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Alternative Fuels

LR webinar highlights lack of regulatory framework holding up decarbonisation progress

Held jointly with the Environmental Defense Fund, panelists discussed the lack of a clear regulatory framework on which can base their investment decisions.




Screen Shot 2021 02 23 at 1.40.48 PM

UK-based classification society Lloyd’s Register (LR) on Friday (19 February) said the uncertainty of regulations impacting investment decisions in the shipping industry was one of the key points discussed at its webinar held jointly with the Environmental Defense Fund (EDF).

The webinar was held on Thursday, 18 February and chaired by Katharine Palmer, LR’s Global Head of Sustainability.

Lloyd’s Register noted despite the need for speed, the shipping industry does not have the tools to decarbonise quickly enough to meet its own targets.

Without a clear regulatory framework on which shipowners and operators can base their investment decisions, shipping’s decarbonisation process will be too slow. As a result, any chance of the industry itself, through the IMO, retaining control of its own decarbonisation process will be lost.

Taking part in the webinar were Aoife O’Leary, Director, International Climate at EDF Europe, Trafigura’s Rasmus Bach Nielsen who headed the trading house’s shipping operations until recently and is now Global Head of Fuel Decarbonisation, and Tony Foster, CEO/CIO of Marine Capital, a marine asset manager which owns and operates ships on behalf institutional investors.

The following are the points discussed by the panelists at the webinar:

Focus on fuel supply chain

O’Leary emphasised the importance of national and regional decarbonisation measures which, she said, should start to take effect and enable the IMO to copy and broaden them across global shipping as a whole. She stressed the importance of the entire supply chain in measuring the environmental impact of different fuels and said that IMO regulations should not focus solely on the ship.

The production process is important. New fuels could be developed in brown, blue or green processes, she pointed out, with green clearly the most favoured. Such fuels are produced in processes involving no carbon and using sustainable sources of power.

Carbon levy – not complicated 

Nielsen made a robust call for a carbon levy, warning that the IMO risks using past decision-making processes to make decisions for the future. He was referring to an assessment by the UN Agency in 2013 which concluded that a carbon levy was not the way forward. But eight years later, the world has changed, Nielsen declared, particularly after more than a year of pandemic.

He explained that although Trafigura is not an IMO member, its recent submission to the UN agency on the decarbonisation issue had set out how a carbon levy could work. It was not complicated, he said.

The greenhouse gas and polluting emissions of every marine fuel would be assessed. Ships using more polluting fuels would be penalised and their charterers would have to pay a levy into a central fund. This money, held within the industry, would then be used to subsidise the cost of using more expensive low- or zero-carbon fuels.

“We would need a firm regulatory framework, but it’s not that difficult to benchmark these fuels because there aren’t that many [of them],” he declared.

An incentive to do nothing

Foster noted conflicting pressures. On the one hand, the lack of a regulatory framework was potentially an incentive to owners to continue operating “old bangers”, he said, because there is currently no certainty on which to base investment decisions.

“Shipowners don’t know what they’re supposed to be doing and that’s disincentivising change in the short run,” he declared.

Meanwhile, on the other hand, initiatives like the Poseidon Principles were to be welcomed, Foster said, but the related financing criteria should be expected to tighten further, he warned. Indeed, it was not at all clear where the money would come from to fund new acquisitions or existing assets as financing terms became tighter.

Banks and finance houses were coming under increasing pressure from institutional investors and pension funds, he said, but it was by no means whether sources of ‘alternative capital’ would play a bigger role in financing existing and new assets and, if so, whether they would charge more for doing so.

A recording of Lloyd’s Register and EDF webinar is available here.

Photo credit:
Lloyd’s Register
Published: 23 February, 2021


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Alternative Fuels

IUMI: How can liability and compensation regimes adapt to alternative bunker fuels and cargoes?

Existing international liability and compensation regimes do not fully cater to the changes that the use of alternative marine fuels will bring.





Dangerous cargo

By Tim Howse, Member of the IUMI Legal & Liability Committee and Vice President, Head of Industry Liaison, Gard (UK) Limited

The world economy is transitioning, with industries across the board seeking to reduce their carbon footprint and embrace more sustainable practices. As part of this, there is a huge effort within our industry to look to decarbonise, using alternative fuels such as biofuel, LNG, LPG, ammonia, methanol, and hydrogen.

Until now there has been much focus on carbon emissions and operational risks associated with the use of alternative fuels. This includes increased explosivity, flammability, and corrosivity. An ammonia leak causing an explosion in port could result in personal injuries, not to mention property damage, air, and sea pollution. In addition, alternative fuels may not be compatible with existing onboard systems, increasing the risk of breakdowns and fuel loss resulting in pollution. Apart from these safety concerns, which particularly concern crew, air pollution and other environmental impacts need to be addressed.

However, the green transition also presents us with a separate regulatory challenge, which has received less attention so far. So, whilst carbon emissions and safety concerns are rightly on top of the agenda now, the industry also needs to prioritise the potential barriers in the legal and regulatory frameworks which will come sharply into focus if there is an accident.

If anything, historic maritime disasters like the Torrey Canyon spill in 1967, have taught us that we should look at liability and compensation regimes early and with a degree of realism to ensure society is not caught off-guard. With our combined experience, this is perhaps where the insurance industry can really contribute to the transition.

Currently, existing international liability and compensation regimes do not fully cater to the changes that the use of alternative fuels will bring. For example, an ammonia fuel spill would not fall under the International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunkers Convention), potentially resulting in a non-uniform approach to jurisdiction and liability. Similarly, an ammonia cargo incident would not fall under the International Convention on Civil Liability for Oil Pollution Damage (CLC). Uncertainties may also exist in the carriage of CO2 as part of Carbon Capture and Storage (CCS) projects, which may be treated as a pollutant, with corresponding penalties or fines.

A multitude of questions will arise depending on what happens, where it happens, and the values involved, many of which may end up as barriers for would be claimants. How will such claims be regulated, will there be scope for limitation of liability, and would there be a right of direct action against the insurers? In the absence of a uniform international liability, compensation and limitation framework, shipowners, managers, charterers, individual crew, and the insurers may be at the mercy of local actions. Increased concerns about seafarer criminalisation (even where international conventions exist, ‘wrongful’ criminalisation does still occur) may emerge, creating another disincentive to go to sea.

When being carried as a cargo, the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS), which is not yet in force, may resolve some of these issues for alternative fuels and CO2. However, until HNS comes into force, there will be no international uniformity to liability and compensation for the carriage of alternative fuels and CO2 as cargoes. This creates uncertainties for potential victims and their insurers, who may face increased risks and costs, due to the potential inability of existing regulations to provide protections.

The situation is even less clear in the case of bunkers. The rules for using alternative fuels as bunkers might require a separate protocol to HNS, a protocol to the Bunkers Convention, or a whole new convention specifically for alternative fuels.  Relevant considerations for the appropriate legislative vehicle include states’ preparedness to reopen the Bunkers Convention, the ability to conclude a protocol to HNS before it comes into force, and whether a multi-tier fund structure is needed for alternative fuels as bunkers (perhaps unnecessary because bunkers are usually carried in smaller quantities compared to cargoes).

Until then, what we are left with are the existing international protective funds, designed to respond at the highest levels to pollution claims resulting from an oil spill, without any similar mechanism in place to respond to a spill of alternative fuels, which are themselves so central to a green transition. Somewhat perversely, victims of accidents involving an oil spill may therefore enjoy better protections than victims of an alternative fuels spill.

In summary, while the use of alternative fuels will no doubt help to reduce the industry's carbon footprint, there are safety and practical hurdles to overcome. Stakeholders must also come together to find solutions to complex - and urgent, in relative terms - legal and regulatory challenges.


Photo credit: Manifold Times
Source:  International Union of Marine Insurance
Published: 13 June 2024

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Expert discusses technical considerations of using ammonia as marine fuel

Ammonia as bunker fuel poses significant safety challenges due to its toxicity and flammability, says Senior Marine Surveyor Muammer Akturk.





Technical considerations of ammonia as marine fuel

Muammer Akturk, a Senior Marine Surveyor specialising in alternative bunker fuels, on Monday (10 June) published an article on technical considerations of using ammonia as a marine fuel in his Alternative Marine Fuels Newsletter.

The article dives into the use of ammonia as a marine fuel, focusing on the safety and technical considerations necessary for its implementation.

Ammonia is recognised for its potential as a zero-carbon fuel, making it an attractive option for reducing greenhouse gas emissions in the shipping industry. However, it poses significant safety challenges due to its toxicity and flammability.

Key points discussed include:

  1. Safety Measures: The importance of stringent design and operational safety measures to prevent ammonia releases and mitigate risks during both normal and emergency conditions is emphasized. This includes the need for gas dispersion analyses and the use of safety systems like gas detectors and alarms
  2. Regulatory Framework: The article reviews the latest regulations and guidelines developed to ensure the safe use of ammonia as a marine fuel. This includes the IACS Unified Requirement H1, which provides a framework for controlling ammonia releases on vessels
  3. Engineering Considerations: Technical aspects such as fuel storage, handling systems, and the role of risk assessments in identifying potential hazards and implementing preventive measures are detailed
  4. Human Factors: The article also considers the human factors approach to safety, emphasizing training and the importance of designing systems that account for human errorOverall, the article aims to provide a comprehensive overview of the challenges and solutions associated with using ammonia as a marine fuel, highlighting the importance of safety and regulatory compliance in its adoption.

Editor’s note: The full article can be found at the link here.


Published: 13 June 2024

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Green Marine Fuels Trading, Vopak team up on green methanol port storage facilities

Green Marine Fuels revealed a strategic collaboration with Vopak to secure necessary port storage to accommodate green methanol supply in Shanghai, Tianjin and later in Singapore.





Green Marine Fuels Trading, Vopak team up on green methanol port storage facilities

Green Marine Fuels Trading on Tuesday (11 June) announced a strategic collaboration with Royal Vopak Terminals in the key ports of Shanghai Caojing and Tianjin Lingang, China. 

The firm said the milestone agreement marked the next phase of methanol supply chain infrastructure expansion for Green Marine Fuels Trading, securing necessary port storage capacity to accommodate projected supply of green methanol from Chinese business partners.  

Green Marine will be undertaking a similar cooperation plan with Vopak Singapore as well. 

Gavin McGrath, Director at Green Marine, said: “This is an important milestone in the evolution of Green Marine Fuels Trading and further underscores our preparedness to supply green methanol to the imminent green transition within the shipping industry.” 

“Our leadership in the global methanol marine fuel sector uniquely positions us to bridge the gap between methanol producers and buyers, with storage and supply infrastructure being a crucial link in the chain.”

“We eagerly anticipate leveraging our expertise in these domains to enrich the Shanghai and Tianjin green port and marine fuel ecosystems.”

Manifold Times previously reported Vopak signing a strategic cooperation agreement with the Vice Mayor of Tianjin delegation to support the repurposing of Vopak Tianjin's infrastructure for new energies, including green methanol, sustainable aviation fuel, and potentially ammonia and liquid organic hydrogen carriers (LOHC).

Vopak said Tianjin Port Group will work closely with Vopak to develop a green methanol bunkering service solution.

Related: Tianjin Port Group and Vopak partner to develop green methanol bunkering service


Photo credit: Green Marine Group
Published: 12 June 2024

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