During the 2024 GREEN4SEA Singapore Forum, Capt. Satinder Virdi, Principal Consultant, Head of Research and Development, Maritime Advisory, DNV Singapore Pte. Ltd., discussed the role of technical and operational measures in enhancing greenhouse gas (GHG) emissions management and emphasized the complexities involved in selecting the appropriate fuel, which depend on factors such as trade routes, fuel availability, vessel type, and stakeholder roles.
The drive for decarbonization has undeniably gained momentum since IMO MEPC 80 and MEPC 81. With the impetus provided by these pivotal meetings, the march toward implementing the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII) is well underway.
The question of “why should we do it?” is multifaceted and pivotal. Firstly, stringent regulations and evolving policies, such as those stemming from IMO MEPC 80 and MEPC 81, set the stage for decarbonization efforts. Concurrently, companies are driven by their own Environmental, Social, and Governance (ESG) goals, compelling them towards sustainability. Secondly, the financial sector plays a pivotal role, with banks increasingly reluctant to extend loans without clear green initiatives. This shift necessitates ship owners to provide comprehensive green assessments to secure funding, reflecting a fundamental change in financial prerequisites. Moreover, the value chain is undergoing a paradigm shift, with charterers seeking vessels with robust environmental credentials to align with their sustainability objectives. This interconnected ecosystem underscores the urgency for greener practices. Additionally, regulatory mechanisms like the EU Emissions Trading System (EU ETS) and possible future regional mandates reinforce the imperative for carbon accounting and reduction in GHG emissions.
Various initiative which may be used to minimize GHG emissions include optimizing operational measures on board, enhancing hydrodynamic performance, negotiating better commercial agreements with charterers, and option to adopt alternative fuels. Some of these measures are summarized in our energy transition outlook 2023 report, which highlights positive results from various clients.
One of the most effective methods of reducing fuel consumption is speed optimization with respect to commercial obligation. Since the entire world fleet is adopting this practice, there is no financial disadvantage because charter rates remain consistent. Thus, without sacrificing financial returns, climate impact can still be enhanced. However, the question remains: are we all moving together? Some stakeholders are not yet on board, indicating a lack of unified effort towards decarbonization, which poses a significant challenge.
A significant hurdle in advancing greener shipping practices lies in the traditional inefficiencies of ship production. Shipyards typically offer standardized designs, limiting the flexibility for owners seeking vessels with minimal energy consumption. This lack of opportunity for customization means that even if an owner desires a highly efficient ship, such an option may not be readily available.
Green ships, designed for optimal energy efficiency, often come with a higher price tag. Many ship owners may be unwilling to invest significantly more capital upfront, especially if it means deviating from fixed-price budgets, and ensuring higher returns via higher charter rates.
Additionally, the timing of ship procurement poses another challenge. Given the lengthy process involved in shipbuilding, owners often face constraints in aligning their purchase decisions with emerging green technologies or regulations.
As an example, the hydrodynamic performance of the ship is based on the contracted speed performance. In actual practice, ships might operate on slower speed which necessitates redesigning with new propeller or fixing other drag reduction measures.
This is something which is emerging slowly to ensure compliance with reduction in GHG emissions. There is need for collaboration among shipyards, ship owners, charterers, the IMO, and many other stakeholders to achieve common objective of emission reduction by enhancing efficiency of operations.
Enhancing performance of the vessel operation includes optimization of hydrodynamic performance by hull design, trim optimization and drag reduction measures as well propeller design with current speed profile. The world trade and economy depend on shipping, and everything has to progress together. This is a transition in progress.
For the future, technologies like carbon capture may be utilized to minimize greenhouse gas emissions. The topic of alternative fuels is another major challenge because we aim to reach net zero by 2050. To achieve this, we need a 92% decline in emissions. In the decarbonized world of 2050, oil’s share will be less than 1%. This is necessary to meet the goal of limiting global warming to 1.5°C.
DNV study “Pathway to Net Zero,” which is publicly available document, predicts higher energy efficiencies, a diverse fuel mix, and the adoption of new low-carbon fuels as necessary inputs to achieve net zero target by 2050. The current data on ship orders show a move in this direction. The number of dual-fuel ships ordered has increased from 10% to almost 18% in the last year, according to DNV Alternative Fuel Insights (AFI) platform.
Methanol leads the pack, with ammonia also seeing significant orders. In the last 12 months, about 20 to 25 ammonia-powered vessels have been ordered, to be delivered by 2026-2027. However, there are still questions about whether these vessels will operate on alternate fuels immediately or in future. Engine manufacturers assure us that engines will be available by that time.
For shipowners to decide on ordering ships that run on alternative fuels, several factors must be considered, such as availability, regulatory compliance, technical considerations, and the business case. Currently, rules for ammonia and hydrogen are not fully established, and methanol only has interim guidelines. The shipowners use class rules, which exist for every type of vessel and fuel. The IMO’s alternative design approach must be followed.
The experience with LNG as a fuel is based on four safety principles: segregation, double barriers, leakage detection, and automatic isolation of leakages. The design aim to ensure that fuel does not leak, but if it does, it will be contained and controlled quickly. Currently, IMO is still working on comprehensive international standards for fuels other than LNG.
The CCC committee and IMO are working on updating the IGC and IGF codes, with new items expected between 2026 and 2028.
One significant challenge is preparing the suitable workforce, onboard as well as ashore. Shipowners need shore staff who understand alternative fuels, but these staff typically have experience only with oil. Seafarers will need guidance from shore staff, who themselves may lack experience with alternative fuels. This knowledge gap extends to regulators, shipyards, and others stakeholders in the maritime logistics chain.
Overall, substantial work is needed to gain and share knowledge together with al stakeholders, about handling alternative fuels. These are the challenges and steps we need to address for a successful transition.
Above article has been edited from Capt. Satinder’s Virdi, presentation during the 2024 GREEN4SEA 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.
