Our oceans as a saviour and as an investment
Published 23rd February 2022
By David Stent, Digital Producer
The magnitude of the oceans is often difficult to comprehend, deeper than the highest mountain is tall and filled with life that feeds half of the planet’s population. We are largely coastal dwellers, and even when we are not, the globalized nature of the planet ensures that we rely on goods and resources that either come from the ocean or are transported across the ocean. This will not change, the oceans will continue to be the source of life, food and transport for many years to come – and so, what can be done to utilize the oceans more sustainably and create a viable business proposition for green, clean investments.
The history of wind power can be traced to the Babylonians, as early as the 17th century BCE; however, the more common perception of a windmill can be traced back to the 9th century AD on the modern-day border of Iran and Afghanistan. Since then, windmills expanded to every corner of the earth and underpinned the agrarian society that has allowed humanity to flourish. Now, thousands of years later, we have finally developed a windmill to generate power that floats offshore out on the deep blue sea.
The potential for offshore wind to act as restorative beacons for the oceans and atmosphere is enormous, yet the development of offshore wind farms is only at 2% of where it needs to be to reach the IEA’s 2050 net-zero targets. These NZE targets outline the need to increase all wind installations by 8000 TWh by 2030, increasing on average by 18% and adding 80GW of offshore wind power each year. Currently, annual increases are only 9%.
Yet the potential for exceeding this target and generating sufficient electricity for many of the world’s population certainly exists, despite only accounting for 0,3% of total global electricity generation. The IEA’s offshore wind study, “showed that the best close-to-shore offshore wind sites globally could provide almost 36 000 TWh of electricity per year, which is very close to the global electricity demand projected for 2040.”
As the appetite for offshore wind expands across the globe, the clean energy investment community is looking to reap the rewards, as capex costs and LCoEs decrease; the returns have piqued the interest from major institutional and private equity investors.
The costs of offshore wind turbines development from 2020 until 2050, is expected to continue to fall by another 40%. When furnished with the additional data that “that larger wind turbines and power plant projects alone can reduce a plant’s average total cost per megawatt-hour over its lifetime (also known as LCOE) by more than 23% relative to the average fixed-bottom offshore wind power plant installed in 2019” – the combined advantages make the installation and development of offshore wind farms a no-brainer for any country capable of doing so.
Global investment into offshore wind has been limited in comparison to onshore wind and solar PV generation, however where capital has been deployed and offshore wind farms constructed, the generation results have been exceptional. The “global pipeline for floating offshore wind energy more than tripled in 2020. Overall, the 2020 global floating offshore wind pipeline grew from 7,663 MW to 26,529 MW”.
China accounts for much of the global offshore growth, having overtaken the UK and northern Europe over the past 3 years. In fact, China’s quarterly-on-quarterly upgrade of 48GW of offshore wind capacity (to be installed between 2023-2026), was the single largest installation addition in one quarter and will “account for nearly 70% of the increase to the global 10-year outlook”.
The USA has expanded their offshore wind targets to achieve 30GW by 2030, a first specific goal for offshore wind capacity. Assessing 15 projects in the permitting phase and another 16 having their sites seeking leases.
One of the most exciting opportunities to emerge from the energy transition is the potential to replace the heavy, polluting fuels running cargo ships with green hydrogen or ammonia. The reality is that the globalized world relies on the transport of goods in shipping containers to far flung destinations – but in doing so, creating levels of pollution far beyond what we conceive, roughly the same of Germany each year.
Therefore, replacing the fuel for these ships with a modern, green alternative can effectively lower the emissions that are released into both the atmosphere and the ocean. Green hydrogen, hydrogen made from renewable generation electrolysis, is the go-to solution being touted to solve this sectoral issue as the emissions is simply water vapour. The problem herein is that hydrogen is unstable and requires extremely cold temperatures to transport – ammonia, on the other hand, can be injected with hydrogen and transported safely.
Shipping is costly business, as seen when the Ever Given cargo ship created a significant blockage on the Suez Canal and held up $9.6 billion worth of trade each of the six days it was stuck. The entire cargo shipping industry is built on a relatively short lifespan for their vessels, just 10 years. Therefore, this provides a unique opportunity for major shipping companies to engage actively with restructuring the foundations of their business to be far more environmentally compliant long before 2050.
Deep Blue Sea of Change
One of the crucial elements of shifting our emissions profile and polluting habits is to save the oceans from the loss of biodiversity already underway. Offshore wind farms can provide an element of sanctuary to our close-to-shore marine environments where so many fish live and so much overfishing occurs. While many may find the offshore wind farms as eyesores, the reality is that they can have a dual benefit of electricity generation and habitat restoration.
Green shipping can do its part by radically reducing the pollution placed directly into the seas, a cause of rising acidity and coral reefs dying off globally due to rising atmospheric temperatures. The mass death of coral reefs has long been utilized as an indicator of the ocean’s health and of our impact on our seas – and this has increasingly been worsened by “scrubbers” or “exhaust gas cleaning systems” which trade-off Sulphur emissions removal for acidic wash water that is discharged directly into the ocean. In the last 10 years, the global number of ships utilizing this technology has risen from 11 to over 4,000.
By utilizing green-hydrogen powered ships both these concerns would be eliminated; firstly, reducing Sulphur dioxide emissions and secondly, by removing acidic wash water entering the seas. Furthermore, if our close-to-shore offshore windfarms are developed to maximize marine sanctuaries where subsistence fisheries exist – then there are the multiple benefits of restoring our coral, increasing fish volumes and reducing wash water entering our seas.
The big blue has supported life on earth for millennia, now it is our turn to support life in the oceans. We can do this through managing our coastal planes and utilizing them to generate non-polluting energy to create green hydrogen. In turn, our coastal marine sanctuaries would replenish fish stocks and the green hydrogen would power cleaner ships. Importantly however, the opportunity to generate economic activity and create value for investments in the ocean has never been as strong.
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