绿色航运走廊：根据能源使用和技术可行性筛选中国沿海航运的先行者候选者（英文版）

THEINTERNATIONALOUNCILTHEINTERNATIONALOUNCILNCEANTRANSPRTATNAUGUST2024GreenshippingcorridorsScreeningfirstmovercandidatesforChina’scoastalshippingbasedonenergyuseandtechnologicalfeasibilityXIAOLIMAO,YUANRONGZHOU,ZHIHANGMENG,ANDHAEJEONGCHOACKNOWLEDGMENTSThisworkisconductedwithgeneroussupportfromEnergyFoundationChina.WethankthelateDr.ChuanshengPengforhisinvaluableadviceandsinceresupportforthiswork.WethankDr.ChaohuiZheng,Dr.KunLi,Mr.ShunpingWu,Mr.YongboJi,Mr.ShengdaiChang,ProfessorYanZhang,Ms.FredaFeng,Ms.LiweiMa,Mr.FengTian,andMs.LuFufortheirtechnicalandpolicycommentsandsuggestions.CriticalreviewofthisworkwasprovidedbyICCTcolleaguesChelseaBaldinoandTianlinNiu.InternationalCouncilonCleanTransportation1500KStreetNW,Suite650Washington,DC20005communications@||@TheICCT©2024InternationalCouncilonCleanTransportation(ID182)EXECUTIVESUMMARYGreenhousegasemissionsfromthemaritimesectorareonagrowthtrajectoryincompatiblewiththeclimategoalsoftheParisAgreement.Inrecentyears,anovelcollaborationframeworkcalledgreenshippingcorridors(GSCs)hasbeengainingtractionasatooltospeeddecarbonizationtechnologyinnovationinthemaritimesector.AsofDecember2023,therewere44GSCinitiativesglobally,yetnoneoftheseprojectshavebeenfullycommissioned,anindicatorofthechallengesofcoordinatingthesecorridors.Comparedwithinternationalroutes,domesticroutescouldhavetheadvantageofmorestakeholderhomogeneity.Insomecases,aroutecouldbeoperatedbyasingleentitythatownsthecargoaswellasthevessels.ByencouragingdomesticroutestobecomeGSCs,acountrymayattaintheassociatedenvironmentalandclimatebenefitswhilealsoaccruingtheexperiencenecessaryforinstitutinglarge-scale,multistakeholder,internationalGSCinitiatives.ThisstudyexplorestheopportunityforestablishingGSCsforChina’scoastalshipping.WefirstquantitativelycharacterizedChina’scoastalshippingactivitybasedonopenAutomaticIdentificationSystem(AIS)data.Thedataallowedustoestimateenergyuseforvariousshippingroutesandevaluatethetechnologicalfeasibilityofmeetingthatenergyusewithzeroornear-zerolife-cycleemissionfuels.Thesefuelsincluderenewableliquidhydrogen(LH2)generatedfromrenewableelectricity,renewablemethanol(MeOH)andrenewableammonia(NH3)generatedfromrenewablehydrogen,aswellasdirectrenewableelectricity.Basedontheseresults,weidentifiedthreeroutesasfirstmoverGSCcandidates.ForeachGSCroute,weestimatedfueldemandforthefirsthypotheticallydeployedzero-emissionvessel(ZEV)runningoneitherrenewableliquidhydrogen,renewablemethanol,orrenewableammonia.Wethenpresentedapreliminaryanalysisofthecosttosupplythisfuel(TableES1).InapreviousICCTstudy,wemodeledanddemonstratedthatthecostofrenewableammoniaandrenewablemethanolissimilartorenewablehydrogen,soweonlymodeledandpresentedthecostofrenewablehydrogeninthisstudy(U.S.MaritimeAdministration[MARAD],2024).TableES1Greenshippingcorridorcandidatesandassociatedannualfuelcostforonezero-emissionvesselin2030RoutecharacteristicsShipcharacteristicsFueldemand(tonnes)Annualat-the-pumpcostofhydrogen(millions)aPortsDistance(nm)ShipclassCapacityOriginalfuel(VLSFO)MethanolAmmoniaHydrogenTianjin–Shanghai700Bulkcarrier57,000DWT4751,0001,070153¥8.4($1.2)Shenzhen–Tianjin1,400Container2,000TEU2,2704,7905,130732¥39.2($5.6)Shanghai/Ningbo–Zhoushan75Oiltanker3,000GT4910311116¥0.7($0.1)Total2,7905,8906,310901¥47.6($6.8)Basedon2023monetaryvalues,usinganexchangerateof¥7toUS$1iICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSThisstudyfindsthat:»ThetechnologicalfeasibilityofapplyingrenewablemarinefuelsonChina’scoastalshippingroutesishigh.Shipsonallroutescoulduserenewablemethanolandrenewableammoniawithouttheneedtorefuelenroute.Renewablehydrogenworksformostshipsandroutesexceptforafewroutestraversedbytankers.Batteryelectrictechnologyistheleastfeasible,althoughitisanoptionforcertainshipsonshorterregionalroutes.»ThethreefirstmoverGSCcandidatesanalyzedinthisstudycouldbeservedbyshipsrunningonrenewablemethanol,renewableammonia,andrenewablehydrogen.TheGSCcandidatesincludetwointerregionalroutes,YangtzeRiverDeltatoBoSeaandPearlRiverDeltatoBoSea,andoneintraregionalrouteintheYangtzeRiverDeltaregion.Theseregionsarehometosomeoftheworld’slargestports,includingTianjin,Shanghai,andShenzhen,whicharestrategicallypositionedtocommittoGSCinitiatives.Asanexample,wefoundcontainershipscoulduserenewablemarinefuelstotravelashippingcorridorspanning1,400nauticalmilesfromTianjintoShenzhen.»ToenablethefirstZEVsontheseroutes,about6,000tonnesofrenewablemethanolorrenewableammonia,or900tonnesofrenewablehydrogenneedtobesourced.Thisimpliesatotaldemandof44~60GWhofrenewableelectricityby2030tofuelthefirstmoverGSCcandidates.Weassumethiselectricityissourcedfromoffshorewindenergytoavoidthenegativeimpactselectrolysiscouldhaveonthegrid.»PolicyinterventionscouldhelpspeedthedeploymentofmoreZEVsinthesecorridorstodeliverameaningfulreductioningreenhousegases.Weestimatetheat-the-pumpcostofrenewablehydrogenproducedonsiteattheGSCportscouldbe$7.60/kgby2030,morethan3timesthecostofconventionalmarinefuelsonanenergy-equivalentbasis.Withthiscostassumption,stakeholderswouldneedtopayaround$7millionannuallytodeploythefirstZEVsintheproposedcorridorsby2030.Wealsoestimatethatimprovementsintechnologymayonlyreducethecostofrenewablefuelsbyabout32%by2050.Whilefuturerenewablemarinefuelcostsmaybelowerorhigherthanourestimates,dependingondevelopmentsinkeyareassuchasthecostofelectrolyzers,itislikelythatasignificantpolicyinterventionwillbeneededtoadvanceGSCs.iiICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSTABLEOFCONTENTSExecutivesummary iIntroduction 1Methodology 3Data,studyregion,andscope 3Shiptrafficpatternsandenergyuse 4Technologicalfeasibilityofrenewablemarinefuel 4Fuelcostforthefirstzero-emissionvesselsdeployedonGSCcandidates 5Results 10Energyuse,technologicalfeasibility,andfirstmoverGSCcandidates Casestudy:CostofsupplyinghydrogenfuelforfirstZEVsdeployedonGSCcandidates Discussion Conclusion References iiiICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSLISTOFFIGURESFigure1.Studyregion 3Figure2.Methodologyflowchart 4Figure3.TrafficpatternforinterregionalbulkcarriersalongChina’scoastlineinJune2021 Figure4.Trafficpatternfor“other”tankersalongChina’scoastlineinJune2021 Figure5.Trafficpatternsforthethreehypotheticalzero-emissionvesselsontheGSCroutes,basedon2021activitydata LISTOFTABLESTableES1.Greenshippingcorridorcandidatesandassociatedannualfuelcostforonezero-emissionvesselin2030 iTable1.Renewablemarinefuelsandcorrespondingpropulsionsystemsconsideredinthisstudy 5Table2.CostsofproducingoffshorewindinChina 7Table3.Dataassumptionsformodelinghydrogenproductioncosts 8Table4.VesselsandroutepatternsalongChina’scoastlineinJune2021 Table5.Topfiveroutesforenergyusebyshipclassandrefuelingsneededforeachroute Table6.Hypotheticalactivityforonezero-emissionvesseloneachGSCroute,basedon2021activitydata Table7.Annualfuelandelectricitydemandforthefirstzero-emissionvesselsdeployedin2030 Table8.Levelizedproductioncostandtheat-the-pumpcostofrenewableliquidhydrogenproducedthroughwaterelectrolysis Table9.At-the-pumpcostofsupplyingannualfueldemandforthefirstZEVin2030 Table10.ProjecteddemandforrenewablemarinefueloncandidateGSCsunderthefulldeploymentscenario ivICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSINTRODUCTIONChinahasanextensivecoastlinewithwell-equippedportsthatenableathrivingcoastalfreighttransportindustry.Maritimeshippingsuppliedover50%ofthecountry’sentirefreighttransportdemandin2022(MinistryofTransportofthePeople’sRepublicofChina,2023a).Inrecentyears,thegovernmenthaspromotedwaterborneshippingasalesscarbon-intensivealternativetotransportingfreightbyroad(MinistryofTransportofPeople’sRepublicofChina,2023b).Nevertheless,domesticshippinginChinaisstillresponsibleforanestimated6%ofthecountry’stotalCO2emissionsfromthetransportationsector(X.Mao,2023;X.Mao&Meng,2022).Optionsfordecarbonizingthedomesticmaritimeindustryresemblethoseproposedforinternationalshipping,namelyimprovingenergyefficiencyintheshorttermandtransitioningtolow-andzero-carbontechnologiesinthemid-to-longterm(X.Mao&Meng,2022).InChina,shipsusedfordomesticandinternationaltransportmaybebuiltinthesameshipyards,operatedbythesamecompanies,andservicedbythesameportsandrefuelinginfrastructure.Thatmakesdomesticshippinganidealprovinggroundforpilotingdecarbonizationtechnologies:Knowledgeaccumulatedatthedomesticlevelcandiffusetotheinternationalshippingsectorandhelpindustryplayersgainconfidenceandmaturethemarket.ThishasbecomeapopularmodelwhenadaptinginternationalbestpracticestoChina.1Onepracticegainingmomentuminternationallyistheestablishmentofgreenshippingcorridors(GSCs).AccordingtotheMaerskMc-KinneyMøllerCenterforZeroCarbonShipping,aGSCcouldbeasinglepointaroundaspecificlocation,point-to-pointbetweentwoports,oranetworkroutewherealternativefuelswithlowerenvironmentalimpactthanfossil-basedfuelsaredeployedonships(MaerskMc-KinneyMøllerCenterforZeroCarbonShipping[MMMCZCS],2022a).Barrierstoadoptingzero-carbonfuelsintheshippingsectorincludehighfuelcosts,lackoffuelsupply,andthelackofportinfrastructureandsafetyregulationsforalternativefuels.Anotherchallengeisthedifficultyofcoordinatingamongdifferentstakeholderssuchasfuelproducers,shipownersandoperators,cargoowners,portauthorities,andpolicymakers(FrontierEconomicsetal.,2019).GSCshaveemergedasastrategicplatformtoovercomethosebarriersandacceleratethedecarbonizationoftheshippingsector.Focusingonasingleroutemakesiteasierforpolicymakerstoidentifyandengagewithkeystakeholdersandtocreatetargetedregulatorymeasures.Firstmoverregionsorportscouldbenefitfromfinancialincentives.Readinessforalternativefuelscouldalsoturnintoacompetitiveadvantageforshipowners,ports,andshippers(MMMCZCS,2022b).Lessonslearnedfromsuccessfulgreenshippingcorridorscouldinformandencouragestakeholdersandleadtotherapidadoption,ordiffusion,ofzero-emissionshipping(Slotviketal.,2022).AsmoreinternationalrouteshavebeenannouncedtotransitiontoGSCs,ChinacouldstartbyexploringdomesticGSCstogaugestakeholderinterestandmarketreadiness.ThedevelopmentofaGSCtypicallystartswithpre-feasibilityandfeasibilityanalyses(GettingtoZeroCoalition,2021;MMMCZCS,2022a).Thepre-feasibilityanalysisinvolvesregion-specificresearchonpotentialalternativefuelsuppliesandcosts,shipandvoyagecharacteristics,tradeflows,andtheregulatorylandscape.Thisworkinformstheprocessusedtoestablishselectioncriteriaandscreenpotentialcorridors.Theselectioncriteriamightvarybutwouldingeneralbebasedonpotentialemissionreductions,technicalandeconomicfeasibility,andstakeholderreadiness.Once1AnotherexampleofthismodelisChina’sDomesticEmissionControlArea.ChinaimplementedalocalizedversionofanEmissionControlArea(ECA)toevaluatewhetherandwhendomesticstakeholdersarereadytocomplywiththeInternationalMaritimeOrganization’sregulationsforECAs.1ICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSpotentialcorridorsareselected,amoredetailedfeasibilityanalysisexaminingthetechnological,regulatory,andcommercialrequirementscanbeconducted(Boylandetal.,2023).Thisanalysisisapre-feasibilitystudyonestablishingGSCsforChina’scoastalshipping.WefirstcharacterizeChina’scoastalshippingactivitiesusingreal-worldshipmovementdatatoidentifytheoriginsanddestinationsforeachvoyage.Wethensummarizetheenergyusedbyshipsoneachrouteandevaluatethetechnologicalfeasibilityofpoweringtheshipsontheseroutesusingrenewableliquidhydrogenproducedfrom100%renewableelectricity,aswellasrenewablemethanol(MeOH),renewableammonia(NH3)andrenewableelectricityintheformofbatteries.ThetopthreeroutesintermsofenergyuseandtechnologicalfeasibilityareselectedasfirstmoverGSCcandidates.Finally,wechoseonerepresentativeshiponeachGSCtounderstandfueldemandandtoestimatethecostofsupplyingtherequiredamountofrenewablemarinefuel.ApreviousICCTstudyshowedthatrenewableammoniaandrenewablemethanolhaveacomparableat-the-pumpcostasrenewableliquidhydrogenonanenergy-equivalentbasis(MARAD,2024).Therefore,wemodeledandpresentedcostsonlyforrenewablehydrogeninthisstudy,asdetailedinthemethodologysection.Wethenpresenttheresultsofouranalysis,beforeclosingwithadiscussionandkeytakeaways.2ICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSMETHODOLOGYDATA,STUDYREGION,ANDSCOPEWeusedvessel-trackingdatafromtheAutomaticIdentificationSystem(AIS)tocharacterizethetrafficpatternofChina’scostalshipping.2WeselectedwhichshipstoincludeinthisstudybyanalyzingAISdataforJune2021;2021wasthemostrecentyearofAISdataavailableandJuneisthebusiestmonthforshippingactivityinChina(Mao&Rutherford,2018).Forthisanalysis,weretainedtheAISdataforshipswithMaritimeMobileServiceIdentification(MMSI)numberssignifyingthattheybelongtotheChinesefleet.3Wethenlookedattheannualactivityofshipsinthisdataset,retainingthoseshipsthatspentmorethan90%oftheirtimeinChina’scoastalregion.Figure1showsthestudyregionincludingthemajorportclustersoftheBoSea(BS),YellowSea(YS),YangtzeRiverDelta(YRD),XiamenandPearlRiverDelta(PRD).TheretainedAISdataishereinafterreferredtoastheChinesecoastalshipactivitydata.Figure1StudyregionPearlRiverDeltaBoBoSeaYellowSeaYangtzeRiverDeltaXiamen2AISdataiscommerciallyavailablethroughSpireMaritime,whichacquiredexactEarthLtd.in2021,andothervendors.3AnMMSInumberisauniquenine-digitnumberassignedtoanAISunit.Thefirstthreedigits,calledtheMaritimeIdentificationDigit,arecountryspecific.ChinaisassignedthreeMIDs,412,413,and414.AtableofMarineIdentificationDigitscanbefoundhere:/en/ITU-R/terrestrial/fmd/Pages/mid.aspx.3ICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSSHIPTRAFFICPATTERNSANDENERGYUSEICCT’sSystematicAssessmentofVesselEmissions(SAVE)modelmarriesAISshipactivitydata(e.g.hourlyspeed,location,draught)anddataaboutshiptechnicalcharacteristics(e.g.shiptype,enginepower,fueltype)fromS&PGlobaltocompiletrafficpatterns,energyuse,andanemissionsprofileoftheglobalfleet.4MethodologiesarecompatiblewiththeFourthIMOGreenhouseGasStudy(Faberetal.,2020).ForAISdatathatcouldnotbematchedtoshipsintheS&PGlobaldatabase,wereliedontheopen-accesstoolsfromGlobalFishingWatch(GFW),whichusesmachinelearningtospeculatebasicshipcharacteristicssuchasshiptype,grosstonnage,andlength(Faberetal.,2020).AfteraggregatingAISdataintohourlyintervals,weinterpolatedthemissinghoursandassigneduniquevoyageIDstospecificshipsusingavoyageidentificationalgorithm(Olmeretal.,2017,MARAD,2024).Finally,usingassumptionsonenginefuelconsumptionratesandemissionfactorsupdatedonaregularbasis,wecompiledhourlyenergyuseandemissionsforeachshipandlinkthisinformationtothevoyageID.ThemethodologyflowchartisshowninFigure2.WeusedtheSAVEmodeloutputsfor2021inthisstudy.Figure2Methodologyflowchart HourlyenergyuseandemissionswithassignedvoyageIDInputdataInterimresultsFinaloutputTECHNOLOGICALFEASIBILITYOFRENEWABLEMARINEFUELThemethodologyusedinthisstudytoevaluatethetechnologicalfeasibilityofpoweringashipbyliquidhydrogenfuelcellsystems,batteryelectricsystems,ammoniafuelcellsystems,andmethanolcombustionenginesisdescribedindetailinpreviousICCTstudies(Comer,2019;X.Mao,Georgeff,etal.,2021;X.Mao,Rutherford,Osipova,&Comer,2020;X.Mao,Rutherford,Osipova,&Georgeff,2022).Wecomparedtheenergyrequiredtocompleteeachvoyagewiththeenergyprovidedbytheamountofrenewablemarinefuelashipcouldcarryonboard.Iftheformerisgreaterthanthelatter,avoyagecouldnotbecompletedwithoutrefueling.Theratiobetweenthetwo—orhowmanytimesashipwouldneedtorefueltocompletethevoyageorvoyages—isshowninEquation1.Thisratiowasusedtoevaluatethetechnologicalfeasibilityofusingarenewablemarinefueloptionwithacorrespondingpropulsionsystem(Table1);Thehighertheratio,thelowerthefeasibility.InformationonthedensityandenergydensityoffuelwasobtainedfromMaoetal.(2022)andtheavailablevolumeforfuelstoragewasobtainedfromComer(2019).4MaritimedataproviderIHSMarkitwasacquiredbyS&PGlobalin2022.4ICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSWhere:Ri,jEi,jDjEDjVfisthenumberoftimesshipineedstoberefueledtocompletethevoyage(s)foreachcasewhenusingfueljistheenergyinputneededforshipitooperateonfueljinkWhisthedensityoffueljinkg/m3istheenergydensityoffueljinkWh/kgistheavailablevolumeforfuelstorageonboardincubicmetersTable1RenewablemarinefuelsandcorrespondingpropulsionsystemsconsideredinthisstudyFueltypePropulsionsystemAbbreviationRenewableliquidhydrogenFuelcellHydrogen–FCRenewableammoniaInternalcombustionengineAmmonia–ICEaRenewablemethanolInternalcombustionengineMethanol–ICERenewableelectricityBatteryelectricBatteryelectricWeconsideredanammonia-ICEsystemforitspotentialtoreducelife-cycleGHGemissionstozeroornearzero.However,thereareotherconcernsassociatedwiththissystem,suchasthehazardsofunburnedammonia,aswellasNOemissions(deVries,2019).ForshipsthatarematchedbyGFWdata,welackedtheinputs—namelyenginevolumeandpower—toapplytheabovemethodology.Asaresult,weapproximatedtheseinputsbasedonstatisticalrelationshipsbetweenenginepower,enginevolume,andgrosstonnage,asshowninEquation2.Whenthesestatisticalrelationshipscouldnotbeestablishedduetolackofdata,weusedtheaverageenginepowerandenginevolumeinstead.NotethatcargoshipandtankeraregenericshiptypesforshipsmatchedwithGFWdata.PMEi,c=0.4650×GTi,c+205.7615(2)PMEi,c=0.4650×GTi,c+205.7615PMEi,c=0.4650×GTi,c+205.7615Where:PME_i,cisthemainenginepowerforcargoshipi,inkWGTi,cisthegrosstonnageofcargoshipiPME_i,tisthemainenginepowerfortankeri,inkWGTi,tisthegrosstonnageoftankeriVf_i,cisthevolumetakenupbytheexistingfueltanksonboardcargoshipi,inm3FUELCOSTFORTHEFIRSTZERO-EMISSIONVESSELSDEPLOYEDONGSCCANDIDATESAfterselectingtheGSCcandidateships,wechoseonerepresentativeship—basedonaverageshipcapacityandactivity—tobethefirstZEVdeployedineachoftheGSCs.ForGSCsselectedformultipleshipclasses,wechosetheshipclassthatconsumedthemostenergy.WedidnotincludeshipsthathadbeenmatchedtovoyagesusingGFWdataasthisdatalacksthedetailedshipcharacteristicsneededtosupportaninformativeanalysisoffueldemandandcost.Wethenestimatedtheships’annualfueldemandin2021usingtheSAVEmodel.Allselectedshipsusedverylowsulfur5ICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSfueloil(VLSFO)astheiroriginalfuel.WeconvertedthatdemandtorenewablemarinefueloptionsassumingequivalentenergyoutputasshowninEquation3(Comer,2019).TheenergydensitiesoffuelsweretakenfromMaoetal.(2022).Theefficiencyofpropulsionequipmentassociatedwithdifferentfueltypes,includingtraditionalcombustionenginesandfuelcells,wastakenfromComer(2019)andMaoetal.(2022).Where:FCi,jisthefuelconsumptionofshipiwhenoperatingonfuelj,inkgFCi,LSHFOisthefuelconsumptionofshipiwhenoperatingonVLSFO,inkgEDLSHFOistheenergydensityofVLSFOinkWh/kgEDjistheenergydensityoffueljinkWh/kgηICEisthethermalefficiencyofaninternalcombustionmarineengine,whichweassumeis50%ηp,jistheefficiencyofthepropulsionequipmentassociatedwithusingfueljWemodeledthecostofsupplyingrenewableliquidhydrogenforthisstudyasequaltothecostforitsderivatives,includingrenewableammoniaandrenewablemethanol,whichweconsideredcomparabletoeachotheronanenergy-equivalentbasis(MARAD,2024).Weassumedrenewablehydrogenproductionwouldbelocatedattheport,withminimalhydrogendeliveryneededbetweenfacilities.Giventhegeographicaladvantageofportsaswellasthelimitofonshoreland,weconsideredoffshorewindtobetheelectricitysourceforrenewablehydrogenproductioninthisstudy.Toensuretherenewabilityofhydrogen,weassumedthathydrogenproductionisdirectlyconnectedtooffshorewindelectricity,ratherthanreceivingelectricityfromthegrid.5Becausewindelectricityisonlygeneratedwhenitiswindy,suchadirect-connectionscenariowouldmeanthattheproductionofrenewablehydrogenwouldbelimitedbyhowoftenthewindfacilityruns.Thecostofsupplyingrenewablehydrogenincludestwomaincomponents:hydrogenproductionandhydrogenrefueling.Weadoptedthesamediscountedcashflow(DCF)modelasinpreviousICCTstudiesandupdatedcertaindataassumptionstoestimatetheproductioncostofrenewablehydrogenforthisstudy(S.Maoetal.,2021).Particularly,wecollectedthecapitalcostandoperationalcostofoffshorewindprojects,adjustedbyinflation(ChinaElectricityCouncil,2020;Huangetal.,2020;InternationalEnergyAgency&NuclearEnergyAgency,2020;Shermanetal.,2020;Jin,2022;Guoetal.,2023;InternationalRenewableEnergyAgency[IRENA],2023).Thesecostsincludegeneratingthepowerinoffshorelocationsandtransmittingthepowertotheshore.Weassumethecapacityfactorofoffshorewind—theratioofaverageenergyproducedtothetheoreticalmaximumpoweroutput—tobe35%inChinain2023(Shermanetal.,2020;Guoetal.,2023;IRENA,2023).Researchersexpectrenewablecapitalandoperationalcoststodecrease,whilethecapacityfactorincreasesinthefutureduetotechnologyimprovements.Thus,toprojectfutureoffshorewindelectricitycost,wefollowthecostreductionandcapacityfactorimprovementtrendsusedintheNationalRenewableEnergyLaboratoryannualtechnologybaselinereport(NationalRenewableEnergyLaboratory[NREL],2020).Theassumedcapitalcost,operationalcost,andcapacityfactor,alongwithourestimatedlevelizedcostofoffshorewindbyyear,areshowninTable2.ThecapacityfactorandlevelizedcostareinputstothehydrogenDCFmodel.5Renewablehydrogencouldalsobeproducedwithgridelectricityifthehydrogenproducersignsapower-purchaseagreementwitharenewablepowersupplier.SuchapracticeisnotyetcommoninChinaandthuswedonotmodelthisscenariointhisstudy.6ICCTREPORT|SCREENINGFIRSTMOVERCANDIDATESFORGREENSHIPPINGCORRIDORSTable2CostsofproducingoffshorewindinChinaCapitalcostOperationalcostCapacityfactorLevelizedcostofoffshorewindpower2023¥17,780/kW($2,540/kW)¥205/kW/year($29/kW/year)¥480/MWh($69/MWh)2030¥13,720/kW($1,960/kW)¥180/kW/year($26/kW/year)37.5%¥365/MWh($52/MWh)2040¥12,400/kW($1,770/kW)¥160/kW/year($23/kW/year)38.7%¥320/MWh($46/MWh)2050¥11,215/kW($1,602/kW)¥145/kW/year($21/kW/year)39.8%¥280/MWh($40/MWh)Note:Basedon2023monetaryvalues,usinganexchangerateof¥7toUS$1.Wecollectedthecapitalcostofalkalinewaterelectrolysisfromrecent,China-specificstudies(Zhangetal.,2023;ChinaHydrogenAlliance,n.d.).6OurdataassumptionsforthehydrogenDCFmodelareshowninTable3.Becausethemarketandtechnologyforelectrolyzersisstilldeveloping,weexpectcoststodecreaseandefficiencytoimproveinalineartrend.Toaccountforunforeseeableupfrontcosts,wemultipliedthecapitalcostofanalkalineelectrolyzersystembyacontingencyfactorof1.2,consistentwithpreviousstudies(S.Maoetal.,2021;Zhouetal.,2022).Asthehydrogenplantinthisanalysisisgettingelectricitydirectlyfromoffshorewind,weconsidera10%discountinthecapacityfactortoaccountforpotentialtransmissiondisruptionsandtheneedtoramptheelectrolysisprocessupanddown(Apostolaki-Iosifidouetal.,2019).6AlkalineisthedominantandmostdevelopedtypeofelectrolyzerinChina,whichiswhyweestimatedrenewablehydrogenproductioncostbasedonthissystem.However,alkalineislessflexiblethansomeothertypesofelectrolyzersforrampingupanddown.Itispossiblethatothertypesofelectrolyzersmightbeadoptedinthefuture,suchasprotonexchangemembrane(PEM)becauseofitsrapidsystemresponseanddynamicoperation(vanHaersmaBumaetal.,2023).Usingtheseothertypesofelectrolyzers