Stretching ‘ green’ possibilities for shipping fuel industry
Wider use of LNG will speed up transition, but it can’t end there
In this decade, we’ll see more accelerated change in shipping fuels thanwe’ve seen in the last century. What does this heightened diversity mean for shipowners?
They must be nimbler than ever – a shift that requireswork. It means “greening” supply chains, bolstering energy efficiency, nurturing more partnerships, streamlining costs, and becoming adept at green finance ( frequent change can be expensive to start with). All will help shipowners’ fuel portfolios adapt to the inevitable need for a greener status quo as the push for a lower carbon world intensifies – and maritime fuels are often caught in an unflattering spotlight.
Overhauls can be stressful for any industry, but there’s good news. We know that the supply chain for bunker fuels, including shipowners, can react quickly. We’re nearly one year into the International Maritime Organisation’s ( IMOs) ruling to cut the sulphur limit on bunker fuels from3.5 per cent to 0.5 per cent.
Removing these three percentage pointsmarked one of the bunker fuel industry’s biggest overhauls in decades. The ruling was designed as part of theIMO’s initial greenhouse gas ( GHG) strategy to cut carbon intensity of international shipping by 40 per cent by 2030, compared to 2008. And itwasn’t cheap.
Compliance bills were cited at an additional $ 25- 30 billion in fuel costs for container liners alone in 2020-’ 23, said Boston ConsultingGroup ( BCG) in late2019. This was especially tricky for shipowners, an industry emerging from bankruptcies and closures, to absorb.
Yet the switch has been relatively seamless – a point which buoys many stakeholders’ optimismin the face of even greater change.
Appetite for liquified natural gas ( LNG) bunkering is undoubtedly rising, helped by the robust supply of this “greenest fossil fuel”. In early 2019, there were just six LNG bunkering vessels around the world. This has doubled, andwith a further 27 on order and/ or undergoing commissioning, according to SEA- LNG.
But rising demand doesn’t mean LNG is a one- stop shop win for all shipowners. It’s still a fossil fuel in an increasingly green world, putting it at a high risk of falling victim to environmental restrictions. The stakeholders who’ve caught on early are proactively examining how to decarbonise LNG.
Can the most abundant element in the universe transform the maritime fuel industry up to 2050? Yes, but there’s a vast amount of groundwork that must first be achieved.
Hydrogen’s potential is not new; it’s had a few false starts in the last half century. But the current revival – illustrated by news headlines describing hydrogen as the, not a, fuel of the future – seems to have greater credibility than ever in the political and business circles embracing sustainability. Still, roadmaps detailing policy and technological developments, an array of pilot projects to pinpoint risk- reward ratios, reliable supplydemand dynamics and scalability, are all still needed.
And even this array – LSFO, LNG, and hydrogen – are just a part of the greener marine fuels bucket in the 21st century. There’s still plenty of work to explore other clean alternative fuels, such as ammonia and methanol. Proactivity will be pivotal to help shipowners calm the roaring seas of change, for one thing is certain: the status quo they sailed in the last century will be unrecognisable in the next decades to come.
Proactivity will be pivotal to help shipowners calm the roaring seas of change, for one thing is certain: the status quo they sailed in the last century will be unrecognisable in the next decades to come.