Although the shipping industry is only at the start of a unprecedented investment program around fleet renewal ($1 trillion of newbuild orders this decade?) and shoreside infrastructure to deal with emissions reduction, this week’s Analysis features extracts from our latest Fuelling Transition series profiling important progress so far in uptake of Alternative Fuels, ESTs, “Eco” engines, scrubbers and port facilities.
In our recent Fuelling Transition update, we argued that environmental pressures were “amplifying” and policy announcements “ramping up” (e.g. IMO agreement on 2030 policies, EU and ETS, Sea Cargo Charter, China carbon net zero by 2060, US re-signing Paris Climate Accord). The timing, technology choice and financing of the investment required to reduce shipping’s GHG emissions (currently includes 800mt and 2.3% of global CO2) however remains a huge hurdle for stakeholders across maritime.
Choosing The Alternatives…
Our table opposite (see 1&2) shows alternative fuels are gaining traction (3.5% of the fleet, 27% of the orderbook by tonnage), albeit there remain pros and cons to each option (see Fuelling Transition). Outside of LNG carriers, we are now tracking 227 (15.1m GT) confirmed LNG fuel capable newbuilding orders, above the 202 in the trading fleet. LNG fuel uptake by segment is lead by Tankers (34 in the fleet plus 72 newbuild orders), Ferry (50 plus 24), Containerships (11 plus 30), Offshore (32 plus 19) and Cruise (7 plus 28). LPG as a fuel is gaining good traction within the LPG carrier fleet (1 in fleet, 37 newbuild orders plus 11 pending retrofits). There are also projects involving Biofuel (23 in the fleet plus 7 newbuildings, excluding recent trials of vessels using biofuel blends), Methanol (12 plus 11), Ethane (7 plus 13), Hydrogen (3 newbuilds) and Battery Hybrid (141 plus 109). For detailed data see World Fleet Register (we are also tracking >650 alternative fuelled newbuilds for inland water trading) and Shipping Intelligence Network (we have integrated new data across the vessel listings).
LNG’s case as a legitimate “stepping stone” to meet emissions targets is supported by port facility investment (see 6): we now record 124 ports with LNG bunkering facilities (up from 114 at the start of the year and forecast at 170 by 2022) and also project that the LNG bunkering fleet will double in size in the next two years. We are also monitoring other port facility upgrades (e.g. onshore power).
Newbuild Or Retro?
We are also tracking increases in EST uptake (see 3 for a selection of technologies). Many of these will certainly help with the IMO “short term measures” from 2023 and also contribute to the fleet renewal decision making process, especially around the relatively young, non “eco” cohort of tonnage built in the 2008-12 shipbuilding production peak.
Perhaps another “amplifying” trend to monitor will be further earnings and value “tiering” of fleets. Some of this has already started with 24% of the current fleet by tonnage already “eco” electronic main engine (see 5) and 20% of the fleet already scrubber fitted (see 4). But as fleet renewal continues and polices evolve there is much more to come. While the shipping industry is just starting an unprecedented investment and fleet renewal program, our aim is to track progress as stakeholders grapple with tricky but important investment choices ahead.
The author of this feature article is Stephen Gordon. Any views or opinions presented are solely those of the author and do not necessarily represent those of the Clarksons group.