Ship owners and operators accepting of a diverse fuel mix through to 2050

By Carly Fields

 

Decarbonising the shipping industry is a complex challenge, yet a wholesale switch to green fuels would go a long way towards meeting net zero ambitions. However, that switch is being hampered by a lack of demand-side signals for greener shipping from policy makers, suppliers of goods, and consumers, making it difficult for the industry to move forward with confidence.

Additionally, apprehensions about the use of greener fuels – including the potential for health, safety, and environmental concerns, higher costs, lower energy density, and limited availability at ports of call - are compounding demand-side challenges, according to the Global Maritime Forum (GMF).

To understand how industry leaders are thinking about future fuels, the Global Centre for Maritime Decarbonisation, GMF, and the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping undertook a survey of 29 shipping companies. The survey asked professionals responsible for the decarbonisation efforts of those organisations about their plans and projections to adopt cleaner fuels and efficiency-boosting technologies.

Their answers reveal a world with many fuels in the mix through to 2050. 

Many respondents expect their fleets to run on multiple types of fuel well into the future.

“This suggests that shipping’s route to decarbonisation could be complex—especially given the knotty interdependence between ship owners and operators, ports, engine manufacturers, and fuel providers,” said the GMF. “How the industry builds out and manages multiple fuel supply chains over the next decades will have a decisive effect on the speed at which it decarbonises.”

Multi-fuel future

This multi-fuel future foresees a fleet operating on three or more fuel ‘families’. The most common mix by 2050 - represented by 45% of respondents - is a fleet concurrently running vessels on fuel oil/biodiesel, methane, methanol, and ammonia. This represents a “step-change in fuel diversity”, said the GMF.

Bo Cerup-Simonsen, CEO of the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping, said: “The industry will need to think strategically about how to operate multi-fuel fleets and green fuels must be introduced in a safe and cost-efficient manner to make them the preferred alternative to current petroleum products.’’

The survey found that many companies are already piloting green-fuel alternatives, and an increasing number are beginning to make large orders for vessels that can consume lower-carbon fuels. “Companies that are currently plotting investment strategies might consider viewing this inchoate moment as an opportunity for bold decision making,” said the GMF. 

“Multiple fuel pathways continue to be viable, and advantages for first movers are there for the taking.”

Another finding from the survey was that internal combustion engines would remain the preferred technology through to 2050. Also, the speed of the shipping industry’s adoption of alternative fuels will be tied to the cost gap with fossil fuels and the degree of availability of greener fuels at global ports.

Regulatory pressure to decarbonise was noted as the single most important factor in fuel choice, as both policymakers and regulators have the power to help close that cost gap between green fuels and fossil fuels - and in doing so, create a “level playing field” for the take up of green fuels.

“To reach a zero-emissions future, the industry needs a more ambitious regulatory framework with clear reduction targets and supporting policies to close the cost gap between green fuels and the fossil fuels that currently power the global fleet,” said Johannah Christensen, CEO of the GMF. “The sooner there is clarity about targets and policies, and the sooner these come into effect, the easier it will be for companies to develop a view on how to meet the goals. The role of regulators will be crucial in this process, in particular the outcome of the ongoing negotiations at the IMO.”

Green fuel mix

Survey respondents forecast that by 2050, biodiesel, LNG, biomethane, synthetic/e-methane, biomethanol, synthetic/e-methanol, and ammonia (both blue and green) could all scale up – “no one fuel has a clear lead over the others, and only hydrogen and nuclear power lagged when it came to predictions about future fuel usage”, said the report.

The GMF suggested that ports and bunker suppliers prioritise the availability of individual fuels in the short term, while preparing to offer multiple fuel types in the longer-term – if they want to attract the greatest number of vessels in the future.

Indeed, a top priority noted by respondents is for fuel providers to bring alternative-fuel projects to final investment decisions and to commence commercial operations while bringing down the cost of those fuels as they scale. 

“Shipping companies need greater clarity on when, where, and at what cost alternative fuels will be available,” said the GMF.

Another factor noted was charterers’ and shippers’ willingness to pay a green premium, while there is a cost gap between greener fuels and fossil fuels. “This willingness to pay could help defray some of the potential risk to shipping companies of adopting more expensive greener fuels faster than their peers.”

The survey’s participants were predominantly companies formally affiliated with three large maritime decarbonisation entities. The GMF noted that these shipping companies tend to harbour more ambitious decarbonisation goals than their industry peers, with about half targeting net-zero emissions by 2050. The companies surveyed represented approximately 20% of the world’s total fleet capacity, covering owned and operated container ships, tankers, dry bulkers, gas carriers, car carriers, cruise ships, tugs, and offshore vessels.