Over recent months the shipping industry has seen a huge surge in activity in response to the 2020 Sulphur Cap. Not only have the IMO stated that there will be no delays on the implementation of the Sulphur Cap, but 171/173 Member States made an official commitment to reduce emissions by at least 50% from the shipping industry by 2050. This historic agreement was initially met with scepticism in the maritime market and large uncertainty on how these goals could be met. However, the International Transport Forum have recently published research to show how almost-complete decarbonisation could be attainable by 2035 if all available technologies were utilised to their maximum, presenting four optional pathways. In comparison to the EU commitment to reduce terrestrial emissions by 80% by 2050 (with most EU countries on track to meet their 2030 target) and Sweden achieving their 2030 renewable energy target this year (aiming to achieve 100% renewable production by 2040), the targets for the maritime industry should seem easily achievable. We appear to have consensus between regulators and available technology, with a multitude of large announcements across the media declaring huge investments in scrubber technology, LNG, low sulphur fuels, shore powered facilities and even hydrogen, yet the market still seems shrouded in doubt as to the effectiveness of enforcement come January 1 2020, as well as aspirations for further decarbonisation.
A fundamental reason behind this is the uncertainty of fuel pricing and availability, as the demand is currently low with prices remaining high and distribution limited. However, this playing field is expected to even out pretty quickly and the major shipping associations have collaborated on a paper and put forward a framework on how to ease this transition, which is to be discussed at the next MEPC meeting. Analysts have concluded low sulphur fuels will be roughly three times the price of fuels utilised today so operators have to either choose to accept these additional operational costs or alternatively invest in exhaust gas cleaning system technology to take advantage of low cost HSFO come 2020.
The scrubber market has certainly seen a phenomenal increase in investment this year, with deals such as the €170 Million container fleet deal in Europe this month and Lloyd’s Register reporting that order books to install by 2020 are almost full, with some operators securing installation dates as soon as 2023. Confidence clearly reigns high with some operators, with companies like DHT holding having expressed scrubber equipped tankers could potentially create a super profit for vessels, with Frontline having even invested a 20% stake in their scrubber manufacture. The industry is shifting from manufacturers competing for projects to operators competing with time. Chelsea Technologies Group have also noted a prominent increase in the number of Chinese scrubber manufacturers and have been involved in the first of a multitude of installations that are likely to further reduce the overall costs of choosing scrubbing as an option.
Further concerns are driven by the ability to regulate the various compliance options, for example the testing of a wide range of new fuels or the emissions and wash water from scrubber systems. However, strong progression is also being made in these areas, for example with the IBIA establishing a uniform method to fuel oil testing to submit to the IMO and with Chelsea Technologies working with the EGCSA to iron out the details in guidance related to scrubber wash water monitoring. Furthermore, it has been continuously expressed by the IMO that if an operator follows all guidance currently available in good faith, they will not be penalised. If an operator explores and chooses their options carefully and can ensure his vessel can confidently demonstrate they have tried to comply, there will be no fines or detention.
What really does remain unknown is how this changing structure of the fuel supply chain and the evolution of transportation management in general, will reshape the shipping industry. Sea, land and air transport will increasingly be forced to compete with each other, which will ultimately be driven by consumerism and the increasing trend to prefer environmentally sound practise. From a student project that started using coffee waste to power London’s buses to using the degradation of human waste to power thousands of homes, the future energy market is being blown wide open so that we can improve our energy cycles and the way we treat the planet. Businesses will essentially have to choose between the morally and financially cheaper, short term options or invest in the future.
There is still a long way to go on our road to decarbonisation. We need sustainable non-food derived biofuels, electric power that isn’t fuelled by coal and investment in hydrogen, which offers faster power response, low noise operation, uses less water and is impossible to cause a polluting spill. We also desperately need to invest in countries that don’t have the capital to evolve in the necessary timescales. Strong initiative and collaboration is urgently needed in order to achieve the goals we have set as minimum requirements in the attempt to slow down the effects of climate change. Concerning new research published in Nature Geoscience from 17 countries, revealed that future global warming may be twice the extent of what current models predict, based on extensive studies of previous warming periods of the Earth. Recent Arctic studies have also raised concerns that increasing warm water boundaries and subsequent mixing of the water column is causing a further increase in Artic ice melt and substantial cracks to form underneath the continent, which threaten devastatingly large proportions of the to break off. Sea level may rise up to 6 meters and we are already seeing the harsh weather effects caused by the relatively small rise we have suffered already, with many of the island member states of the IMO pleading for immediate action as they are watching their homes disappear at an alarming rate.
The traditional timescales of adopting guidance and regulations can and is being addressed with allowances for funding and permits to further encourage the research required to effectively test and develop genuine zero CO2 fuels and provide efficiency improvements. Zero emission transportation can already be achieved, with LNG and biofuels only playing an intermediate role, so a strong focus should be placed on developing cooperation between ship builders, manufacturers, class societies, regulators and researchers, so that we can facilitate new propulsion systems as quickly as possible, as this is undoubtedly the future of the energy market.
By Stephanie Lavelle, Maritime Manager, Chelsea Technologies Group
The views presented hereabove are only those of the author and not necessarily those of SAFETY4SEA and are for information sharing and discussion purposes only.
About Stephanie Lavelle
Stephanie Lavelle is Maritime Manager at Chelsea Technologies Group. She has a Master in Marine Biology and Biological Oceanography and she has a special interest in Marine Biology, Ecology and Science. Before Chelsea Technologies Group she has worked as a Researcher, Business Development Manager, Project Coordinator, and Chief Science Officer.