Green wave: 61% of newbuilds ordered will burn alternative fuels

Getting ready for ammonia

Shipowners are also preparing for the emergence of ammonia as a marine fuel. Clarksons reported 16.3% of orders were ’ammonia ready’ (66 orders of 5.8M gt), 0.8% were ’LNG ready’ (12 orders of 0.3M gt) and 0.1% were ’hydrogen ready’ (three orders of 15,000 gt).

The shipbroker noted an increasing trend to order vessels that are built to be capable of handling multiple fuel types "to provide future optionality. For context, in 2021 31.7% of newbuild tonnage ordered was for alternative fuel-capable vessels (459 units), up from 211 orders in 2020 and 46 orders in 2016.”

Green fleet grows

The uptake of alternative fuels has continued to progress, with 4.7% (2021: 3.9%, 2017: 2.2%) of the fleet on the water and 41.3% (2021: 27.8%, 2017: 11.8%) of the orderbook in tonnage terms capable of using alternative fuels or propulsion. “We are projecting that 5% of global fleet capacity will be alternative fuelled by the start of 2023,” said Mr Gordon.

Of the orderbook, 37.3% of tonnage is set to use LNG (741 units), 2.2% to use LPG (87 units) and 3.3% due to use other alternative fuels (about 220 units; including methanol (24), ethane (nine), biofuels (seven), hydrogen (six) and battery/hybrid propulsion (about 180)).

Over 307 ships in the fleet and 98 on the orderbook are designated ’LNG ready,’ while there are now 115 ’ammonia ready’ and eight ’hydrogen ready’ vessels on order.

Scrubbers still an option

While orders for exhaust gas cleaning systems have cooled, they still represent about 4,730 ships in the fleet (24.5% of total gt). Clarksons reported scrubber retrofitting activity has slowed from about 100 per month in June 2020 to about 15 per month as of June 2022. The shipbroker said, however, newbuild uptake grew slightly in 2021, with 268 newbuild orders for scrubber-fitted units reported across the full year, including 198 container ships; 26 scrubber-fitted units have been ordered in 2022 so far.

“The current price differential between HSFO and VLSFO is significant (Rotterdam/Singapore: US$310/US$513), close to previous highs (Jan 2020: ~US$330),” said Mr Gordon. “We expect the share of global tonnage with a scrubber to grow marginally to 24% by the start of 2023.”

“As pressures builds globally to find solutions to moderate climate change, the green transition will cause fundamental change to shipping, trade, offshore and energy,” said Mr Gordon.