According to Allianz Safery and Shipping report 2023, decarbonization of shipping is now well underway, but the pace of these efforts is influenced by range of factors, including green technology, regulation and market forces.
he report also highlights that collaboration is key when it comes to innovation and regular exchanges of information from testing and experiences between companies and insurers will be important in helping to reduce transition risks.
Key areas driving shipping towards decarbonization according to Allianz:
#1 Reduction in carbon intensity
One key indicator of progress is the reduction in carbon intensity, which is the amount of carbon emissions per unit of transport work (such as per ton-mile).
The IMO’s target of reducing the shipping industry’s carbon intensity by 40% by 2030, compared to 2008 levels, is ambitious and the industry will need to accelerate its adoption of energy-efficient technologies and fuels
… said Captain Rahul Khanna, Global Head of Marine Risk Consulting at Allianz Global Corporate & Specialty (AGCS).
#2 Regulatory frameworks
Another indicator of progress is the adoption of regulatory frameworks aimed at reducing emissions. The IMO has introduced a range of measures to promote energy efficiency and reduce emissions, including the Energy Efficiency Design Index (EEDI), the Ship Energy Efficiency Management Plan (SEEMP), and the Carbon Intensity Indicator (CII). The CII regulations have come into force from January 1, 2023, and this should help accelerate the pace of transition.
#3 Market forces
Market forces are also driving decarbonization efforts in the shipping sector. Increasingly, consumers and investors are demanding sustainable and low-carbon supply chains, and shipping companies are responding by adopting cleaner technologies and fuels.
New ships with engine propulsion using biofuels and methanol are already in the service. The availability and affordability of such low-carbon fuels will also play a significant role in the sector’s decarbonization efforts and in part is dependent on upstream producers.
#4 Green corridors
Establishing green corridors is also an idea gaining in popularity. These are dedicated routes or lanes where special measures are taken to promote sustainable shipping and are collaborations between industry stakeholders such as shipping companies, ports and local authorities.
#5 Fuels and technology
Shipping companies and cargo operators are already switching to vessels powered by liquefied natural gas (LNG). Much of the current activity is focused on experimenting with alternative fuels, including biofuels, methanol, ammonia and hydrogen power, as well as solar and battery powered all-electric vessels and hybrid propulsion systems.
However, transitioning away from carbon-based shipping will involve a challenging period of adjustment and change. Furthermore, the shipping industry also has only limited experience of using and handling biofuels, while the long-term effects of alternative fuels on engines and fuel systems have yet to be borne out.
It will take years to build the scale of infrastructure required to support the transition to alternative fuels, and a mix of fuels is likely to exist for the next five to 10 years, which poses a challenge for shipowners and operators, ports, and bunker operators
… said Captain Rahul Khanna
#6 Electric and autonomous vessels
While electric and autonomous vessel development has so far focused on smaller coastal vessels, the technology could be deployed in larger ocean-going vessels.
However, the lithium-ion (Li-ion) batteries used in electric vessels are an important risk factor, explains Captain Nitin Chopra, Senior Marine Risk Consultant at Allianz Global Corporate & Specialty (AGCS). In addition, with no crew on board, autonomous technology raises questions around emergency response and loss prevention.
Fire detection, prevention and fighting capabilities will be an important consideration in the development of safe operation of electric-powered vessels, explains Chopra. Crew training and procedures will also need to reflect the potential fire risks.
Coastal trade has provided a good testing ground for this technology, and from an insurance perspective, we would like to see continued testing with smaller coastal vessels, learning and refining systems over time, before moving on to scaled-up ocean transit operations
… said Captain Nitin Chopra.
To remind, the International Maritime Organization’s Maritime Safety Committee is in the process of developing new regulations for the operation of maritime autonomous surface ships (MASS), including the role, competencies and responsibilities of MASS master and crew.