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September 30, 2021

Voyager News, Voyager Blogs

Tell me that you want me

Regular readers of this blog will have long recognised that the challenges facing the shipping industry amount to generational rather than cyclical issues.

OK so the dynamics of global politics and trade might be ‘technical’ events, but the real show-stoppers: the lingering impact of the pandemic on the supply chain and the treatment of crews, not to mention decarbonisation and digitalisation are big tickets.

With efforts continuing, stutteringly to solve the crew change crisis and the supply chain providing rich future dissertation material, the big one is decarbonisation. We should probably think about this as ‘net zero carbon’ that is, reducing emissions as much as possible towards neutrality.

It’s a subject currently benefitting from a great deal of attention as the conference circuit continues albeit in hybrid form; with several key themes emerging.

There was precious little else to be discussed at London International Shipping Week and a panel convened at Sea-Asia took a look at the topic in terms of the challenges that decarbonisation presents, what practical steps can be taken and where the risks lie.

It’s no secret that the first step in seeking help is admitting you have a problem and the primary challenge that shipping must face is sourcing the future fuels it needs. That process has started but there is still a huge amount of work to do to understand the question as well as the answer.

Peter Lye Global Head of Shipping for Anglo American told the panel his priorities are understanding “when the engine technology is ready and when can we expect reliable fuel supply. But the industry is divided on what people think is right way forward, not to mention who pays and how much.”

Bud Darr, EVP, Maritime Policy at MSC agreed that so far the demand signal had not been strong enough. “First and foremost we actually need the fuels, how do we get there? It starts with the realisation of an actual problem, not just regulatory but from a policy perspective; we need to do our part,” he said.

That suggests a need to be creative and open minded; no one fuel pathway will solve the problems of all, he added. “We need to diversify climate risks, we can’t all charge down one corridor and risk we’re wrong, or the fuel is not available with the right attributes.”

Which brings us once again to the thorny question of collaboration – and whether an industry that has only known competition can work across commercial frontiers. Peter Lye pointed out that the direction is set and owners will be expected to play their part. “We are a customer and the decarbonisation of our business is demanded by our, stakeholders whether that’s customers or employees. It flows downhill and we expect our shipowners to be a part of it,” he said.

Collaboration was prudent he said precisely because of the new technologies that will be needed on the vessel and in the supply chain. “How do we go about that? It’s collaboration, it can’t be all on one individual, you need partners willing to share that load.”

MSC has moved itself into collaborative mode by striking strategic partnerships and joining associations to explore its options, conscious that no company or even single sector can achieve decarbonisation by itself. “We can’t drive the energy markets so we need to work more broadly, we have to get some ideas off the drawing board and into reality through a non-existent [fuel supply] midstream then deliver it,” added Darr.

As session moderator Knut Orbeck Nilsson of class society DNV pointed out, the regulation that will underpin the process needs further development, particularly on measuring the full lifecycle of emissions from ‘well to wake’ rather than just ‘tank to wake’ and which fuels are actually permitted

Opinions diverge at this point. To Takeo Akamatsu. Project Leader, NH3 of Itochu Corporation, which is running a broad industry pilot on the use of Ammonia as fuel, it is IMO which has the responsibility to provide guidelines and incentives and should be encouraged to go further and faster. “We are still waiting,” he said. “So we believe have to try tests and pilots with our partners – others must also do the same.”

A shift is taking place that puts the responsibility for fuel choices more squarely on the owner’s shoulders. “We say to our partners that to wait and see not an option. When and how will the owner will shift to zero emissions – there is no clear solution today; if they wait they have to study further.”

For MSC waiting for more environmental regulations is not an option. “The details will be driven by regulation but we can’t wait, we have to press ahead and set our own goals if we are going to get to net zero by 2050,” added Darr. “When look 20 years down the track we see that we need to start yesterday.”

Jerome Leprince-Ringuet, Vice President Marine Fuels, TotalEnergies, concluded with a note of caution – one made all the more relevant by the current gas price environment and its effect on Ammonia production.

Shipping will be in strong competition with other industries for future fuels whether Methanol, Ammonia, Methane or Hydrogen. “It’s a no brainer that we must start to produce more, what is less obvious is how to direct the fuels towards shipping. IMO and shipowners have role to play in giving visibility on demand,” he said.

A development phase is needed to give some comfort to producers but it will be complex; each owner will need bespoke solution, he added.

“[For the maritime industry] to achieve net zero, we need to speed up R&D; fresh ideas are needed, candidates like LNG and biofuel exist, potential candidates like biomass and hydrogen are still at the development stage. There is a clear role for collaboration among fuel suppliers and a clear regulatory framework will give visibility to shipowners and energy providers. [To generate the renewable fuels required] gigawatts of green electricity is going to be needed, shipping needs to send a demand signal.”

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