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Decarbonising shipping: We must find new ways to resolve the split incentive

Sector needs to work together on preventing split incentives from being the silent killer of innovation for decarbonisation, writes Founder & CEO of Silverstream Technologies.
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By Noah Silberschmidt, Founder & CEO, Silverstream Technologies

Split incentives for technology adoption in shipping have been discussed for years. They arise because of the unique way that the industry pays for fuel for time-chartered ships. While ship owners are responsible for paying for solutions that improve the efficiency of their vessels, it is the charterer that pays for the fuel and thus reaps the rewards of increased efficiency.

This simple problem has until recently been a major barrier to clean technology uptake. There have been many efforts to resolve the split incentive, including updating charterparty agreements to enable the upsides of clean technologies to be shared. However, today, there exists no contractual solution to the challenge that has been conclusively adopted by the industry.

Last year, BIMCO introduced a new clause for time-charter agreements related to the Energy Efficiency Existing Ships Index (EEXI), which comes into force next year. The clause put forward is a clear demonstration of the increasingly close dialogue between owners and charterers regarding environmental performance. But it does not go far enough to solve the structural barrier to uptake of clean technologies that is the split incentive.

In developing the clause, BIMCO chose to focus on Engine Power Limitation (EPL) and Shaft Power Limitation (SHAPOLI), saying they will probably be the measures taken by the majority of ships needing to meet the Energy Efficiency Existing Ships Index (EEXI) regulations entering into effect on 1 January 2023.

The clause states that the charterer “shall not order the vessel to prosecute voyages at a speed which would exceed the new maximum speed” determined by EPL or SHAPOLI adjustments.

The clause also notes that “EEXI modifications other than or in addition to EPL or SHAPOLI shall be subject to the charterers’ prior agreement and approval, which shall not be unreasonably withheld or delayed.”

However, neither of these provisions do anything to ease split incentives and the focus on EPL or SHAPOLI must be challenged as short-term thinking.

The uptake of EPL and SHAPOLI as compliance measures fails to address the underlying aim of design efficiency and constrains operational flexibility. It also ignores the reality that EEXI regulations will tighten, as will other regulations over the coming decades.

The split incentive is a fundamental structural challenge and barrier to decarbonisation. It is a problem of our industry’s own making, so it stands to reason that we can also find positive solutions to it.

Still, BIMCO is promoting industry-wide clarification at a contractual level, and this is to be applauded. The entire clause and comments to the clause stress the importance of a close dialogue between the ship owner and the charterer. This, and coming clauses, should therefore be a step in the right direction to level out the split incentive.

The industry needs to work together on preventing split incentives from being the silent killer of innovation for decarbonisation. On a structural level, shipping must forge itself as an industry that supports and rewards radical innovation and places proven clean technologies at the centre of its decarbonisation pathway.

With future, low or zero-carbon fuels still early in their development, the sector must find ways to adapt and evolve its operations today. And, no matter what the fuel, clean technologies have the power to reduce fuel bills and emissions, provide operational flexibility to vessels, and increase profitability for ship owners and charterers.

This is particularly relevant given the simple economics of shipping’s future fuels. They are, and will continue to be, many multiple times more expensive than the fossil default, heightening the context for efficiencies.

With all this in mind, it’s clear that we must now work together to solve the structural challenges that are acting as barriers to the uptake of efficiency solutions. Untangling the split incentive and coming up with a fair model to share upsides is one of the best actions that we can take as we lay the foundations for decarbonisation. It’s time to be bold and act: the sustainable future for our industry depends on it.

 

Source: steve pb from Pixabay
Published: 10 March, 2022

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Bunker Fuel

Singapore: Bunker sales volume raises to year record high of 4.88 million mt in May

Bio-blended variants of marine fuel oil jumped 671.7% to 40,900 mt when compared to figures seen in May 2024.
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7 days ago

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June 16, 2025

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SG bunker performance May 2025

Bunker fuel sales at Singapore port inched forward by 1.1% on year in May 2025, the highest volume seen in 2025, according to Maritime and Port Authority of Singapore (MPA) data.

In total, 4.88 million metric tonnes (mt) (exact 4,878,100 mt) of various marine fuel grades were delivered at the world’s largest bunkering port in April, up from 4.83 million mt (4,826,800 mt) recorded during the similar month in 2024.

Deliveries of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in May (against on year) recorded respectively 1.89 million mt (+8.6% from 1.74 million mt), 2.45 million mt (-7.2% from 2.64 million mt), 1,200 mt (from zero), 1,700 mt (-88% from 14,300 mt) and zero (from zero).

SG bunker port performance May 2025

Bio-blended variants of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in May (against on year) recorded respectively 40,900 mt (+671.7% from 5,300 mt), 95,800 mt (+97.9% from 48,400 mt), 700 mt (from zero), zero (from zero) and zero (from 300 mt). B100 biofuel bunkers, introduced in February this year, recorded 1,900 mt of deliveries in May.

LNG and methanol sales were respectively 45,000 mt (-7.8% from 48,800) and zero (from 1,600 mt). There were no recorded sales of ammonia for the month and so far in 2025.

Related: Singapore: Bunker fuel sales increase by 4% on year in April 2025
Related: Singapore: Bunker fuel sales increase by 0.5% on year in March 2025
Related: Singapore: Bunker fuel sales down by 8.1% on year in February 2025
Related: Singapore: Bunker fuel sales down by 9.1% on year in January 2025

A complete series of articles on Singapore bunker volumes reported by Manifold Times tracked since 2018 can be found via the link here.

 

Photo credit: Maritime and Port Authority of Singapore
Published: 16 June 2025

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Bunker Fuel

Panama bunker sales volume up 13.9% on year to 453,397 mt in May 2025

Total bunker sales at Panama was 453,397 metric tonnes (mt) in May 2025, compared to sales of 398,964 mt during the similar period in 2024.
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June 16, 2025

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RESIZED Panama

Bunker fuel sales at Panama increased by 13.9% in May 2025, according to the latest data from La Autoridad Maritima de Panama, also known as the Panama Maritime Authority (PMA).

Total bunker sales at Panama was 453,397 metric tonnes (mt) in May 2025, compared to sales of 398,964 mt during the similar period in 2024.

In May 2025, the Pacific side of Panama posted bunker sales of 368,419 mt; 213,589 mt of VLSFO, 117,297 mt of RMG 380, 1,538 of marine gas oil (MGO), and 35,995 mt of low sulphur marine gas oil (LSMGO) were delivered.

The similar region saw total marine sales of 323,084 mt a year before in May; with VLSFO sales at 184,761 mt, RMG 380 sales at 112,011 mt, MGO sales at 2,199 mt, and 24,113 mt of LSMGO being sold.

Panama’s Atlantic side, meanwhile, recorded total bunker fuel sales of 84,978 during May 2025; the figure comprised 63,318 mt of VLSFO, 8,575 mt of RMG 380, 1,987 mt of MGO, and 11,098 mt of LSMGO.

It saw total sales of 74,980 mt in May a year before; with VLSFO sales of 59,855 mt, RMG 380 sales of 6,508 mt, 1,545 mt of MGO, and LSMGO sales of 7,072 mt.

 

Photo credit: George Keel
Published: 16 June 2025

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Research

GCMD presents key learnings from ammonia STS transfer trial at Pilbara, Australia

Findings share operational recommendations for both bunker tankers and receiving vessels for ammonia bunkering operations.
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7 days ago

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June 16, 2025

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GCMD path to zero carbon shipping

The Global Centre for Maritime Decarbonisation (GCMD) on Friday (13 June) launched its Path to Zero-Carbon Shipping – Insights from ammonia transfer trial in the Pilbara report.

The document captures key learnings from a pilot involving the ship-to-ship transfer of liquid ammonia between two gas carriers — the Green Pioneer and the Navigator Global — at anchorage off Port Dampier in the Pilbara, Western Australia.

The trial demonstrated that ship-to-ship ammonia transfer at anchorage can be both safe and practicable, provided that recommended safeguards and operational controls are implemented.

To share these crucial learnings with the industry, the report offers quantitative insights from executing the trial, forming a reference for future pilots and eventual commercial-scale operations.

The report offers:

Project background and objectives: An overview of the trial’s goals and operational context

Detailed safety studies covering four key areas:

  • Feasibility: Response motions and mooring analysis
  • Risks: HAZID and HAZOP findings and mitigations
  • Consequences: Computational Fluid Dynamics (CFD) plume dispersion modelling
  • Response: Emergency Response measures and protocols

Operation execution overview: A detailed account of the actual transfer operation, including the Joint Plan of Operations (JPO), assets deployed and a timeline of key events.

Optimising ammonia bunkering: Operational recommendations for both bunker tankers and receiving vessels, covering aspects such as transfer system setup, manifold arrangement, sample collection and more. A checklist of ERP resources required onboard is also included.

“In the past, bunkering guidelines took years to develop and were typically derived from experience with actual operations,” said Professor Lynn Loo, CEO of GCMD.

“In this case, guideline development is preceding actual commercial-scale operations, making it all the more important that these trials are as informative and comprehensive as possible so they can serve as a relevant reference for industry bodies in refining safe handling procedures, emergency response plans, and operational guidelines.”

Note: The full report of Path to Zero-Carbon Shipping – Insights from ammonia transfer trial in the Pilbara can be downloaded here.

 

Photo credit: Global Centre for Maritime Decarbonisation
Published: 16 June 2025

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