Nicholas Watt of global energy and commodity price reporting agency Argus Media on Friday (24 September) reported on panellists’ views of the Call to Action programme during a recent shipping conference:

Shipping associations rejected incremental efficiency improvements as the means to reach the increasingly ambitious 2050 emissions-cutting goals adopted by the industry and called for urgent transformational change during the Marine Money conference.

Earlier this week, over 150 signatories of the Call to Action for Shipping Decarbonisation, including AP Moller-Maersk, Euronav, and Trafigura, called for the global maritime fleet to eliminate net carbon emissions by 2050, echoing what the US and UK announced earlier this year.

“You will never get there if you think about the individual problems you have today and trying to solve those problems to get [to decarbonisation],” said David Cummins, President of the Blue Sky Maritime Coalition, a US and Canada shipping association.

“Regulations have to adapt with technologies, along with fuels, along with commercial measures. All of this has to come together now.”

The challenge to reach this goal, or even the less ambitious goal from the International Maritime Organization (IMO) to cut emissions by half in the same time frame, requires bridging a very wide gap. Less than 1pc of the global shipping fleet, which accounts for 2-3pc of the world greenhouse gas emissions, runs on unconventional fuel.

The Call to Action also supported making zero-carbon ships the default newbuilding option by 2030.

“We need to think about the future we want [in 2050] and backing up to today, understanding how to get there,” said Cummins. He floated one possible future scenario that involved crewless autonomous vessels and AI-run ports at which every ship arrives exactly at the same time another leaves the berth.

“If you take that as the future, what do you have to do to transition to it?” he said.

Given the enormity of the decarbonisation task, assuming the status quo in shipping may be misguided, according to another participant in the Marine Money conference. “The idea that ships are going to be powered by a zero carbon/green fuel and all other structural elements remain the same is something to be questioned,” said Hew Crooks, an executive at crude tanker Ridgebury Tankers. “That we are moving oil in the same quantities to the same places is a little bit debatable.”

Opportunities in green shipping

While such change in the shipping industry is likely to be bumpy for many stakeholders, it will open up opportunities for others. One such opportunity would be in the transportation of alternative fuel ammonia, whose lack of energy density — only a fifth of fuel oil — means more cargo demand for shipowners, according to Guy Platten, president of the International Chamber of Shipowners (ICS).

“[Ammonia] is going to have to be shipped from places where it is produced to places where it is needed. And it is going to need five times as many tankers/gas carriers as you do oil tankers,” he said.

Furthermore, on such voyages, ships may be able to use part of their environmentally friendly cargo to fuel their journey, another “potential opportunity,” said Platten.

A fuel quandary for shipowners

Continuing the status quo of building ships that burn conventional fuel is increasingly risky for shipowners too since such ships could be regulated into obsolescence early in their lifespan depending on how emissions rules evolve.

This risk has led to reluctance among shipowners to order new vessels, said Platten.

“We do not think anyone fuel will dominate,” said Anthony Gurnee, chief executive of product tanker company Ardmore Shipping. “We are looking for the right horse to back.”

Furthermore, the appetite among banks to finance carbon intensive projects, such as conventionally fueled newbuildings, will continue to decline, according to Johanna Christensen, chief executive of the Global Maritime Forum.

“On the finance side, the Poseidon Principles is only the beginning. In the financial ecosystem there is more and more focus on bringing investment decisions in line with the kinds of goals being set in the Paris agreement,” she said. “Financing for any type of asset including ships that are not aligned with that trajectory is simply going to dry up in the future.”

But the solution is not simply incentivizing shipowners to build more ships that can burn more environmentally friendly fuel.

Access to alternative fuel supply is the “elephant in the room,” said Platten. “It does not matter how many zero-carbon ships you build if there’s no fuel there to run them on,” he said.

Ammonia or hydrogen bunkering capability is largely non-existent at the world’s seaports.

Government backing needed for shipping change

“This idea of incrementalism is not going to get us [to the decarbonization targets]. I think there are some incremental steps that should be taken efficiency is a good example of that. But there is a wholescale transformation that needs to take place,” said Christensen.

Such momentous change will need the unequivocal support of global policymakers, said Platten.

“Everyone has got the message that we need to decarbonize. But we do need political certainty to do that,” he said. It does need governments stepping up to the plate. You cannot invest unless you have that certainty.”

Photo credit and source: Argus Media
Published: 27 September, 2021