‘Low maturity of solutions’ the main barrier to decarbonisation, Lloyd’s List survey finds
Biofuels, LNG and methanol are the most viable alternative fuels towards decarbonising shipping through to 2030, according to shipowners, charterers and operators in a Lloyd’s List survey
Shipping companies want to see more mature solutions on the industry’s pathway to net zero and to start investing in new technologies, according to the second Lloyd’s List decarbonisation survey in collaboration with Lloyd’s Register
LOW maturity and uncertainty of available solutions are among the top barriers to shipping’s decarbonisation, according to nearly a third of respondents in a Lloyd’s List survey in collaboration with classification society Lloyd’s Register
The findings of the survey confirm that parts of the industry are not ready to invest in alternative fuels or technologies viewed as immature.
Regulatory uncertainty around greenhouse gas emissions reductions is also creating further reluctance among companies to invest in these technologies, the survey found.
Uncertainty around future availability in scale of low- and zero-emission marine fuels has been the main hurdle blocking investment in these technologies, as shipping needs to replace up to 300m tonnes of bunker fuel per annum with new fuels to reduce emissions.
The industry expects the International Maritime Organization to address these uncertainties by setting more ambitious emission-reduction targets at the upcoming Marine Environment Protection Committee 80 in July.
More than 50% of respondents view staff training as the biggest risk against energy transition’s implementation, while more than 40% of participants also identified a lack of suitable technology and operational guidance as other risks.
The transition to alternative fuels will require significant training for crew in the coming years, as alternative fuels will have to replace conventional ones to pave the way for shipping’s decarbonisation.
Participants in the survey also answered questions around current and future solutions they are either using or considering in order to reduce emissions and increase energy efficiency, as alternative fuels will most likely be more expensive than fossil fuels of today.
More than half of shipowners, charterers and operators identified hull appendages and coatings as the most likely energy-efficiency measures they will use to comply with the IMO’s Carbon Intensity Indicator and Energy Efficiency Existing Ship Index, also called CII and EEXI.
Some 36% of participants also viewed air lubrication systems as a means of complying with these new regulations that came into force at the start of 2023.
Slow steaming and voyage optimisation are methods that more than 70% of participants consider using to increase energy efficiency and reduce emissions.
Experts have been calling on the IMO to amend its carbon intensity regulations and set higher targets to boost alternative methods such as wind assistance, as well as operational measures including slow steaming.
Officials at the IMO said they were planning to address industry concerns around CII rules once the review process is complete by 2026, as the industry has been urging the global shipping regulator to change its metrics and provide necessary exemptions to some segments.
The survey, conducted between February and May, sheds light on the industry’s alternative fuel choices, as a multi-fuel future is expected to be the most likely scenario.
Biofuels, liquefied natural gas and methanol were the three most popular transition fuel choices leading up to 2030 among shipowners, charterers and operators, while hydrogen, nuclear and ammonia topped the list of the most viable fuel choices for 2030 onwards.
Nuclear’s inclusion as a top alternative fuel choice after 2030 was one of the most surprising findings of the survey, as safety concerns and unfamiliarity were thought to keep interest in nuclear as a bunker fuel limited.
Most alternative fuel vessel orders have been placed for LNG and methanol dual-fuel ships in 2023, according to data from classification society DNV.
However, concerns around green methanol supply are still valid, as there is currently no significant production of the fuel. This represents one of the biggest challenges blocking or delaying concrete investment.
Methanol is considered “green” when it is produced by electrolysis of renewable power to become a zero-emission option, while methanol produced from fossil fuels, such as natural gas and coal, is called “grey”.
Grey methanol does not provide meaningful emission reductions compared with fuels available today, including LNG.
The survey confirms that ammonia is seen as an alternative fuel option from 2030 onwards, given that the ammonia dual-fuel engines have still to be produced on a commercial basis.
Engine producers MAN B&W and Wärtsilä aim to make ammonia engines commercially available in the next couple of years. A successful launch of ammonia engines could kickstart more dual-fuel vessel orders.
More than 85% of shipowners, charterers and operators believe the IMO should be responsible for a carbon pricing mechanism, while views diverged on how this mechanism should be funded, with 36% preferring a fuel levy and 32% choosing a cap-and-trade scheme as the most viable.
The European Union has agreed to include shipping in its Emissions Trading System from 2024. The bloc will earmark around $2bn for shipping-specific projects as part of the Innovation Fund and the Climate Investment Fund.
This article is part of Lloyd’s List’s Special Report on Decarbonisation which can be viewed here