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Silk Alliance scopes out fuel supply chain requirements to operationalise green corridor cluster

Monday, 20 November 2023 | 01:00
A progress report from the Silk Alliance projects a strong and increasing demand for methanol and ammonia from 2030 onwards. It estimates more than 3 million tonnes of clean methanol and a minimum of 280,000 tonnes of clean ammonia will be required by 2030, to meet the demand of 137 ships in the cluster aligned to its implementation plan with potential for ammonia to scale 10-fold from 2030 to 2035. This is a key takeaway from analysis carried out by the cross-supply chain partnership, which now spans across three workstreams – fleet turnover and fuel demand, fuel supply and finance.

Since the Silk Alliance was formed in May 2022, a baseline fleet of 359 vessels was identified and a programme of activities and assessments were conducted to support consensus building within the Alliance, which culminated in the creation of an implementation plan in April 2023. According to a modelling exercise undertaken by the Lloyd’s Register Maritime Decarbonisation Hub, which acts as the Secretariat of the Silk Alliance, by 2030, 98 newbuilds will be operational and 39 of the original fleet retrofitted, bringing the fleet operating on cleaner fuels to 137.

This analysis, which can be viewed in the most recent progress report, forms part of the fuel demand workstream. The projected costs and emissions, given this aggregated demand, depend on the carbon intensity of the fuels, and research in this area forms part of workstream two – fuel supply. Under this workstream, members agreed to set the desired carbon intensity of the fuels between 20% and 10% in terms of life cycle emissions compared to fossil fuels. The analysis under both workstreams – fuel demand and fuel supply – will continue to capture any changes while members continue to discuss implementation.

The Alliance is now applying the projected fuel requirements and tentative carbon intensity to scope the cost gap within the Silk Alliance green shipping cluster and to identify financing mechanisms that can bridge these gaps.

Forming part of workstream three, the Alliance has created an asset-based cashflow model and is mapping out various options, including leasing structures, public-private partnerships, leasing platforms and mass balancing, amongst others, to unlock supply-side investments.

Commenting on the progress made by the group, Senior Decarbonisation Analyst from the LR Maritime Decarbonisation Hub, Ahila Karan, said: “These workstreams represent a strong commitment by the Members of the Silk Alliance to reduce emissions in the world’s busiest shipping routes across the Indian and Pacific Oceans by addressing cost gaps on both the fleet and fuel supply side. Through quantifiable tasks set out to bridge these cost gaps and fulfil key milestones in the implementation plan from now until 2030, we aim to demonstrate that zero-carbon shipping at scale is both feasible and practical.”
“Members of the Alliance have shown a great interest in kickstarting the adoption of long-term solutions that will be vital in transforming the maritime sector. This green corridor cluster has the ideal conditions to create a significant spillover effect” commented Dr Carlo Raucci, an expert from the LR Decarbonisation Hub.

“The implementation plan is the culmination of a year-long effort by members of the Silk Alliance. Going forward with the three workstreams, members will explore furthering key partnerships to strengthen the scale and foster implementation of the green corridor cluster, while ensuring that wider consideration for environmental impacts and sustainability are taken into account”.

The Silk Alliance was established in May 2022 by the LR Maritime Decarbonisation Hub, a joint initiative between Lloyd’s Register Group and Lloyd’s Register Foundation.
Source: Lloyd’s Register

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