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Shipping makes the case for LNG as it calls for clear regulatory framework

Many of the shipping industry’s top brass descended on Glasgow over the weekend to give their verdict on how the industry decarbonises as regulators thrash out climate details at the ongoing COP26 climate summit taking place in Scotland’s largest city.

As the shipping industry is looking to decarbonise by using more efficient technologies and lower emission fuels, liquefied natural gas (LNG) has been highlighted as the best starting point to do something in the short term while the sector awaits a more stable regulatory framework that would set it on an ultimate course of moving to new zero-carbon fuels in the future.

Christine Cabau Woehrel, CEO of CMA Ships and head of fleets and assets at French liner CMA CGM, stressed that the industry needs a very pragmatic approach and that “what is available now, should be the now.”

“LNG is available, it is technically viable, the scale is there, let’s go into LNG,” she told panelists at Shaping the Future of Shipping conference, shipping’s big green gathering in Glasgow. Cabau Woehrel said that LNG is only the beginning of the story. “It is certainly not the end, but it is a bridge, it is a transition,” she said.

We cannot let something good be the worst enemy of the best

Rolf Habben Jansen, the CEO Hapag-Lloyd, said that Germany’s largest liner is also looking at LNG which can give a contribution today and that is important to do things today and not only in the future. He thinks that it is also worth looking into methanol and ammonia and not focusing on only one route. Still, he pointed out that these fuels are not there at scale just yet, and the sector should be realistic about that too.

“We talk a lot about synthetic fuels and carbon neutral fuels, but they are not available at scale yet, so that means we need to find a way to get there and build the ships in a way that they can also deal with different types of fuel,” the Hapag-Lloyd boss said.

Svein Steimler, president and CEO of Nippon Yusen Kaisha (NYK) Europe, said he sees ammonia and methanol becoming part of the future fuel mix, but he believes LNG is a bridge into something new that will come.

“LNG is currently seen as a black carbon fuel, which it is, but it is the only system we have today which has been tested and proven. It has taken us decades to build up that infrastructure. Some people have accused me of saying that if we go along this LNG path, we’re not going to do what is needed with other fuels. That is nonsense. Doing nothing today is wrong. We cannot let something good be the worst enemy of the best,” Steimler said.

Knut Ørbeck-Nilssen, CEO of DNV Maritime, also reckoned the industry should stop talking about what it wants to do in 2050 as LNG is a really good step to take now. “LNG gives savings of 15% – 25% in CO2 emissions. It might not be perfect, but I can assure you that if you were able to save 20% on your cost, you wouldn’t dismiss it,” he said.

Ørbeck-Nilssen noted that the industry also needs to explore other options, which don’t come without significant investment in R&D, piloting and testing. “This cannot be solved by shipping alone and the challenge is cross-sectoral. There are multiple options for fuels available and let’s make sure we explore every available path and I can tell you that the best fuel of the future is collaboration and that is what we all need to do.”

For Hapag-Lloyd’s Jansen, there are not too many roadblocks to doing things today with LNG and biofuels in the short term. However, he noted that what is potentially threatening is the unclarity in the political field.

We cannot work on the basis of some rules applying here and some rules applying there

“We need to know what’s happening. Technically, we don’t even know whether everyone excepts carbon neutral fuel or carbon free fuels, the same goes for rules for older ships. What’s important is that you have a stable regulatory framework where you can plan for a longer period, because ships we tend to buy for 20 or 25 years, and the decisions we need to make today are not only for 2023 or 2025 but basically up to 2045 or 2050, so I think a longer-term horizon would be really helpful.”

NYK’s Steimler also stressed that politicians need to tell the industry what to do. ” I love rules, the industry loves rules. Come out with rules and we will comply. The solutions need to be realistic and we need to consider the technical development. It’s all about setting the rules and setting global rules. We cannot work on the basis of some rules applying here and some rules applying there.” The glass is not half empty, it’s half full, but we need the support from legislative organisations.”

Vassilios Demetriades, shipping deputy minister of Cyprus, who also joined the panelists on stage, said that LNG as the transitional fuel will provide the necessary breathing space for the industry to engage in more research and innovation and that the shipping industry needs to have a set of measures to make the sector change. “I do note with optimism that the sector is ready and engaging in the decarbonisation path. We have to use technology wisely as a driver for decarbonisation and we have to communicate a better and more positive message for the sector because there are too many regulators at the global, EU, and national levels. We all want one solution, but that is not easy, so we need to strike a balance between ambition and being pragmatic and realistic.”

Jansen believes that there won’t be the same rulebook for everyone. “We need to stop chasing all these illusions that everybody will have a completely leveled playing field and that there will be only one set of rules around the globe.”

Adis Ajdin

Adis is an experienced news reporter with a backgroud in finance, media and education. He has written across the spectrum of offshore energy and ocean industries for many years and is a member of International Federation of Journalists. Previously he had written for Navingo media group titles including Offshore Energy, Subsea World News and Marine Energy.
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