Alternative fuels: shipowners need to choose wisely

With FuelEU Maritime set to kick off less than four months after SMM 2024, you can be sure there will be many questions asked about the new EU maritime regulation in conference halls and on the trade show floor in Hamburg at SMM, one of the industry’s largest gatherings. 

One of those lingering questions is ’Where are the green fuels?’ Without a massive ramp up in the production of green versions of methanol, hydrogen, ammonia and LNG, shipping’s ambitions to obtain net zero by 2050 will be dead in the water.

The whole idea behind FuelEU Maritime is to jumpstart shipping’s transition from a heavy fuel oil transport industry to one of low carbon intensity. Using low- and zero-emissions fuels and emissions-reduction technologies will align shipping with global shipping’s UN-based regulator International Maritime Organisation’s (IMO) greenhouse gas (GHG) reduction strategy.

FuelEU Maritime will require ships calling at EU ports to reduce their carbon intensity by 2% in 2025, 6% by 2030, and accelerating from 2035 to an 80% reduction by 2050. IMO’s revised GHG reduction strategy would see international shipping reduce its average carbon intensity on a CO2 per tonne-mile basis by at least 20% striving for 30% by 2030, by at least 70% striving for 80% by 2040, and net zero by or about by 2050, compared with 2008.

There is still a great deal of scepticism, debate and confusion in the industry, not only about the viability, cost and safety of new fuels, and that unease extends to another IMO GHG regulation, the Carbon Intensity Indicator (CII). Industry voices have formed a consensus regarding inherent flaws in CII’s calculations that for many owners could result in substantial commercial fallout and do not reflect true environmental performance for vessels.

And, in terms of fuels, many shipowners say the lack of infrastructure and availability suggest alternative fuels are not even close to being around the corner. This puts in stark relief part of the updates to IMO’s strategy that lays out a target of at least 5% and striving for 10% of the global fleet operating on low- or zero GHG emissions technologies, fuels or energy sources by 2030.

Some owners, such as the MSC Group, see LNG and biofuels as the viable alternatives for now. This doesn’t mean they are not open to other options; it just means they are selecting a fuel that offers the best options to reduce ship pollutants immediately and does offer a path to decarbonise long term.

And a new study from Massachusetts Institute of Technology calls into question the green credentials of green ammonia, noting it will emit N2O and NOx emissions, and has the potential of ammonia slip when combusted.

A recent draft emergency response plan developed by the Global Center for Maritime Decarbonisation also highlights the safety and environmental hazards of dealing with an ammonia bunkering spill.

Fortunately, amidst all the confusion, shipowners, operators, charterers, financiers, shipbuilders, researchers and technologists will have the opportunity to discuss and debate the merits of CII and the pathways to net zero for shipping at a well-timed, two-day industry event. 

Just ahead of IMO’s closely-watched meeting of the Marine Environment Protection Committee (MEPC 82), Riviera will hold its Maritime Decarbonisation, Europe: Conference, Awards & Exhibition from 24-25 September 2024 in Amsterdam.

Kicking off that conference, the first session will see IMO’s MEPC chair, Dr Harry T. Conway explore updates from the front lines of MEPC, including mid-term emissions measures and the future of CII.

Following up on Dr Conway’s presentation, European Commission policy officer Peter Czaga will provide insight into EU policies and funding for maritime decarbonisation initiatives.

Ultimately, as we report on a regular basis, shipowners are preparing for the inevitable fuels and technology transition. They have been spending at record levels on dual-fuel engine technology over the past three years, including 2024, with some 50% of newbuildings (by tonnage) ordered capable of burning alternative fuels. And the global fleet of dual-fuel ships continues to grow. About 20% of the global fleet will be alternative-fuel capable by 2030, according to Clarksons. Now it is up to the fuel producers.

New fuels bring with them a laundry list of risk – commercial risk, financial risk, operational risk and technical risk. How well shipowners manage those risks at the current regulatory pace will determine not only their success in reducing CO2 and GHG emissions, but commercial survival. When it comes to alternative fuels, shipowners need to choose wisely.