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Realistic, pragmatic, or jaded? Splash readers are a funny bunch. Despite the huge amount of articles and columns carried every week on decarbonisation, 49% of respondents to our survey for this magazine reckon that the majority of the global fleet come 2035 will still be using traditional bunker fuel.
Arguably no single facet will shape what ships look like in 2035 more than fuel, so one in two readers are inferring vessels will not have changed much in appearance 10 years from now, even if recent regulations do genuinely mean ships using traditional bunker fuel will be charged a lot more to move cargoes by 2035.
Shipping’s long path to decarbonise received a kick earlier this year when member states of the International Maritime Organization agreed on a so-called Net Zero Framework.
From 2028, when the measures will come into effect, use of very low sulphur fuel oil and compliance via the purchase of so-called remedial units – essentially carbon credits – could lead to costs of $2,500 a day for a non-eco capesize, rising to $15,000 a day by 2035 as standards tighten, according to calculations from Clarksons Research.
We do not envision a one-size-fits-all fuel
British consultancy Maritime Strategies International (MSI) has also given an early indication of the impact that the Net Zero Framework will have on the bunker market.
By extending the annual fuel consumption estimates calculated for 2024 through to 2035, and applying MSI’s forecasts for bunker prices, it is possible to project the future fuel costs for conventionally-fuelled ships alongside the projected IMO penalties. By this approach, the IMO’s penalties would be equivalent to an 82% premium on top of the fleet bunker costs by 2035 – almost $100bn for the 30,000 ships tracked in MSI’s database.
From another perspective, this also highlights the opportunity for the shipping bunker market – an annual pot directed towards drop-in biofuels and low carbon alternatives that could rise to $100bn per year within the next decade.
Eman Abdalla, global operations and supply chain director at Cargill Ocean Transportation, says of the IMO’s new green rules, “There isn’t necessarily a well-defined business case for anybody to go and immediately order ships for specific zero-carbon fuels, but at least it has definitely planted the right seeds so that we can start ordering dual fuel vessels or dual fuel capable vessels.”
Data from Clarksons Research shows that less than 8% of the global merchant fleet in gt terms today is alternative fuel capable, although more than half of all ships on order will be able to use alternative fuels, a quintupling over the past decade. However, it is important to note that most dual-fuel ships coming out of yards today tend to use traditional bunker fuel most of the time.
“I don’t think anybody, including myself, has that crystal ball to say, OK, which zero-carbon fuel is going to be the answer,” Abdalla admits.
Putting his own spin on the Net Zero Framework, Splash columnist Pierre Aury has some inconvenient truths for shipping, which he shares with readers.
“There is simply no solution deployable at scale which can produce a carbon-neutral, whatever that means, shipping industry within a time frame consistent with preventing global warming turning from a runaway train to a slow-motion train wreck,” he says, adding: “We will not be able to power any meaningful number of ships with either kites, sails, batteries, biofuel, hydrogen or nuclear fuel quickly enough so, whatever its level and its formula, the new fuel levy will only lead to more expensive freight and not to actual decarbonisation. This extra cost will drive some marginal efficiency improvements, which by the way will probably be offset by the growth of the fleet.”
The new fuel levy will only lead to more expensive freight and not to actual decarbonisation
Dr Kanghyun Song, who heads up decarbonisation for the Korean Register, tells Splash: “We believe that the era of multi-fuel usage in shipping will persist for quite some time.”
“While a few leading fuel-types will likely garner wider uptake we do not envision a one-size-fits-all fuel,” agrees Bjorn Hojgaard, the CEO of Anglo-Eastern, the world’s largest shipmanager. “There will still be a need to consider wider alternatives taking into account available resources and risk mitigation through diversification.”
Factors affecting relevant fuel choice according to Hojgaard will include route distance, port infrastructure, ship size, ship type and regulations that may also differ region to region.
Depending on vessel type and trading routes, LNG, methanol, and biofuels will likely be the main initial options, KR’s Song reckons. Once the production of green ammonia begins in earnest, ammonia is also tipped by Song to be adopted more widely.
“For existing vessels, biofuels may be the only viable alternative, but they will face a severe supply shortage due to limited production,” Song adds.
The key factor determining the production of green fuels is the availability of clean energy sources, which means that the generation of renewable power—such as wind and solar—will be critical. Song says countries with strong potential for wind and solar power—such as the US, China, Australia, and those in the Middle East—are expected to become major production hubs.
The era of multi-fuel usage in shipping will persist for quite some time
Other countries such as India, Colombia, Chile, and Egypt are also emerging as potential hubs for green fuel production, according to Prakash Chandra, a director at Fleet Management. “Their efforts will be vital in creating a robust infrastructure,” he says.
Nuclear power is also under consideration, KR’s Song says, but he warns there are still too many issues to resolve before it can be applied to commercial shipping, making near-term adoption unlikely.
In terms of what will the fuel infrastructure will look like come 2035, Vikas Pandey, founder and CEO of ShipFinex, a ship finance specialist, reckons we will see a hybrid network of retrofitted terminals, floating energy storage units, and AI-optimised fuel distribution networks powered by real-time data analytics.
Concluding, Nick Brown, the CEO of Lloyd’s Register, tells Splash: “The next decade will determine the shape of the industry’s long-term sustainability, demanding not just technological advancements but also greater investment in seafarers and human capital, which remain fundamental to creating the long-term change we need.”
To access the whole of Ship Concept 2035 for free online, click here.
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