RFP No. 693JF724R000032-US Maritime Decarbonization Economic Evaluation.pdf

Maritime Administration:

“A Study on Economic Considerations for Energy Transition in the U.S.

Commercial Vessel Fleet” RFP No. 693JF724R000032

REQUEST FOR PROPOSALS (RFP):

The Maritime Administration’s (MARAD) Maritime Environmental and Technical Assistance (META) program is issuing this request for proposals (RFP) for a comprehensive study to evaluate the economics of energy transition for the U.S. domestic commercial fleet.

Project must be completed within a 15-month timeline.

Maximum funding available for this project is $300,000.00

A. PROGRAM DESCRIPTION:

MARAD’s META program (46 U.S.C. § 50307) is investigating the costs and other economic considerations associated with energy transition in the U.S. domestic maritime industry. In the U.S. and globally, the maritime industry is faced with the need to decarbonize over the next 25 years. This challenge pushes the boundaries of available technology while providing no clear economic drivers to advance and adopt new technologies at the rate required.

Near-term planning and investments by industry are crucial to the long-term transition. These actions appear to be limited by risk and a lack of strong financial incentives for first movers. The risk of making these investments is exacerbated by unclear mid- and long-term economics underpinning the decarbonization transition. Ultimately, only clear economic demand signals will drive the market to adapt at the rate required. In the meantime, improving clarity on level of the investments required and potential options to support those investments can provide tools for understanding and addressing investment risk while economic policies are still being developed to mitigate it.

Policies and regulations, now emerging in the U.S and other parts of the world, are beginning to identify and address key economic aspects of the maritime decarbonization challenge. In the past year, two major regulatory programs have begun to show how the economic drivers may support shipping’s energy transition. First, in March 2024, the International Maritime Organization (IMO) began a year-long process to refine a suite of measures that will define the scope and timing of a carbon price for international vessels. This work builds on a more ambitious IMO strategy agreed to in July 2023. Second, the EU Emission Trading System (ETS) began charging vessels in 2024 based on their carbon emissions.

Maintaining safety, efficiency, and competitiveness in the U.S. maritime industry during the decarbonization transition requires a clearer understanding of how both the international and national policies and regulations may affect investment. Mapping and analyzing the economic challenges and opportunities specific to the U.S. fleet will help identify specific areas that need closer attention and may be used to accelerate the transition to decarbonization.

1. Requested Study Content

MARAD is requesting proposals for a comprehensive study and analysis of the economics of decarbonizing the U.S. commercial maritime fleet at a rate and magnitude required to meet the U.S. goal of net-zero economy-wide GHG emissions by 2050. It will draw on both existing and emerging information to estimate the range of total cost over time, the necessary levels of public and private investment, and the likely impact of domestic and international standards and regulations on the U.S. fleet. The goal is to produce results that can inform industry investment decisions and government policies that could better support industry’s transition.

This study must include the following content:

• An evaluation of the decarbonization readiness of U.S. domestic commercial fleet and its component parts in the context of U.S. climate goal of net-zero emissions by 2050. This will include proposing methods to define, evaluate and track readiness; including the use of simple tools such as key performance indicators (KPI’s) to indicate important progress and milestones. This evaluation will further describe the potential, capacity, and cost for retrofitting, repowering, and new building to achieve short and long-term climate goals.

• An evaluation of how the U.S. domestic commercial fleet, its activity patterns, and supporting components may need to evolve and change through 2050 both to meet growing commercial maritime transportation needs of the country and to adapt to a low carbon future. This analysis must include an evaluation of required landside infrastructure and highlight major attributes, challenges, and investments needed to meet short-and long terms needs of a decarbonizing fleet. It must also describe what supporting components of the U.S. domestic commercial fleet and shoreside infrastructure may become stranded assets as the intended decarbonization trajectory is followed.

• An evaluation of how evolving domestic and international regulation and carbon pricing mechanisms may affect the U.S. fleet, especially the portions of the fleet not directly regulated by international agreements. This will include:

o An overview of the early effects of the EU-ETS on E.U. domestic shipping and growth of related decarbonization technology businesses in Europe as well as any effects of E.U. GHG regulations on vessels trading between the E.U. and U.S.

o The likely effects of an International Maritime Organization (IMO) GHG fuel standard (GFS) and carbon pricing mechanism on both the US Flag fleet directly and indirectly on the U.S. domestic commercial fleet that is not covered under IMO regulations. Indirect effects may include how international regulations may affect the price, market and availability of low-carbon fuels and technology for the use by vessels that are not regulated by IMO.

o An evaluation of how a theoretical set of regulated targets and pricing mechanisms (using IMO, E.U., and any other major systems as templates), applied to the US domestic commercial fleet, may support or diminish the rate of adoption of decarbonization methods.

o An evaluation of regulations, levies, or other imposed instruments that either disproportionately favor use of traditional fuels or may diminish the demand for low-carbon fuels in the U.S.

• An evaluation of the overall costs to decarbonize the U.S. domestic commercial shipping industry, to net-zero by 2050 and at key milestones in 2030 and 2040. This will include:

o A detailed description of required capital investments in vessels and landside infrastructure to support energy transition, including a description of how new vessels and retrofits are generally capitalized, consideration of the cost of capital and risk associated with various finance options, and any other considerations that affect industry investment decisions.

o The added operational costs for a decarbonized versus conventionally fueled fleet, including all major categories of operational expenses that may be affected (fuel, crew, taxes and fees, etc.) and where split incentives and other market distortions may affect operational costs and prevent an even playing field in the future.

o An evaluation of how much investment will be required at each stage for energy transition, how much of the investment could come from private and public sources, where investments for the maritime sector align with other modes, and what type and scale of existing or new government programs could be developed or enhanced to make up the difference between needed and available capital. This component of the study must take a deliberate approach to characterizing major sources of uncertainty in funding the energy transition. It must produce both estimates of overall cost, broken down by major cost components, as well as high-and low-cost ranges connected to the uncertainty analysis.

• An evaluation of marginal abatement costs (MAC) associated with all major fuels, measures, and technologies for decarbonization applied overall and to major individual categories of vessels in the US domestic commercial fleet. This analysis must include evaluation and description of uncertainties and produce a visual depiction of most likely decarbonization methods, their contribution to overall decarbonization and associated costs (e.g. a “MAC Curve”).

o The MAC curve will be produced for the U.S. domestic commercial fleet overall and its major components projected for 2030, 2040, and 2050 according to most likely decarbonization trajectories. Each component of the MAC should also be evaluated for an economic readiness level (ERL) for each decade, indicating how well the level of investment needed to deploy each component method is matched with likely available funding from any source.

The output of this study will be a comprehensive, narrative report that includes all analyses, methods, results, and conclusions. The content of the report must be synthesized to provide both industry and policy audiences with a clear understanding of the current range of technologies and associated costs. The information in this study should also be designed to inform both private investment decisions and public policy development. The report must be easy to navigate, well written, and incorporate visually compelling graphics that summarize complex topics in creative and effective ways.

All required materials must be submitted in final form within 15 months of the project inception.

Proposals may include:

• Additional considerations, outreach, or analysis tasks recommended to achieve the goals of the study.

B. FEDERAL AWARD INFORMATION:

MARAD will provide funding through a cooperative agreement for the execution of this study.

This announcement is an expression of interest only and does not commit MARAD to make any award.

To be considered for selection, the study must be able to be completed within 15 months from the time of award. The final report and other summary materials will be publicly available and posted to the META webpage.

Proposals are limited to 16 pages and must be received within sixty (60) days of the publication of this notice.

MARAD reserves the right to fund some or none of the proposals received under this RFP.

MARAD provides no funding for reimbursement of proposal development costs. Technical and cost proposals (or any other material) submitted in response to this RFP will not be returned. It is the policy of MARAD to treat all proposals submitted under this RFP as sensitive competitive information and to disclose their contents only for the purposes of evaluation. All applicants must be registered and current with SAM.gov at the time of award.

C. ELIGIBILITY INFORMATION.

1. Eligible Applicants: all applicants must be registered and current with SAM.gov.

2. MARAD is seeking to provide full funding through cooperative agreement(s) for the proposal that provide sufficient, verifiable, and detailed data on how to reach the objective of this feasibility study. MARAD will fund 100% of the total cost of the project up to $300,000.00. Proposals must include a detailed cost breakdown that shows how Federal funds will be used for the project.

Please see Section D.2 for information on proposal format requirements.

3. Systems for Award Management (SAM) Requirements. MARAD will not make an award to an applicant until the applicant has complied with all applicable unique entity identifier and SAM requirements. If an applicant has not fully complied with the requirements by the time MARAD is ready to make an award, MARAD may determine that the applicant is not qualified to receive an award and use that determination as a basis for making an award to another applicant. Please see Section D.3 for information on SAM requirements. MARAD will not make an award to any applicant with an exclusion in SAM.

D. APPLICATION AND SUBMISSION INFORMATION

1. Address to Request Application Package. This RFP contains all the information needed to submit a proposal and be considered for award. No specific application form or other materials need to be obtained from MARAD.

2. Content and Form of Application.

Proposals are limited to 16 pages and must be received within thirty (30) days of the publication of this notice.

Proposals must provide sufficient, verifiable, and detailed information covering all elements of the “Required Study Content” described in section A.1 above.

3. Unique Entity Identifier and System for Award Management (SAM).

Each applicant is required to:] (a) be registered and current in SAM before submitting its application;

(b) provide a valid unique entity identifier in its applicant; and (c) continue to maintain an active SAM registration with current information at all times during which it has an active Federal award or an application or plan under consideration by a Federal awarding agency. MARAD will not make an award to an applicant until the applicant has complied with all applicable unique entity identifier and SAM requirements and if an applicant has not fully complied with the requirements by the time MARAD is ready to make an award, MARAD may determine that the applicant is not qualified to receive an award and use that determination as a basis for making an award to another applicant.

4. Submission Dates and Times.

5. The deadline for proposal submission is 12:00 PM EDT on the closing date listed for this RFP on SAMS.gov. The closing date will be 30 days after this RFP is published on Sam.gov him Please submit proposals in PDF format attached to an email. Send proposals to Donald Coonan/Contract Specialist at don.coonan@dot.gov. Do not send paper copies, or other media of the proposal via post office or delivery service. Proposals received by MARAD after the deadline will not be considered for award. An email will be deemed “received” by MARAD on the date and time the email was “sent” to the email address in Section D.7, below, as determined by MARAD’s servers.

6. Intergovernmental Review.

This funding opportunity is not subject to Executive Order 12372, “Intergovernmental Review of Federal Programs.”

7. Funding Restrictions.

Applicants are advised to review 2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards as supplemented by 2 C.F.R. Part 1201 for cost principles used to determine allowable costs of work performed under Federal awards.

8. Other Submission Requirements.

mailto:don.coonan@dot.gov

Proposals must be submitted by the deadline set forth in Section D.4 above by electronic mail to Donald Coonan at don.coonan@dot.gov. Please include the Funding Opportunity Number and Title in the Subject Line.

E. APPLICATION REVIEW INFORMATION

1. Review and Selection Process.

MARAD will set up an internal review team to evaluate all proposals that are submitted under this announcement. All eligible proposals will be evaluated within three (3) weeks after the closing date. If the review team has any questions on an individual proposal, it will notify the applicant for clarification.

The proposals will be evaluated against the following criteria:

1) The total fixed cost proposed for the project, including a detailed, appropriate, and defensible budget for each component of the project, and description of any other value-added components, resources, or co-funding.

2) The applicant’s understanding of the overall project, its individual components, and the value to U.S. commercial maritime industry.

3) The applicant organization’s technical capabilities and resources relevant to the project, including related experience, techniques, or unique combinations of these that are integral factors for achieving the study objectives. This will include consideration of the experience and capability of key personnel involved, the number of hours budgeted for key persons, and the role, value, and level of participation of any partners. Postaward changes to key personnel will be subject to MARAD approval.

4) Well documented and context-appropriate methodology to undertake and successfully complete each of the study components in a timely manner. Methodologies must include descriptions of major analytical approaches being proposed for the study components, including those for evaluating current and future economic conditions. Methodology also includes any specific models and data sources intended to be used for each component of the project.

5) Based on past work and descriptions in the proposal, the applicant’s ability to deliver a product that is:

a. Sufficiently detailed to fully describe the information in each task.

b. Well synthesized, so information and analysis from each tasks informs other tasks and contributes to a well-organized overall study.

c. Applicable to the indicated subject (the U.S. Commercial Maritime Fleet)

d. Easily useable and accessible by, and relevant to the intended audiences (U.S.

industry and policy makers.)

F. FEDERAL AWARD ADMINISTRATION INFORMATION

1. Federal Award Notices.

The successful applicant(s) will be notified by MARAD’s Office of Acquisition via telephone;

however, the telephone call is not the actual award or the authorization to begin performance. All awards will be made by a cooperative agreement signed by MARAD’s Agreement/Grants Officer.

After an award, has been made a MARAD representative from the Office of Environment and Innovation will notify the awardee to set-up a kick-off meeting for the project.

Unsuccessful applicants will be notified via email.

2. Administrative and National Policy Requirements.

Applicants are advised to review 2. C.F.R. Part 200, Uniform Administrative Requirements, Costs Principles and Audit Requirements for Federal Awards as supplemented by 2 C.F.R. Part 1201, for applicable administrative and national policy requirements. For a copy of the general terms and conditions of the Federal award made under this RFP, please contact Donald Coonan at don.coonan@dot.gov. Federal awards made under RFP may include additional terms that are specific to the project, including without limitation awardee information, project description, funding details and appropriate data rights clauses.

3. Reporting.

Applicants are advised to review 2 C.F.R. Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, as supplemented by 2 C.F.R. Part 1201, for applicable reporting requirements. Federal awards made under this RFP may include additional reporting requirements that are appropriate for the specific project to be funded by MARAD.

G. FEDERAL AWARDING AGENCY CONTACT

For any questions relating to the technical or programmatic aspects of this RFP, please contact Galen Hon, at Galen.Hon@dot.gov and Donald Coonan at don.coonan@dot.gov.

For any questions about the administration of this funding opportunity and any awards, please contact Donald Coonan at don.coonan@dot.gov.

H. OTHER INFORMATION

Applicants must identify all proprietary information in its submission. MARAD is not obligated to make any Federal award as a result of this RFP.

mailto:Galen.Hon@dot.gov