweight tonnage) dimensionlessby using the AER reference line of each ship type.

32

Figure 6.2.2-1 AER distribution of global fleet in 2018 (bulk carriers)
In this simulation, GHG emissions are projected to 2050 by changing the distribution of AER
and resulted fleet average of AER, with the assumptions described in following paragraphs.
6.2.3 Fuel Mix for Zero Emission
The fuel breakdown for zero-emission ships was estimated using the energy consumption
ratios of ammonia, hydrogen biodiesel/biomethane, and the other energy(total of electricity andsynthesised fuels) in the international shipping sector as projected in the IEA NZE report32.
Specifically, the ratio of ammonia to hydrogen in the total zero emission fuels in the shipping
sector is assumed as 45.8 % in 2030, 53.3% in 2040 and 54.9 % in 2050, respectively. For
the CO2, all the fuels will result zero emission, however, applying the emission factor stated intable 6.3.4-3, the N2O and CH4 emission were estimated. It is assumed that by use zeroemission fuels other than ammonia no N2O and CH4 emission are expected. IEA only provided
the energy mix for each decade, the Linear interpolation was applied for each annual mix.

Figure 6.2.3-1 Energy consumption in the transportation sector under the IEA NZE scenario
Section 6.3: Assumption applied commonly for Ship Types
6.3.1 Assumptions about Scrapping Rates
With regard to the rate at which new ships are introduced and old ships are retired, i.e., thespeed of replacement , the historical scrapping rate (the ratio of the scrapped ship's tonnage(DWT) to the previous year's tonnage) calculated based on the IHS Markit ship data shown in
Table 6.3.1-1.

32 International Energy Agency (2021), Net Zero by 2050 A Roadmap for the Global Energy Sector

33

Table 6.3.1-1 Changes in the scrapping rate (%) of bulk carriers, tankers, container carriers,
and car carriers (2008-2020)(The numbers in red indicate the maximum scrapping rate for each ship type.)
Ship type
Bulk carriers
Tankers
Container carriers
All ship types

08
1.3
1.3
1.0
1.3

09
3.3
2.3
2.3
2.7

10
0.9
3.2
0.7
2.0

11
3.9
1.7
0.5
2.5

12
4.6
2.8
2.2
3.3

13
2.4
1.9
2.6
2.3

14
1.6
1.2
2.1
1.6

15
3.2
0.5
0.8
1.8

16
3.4
0.3
3.2
2.2

17
1.2
1.7
2.1
1.5

18
0.5
3.3
0.4
1.5

19
0.9
0.6
1.0
0.9

20
1.5
0.3
0.9
1.1

Specifically, for each ship type, the scrapping rate was set by rounding down to the nearest
whole number for the year with the highest scrapping rate in the past. The reason for using thelargest annual scrapping rate in the past is that a higher scrapping rate is expected from theperspective of bringing GHG emissions closer to zero as soon as possible by encouraging the
replacement of existing fossil fuel ships with newly built zero-emission ships. The scrapping
rate was estimated separately and set at 4% (25 years) for bulk carriers and 3% (33 years) for
tankers, container carriers, and car carriers (average age of scrapped ships in parentheses).
The scrapping rate for car carriers varied widely, due to the small number of ships involved,
and therefore the rate was set based on the results for all ship types.
6.3.2 Assumptions about the Retirement of Elder Ships
In general, ships that have been used for a certain period of time after construction lose theireconomic competitiveness due to aging and obsolescence. And ages ships are to be scrapped.
Since ship age is a factor balanced between newbuliding and scrapping, it is most natural toassume that ships over a certain age stated in paragraph 6.3.1 will be scrapped, but the AER
distribution of the global fleet in 2018 (see 6.2.2) based on the IMO's DCS does not include
information on ship age, therefore such an assumption cannot be implemented. Instead, we
assumed that the worse performance (actual AER/CII reference value), the ships should beelder, and we simulated under the condition that the ships with the worst environmental
performance (elder ships) will be scrapped.
To discuss the superiority and inferiority of a ship's performance in the AER distribution of the
global fleet, it is useful to use the Carbon Intensity Indicator (CII). CII is given a reference value(required annual operational CII) at the median in the AER distribution of the global fleet in2018, and ships located in the 15% before and after the reference value are given a C rating.
Ships distributed in the 20% area with better performance (lower CO2 emissions per ton-mile)than the C rating are given a B rating, and ships distributed in the 20% area with worse
performance (higher CO2 emissions per ton-mile) than the C rating are given a D rating. Ships
distributed in the top 15% with the best performance are given an A rating, and ships distributedin the 15% with the worst performance are given an E rating (see Figure 6.3.2-1).

34

Figure 6.3.2-1 AER distribution of the global fleet in 2018 (bulk carriers)
The CII Reference Line Guidelines (MEPC.338(76)) stipulate that the reference values andeach threshold should be improved in the direction of better performance by 2% every year
from 2023 to 202633. At this moment, the quantitative reduction factor (Z factor) after 2027 has
not been determined, but it is assumed that after 2027 the values for reference line together
with those thresholds will decrease uniformly to zero in 2049 (See Figure 6.3.2-2).

Figure 6.3.2-2 Decrease in CII reference values and thresholds
Under the above assumptions regarding CII, the following assumptions were made for the
breakdown of ships to be scrapped each year.
(i) Retirement of existing ships in 2018
Ships existing in 2018 should be scrapped first in the total fleet. In the specific selection ofships to be scrapped, 4% or 3% of the previous year's tonnage will be scrapped, of which
40% will be from CII D-rated ships and 60% from E-rated ships in each year.

33 IMO. (2021). MEPC 76/15/Add.2, 2021 Guidelines on the operational carbon intensity reduction factors relative to referencelines (CII reduction factors guidelines, G3).
35

(ii) Retirement of ships to be built after 2019
After all existing ships in 2018 have been scrapped, the scrapping of ships built after 2019will start. In selecting the ships to be scrapped, ships shall be scrapped by 4% or 3% of theprevious year's existing tonnage, and the ships to be scrapped shall not depend on theperformance (equally scrapped by 4% or 3% each in all CII values).
6.3.3 Assumptions about the Performance of New Ships
For new ships, given that the latest energy-saving technologies can be adopted, it can beassumed that the performance is qualitatively better and improves every year. Under thisassumption, the performance (=actual AER/CII reference value) of new ships introduced eachyear is assumed to be lower than the threshold of the A-rating in CII for each year applying the
Z factor assumed in 6.3.2, and the shape of the distribution (probability density function) is
assumed to remain the same as the A-rating distribution in 2018. In this simulation, the total
number of new ships to be built is assumed to be summed up the amount of ships scrappedeach year with the increase or decrease in the fleet resulting from the changes of transportation
demand. As CII reference values and thresholds for A-B are improved every year, the lower
limit of the performance of new ships will also be improved every year. The improvement rateshall be 2% every year until 2026 and 3.3% every year after that (note that the rate will be
merely lower than the Z factor for reference line).
Next, consider the performance limit of the new ships to be introduced. Since the IMO 4th GHG
study estimates that up to 55~60% GHG reduction is possible without using zero-emission
fuels, the limit value of fuel efficiency for existing fossil fuel ships was assumed to be 0.45
(limited to LNG fueled ships), in terms of the dimensionless value shown in Figure 6.2.2-1, andwe assume that the value of new fossil fueled ships is not less than this 0.45. On the other
hand, since the A-rating threshold improves every year in the simulation, after a certain year,
the performance distribution of new ships to be introduced will be below 0.45. For the ships in
the region below 0.45 of the distribution, all the ships are assumed to be zero-emission ships,
whose AER=0 (ships that annually operate with zero CO2 emissions.) (See Fig 6.3.3-1).

Figure 6.3.3-1 Introducing a zero-emission ship as a new ship
As zero-emission ships will not enter service until 2028, and that small portion of the36performance distribution of new ships will be below 0.45 before 2027, then LNG fueled ships
with performance of 0.45 are assumed to be built for all the ships with AER values below 0.45.
6.3.4 Assumptions about Future Technologies
There are various technical challenges in using alternative fuels as marine fuels, among which
the factors that affect GHG emissions are pilot fuels, methane slips (for methane fueled ships),
and N2O emissions (for ammonia fueled ships). To make the simulation more realistic, we
decided to take into account these factors in this simulation and made the assumptions shownin Tables 6.3.4-1 through 6.3.4-3 for pilot fuels, methane slips, and N2O emissions in the years
2030, 2040, and 2050.
For the pilot fuels, the values were set for the case where the fuels are LNG and ammonia.
For the intervening years in the table, values are set by performing linear interpolation. The
units in Table 6.3.4-1 are calorific value based (%).
Table 6.3.4-1 Assumptions about pilot fuel
2030
2040
2050

LNG
5%
3%
0%

Ammonia5%
3%0%

As for methane slips, the assumption was set for LNG fueled ships. For the intervening years
in the table, values are set by performing linear interpolation. The unit is the amount [g] of
unburned methane released into the atmosphere when 1 [g] of methane is burned.

37

Table 6.3.4-2 Assumptions about methane slips*
2030
0.004 g/g‐fuel (2.3 g‐CO2eq/MJ)
2040
0.002 g/g‐fuel (1.2 g‐CO2eq/MJ)
2050
0.0006 g/g‐fuel (0.35 g‐CO2eq/MJ)*The IPCC AR5 values were used for GWP100 for CO2 conversion.

N2O emissions were set for ammonia fueled ships. For the intervening years in the table,
values are set by performing linear interpolation. The unit is the amount [g] of N2O released
into the atmosphere when 1 [g] of ammonia is burned. It should be noted that those assumption
is not applied for the fuel used by boiler, the fuel consumption rates by main engine, auxiliary
engine and boiler for each ship types are assumed from the data provided in the table 35 of
the IMO 4th GHG Study.
Table 6.3.4-3 Assumptions about N2O emissions*2030
0.0005 g/g‐fuel (8.0 g‐CO2eq/MJ)
2040
0.00025 g/g‐fuel (4.0 g‐CO2eq/MJ)
2050
0.0000025 g/g‐fuel (0.04 g‐CO2eq/MJ)*The IPCC AR5 values were used for GWP100 for CO2 conversion.

Section 6.4: Differences by Scenario
6.4.1 Year in which All New Ships will be Zero-Emission Ships
The year when all new ships are to be zero-emission ships varies from scenario to scenario.
For Scenarios 1 and 3, all new ships to be built as zero-emission after 2030, and for Scenarios
4 and 5, all new ships to be built as zero-emission after 2033, and the assumptions regarding
the performance of new ships described in 6.3.3 are not applied. Note that for Scenarios 0 and
2, the lower performance limit for new ships described in 6.3.3 naturally falls below 0.45 in
2037, so all new ships to be built as zero-emission after 2037.
6.4.2 Improvement in AERs of Existing Ships or Not
Scenarios 2, 3, and 5 assume that existing fossil fueled ships after 2030 will improve their
AERs as an additional setting. Specifically, it is assumed that ships that emitted CO2 above
the CII reference line (Required CII) in the previous year will improve their AERs to theRequired CII in the following year by using drop-in fuel, etc (See Figure 6.4.2-1). Possible
ways to improve AERs include that: ships that has been operated as zero-emission fuels-readyexpand the use of zero-emission fuels; ships that has been converted to use dual fuel by retrofit
operate with zero-emission fuels; and ships operate with carbon-neutral fuels, etc. that havethe same composition as fossil fuels (e.g. heavy fuel oil to biodiesel oil, LNG to synthetic
methane) without retrofitting.

38

Figure 6.4.2-1 Improvement in AERs of existing ships
Section 6.5: Results and Discussion
6.5.1 Results of Bulk Carriers
For bulk carriers, the GHG emission trends, annual construction of zero-emission ships, and
GHG emission reduction rates in 2040 and 2050, compared to 2018, are shown below (Figure
6.5.1-1, Figure 6.5.1-2 and Table 6.5.1-1) for each scenario.

Figure 6.5.1-1 GHG emission trends for bulk carriers

39Figure 6.5.1-2 Annual construction number of zero-emission ships (bulk carriers)
Table 6.5.1-1 GHG emission reductions rates in 2040 and 2050 for bulk carriers (compared
to 2018)

6.5.2 Results of Tankers
For tankers, the GHG emission trends, annual construction of zero-emission ships, and GHG
emission reduction rates in 2040 and 2050, compared to 2018, are shown below (Figure 6.5.21, Figure 6.5.2-2 and Table 6.5.2-1) for each scenario.

40

Figure 6.5.2-1 GHG emission trends for tankers

Figure 6.5.2-2 Annual construction number of zero-emission ships (tankers)
41

Table 6.5.2-1 GHG emission reduction rates in 2040 and 2050 for tankers (compared to2018)

6.5.3 Result of Container Carriers
For container carriers, the GHG emission trends, annual construction of zero-emission ships,
and GHG emission reduction rates in 2040 and 2050, compared to 2018, are shown below(Figure 6.5.3-1, Figure 6.5.3-2 and Table 6.5.3-1) for each scenario.

Figure 6.5.3-1 GHG emission trends for container carriers

42Figure 6.5.3-2 Annual construction number of zero-emission ships (container carriers)
Table 6.5.3-1 GHG emission reduction rates in 2040 and 2050 for containers carriers(compared to 2018)

6.5.4 Results of Car Carriers
For car carriers, the GHG emission trends, annual construction of zero-emission ships, and
GHG emission reduction rates in 2040 and 2050, compared to 2018, are shown below (Figure
6.5.4-1, Figure 6.5.4-2 and Table 6.5.4-1) for each scenario.

43

Figure 6.5.4-1 GHG emission trends from car carriers

Figure 6.5.4-2 Annual construction number of zero-emission ships (car carriers)
44

Table 6.5.4-1 GHG emission reduction rates in 2040 and 2050 for car carriers (compared to2018)

6.5.5 Discussion
Table 6.5.5-1 shows the GHG reduction rate and the number of remaining fossil fuel ships in
2050 under Scenario 1, in which zero emissions is mandatory required for new ships after
2030 and Scenario 4, in which zero emissions is mandatory required for new ships after 2033
for each ship type.

45

Table 6.5.5-1 GHG reduction rates for Scenarios 1 and 4 by ship type (2050)
Ship type
Scenario
GHG reduction
The number of existing fossil
rate in 2050 (%)
fueled ships in 2050
bulk carrier
tankercontainer
carriercar carrier

1
4
1
4
1
4
1
4

60.2
51.1
74.5
70.9
46.1
36.6
67.0
61.6

(% of ships in the fleet)
5,957 (22%)
7,697 (31%)
2,594 (54%)
3,062 (64%)
3,191 (34%)
3,902 (41%)
305 (54%)369 (65%)

This results indicate that forcing zero-emissions only to new ships will not result in zero GHG
emissions in 2050, regardless of the advanced timing. This is because a certain amount offossil fuel ships will remain according to the replacement effected both by the scrapping rate
and growth of transportation, and the GHG reduction rate will only be 30-70% less comparedto that in 2018.
On the other hand, the scenarios (2, 3, and 5), in which improvements in AERs of the existingships is required, show that the GHG reduction rates could reach 99.9% in all the scenarios(see Table 6.5.5-2 below).
Table 6.5.5-2 GHG reduction rates for Scenarios 2, 3 and 5 by ship type (2050)
Ship type
Scenario GHG reduction rate GHG reduction rate
in 2040 (%)
in 2050 (%)
bulk carrier
2
56.6
99.9%
3
71.3
99.9%
5
63.0
99.9%
tanker
2
73.1
99.9%
3
76.9
99.9%
5
74.6
99.9%
container
2
52.0
99.9%
carrier
3
63.5
99.9%
5
56.3
99.9%
car carrier
2
68.3
99.9%
3
74.1
99.9%
5
70.7
99.9%
As a method of improving the AERs of existing ships, all the scenarios assume that existingships that emitted more CO2 (with D or E score) than the CII reference line in the previous
year will improve AERs to the reference line in the following year through drop-in of zeroemission fuel, etc. As the CII reference line will be reduced to zero in 2049, the total fleet AER
for all existing ships will be zero in 2049. Note that the GHG reduction rate will not be 100%due to the effects of pilot fuels, methane slips and N2O emission.
Based on the above results, it is concluded that a framework is necessary to ensure thatmeasures to reduce emissions from existing ships will be implemented in order to achieve zero
emissions in 2050.

46

Chapter 7: Regulatory Developments
Based on the technical development issues related to the realization of zero-emission ships
and the simulation of GHG emission reductions up to 2050 under multiple scenarios, we havesummarized the regulatory developments necessary to achieve "net zero GHG emissions in
2050," with a particular focus on mid- and long-term measures to be considered in earnest at
IMO in the future.
Section 7.1: Mid- and Long-Term Measures at IMO
The IMO strategy adopted by IMO in 2018 lists the GHG reduction targets as well as candidate
short-, mid-, and long-term measures to achieve the targets; the candidate mid- and long-term
measures are listed below.
-

Candidate mid-term measures (measures to be finalized and agreed upon between
2023 and 2030)

1. Implementation programs for the effective uptake of alternative low-carbon and zerocarbon fuels
2. Operational energy efficiency measures for both new and existing ships
3. New/innovative emission reduction mechanism(s), possibly including Market-based
Measures (MBMs), to incentivize GHG emission reductions
4. Further continue and enhance technical cooperation and capacity-building activities
such as under the Integrated Technical Co-operation Programme (ITCP)
5. Development of a feedback mechanism to enable lessons learned on implementationof measures to be collated and shared through a possible information exchange on
best practice-

Candidate long-term measures (measures to be finalized and agreed upon after 2030)

1. Pursue the development and provision of zero-carbon or fossil-free fuels to enable
the shipping sector to assess and consider decarbonization in the second half of the
century
2. Encourage and facilitate the general adoption of other possible new/innovativeemission reduction mechanism(s)At the 76th meeting of the Marine Environment Protection Committee held in June 2021, theCommittee approved a work plan for considering mid- and long-term measures. In the workplan, the study will be carried out according to the following three phases.
Phase I (Spring 2021 to spring 2022)

Collation and initial consideration of proposals
for measures
Assessment and selection of measure(s) tofurther develop
Development of (a) measure(s) to be finalized
within (an) agreed target date(s)Phase II (Spring 2022 to spring 2023)
Phase III (Spring 2023 -)In considering mid- and long-term measures, it is considered effective to first organize themfrom the overall picture of mid- and long-term measures to ensure and effectively realize thetransition from fossil fuel ships to zero-emission ships in order for international shipping toachieve net zero GHG emissions by 2050.
As mentioned earlier, the technology for zero-emission ships is still under development, and a47

supply chain for zero-emission fuel is not yet in place in sufficient quantities. In light of thevarious initiatives being launched at the governmental and private sector levels in Japan andaround the world to promote zero-emission international shipping, it is expected that zeroemission ships will be in commercial operation in the late 2020s (around 2028), but at that time,
the technology and fuel for zero-emission ships is expected to be more expensive than existingfossil fuel ships.
In order to reduce the cost related to technology and fuel for zero-emission ships, it isnecessary to increase the demand and supply of such technology and fuel as well as toimprove Technology Readiness Levels by accumulating operational experience, etc. To thisend, in the initial stages of the transition to zero-emission ships, that is, in the initial stages of
introducing zero-emission ships to the market, owners/operators who intend to introduce zeroemission ships ahead of others (hereinafter referred to as “first movers") should be encouraged
to do so. It is considered most effective to introduce measures to support the emergence andexpansion of first movers by appropriately supporting them and not creating competitive
disadvantages between them and operators of fossil fueled ships. Such measures can beachieved by introducing the market-based measures (MBMs) described below.
As the transition to zero-emission ships progresses and the technology matures, as well as
when the global fuel supply system is sufficiently large, it will be necessary to make a stronger(forceful) transition to zero-emission ships by introducing regulatory measures in order toachieve the goal of net zero GHG emissions by 2050.

Figure 7.1-1 Image of GHG reduction scenario and mid- to long-term measures
Section 7.2: Concept of Market-Based Measures (MBMs) to be Introduced In IMO
In response to growing social demands to address global warming, efforts to realize effective
GHG emission reductions by utilizing the market mechanism by introducing carbon pricing, etc.
have already been seen all over the world. The following two concepts are representative ofsuch efforts.
1. Carbon levy system: A system that charges a fixed amount per unit of fuel use (or per
unit of GHG emissions). The carbon price (amount of levy) is determined in advanceunder the system, and the amount of emission reductions depends on the actions of
the entity levied the charge under the system.
2. Emissions Trading Scheme (ETS): A scheme in which emission caps (emission
allowances) are set, emission allowances are allocated, and surplus and deficit
emission allowances are traded among businesses. The carbon price is determined by
the market based on the supply and demand of emission allowances, and the amount48

of emission reductions depends on the setting of emission allowances.
Both systems have their advantages and disadvantages. The carbon levy system has theadvantage of predictability in the carbon price, while the emissions trading scheme is said tobe superior in terms of certainty of meeting emission reduction targets (however, even with thecarbon levy system, it is possible to increase certainty by adjusting the amount of levy.).
Although there are arguments in economic theory, Nordhaus (2006)34 suggests that pricebased approach is more efficient than quantity-based approach when there are uncertainties
and if curvature of the benefit function is smaller than the curvature of the cost function ofemissions, as is clearly the case for climate change.
When considering the introduction of market-based measures (MBMs) in the international
shipping sector, emissions trading schemes have the problem of making investment decisions
for transitioning to zero-emission ships more difficult due to fluctuating carbon prices and lesspredictable costs for owners/operators. The International Chamber of Shipping (ICS) has also
pointed this out35. Therefore, regarding the market-based measures (MBMs) to be introducedin IMO, it is considered that a method of determining the carbon price in advance under thesystem (price approach) should be adopted.
As for the revenue generated by the introduction of market-based measures, as mentioned
earlier, it is considered to be effective to provide economic incentives to first movers throughmarket-based measures (MBMs) in the initial phase of the transition to zero-emission ships. It
is possible that a portion of the revenues could be used to implement fuel supply infrastructuredevelopment (including capacity buildings) to support zero-emission shipping in developing
countries (especially Small Island Developing States (SIDS) and Least Developed Countries(LDCs)), but detailed discussions are required regarding the necessary funds, their use, andhow they would be managed.
Based on the above, and in accordance with the work plan for development of mid- and longterm measures, the following two concepts are proposed by Japan in Phase I.
1. Feebate system
A system that combines a fee for fossil fuel ships and a rebate for zero-emission ships.
The system is to refund zero-emission ships at a level that ensures sufficient economic
incentives based on cost differences (differences in fuel prices, ship prices, etc.) withfossil fuel ships, and to impose a levy on fossil fuel ships to secure the necessary
revenue.
The levy rate and the rebate rate will be determined based on future projections
regarding fuel prices and penetration rates, etc., and will be reviewed periodically by
IMO.

34 Nordhaus, W. D. (2006) After Kyoto: Alternative Mechanisms to Control Global Warming. The American Economic Review,Vol. 96, No. 2, pp.31-34.
35 Comments on proposal for a cap-and-trade system, as opposed to a carbon levy (MEPC77/7/23)
49

Figure 7.2-1 Image of feebate mechanism
2. Fixed price allocation of CO2 allowances by benchmarking
Compared to emissions trading schemes, the feebate system does not have a direct
link between the system and emission reduction targets, and there is an aspect of
uncertainty in the reduction effects of the introduction of the system.
Therefore, as an alternative to 1, the concept of fixed price allocation of CO2
allowances by benchmarking can be considered as a system that is linked to reduction
targets while adhering to the approach where a carbon price is set in advance under
the system.
Under this system, IMO allocates allowances for a fixed price calculated as the productof a benchmark (CO2 emissions per ton-mile) and the amount of transportation activity(ton-miles) to individual ships. The surplus or deficit of allowances may be tradedamong ships.

Figure 7.2-2 Image of fixed price allocation of CO2 allowances by benchmarking
Under this system, in order to increase predictability of carbon price, the price ofemission allowances allocated by the IMO can be fixed (set in advance) without
allocating allowances through an auction. Furthermore, since the benchmark is usedas the basis, international shipping activities will not be restricted by this system even
if the demand for shipping activities increases due to the increase in the volume ofmaritime cargo transportation. As with the feebate system, the fixed price of emission
allowances will be set based on future projections of fuel prices, penetration rates, etc.,
and on estimates of the amount required to secure a refund amount that provides
sufficient economic incentives for zero-emission ships.
Benchmarks will be set for each appropriate ship type and size, and will bestrengthened sequentially to induce a steady reduction in emissions from international
shipping.
It should be noted, however, that the design of this system is more complicated thanthat of a feebate system, including the establishment of benchmarks and rules for
trading emission allowances.

50

Figure 7.2-3 Image of emission reduction inducement by benchmark
Section 7.3: Regulatory Approach
As outlined in 7.1, once zero-emission ship technologies and fuels have become widespreadenough and a certain level of cost reduction has been achieved by supporting the emergenceand expansion of first movers through the market-based measures (MBMs), the key toachieving net zero GHG emissions by 2050 will be how to ensure a transition from fossil fuelships to zero-emission ships. In such a phase, it will be necessary to strongly (forcibly) shift tozero-emission ships through regulatory measures.
Specifically, the first step would be to introduce regulations mandating new ships built after acertain year to operate with zero emissions. However, as the simulation results in Chapter 6
show, it will be difficult to achieve net zero emissions simply by mandating zero-emission
operation for new ships, since it is expected that a certain number of fossil fuel ships will remain
in operation in 2050. Therefore, in addition to regulations for new ships, it will be necessary tofurther introduce regulations mandating existing ships to operate with zero emissions throughthe use of drop-in fuel, etc in later years. Based on the above discussion, the overview of midand long-term measures is shown in Figure 7.3-1.

51

Figure 7.3-1 Overview of mid- and long-term measures
Section 7.4: LCA (Life Cycle Assessment) of GHG Emissions
Global warming is a common issue worldwide, and it is important to be aware that GHG
emissions from fuels used in the shipping sector are not only generated during onboard
combustion, but also during production and other processes. IMO is currently developing
guidelines for assessing life cycle GHG emissions from marine fuels (LCA Guidelines). The
main concepts of the LCA guidelines are as follows:
1. Evaluate land-based
respectively.

(Well-to-Tank)

andonboard(Tank-to-Wake)emissions2. The assessment of GHG emissions should be consistent with IPCC guidelines36. For
example, for carbon-recycled fuels, which are produced by capturing CO2 emitted fromthe use of fossil fuels as raw materials, the emission of captured CO2 shall be
accounted as land-based emissions and the CO2 emissions on board shall be treatedas zero.
3. In addition to the method of calculating GHG emissions according to the production
process of the fuel used, etc., default values that can be used simply for each type offuel shall also be set.
In the LCA guidelines, the evaluation method for land-based emissions, including the settingof default values, will require further discussion by experts in the future, and it will take a certain
period of time to complete. On the other hand, if an evaluation method for onboard emissions
is established, GHG emissions when alternative fuels are used will be clarified, and the use ofalternative fuels is expected to be promoted through the adoption of this method for CII ratings,
etc. Furthermore, if an evaluation method for land-based emissions can be established andmade available, it is expected to raise awareness of GHG emission reductions throughout the
36 2006 IPCC Guidelines for National Greenhouse Gas Inventories

52

life cycle and promote GHG emission reduction efforts on the fuel supply side.
Section 7.5: Rules on Ship Safety and Seafarers
When considering the utilization of alternative fuels, rules on safety of the ships and seafarers
are needed to be reviewed and revised, or newly developed, according to the progress of R&D
on the use of those fuels.
Currently, IMO has already developed safety standards for LNG-fueled ships under theInternational Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code).
However, there is no safety standards for ships using hydrogen or ammonia.
In addition to that, the use of ammonia cargo as a fuel is prohibited under the International
Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC
Code).
Therefore, in order to facilitate hydrogen/ammonia fueled ships, it is urgent to understand theapplication of existing in-force regulations and develop safety standards, taking into accountthe ongoing R&D. In addition, it will be necessary to develop safety standards for the
installation of wind propulsion systems and onboard CO2 capture and storage systems.
In introducing alternative fuels such as hydrogen fuel and ammonia fuel as well as new
systems such as onboard CO2 capture to ships, the requirements of competence for
seafarers to operate such ships should be considered, and the international standardizationof such requirements should be promoted.

53

Chapter 8: Concluding Remarks
It is difficult to make definitive future predictions on future trends toward zero emissions ininternational shipping due to uncertainties such as the fuel supply side, technology
development issues, and costs. We will continue to monitor trends.
This report is based on currently available information and presents the contents and timing of
the necessary zero-emission ship technology development and regulatory developments,
based on analysis and study of GHG reduction measures that should be introduced to achieve
net zero GHG emissions from international shipping by 2050.
In order to achieve net zero GHG emissions by 2050, it is necessary to continue to grasp andorganize information on the outlook for the supply of zero-emission fuels and trends in thedevelopment of zero-emission ships, as well as to further study the following.
-

Supply and price outlook of zero-emission fuels to the maritime sector-

Organize technical development issues and technology readiness levels for early
introduction of zero-emission ships-

The state of mid- and long-term measures based on the progress of discussions at IMO___________

54