After a transition to IMO 2020, shipowners and bunker buyers are now facing their next big challenge -- the 2030 target to reduce greenhouse gas emissions, participants said at the Maritime Week Americas 2020 conference organized by Petrospot.
With the coronavirus pandemic still looming, the industry is now being forced to at least start planning for alternative fuels that will be required to comply with International Maritime Organization's new mandate.
By 2030, carbon dioxide emissions should be reduced by at least 40% from 2008 levels, and by 50% by 2050, measured by emissions per transport work, or the amount of carbon produced per ship, according to the mandate. However, no decision has yet been made on how to achieve those goals.
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According to Mark Williams, managing director of Shipping Strategy, LNG will be used at least during some transition period, but it will ultimately phase out by the middle of the century in favor of other ways of ship propulsion yet to be decided.
"Nobody is building anything at the moment because nobody knows what to build. The shipowners are waiting for a clear steer from the regulators to tell them what they should build," he added.
Mad Bjornebye, manager of bunker services at Teekay Shipping, said his company is still looking into what will be the fuel they will need the next time they order new vessels, adding LNG is a stepping stone to a greener fuel with the advantages of a proven technology.
"It can be expensive but it can move a vessel across oceans," he said.
Looking toward 2030, Teekay is also analyzing hydrogen fuel cells, which, he said, "are very promising, very clean, but they are not at the stage where you can move a Suezmax across the Pacific."
Other technologies like ammonia or methanol are probably going to develop more in the coming couple of years. Then, "we will be able to see if those solutions are going to work," Bjornebye said.
Williams said that as the world comes out of the coronavirus pandemic, there will be a recovery period with a fast growing demand coupled with a strained shipping supply, which will lead to a higher freight rate.
He added this would lead to good profits for owners of any type of ship that can burn clean fuels, especially marine gasoil, but the more stringent mandate for 2030 will then be looming in the horizon.
Frank Dahan, global fuel strategy director at Group CSL, said CSL is already testing two ships fully operational on biodiesel B100 in Canada. It is promising, he said, but still early to talk about its functionality.
The company is also looking at ammonia and hydrogen. To Dahan, the transition toward cleaner fuels will be through a multi-tier approach, with a certain type of fuel to be used in the next 15-20 years, and a different type after that.
The need for cleaner fuels will develop within a world with different trade rules, Williams explained, with intense economic and technological competition between the US and China leading to the deglobalization of trade toward a more regional trade, or North-South trade in the case of the Americas.
This change would also affect shipping routes and the types of ships and fuels that would be needed, as the distance to travel could be shortened, he said. Dual-fueled vessels powered by batteries could be an option for those shorter trips.
After IMO 2020
Regarding the performance of marine fuel with up to 0.5% sulfur content -- the main bunker fuel introduced in January by the IMO 2020 greenhouse gas regulations -- buyers said no big issues have come up on sulfur content for these blends.
However, especially at the beginning of the year, complaints surfaced on paraffinic elements, a lot of wax and sometimes quite high sediment, Bjornebye said.
"It is quite different from high sulfur fuel oil in terms on how you handle and store them. These fuels should be consumed within three months at the most," he said.
For Angel Canessa, general manager at Ultranav, the shelving time might be shorter.
"Problems start with those fuels when you store them more than one month," Canessa said. "For those cases, you have to recirculate the fuel frequently and also some additives might improve the situation."
On high sulfur RMG 380, allowed to be used in ships with scrubbers as its sulfur content is up to 3.5%, Eric Evans with Energy Fuel Consultant said companies that have invested in that retrofit will probably see a payback in two to four years.
