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The impact of the revised strategy to decarbonise the global shipping industry adopted by the International Maritime Organization (IMO) will be felt by the industry for decades to come. Shipbuilding is probably the sector looking at the most drastic changes from 2030 onwards when the first target is set to come into force. In July, IMO members agreed on so-called indicative checkpoints of reducing emissions by at least 20%, and striving for 30%, by 2030 compared to 2008 levels, and at least 70%, striving for 80%, by 2040, reaching net-zero “by or around, i.e., close to 2050” – qualified by whether “national circumstances allow.” Today, shipping produces 2.3% of global CO2 or 855m tonnes per year. According to class society DNV, all these targets are on a well-to-wake basis rather than the tank-to-wake figures we have become accustomed to looking at in the context of the original strategy. So, fuel production is coming under much greater scrutiny. At the time, many Western nations and environmentalists were pushing for more firm commitments from the 80th gathering of the Marine Environment Protection Committee (MEPC). The Pacific Island countries, supported by Canada, the US, and the UK, fought hard for a 1.5°C- aligned action but were opposed by China, Brazil, Argentina and others. A global carbon price, supported by over 70 developing and developed countries, has been moved forward as an economic measure under the IMO’s basket of measures and will be up for further investigation and debate at future MEPCs. A very clear demand signal has been sent to the fuel supplier industry This means that changes to the very tools of the maritime industry – the ships themselves – would have to align themselves with the new measures, either through retrofitting the old or building a newbuild fleet of IMO-compliant vessels set to enter use from 2030 onwards. The 2023 IMO Strategy on Reduction of GHG Emissions from Ships makes specific reference to an ambition to increase the uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources to represent at least 5%, striving for 10% of the energy used by international shipping by 2030. But before we take any sort of look towards the future, we must know what is going on in the here and now. Clarksons Research, in its recent mid-year report on the world shipping fleet, estimates 44% of newbuild tonnage ordered in the first half of 2023 was alternative fuelled. Namely, methanol accounts for 62 orders, slowly catching up to LNG’s 86 orders. In its 2022 Shipbuilding Review Clarksons claimed that 61% of tonnage ordered – 35% by number of orders – was alternative-fuelled. Over half of the tonnage ordered (397 orders, 36.7m gt) was LNG dual-fuelled, 7% was methanol (43 orders, 5m gt), 1.1% LPG (17 orders, 0.8m gt) and 1.2% included battery hybrid. There were also 10.8% of orders that were ammonia-ready (90 orders, 7.7m gt), 1.4% of orders were LNG-ready (31 orders), 0.1% were hydrogen-ready, and 22 orders were methanol-ready. As the data suggests, changes are underway and it is obvious that new, more environmentally friendly fuels, have become the norm and that steps are being taken to ensure the IMO measures are met. BIMCO deputy secretary general, Lars Robert Pedersen, agrees that the IMO strategy was a lot about now and less about the distant future. “The strategy contains some indicative checkpoints of which the one for 2040 is the most interesting. By 2040 the total emissions from ships must have been reduced by at least 70%, striving for 80%. As the industry is still expected to grow towards 2040 and beyond, the reduction at ship level would have to be around 90% compared to the baseline ship of 2008,” Pedersen says. As 2040 is only 17 years away, new ships already on the water today will also be part of the fleet in 2040. Therefore, an average 90% reduction means that new ships by 2040 would already have to be at net zero. If that is to be met, the capability of burning zero-emissions fuels is already a requirement. “By 2030 this translates into ships being built for burning at least one type of alternative low- or zero-emission fuel. That entails differently configured engines and special fuel supply and storage systems onboard. It also requires much more efficient ships than what is the standard today. Wind-assisted propulsion may prove to be critical for the success of such new ships where possible,” Pedersen adds. At this current moment, not all less GHG intense fuels are created equal with LNG being the most abundant and cheapest for use. In complete contrast, Maersk recently paid $2,500 a tonne, almost ten times the cost of conventional fuels on an energy-equivalent basis, for the bio-methanol loaded onto the company’s first-ever methanol-powered containership ahead of its maiden voyage to Copenhagen. This is due to the low-carbon variants of methanol fuel still being scarce and commanding a substantial price premium. Regardless of the bio-methanol price, Lynn Loo, CEO of the Global Centre for Maritime Decarbonisation, says that there is industry confidence in dual-fuelled methanol vessels as there have already been over 100 orders for such vessels – mostly across the container, dry bulk, and tanker segments. But this is likely to change. According to Liz Shaw of the IMO, the technologies and fuels needed to meet the demand of a more ambitious decarbonisation scenario will be technically and commercially ready in time. A study within IMO's Future Fuels Project assessed the state of availability and readiness of low- and zero-carbon ship technology and marine fuels. According to the data from the study, several energy efficiency technologies are already mature with a potential for greater roll-out. Other energy-saving technologies are already operating commercially or transitioning to commercial development by 2030. Biofuel and e-fuel production pathways are forecast to be fully mature before 2030 while blue hydrogen and ammonia production pathways are forecast to reach full maturity before 2030 and mid-2030s, respectively. Fuel combustion engine technologies with new candidate fuels are forecast to reach commercial operation by 2030 whereas fuel cell technologies may take until the late-2030s to fully mature. All these forecasts are considered as maximum durations under conservative assumptions because, with higher demand and supporting follow-up policies, technology development should accelerate. So, Shaw believes that the commercial rollout of fuels is not expected to hinder anything. Eirik Nyhus, director for the environment at DNV, was a bit more cautious, telling Splash Extra: “The future fuel mix is highly dependent on fuel prices and policy ambitions. Shipowners therefore need transition plans that reflect the uncertain future and fuel flexible solutions that provide robustness and reduce carbon risk. Design options for newbuildings should enhance a vessel’s ability to utilise multiple fuel options, increasing resilience and the ability to stay in compliance and remain competitive as regulations and stakeholder requirements tighten.” He adds that allocating sufficient space for fuel storage, while minimising carrying capacity loss and maintaining safety levels, was the main design challenge going forward. Nyhus also points out several aspects to look out for when talking about potential newbuilds in the near future. “Vessels operating on alternative fuels such as the dominant LNG and methanol may face reduced operating range. This may result in shorter bunkering intervals where operating patterns for vessels with regular routes are optimised towards storage volumes/bunkering intervals,” Nyhus says. Onboard carbon capture (CCS) is a hot topic, but Nyhus says it's uncertain whether this tech can scale fast enough to play a significant role in attaining the 2030 goals of the greenhouse gas strategy. Post-2030, however, it may see increasing use and impact, he reckons. Nyhus also believes that digitalisation could deliver up to 15% of the GHG emission savings required by 2050, by enabling more energy-efficient ship design, construction, and operation along with the use of digital twin technology for fleet optimisation and vessel utilisation. Shaw also chips in on the topic by pointing out other technologies that would push towards GHG emission reduction. “We already see some ships using wind-assisted propulsion to boost their carbon intensity ratings. These are visible changes, for example, the use of rotor sails or high-tech wind kites attached to ships. Many other energy-saving devices are already mature and available for existing and new ships. Shore power may become more widely available,” she tells Splash Extra. All respondents to Splash Extra believe the 2030 target is one where energy efficiency, and sustainable biofuels, possibly supplemented by increased uptake of hybrid and wind assistance power systems, would be expected to play the most significant role. In conclusion, ships in 2030 might not be visibly different but will most certainly be equipped to use new fuels, have different piping arrangements, and have seafarers trained to handle new potentially hazardous substances. As DNV’s Nyhus puts it: “The course is set, the speed is set, and a clear signal has been sent as to what is expected from us as a sector. A very clear demand signal has also been sent to the fuel supplier industry. There is now a much greater certainty when it comes to future demand for green fuels.” It is now just a matter of further developing new technologies and new fuels as well as waiting for the arrival of new regulations. MEPC has already initiated the development of a basket of mid-term measures delivering on the reduction targets, comprised of both a technical element (fuel standard) and an economic element (GHG emissions pricing mechanism), expected to be approved in the spring of 2025. With all this set to go ahead and accelerate the way shipping is conducted in the future, all we need to do is keep our eyes on the shipowners and shipyards and watch the future become the present. Estimated maturation timelines for energy converters, onboard CCS technologies, and corresponding safety regulations for onboard use with alternative fuels other than LNG/LPG. (DNV)

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