During the GREEN4SEA Forum 2022, Capt. Akshat Arora, Senior Surveyor, Standard Club, and Jamie Wallace, Legal Director, Standard Club talked about the potential that alternative fuels have in shipping. Speaking from an insurer’s perspective, Capt. Arora and Mr. Wallace presented the current landscape regarding alternative fuels, and made recommendations for their best use.
Innovative technologies
In terms of alternative fuels and innovative technologies there is no one size fits all solution. A lot of consideration is necessary to find the best solution based on the ship’s type, age, trading area, operating budget, fuel price and infrastructure and development.
Having said that, most of today’s innovative technologies are under review. However, some technologies are available, and have been selected by some operators. These are:
- Hull form optimization
- Hull coatings
- Air lubrication
- Propellers and rudders
- Electric or hybrid propulsion
- Hydrogen fuel cells
- Shore to ship power
- Waste heat recovery systems
- Carbon capture and storage
- Solar panels
- Wind assisted propulsion systems
Alternative fuels
In terms of alternative fuels the prime considerations include the cost and availability of the fuels, the development of infrastructure, the reliability of technology, capital investment, and then the safety training of crew to use these fuels efficiently and without risks.
Moreover, operators should also be aware of the most common types of claims that alternative fuels come up with. As Mr. Wallace explained, these are:
- Pollution
- Fines
- Deviation
- Off-spec fuels
- Contractual disputes
However, the issues do not stop there, as there are limitations in existing conventions surrounding the alternative fuels. More specifically, the CLC, Bunkers & HNS conventions cover hydrocarbons, but do not cover alternative fuels. A new regime could provide a solution, but that will take time and cause uncertainty in the meantime.
In addition, operators should also focus on the types of risks that come with charterparties. Here, there is a wide range of disputes regarding the allocation of compliance, risk and costs. Furthermore, current regulations, such as the EU ETS, cause a great deal of uncertainty in the shipping industry.
Of course today there is a wide variety of clauses, such as the Sea Cargo Charter, as well as BIMCO clauses, which are helpful, but the history has highlighted that there are problems in this area.
Another challenging aspect for operators is the limited they have to comply with new regulations. For example, the implementation of the EEXI certification, CII, and EU ETS, all start from the beginning of 2023.
So, what could shipping companies do in order to promote the use of alternative fuels and get the best out of this technology?
- Benchmark their fleet’s performance and fuel consumption.
- Review relevant contracts, including contracts of carriage and similar arrangements.
- Act now, as regulations and emissions schemes come into force from January 1 2023.
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.
