In July, the IMO member states reached an agreement aimed at achieving climate neutrality in global shipping by 2050. Our industry has long been demanding clear guidelines, given the long investment cycles in the shipping sector requiring regulation that ensures planning certainty and future-oriented energy transformation.
In addition to the ultimate goal of 2050, there will be indicative checkpoints to reach net-zero GHG emissions of 20% striving for 30% by 2030, and 70% striving for 80% by 2040, compared to 2008 levels. The IMO also agreed that low-carbon and zero-carbon fuels uptake for international shipping will be at least 5%, striving for 10%, by 2030.
A global fuel standard could imply a stringent measure for reducing greenhouse gas emissions in maritime operations. The EU has already embarked on this path with its “FuelEU Maritime” initiative. It is expected that the IMO will follow this approach, as the EU’s proposal for this measure received positive feedback from the UN organisation.
The use of alternative fuels and new propulsion systems will be of major importance. Even before the adoption of the new IMO strategy, the number of new building orders with dual-fuel propulsion or at least with the retrofitting option has significantly increased, as the market prospects for ships with conventional fuel propulsion are likely to deteriorate in the future.
Methanol is currently gaining prominence as an alternative fuel and is becoming increasingly important in new ship orders. For smaller, locally operated vessels, fully electric battery propulsion is also being considered. Additionally, there are already orders for ships fuelled with ammonia and hydrogen. However, LNG is currently leading in ship orders, with more than 80% of newbuilding contracts placed last year for ships capable of non-conventional fuel propulsion being with this fuel.
As is well known, LNG is a fossil natural gas, so it is not climate-neutral, but it is considered a suitable transitional solution until, for example, synthetic LNG is available. In addition, by adding liquid biomethane (LBM) or liquid e-methane (LEM) to LNG, the carbon footprint can be further reduced without having to change the engine technology. Ultimately, vessels running on LNG could run 100% on LBM or LEM without any modifications.
The question of which alternative fuel will establish itself and prevail in the long run remains open. The decision is associated with many risks for each owner. The availability and scalability of low-carbon and zero-carbon fuels will be a challenge. While alternative fuels such as LNG and biofuels are increasingly being used in shipping, the production and distribution infrastructure for these fuels is still underdeveloped. Additionally, the availability of these fuels and the requested bunkering, refuelling and charging infrastructure may be limited in certain regions of the world.
We need further political efforts to create the conditions that accelerate the production and distribution of alternative fuels and make them available to the maritime industry as quickly as possible. 2050 is not far away and the availability of zero-GHG marine fuels today is very limited.
The economic factor is, of course, also crucial. Investment decisions need to be reconsidered, ship concepts changed, and business models altered – all with the risk of backing the wrong horse.
It is not going to be an easy journey. There are a number of issues that require solving before the industry can become truly carbon neutral. It all boils down to the availability and cost of green fuels to replace the hydrocarbon fuels we use today.
We might not be able to switch to new fuels as quickly as we would like. Until then, we must make every effort to operate and optimise our fleets more efficiently, pushing them to their sustainability limits. As ship managers, our goal is to support our customers in this endeavour. With BSM’s Fleet Performance Centre, we have the capability to monitor all requirements and navigate our clients through the jungle of regulations, whether it is about improving ships’ CII rating or optimising EU ETS management – both topics are covered in more detail in this edition of BSM Highlights – along with FuelEU Maritime and other regulations. We develop IT-supported compliance solutions, utilising and analysing the collected data to provide recommendations that achieve maximum impact.
In addition, we prepare our seafarers in our Maritime Training Centres for alternative fuels and new propulsion systems so that they can meet the future requirements of our clients.
The profound transformation in the way ships are built, operated and fuelled will change the business of every single shipowner. This is not a minor change; it is a tremendous revolution in our industry – akin to the transition from sail to steam and motorised shipping in the past. So, we are used to change.