Offshore wind service vessels must be decarbonised or incur a carbon cost that is set to grow substantially in the 2030s.

The carbon footprint of North Sea wind operations and maintenance (O&M) could be half a million tonnes of CO2 per annum or more by 2040
O&M activities could incur a cumulative carbon tax of almost £800 million in 2040 unless reliance on emissions-intensive fuels is reduced
The North Sea wind O&M space is making incremental progress towards cleaner solutions thanks to voluntary efforts, but these alone won’t achieve industry-wide fleet decarbonisation
Scaling up quickly requires careful policy intervention to level the playing field and share the vessel decarbonisation cost burden equitably

The CO2 impact of operations and maintenance (O&M) represents only a tiny sliver of offshore wind’s lifecycle emissions. However, analysis by E-FWD reveals that the carbon liability associated with refuelling service operation vessels (SOVs) and crew transfer vessels (CTVs) is set to become increasingly challenging as more turbines are installed and carbon prices rise.

Offshore wind’s carbon footprint is overwhelmingly concentrated in the materials extraction and fabrication stage, which accounts for almost 90% of lifecycle emissions according to academic literature. O&M activities account for roughly 3.5%, the vast majority of which is attributable to the combustion of marine fuel oil (MFO) and marine gas oil (MGO) in CTVs and SOVs.

According to a benchmark study by Offshore Renewable Energy (ORE) Catapult, a 180MW near-shore wind farm would emit 2,060 tonnes of carbon dioxide equivalent (tCO2e) per year from the use of smaller CTVs for its O&M activities. This equates to 3.6 tCO2e per GWh of electricity generated.

A larger 1.2GW site located in deeper waters further offshore using bigger SOVs for O&M would produce 10,040 tCO2e per year, or 2.1 tCO2e per GWh generated. SOVs result in a lower emissions intensity because the larger vessel acts as a floating workshop, spending weeks at a time offshore to reduce the number of shore-to-site transfers.

An Edda Wind daughter CTV designed by Chartwell Marine for use at Dogger Bank. Supplied by Chartwell Marine.

No free pass on emissions

These figures might seem irrelevant in the wider context of power sector emissions. Unabated coal plants produce roughly 700 tCO2e/GWh at the point of combustion, while gas-fired turbines produce 360 tCO2e/GWh – or significantly more than that, if you include lifecycle emissions associated with mining or extraction. The emissions intensity of UK grid power averaged 128 tCO2e/GWh in 2022, and has never dipped below 39 tCO2e/GWh. Offshore wind’s embedded emissions are well below this and its O&M emissions footprint is a drop in the ocean – right?

Yes and no. Offshore wind is expected to play a major role in lowering the UK’s grid emissions intensity by replacing dirtier power sources, but the industry cannot rest on its laurels. The fuels used in offshore wind O&M vessels contribute to Scope 1 and 2 emissions of publicly traded developers and utilities such as Ørsted and SSE Renewables. Investors keep a close eye on environmental, sustainability and governance (ESG) metrics such as these.

Moreover, scaling up offshore wind without addressing the carbon footprint of O&M is fuel for critics, who point to the environmental performance of its supply chain and support networks including the dirty fuels used by service vessels. This “may lead to question marks over the effectiveness of the wind sector as a true zero-carbon energy solution,” says fleet operator Seacat Services.

The issue is not just one of public perception or investor preference. Vessel operators who cannot pass these costs onto their utility clients risk exposure to new financial costs and penalties if they continue with the status quo.

O&M’s burgeoning CO2 burden

There is a multiplier effect at work from growth in both the absolute volume of emissions and the unit cost of each tonne released during fuel combustion. As carbon prices rise to guide markets onto a net zero-aligned pathway, the implicit carbon cost associated with operating and maintaining the UK’s growing fleet of offshore wind farms will grow faster than the industry’s volumetric increase in combustion of MFO and MGO.

Analysis by E-FWD illustrates just how big the carbon liability of offshore wind O&M could become if the industry scales up and a growing number of North Sea turbines are serviced using conventional CTVs and SOVs. The analysis builds on the ORE Catapult study referenced above and rests on several core assumptions around offshore wind’s growth trajectory in the UK power mix, the predominance of SOV-based O&M strategies, and future carbon prices.

E-FWD produced three scenarios where annual offshore wind output varies based on UK government projections for renewables generation out to 2040: the central reference case, and government modelling for a net zero-aligned power sector in ‘high demand’ and ‘low demand’ scenarios. In these scenarios, offshore wind generation in 2040 varies between 198 TWh and 346 TWh, assuming wind’s market share rises steadily to 70% of total renewables generation in that year. In all scenarios, 90% of the UK’s operational offshore wind farms are assumed to use an SOV-based O&M strategy, with the remainder using CTVs only.

The results are revealing. By 2040, the emissions footprint of operating and maintaining the UK’s fleet of offshore wind turbines could amount to between 445 and 778 thousand tonnes of CO2 per annum. In the highest wind deployment scenario (Net Zero – High Demand), the cumulative emissions from offshore wind O&M could rise to as much as 8.2 million tonnes of CO2 between 2010 and 2040. That’s equivalent to roughly half of the annual emissions from all heavy goods vehicles (HGVs) on UK roads in 2022 (18.6 mtCO2e, per government statistics).

Pricing up the carbon

Offshore wind service vessels do not currently fall under either the UK or EU emissions trading systems, so they do not need to buy carbon allowances. But over time, the UK and EU carbon cap-and-trade mechanisms will be expanded to cover other sectors of the economy.

For example, from 2026 the UK ETS will apply to large maritime vessels of 5,000 gross tonnage and above, in line with International Maritime Organization (IMO) guidance. The IMO is believed to be reviewing this and might lower the threshold to as low as 400 gt and above, which would catch all SOVs and some of the larger CTVs. Details are scarce, but it is reasonable to assume that offshore wind O&M service vessels will be liable to buy carbon credits corresponding to their fuel usage by the early 2030s, if not sooner.

This raises the question: how big could the carbon liability of O&M vessels become by 2040? To calculate this, E-FWD multiplied the benchmarked emissions of offshore wind O&M under each of the three scenarios by an assumed carbon price based on the current trajectory of exchange-traded EU ETS allowance futures. The illustrative price starts at €115/tonne in 2031 and rises by 7% every year out to 2040, and is converted into pounds sterling based on a constant conversion factor.

The main variable here is the volume of electricity being produced from offshore wind under each scenario. The greater the power generation, the more turbines are needed, and thus more O&M service and crew transfer vessels are required to maintain them – implying greater usage of emissions-intensive MFO and MGO fuels.

The calculations reveal that O&M vessel owners and/or charters might face a collective carbon penalty of between £81 million and £142 million per year by 2040. Post-2030, when these vessels might realistically expect to pay the full carbon price, the cumulative carbon liability could amount to between £518 million and £848 million out to 2040, depending on the pace and scale of offshore wind deployment. This is on top of the cost of refuelling the vessels, maintaining them and all other costs such as labour, tax and licensing.

A rising carbon price sinks all boats

However, future carbon prices are likely to be much higher than the price at which the futures markets currently price 2030 emissions allowances today. For example, the price of EU ETS allowance futures on CME for 2030 is currently €100/tonne, but analyst consensus estimates put the likely 2030 carbon price at €150/tonne. To reflect this, E-FWD created a fourth scenario that applies a 40% uplift to carbon prices in line with these estimates. Under this ‘high CO2 price’ scenario, the cost of carbon rises from €163/tonne in 2031 to €300/tonne in 2040.

At this cost escalation, with offshore wind generation at the government’s (non-net zero aligned) central estimate of 282 TWh in 2040, the carbon liability for O&M vessel owners comes in at £115 million per year, or £736 million cumulatively over the 2031-2040 period. This means that, even if offshore wind deployment fails to achieve the scale required to align with any net zero pathway, the carbon penalty payable for O&M activities will still balloon in the 2030s.

Act now, don’t pay later

The best way to reduce exposure to future carbon liabilities is to take measures now to progressively modernise fleets of service operation vessels (SOVs) and crew transfer vessels (CTVs). After all, many of the vessels that will be operating in 2040 and 2050 will be built in the coming years. ORE Catapult estimates as many as 1,400 new O&M vessels will be built between now and 2050 to service the entire pan-European North Sea market.

The good news is that there is already plenty of activity in this space, both at the wind project developer and fleet owner level. For example, Ørsted has a target to reduce its Scope 1 and 2 emissions intensity by 98% from 2006 levels by 2025, and achieve net zero Scope 1-3 emissions by 2040. Achieving these targets involves, among other things, switching to zero emissions service vessels to eradicate its offshore wind O&M carbon footprint, which stood at 39,000 tCO2 in 2022.

To this end, the Danish energy company last year invested in what it claimed will be the “world’s first” zero emissions SOV powered by batteries and dual fuel engines, capable of sailing on renewable e-methanol produced from wind energy and biogenic carbon. Ørsted intends to supply the e-methanol, leading to a yearly emission reduction of around 4,500 tonnes of CO2. The SOV will service the Hornsea 2 offshore wind farm from the end of 2024.

Ørsted and ESVAGT are working on the world’s first service operation vessel (SOV) that can operate on green fuels.

At the vessel owner level, numerous initiatives are underway too. Seacat Services, which is supporting O&M activity at the 950MW Moray East wind farm, became the first fleet operator to sign up to a Carbon Management Plan drawn up by consultancy Cedar Marine in 2021. The plan measures Seacat’s baseline emissions and commits the company to a “sustained period of operational change, R&D, and significant investments to bring down its emissions” to comply with evolving industry standards.

Major UK service fleet operator North Star this summer brought into service its second hybrid-propulsion SOV to support SSE Renewables with a new scope of work at the Dogger Bank Wind Farm. The company, which hired a sustainable shipping specialist to lead its ESG strategy, expects to have four hybrid-electric ships operational in the field by 2026. It is also exploring with Stillstrom how to speed up the adoption of charging and electrification technologies for offshore wind vessels.

Levelling up

Voluntary initiatives, whether led by proactive project developers or forward-thinking vessel operators, are to be welcomed. However, on their own they are unlikely to achieve industry-wide decarbonisation of the O&M fleet. In fact, in the worst scenario, first movers could even be penalised unless policies are put in place to reward the use of low or zero emissions service vessels.

The UK government is funding new clean maritime solutions via its Zero Emission Vessel Infrastructure (ZEVI) competition, which recently awarded funding to a consortium led by Bibby Marine to build the “world’s first” zero-emission electric Service Operation Vessel (eSOV).

Other initiatives, such as Artemis Technologies’ e-foiler, are being supported through the Clean Maritime Demonstrator Competition (CMDC), which is now onto its fourth round of funding. The government last year launched UK Shipping Office for Reducing Emissions (UK SHORE), a new unit within the Department for Transport, to implement research and development through the CMDC with £206 million of new funding.

But scaling up cannot be bankrolled by grant funding – it must be paid for by the wind industry itself, which is better placed to absorb these costs than vessel owners, who in any case are expected to pass on any future carbon liabilities to their utility clients.

The cost of rolling out vessel efficiency improvements, fuel switching, electrification and other innovations pales into insignificance against the capital requirements of building gigawatt-scale wind capacities in the North Sea. But for this to happen, regulation is needed to create a level playing field.

Carbon pricing is just one mechanism, but there are uncertainties around the timeframe for expanding the UK ETS to capture smaller workboats. Whether future carbon pricing will be sufficiently punitive to incentivise supply chain investment is another open question.

An alternative approach could be to impose a carbon intensity metric for O&M activities within the Contracts for Difference subsidy framework, or to mandate zero emissions fuels at future projects at the seabed leasing stage. Policy instruments such as these could drag the entire industry forwards in lockstep towards the goal of zero offshore wind O&M emissions by 2050.

The good news is that both the high-level political will and an overarching pan-industry coalition already exist to move in this direction. The UK was among the 28 founding member signatories to the Operation Zero coalition formed at COP26 in 2021 to accelerate decarbonisation of O&M vessels in the North Sea offshore wind sector. Operation Zero members are exploring the potential for offshore wind to play a key role in wider maritime decarbonisation, both by using zero-emissions O&M vessels and producing fuels needed to decarbonise other sectors of the maritime economy. Crucially, the initiative also calls on members to “work collaboratively in ensuring that costs and risks … are fairly distributed”.

The question of ‘who pays’ is key. How can vessel operators access up-front capital needed to invest in innovative new propulsion technologies, or navigate the regulatory complexities of bringing new vessel designs to market? What role can government play in streamlining regulatory processes and sharing the cost burden? Can offshore wind developers realistically bankroll O&M decarbonisation on top of all the other cost pressures they already face? If not, how else can vessels be profitably switched to run on batteries, e-fuels and hybrid systems?

These questions and more will be explored further in the second part of this three-part series, available exclusively to E-FWD members.

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