In 2020, collaboration and discussion around decarbonisation is set to heighten and industry members will need to ensure they are part of this conversation if the IMO’s target of reducing greenhouse gas (GHG) emissions by at least 40 per cent by 2030 is to be met, warned a panel of industry experts last week.
Thanks to the advance of technologies today, it is relatively straightforward for smaller vessels and ferries to adopt alternative fuels and propulsion solutions to decarbonise, explained Anne Hedensted Steffensen, director general and CEO of Danish Shipping during a panel webinar discussion hosted by Lloyd’s List last week (December 5). However, the industry still needs to identify both carbon neutral fuels suitable for larger commercial ships, and establish a carbon neutral supply chain, if significant reductions in shipping GHG emissions are to be achieved. Ms Steffensen went on to say that for this to happen, collaboration and engagement from all stakeholders is vital. There is evidence of this happening already, with offshore wind farms producing hydrogen for shipping. “This type of collaboration is likely to speed up in 2020,” she confirmed.
Tiejha Smyth, deputy director (FD&D), North P&I Club said during the webinar that from her perspective, this type of collaboration has started to step up the last several years. “The last two years there’s been a lot of looking at preparing for the sulphur cap, but in the last year there’s been real progress with charterers and owners cooperating and discussing together to ensure how the ship in question is ready for the cap in time. There has been an interest from both parties to make sure the ship is there doing what it needs to do, to move goods around the world. In the time charter situation, you have the charterers responsible for fuel but owners responsible for compliance. Both have their own responsibilities so both have to work together. The sulphur cap has really impacted when and how people enter into charter parties.”
Increasing pressure from industry members and the public for shipping to cut its carbon footprint as awareness around environmental responsibility grows is also set to spearhead the discussion around decarbonisation in 2020. “There are a lot of stakeholders in the industry and a lot asking questions about how we are tacking climate in our own companies. Cruise passengers are even asking about their carbon footprint. There is a huge pressure building. It won’t be solved in 2020 but we have to start talking about it and dealing with it.”
However, Capt. Frank Coles, chief executive officer at Wallem Group believes that 2020 will not be the time for action. “No doubt that the discussion around new fuels will be a discussion in 2020, but it will be nothing more than that,” he said. “What will be at the top of shipowners’ minds is what kind of ship they will build. There are many diesel ships still being built today and LNG, which is still carbon based is the only fuel actually being built for ships. Anyone who takes a risk in 2020 is likely to build a dual fuel HFO and diesel ship – and an LNG ship.”
Michelle Wiese Bockmann, senior reporter at Lloyd’s List said she sees “shipowners showing very little concern for the environment other than for investment for their next ship.” She went on to say that she sees some owners looking into the alternatives such as methanol for environmental gains, but this is on a small basis. It also tends to be focussed on short scale shipping and in the North Sea. “Decisions around decarbonisation is a big concern.”
In Denmark, discussions around decarbonisation are progressing well, according to Ms Steffensen. While Danish shipowners are looking at decarbonisation in terms of profitability and ensuring security on their next newbuild investment, they are also putting a lot of focus on wanting to be responsible and answer legitimate questions from decision-makers and stakeholders about their environmental footprint. “Climate will be big in 2020,” she warned. “Not necessarily to find the solutions but we will see stakeholders being more demanding on the owners, that they are taking these decarbonisation issues seriously. This will be influential on business in 2020…we will see a trend where owners will have to answer questions.”
Adding to this, Mr Coles said that it is very difficult for owners as “they are just told they need to build a greener ship. They look to the large engines manufacturers and energy companies to develop these technologies. There is very little impetus on an owner to do anything at the moment because there is no return.”
Ultimately, collaboration is necessary to ensure shipowners do not feel like they alone are expected to solve the decarbonisation problem. Using the chicken and egg dilemma as an example, Ms Steffensen asked the question of whether there is “somebody out there demanding enough for there to be a market for new technologies and new fuels, or how do we make sure the market is there so the investments are actually coming in to decarbonise fuels, or design new ship types or technologies?”
She went on to say that this is an area for collaboration, and one that is coming. “Engine manufactures are coming tougher with fuel supplies and owners are working to find the new technologies or fuels that we are going to run our ships on in the future. Collaboration is there and everybody in the supply chain has to take responsibility, including the shipowners.”