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LR: Retrofit or newbuild? The challenge for shipowners seeking future carbon compliance

‘We estimate that at least 45% of ships today will not be compliant with carbon intensity regulations in three years’ time. Owners are asking us many more questions,’ says Nikos Tsatsaros of LR.
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Classification society Lloyd’s Register recently published an article on the growing demand for replacement ships as shipowners face more carbon regulations targeting older, less efficient ships. Three Lloyd’s Register experts share their views on whether it’s wiser to retrofit an existing vessel to improve its carbon ratings or replace it with a new one: 

As Program Manager of LR’s Maritime Decarbonisation Hub, Charles Haskell is well-placed to outline challenges facing shipowners today as they weigh up the options of retrofits versus new so-called ‘future-proofed’ newbuild ships. The reality is no ship can be fully future-proofed yet because the marine fuels of the future are still under development and there are few rules, designs or builders, no crews, and no managers for the ships of tomorrow.

Perhaps most importantly from a Class point of view, there are no safety frameworks yet, though Haskell and his team are engaged in an ammonia-for-fuel project. It is focusing on a detailed quantitative safety risk assessment spanning several industrial sectors, outside shipping, over several decades.

But the reality is that ship designers cannot even offer blueprints yet; shipbuilders don’t know what materials will be required; repairers have no experience of new fuel technologies; ships’ crews are not trained to handle new fuels or operate ships which use them; and shipowners’ land-based staff, including experienced superintendents, will need to learn about new fuel supply systems, storage, and combustion technologies.

Haskell refers to the Maritime Just Transition Task Force, set up during COP26, in which LR was involved, which has concluded that no fewer than 800,000 seafarers will need to be trained by 2030.

Three decades of retrofits

Haskell has clear views on the question of retrofit or replace. He points to analysis from The Silk Alliance, an initiative set up by the LR Maritime Decarbonisation Hub of 11 members (now 12) that has developed a future fuel framework to enable the setting up of a scalable green corridor cluster. Their analysis has revealed that quite apart from existing ships, 20-30% of those that are built in the years ahead will need to undergo retrofits before 2050.

That means, Haskell explains, that the challenge facing owners and operators today is not only what to do with existing ships, especially younger ones; it is also how to ensure that ships designed and built in the balance of this decade can be retrofitted effectively and economically before the middle of the century.

Nikos Tsatsaros is LR’s New Constructions Sales Director. He has seen a significant change in owners’ thinking over the last year. “There is now a realisation that the clock is ticking,” he says. “We have moved on from theory; two years ago, they were asking ‘what is ammonia, what is methanol?’

“Our clients realise that they need a technical understanding of what is coming and to understand the technologies and how they work, how crews can be prepared, and how ships may be designed and operated. They certainly need to know that there will be an acceptable return on investment. And they realise that collaboration with charterers is essential.”

Complex charter negotiations

Tsatsaros reveals that charter negotiations on new ships are growing in complexity. For owners, adopting new technologies is about investment returns and therefore close attention is required to clauses in the charterparty agreement relating to ship performance. On new projects that are under development, Tsatsaros sees some charterers who are proving to be supportive, others who are not. More collaboration is required.

“We have an essential role to play here. Our vision is to be the trusted adviser to our clients, whether it be in new construction or retrofits. Charterers’ strategies vary and some say that extra costs are for an owners’ account. Others are more realistic If the cost of providing the service goes up, the charterer will have to pay more. I think charterers’ views are softening. It’s a matter of collaboration between different stakeholders.”

Retrofits on younger ships often make good sense, he says, but options become limited on older vessels where significant capital investment won’t pay back over the vessel’s operational lifespan. Meanwhile, some new technologies cannot be installed on existing ships and the cost of a retrofit could actually work out to be more expensive. In these cases, LR’s cost benefit analyses can prove invaluable, he says.

Tsatsaros also stresses the broad range of owners and their access to resources. The industry’s leading pioneers, such as major container lines, have sufficient muscle to test new fuels on their own, but most shipowners lack the resources for this.

“Smaller owners want advice on available options, techno-economic guidance, and involvement in joint development projects. We are engaged in a large number of these, across both newbuild and retrofit projects,” he says.

Practical aspects are key considerations. “When owners have understood the new technologies that are likely to become available, they are asking how ships can be made ready today for economically viable modifications tomorrow. And, of course, there are different levels of ‘readiness’.”

“As an adviser, we can step in and say: ‘These are the options. Here’s how we can help you. Let’s work with a designer, a shipyard, an engine builder, and others, to identify the best strategy and develop something that best suits your needs.’”

Speaking of the existing fleet, Tsatsaros says there is no time to lose. “We estimate that at least 45% of ships today will not be compliant with carbon intensity regulations in three years’ time. Owners are asking us many more questions; what’s happening in China, what’s happening in South Korea, are there enough shipyards?

“This last question is important from a retrofit perspective. If there are no newbuilding slots available, then retrofitting older ships may be the only option. If there is a proper cost analysis and a good charterparty where the charterer is willing to share the cost, then you have an asset with another ten years of viable operation. However, my concern is that charterers may not yet be ready to support retrofit projects. Of course, it depends, and must be viewed on a case-by-case basis.”

Note: The full article ‘Retrofit or newbuild? The challenge for shipowners seeking future carbon compliance’ can be found here. 

 

Photo credit: Lloyd’s Register
Published: 10 April, 2023

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Methanol

China: Zhejiang completes first ship-to-ship methanol bunkering operation at shipyard

Zhejiang Free Trade Zone PetroChina Fuel Oil’s bunker tanker “JIA CHEN 17” supplied 795 mt of methanol to a newly built 5,900 TEU Maersk methanol dual-fuel container vessel.
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China: Zhejiang completes first ship-to-ship methanol bunkering at shipyard

China (Zhejiang) Pilot Free Trade Zone on Tuesday (30 June) said it has completed the province’s first ship-to-ship (STS) methanol bunkering operation at a shipyard, marking a new milestone in Zhoushan’s efforts to expand its portfolio of alternative marine fuel bunkering services.

The operation took place recently at Qingshan West Berth No. 2 of Tsuneishi Group (Zhoushan) Shipbuilding, where Zhejiang Free Trade Zone PetroChina Fuel Oil’s bunker tanker JIA CHEN 17 supplied 795 metric tonnes (mt) of methanol to the newly built 5,900 TEU methanol dual-fuel container vessel MAERSK FLINDERS.

The bunkering operation was completed in approximately 5.5 hours, making it significantly more efficient than truck-to-ship methanol bunkering, which authorities said would have taken around nine times longer to deliver the same volume

According to local authorities, the operation is the first of its kind at a shipyard berth in Zhejiang Province, filling a gap in on-site bunkering capabilities for shipbuilding and repair yards. Zhoushan has previously conducted truck-to-ship methanol bunkering, truck- and ship-to-ship LNG bunkering, and blended biofuel bunkering operations.

The demonstration project forms part of Zhejiang’s strategy to develop green marine fuel bunkering under the China (Zhejiang) Pilot Free Trade Zone Bulk Commodity Resource Allocation Hub Development Plan, which calls for pilot bunkering of alternative fuels including green methanol, liquid hydrogen and ammonia.

Earlier this year, the China (Zhejiang) Pilot Free Trade Zone‘s Zhoushan Administrative Committee identified three priority projects: the world’s first anchorage ammonia bunkering operation, Zhejiang’s first shipyard-based STS methanol bunkering operation, and simultaneous LNG bunkering alongside cargo operations at Yongzhou Terminal, Ningbo-Zhoushan Port.

Authorities said the shipyard-based STS model offers operational advantages over both ship-to-ship and anchorage STS bunkering. In addition to reducing inter-island transport and lowering overall costs, conducting the operation alongside at the shipyard minimises weather-related disruptions and improves operational safety and schedule certainty.

 

Photo credit: China (Zhejiang) Pilot Free Trade Zone
Published: 2 July, 2026

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Shipping Corridor

BV and Shenzhen Port Group to advance green shipping corridor development

Through resource sharing and complementary capabilities, they will jointly develop green shipping projects to deliver replicable and scalable outcomes.
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BV and Shenzhen Port Group to advance green shipping corridor development

Bureau Veritas Marine & Offshore (BV) on Tuesday (30 June) said it signed a strategic cooperation agreement with Shenzhen Port Group on 29 June in Shenzhen, China.

The two parties engaged in in-depth discussions on strengthening collaboration across key sectors and jointly advancing the development of green shipping corridors.

Under the agreement, both parties will leverage their respective strengths and resources to deepen collaboration focused on the development of green shipping corridors and related businesses. Through resource sharing and complementary capabilities, they will jointly develop green shipping projects to deliver replicable and scalable outcomes.

Bureau Veritas will provide professional technical support to Shenzhen Port Group and industry players at large, helping them navigate evolving maritime regulatory policies and translate emerging international rules into practical, implementable measures to align domestic and global industry standards.

Backed by its comprehensive global business footprint, BV offers end-to-end testing, inspection and certification services covering the entire green fuel industrial chain, spanning renewable energy production to bunkering infrastructure for marine fuels. It has also built extensive hands-on experience in numerous domestic green fuel projects.

Alex Gregg-Smith, President of Bureau Veritas Marine & Offshore, said: Global decarbonization of the shipping industry requires concerted efforts and in-depth collaboration across the entire industrial value chain. 

“As a world-class port conglomerate, Shenzhen Port Group boasts strengths that are highly complementary to Bureau Veritas’s expertise in technical services and standard-setting. Deepening our partnership is of great significance for the green transition of the shipping sector. We hope this collaboration will serve as a catalyst to align domestic and international standards and jointly develop viable pathways for low-carbon maritime trade.”

Hu Zhaoyang, Secretary of the Party Committee and Chairman of the Board at Shenzhen Port Group, stated: “Bureau Veritas Marine & Offshore is a globally recognized authoritative body in the maritime sector, with a wealth of decarbonization solutions and practical experience for the global shipping industry. Its vision aligns perfectly with Shenzhen Port Group’s green development strategy. 

“Building on this agreement, we will further expand all-round cooperation across relevant fields, and maximize the combined value of Shenzhen Port Group’s diverse industrial application scenarios and BV’s authoritative technical certification capabilities to achieve mutual benefit through complementary strengths.”

 

Photo credit: Bureau Veritas Marine & Offshore
Published: 2 July, 2026

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Biofuel

MarineFifty to invest in Kvasir Technologies to scale up low-carbon, drop-in marine fuel

Kvasir has developed a proprietary process that converts abundant, non-edible biomass into a high-quality bio-oil — a drop-in replacement for fossil HFO that works with existing ship engines.
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MarineFifty to invest in Kvasir Technologies to scale up low-carbon bio bunker fuel

MarineFifty, the global investment business focused on maritime decarbonisation, on Wednesday (1 July) announced their intention to invest in Danish fueltech company Kvasir Technologies (Kvasir).

This follows the initial Series A financing round, announced by Kvasir on 18 June 2026, in which they raised EUR 10 million from a mix of existing and new investors. 

Subject to contract, MarineFifty intends to invest up to EUR 11 million as part of Kvasir’s Series A financing round, enabling the company to move from successful /demonstration plant operations to FID of a plant with commercial scale production.

Kvasir has developed a proprietary process that converts abundant, non-edible biomass into a high-quality bio-oil — a drop-in replacement for fossil HFO (Heavy Fuel Oil) that works with existing ship engines. By enabling shipowners to change fuel rather than engine, the technology offers a practical, scalable path to decarbonising one of the world’s hardest-to-abate sectors.

The investment reflects MarineFifty’s strategy of backing the breakthrough technologies, fuels and infrastructure that the shipping industry needs to reach net zero. An estimated 60 to 70% of the sector’s emissions reductions must come from exactly these kinds of innovations, and MarineFifty aims to provide not only capital but the technical conviction and partnership to help them reach commercial scale.

“Many of the technologies that will decarbonise shipping have already been invented. At MarineFifty, our mission is to find them, back them, and get them to scale in time to make a difference,” said Krishnan Narayanan, Chairman of MarineFifty. 

“Kvasir is exactly that kind of breakthrough – a scalable, drop-in solution that meets shipping where it is today, while pointing to a fossil-free future.”

“This investment is a strong endorsement of the technology our team has built and the path ahead of us,” said Dr. Joachim B. Nielsen, CEO and Co-Founder of Kvasir Technologies. 

“MarineFifty brings deep sector knowledge and a shared sense of urgency about decarbonising shipping. Their support helps us move faster towards commercial-scale production and towards delivering a genuine, sustainable alternative to fossil oil.”

 

Photo credit: Kvasir Technologies
Published: 2 July, 2026

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