During the 2023 SAFETY4SEA Singapore Forum, Ansuman Ghosh, Director of Risk Assessment at the UK P&I Club, addressed critical topics that require immediate attention, empowering the shipping industry to proceed with confidence towards a net-zero future.
Transition towards green shipping is eminent but many uncertainties exist, coming from the novel technologies, the revolving regulatory demands and the potential operational constraints. These factors have the potential to give rise to catastrophic incidents and can be big contractual claims.
Incidents arise due to constraints on ships. Although people are continuously adapting to constraints on ships, there are unclear procedures and equipment design limitations. Additionally, there are constraints like skill shortages, manpower shortages, and budget limitations. At this juncture, we have to plan for a seamless transition. The future depends on what we choose today.
What about technology readiness?
Firstly, it is important to consider if we have technology readiness. I believe that it is conspicuously lacking in the industry.
Take for example LNG; this fuel is being used for a decade in the shipping industry and is considered as a transitional fuel, but it continues to evolve as there are a lot of issues with LNG. Furthermore, LNG technology is continuously evolving with numerous different engine types and different methane abatement technologies. However, there is a lot of confusion, even in LNG vessels, where there is a limited number of seafarers. Unfortunately, such problems and many more have remained with LNG, and they will remain if we don’t do the transition properly. There have also been huge problems with methanol; operators who are managing vessels with methanol as fuel are operating vessels for a very short period of time because there have been a lot of associated problems.
The maritime sector is also increasingly embracing automation. Modern vessels are equipped with significant automation, and future ships will feature even more advanced automated systems. These will have different systems and safety arrangements for the alternative fuels to be handled on the vessels. Crew will not directly interact with these fuels, so there has to be plug and play systems, meaning that also maintenance practices will change and several ship operations. One thing is for sure; we need to adapt to new conditions!
When it comes to technology readiness, the following challenges need to be considered:
- Lack of real-life knowledge about green fuel value chains.
- Safety and quality standards
- Scaling and supply
- Fuel production challenges
- Bunkering infrastructure
- Vessel designs and fuel storage
Tackling with retrofitting challenges
Although retrofit solutions for converting merchant vessels to use LNG have existed for nearly ten years, retrofits have remained uncommon and unpopular.
As there is already a huge pool of vessels—maybe more than 6,000—that are prime candidates for retrofits, we must do something about these existing ships. Retrofits have always been a challenge; this was evident with the ballast water management systems and scrubber systems during the last decade.
The challenges associated with retrofitting are integrating the new fuel system on an existing vessel. This also includes addressing safety concerns, and ensuring compliance with regulatory uncertainties, especially regarding emissions ratings.
In particular, larger tank volume requirements for fuels with lower energy density mean finding the appropriate place for tanks and meeting safety requirements with minimal impact on structural integrity and cargo capacity. New fuel piping means that ship conversion pipe routings should be planned to minimize the disruption to ship structures, such as bulkhead penetrations.
Other considerations regarding contractual issues
Additionally, there are upcoming changes in the industry, such as CII, the new life cycle analysis from the IMO and the introduction of an IMO carbon tax. Moving forward, EU ETS brings uncertainty about the volatility and pricing of EUA’s, energy trading, transfer of costs and enforcement while ETS schemes by other states add more complexity to the landscape. The FuelEU Maritime and averaging fuel intensity between fleets will put small operators in a disadvantageous position.
Furthermore, the CII CP clauses are very complicated and questions arose where there is any commercial value in the CII rating of a ship or any monetary value in Charterers’ non-compliance with any CII clause agreed. Also, will PSC actually enforce CII sanctions?
As the BIMCO ETS clause is now available, many prefer this one however, IMO should consider a possible change to a common system of global carbon taxes; this is very straightforward as you will pay as much as you emit without considering other factors. Though, global taxes is not the solution the final aim should be to reduce the GHG intensity of the fuel being used by uptake of green fuels.
Key risks arising
- EV transportation – one of the first real examples of the decarbonization challenges
- Not only the ship type but also the cargo is changing with the changing energy
- Workmanship of the yards, engine licence differ between yards/ country
- Contractual risks – possible disputes with shipyards, warranty claims and performance issues
- Stoppages, delays, off hires
- Increased automation from the new systems will bring in some risks for possible stoppages/ blackouts
- Seafarers ability to find fault and resolve issues can be of some concern
Above article has been edited from Ansuman’s Ghosh presentation during the 2023 SAFETY4SEA Singapore Forum.
Explore more by watching his video presentation here below
The views presented are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
