The long-term outlook for marine fuels is a complex one and clearly a transition is underway. But it’s less clear is where the transition will lead, how quickly it will happen, or be measured – issues grappled with by speakers at Day 2 of CMA Shipping.
S&P Global’s Barbara Troner started the session with an overview of the possible future uptake of ammonia, methanol, hydrogen, LNG and biofuels. In Troner’s forecast slides, she explained that alternative fuels are unlikely to see big gains before 2030; In fact, scrubbers would sustain heavy oil demand through the end of the decade — with “the lack of viable alternatives … demand for high-sulfur fuel is not going to slow down,” she said.
By 2030, S&P predicts that LNG will be the predominant “alternative” fuel option, with tankers and container ships leading the way. Her presentation also addressed the pricing implications of the forthcoming European Union Emissions Trading Scheme (EU ETS) on certain tanker movements, suggesting an increase in freight costs on affected movements to/from EU ports, around $0.30 to $0.40 per barrel, an impact would have a significant impact on crude oil arbitrage differentials.
Toby Menzies from Core Power, Nuclear for Maritime, who made a brief presentation following Troner, pointed to an issue highlighted in an earlier session – the ‘Green Energy Gap’ which he says is being ignored. On the issue of the “blind spot,” he claimed: “The expansion of green shipping requires enormous generation capacity.”
The main panel in the morning, ‘The Accountability Framework for the Energy Transition’, looked at the practical aspects of how the transition could be managed at the micro level in companies and more broadly across the broader international trade arena. Excellent moderation by North American Marine Environmental Protection Association (NAMEPA) President Carleen Lyden-Walker drew responses from panel members on how the transition could be better managed.
measuring the transition
Panelist Jan Hagen Andersen, Business Development Manager at DNV Maritime, highlighted a difference in new fuel regulations compared to previous government regulations and the commercial implications. “We talk to both business people and technicians at our customers,” he said. More practically, he added: “We have the tools to measure different ways of measuring fuel consumption and verification is also becoming more important… there are many innovative solutions like sensors.”
Panelist Elpi Petraki, representing the Greek shortsea sector, said that with the Carbon Intensity Indicator (CII) rules now in place, “for the first time we can have a real discussion between owners and charterers and discuss real numbers”.
Panel colleague Helio Vicente from the International Chamber of Shipping (ICS) said: “This year is a crucial year for the developments that we will have on decarbonisation. Accountability and transparency frameworks will be put in place,” but expressed concern about how these measurements actually work.
Looking at the alphabet soup of possible metrics, he said: “EEOI is possibly a fairer and more balanced metric – it looks at the cargo carried. In response to a question about blind spots and missing points, he suggested that a broader conversation among all participants in the clean energy hub value chain was needed.”
difficulties with data
Jennifer States, newly appointed chief strategy officer at the Blue Sky Maritime Coalition, which works with North American shipowners on decarbonization, pointed to a current “knowledge gap” and extensive difficulties with ship emissions data. She explained that currently most North American ship operators are not required to report under current IMO dictates, but: “regulations will likely come at some point”. She stressed, “We now have an opportunity to get it right” and to explore the feasibility of using different measures and “find a way for the measures to work for multiple parties”.
Expressing the view that shipowners should try to circumvent regulations, she highlighted the practicalities where solutions are being developed, saying, “Yes, we can measure fuel consumption, but there are big differences depending on the fuel.” highlighted Sailplan’s efforts to now provide direct measurements for the US. OSV operators Harvey Gulf and Hornbeck in US Gulf.
Referring to the high cost of installing metering technologies, states stressed the need for government funding from the public sector to deal with these high prices and find ways through demonstration projects — the “key gap is funding,” she said . The Norwegian government’s participation in the electrification of ferries was given as an example.
Arlie Sterling of consultancy Marsoft Inc., also a stakeholder in the Blue Sky Maritime Coalition, said bluntly: “Measures such as CII and AER are not very meaningful” as they are bound to conflate the owner’s concerns – the quality of the ship – with those in Connecting the charterer – user of the ship.
He highlighted Marsoft’s efforts with shipowners to fund ship retrofits, which show the economic impact very accurately. He spoke of life cycle calculations for reducing emissions as “very open” and far from measurement. Regarding the issues of CO2 capture and sequestration emerging as alternatives to full decarbonization, he described measuring them as “an unresolved issue”. Long-term charter arrangements, where charterers could help fund alternative fuels, are discussed by Dr. Sterling along with other board members.
With presentations like this, sometimes the best observations come from the audience – during the Q&A session. Listener Harry Theochari, OBE, a prominent UK lawyer and Chair of Maritime London, claimed: “The way forward for maritime decarbonisation is ‘as clear as mud’. Among his other observations, which went beyond the practicalities of measurement, were “Shipowner charterers make no effort…unless forced to do so.” Expressing concern about the upcoming IMO MEPC 80 meetings (summer 2023), he said: “Regulators need to pull themselves together.”
Source: News Network
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