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New Fuels mainly for Shipping industry in a Circular Economy model

Biofuels, LNG and methanol are the most viable alternative fuels towards decarbonising shipping through to 2030, according to shipowners, charterers and operators in a Lloyd’s List survey.

The findings of the survey confirm that parts of the industry are not ready to invest in alternative fuels or technologies viewed as immature. Regulatory uncertainty around greenhouse gas emissions reductions is also creating further reluctance among companies to invest in these technologies.

Uncertainty around future availability in scale of low- and zero-emission marine fuels has been the main hurdle blocking investment in these technologies, as shipping and industry needs to replace bunker fuel with new fuels to reduce emissions.

More than half of shipowners, charterers and operators identified hull appendages and coatings as the most likely energy-efficiency measures they will use to comply with the IMO’s Carbon Intensity Indicator and Energy Efficiency Existing Ship Index, also called CII and EEXI.

Some 36% of participants also viewed air lubrication systems as a means of complying with these new regulations that came into force at the start of 2023.

Slow steaming and voyage optimisation are methods that more than 70% of participants consider using to increase energy efficiency and reduce emissions.

Experts have been calling on the IMO to amend its carbon intensity regulations and set higher targets to boost alternative methods such as wind assistance, as well as operational measures including slow steaming.

Officials at the IMO said they were planning to address industry concerns around CII rules once the review process is complete by 2026, as the industry has been urging the global shipping regulator to change its metrics and provide necessary exemptions to some segments.

Biofuels, liquefied natural gas and methanol were the three most popular transition fuel choices leading up to 2030 among shipowners, charterers and operators, while hydrogen, nuclear and ammonia topped the list of the most viable fuel choices for 2030 onwards.

Nuclear’s inclusion as a top alternative fuel choice after 2030 was one of the most surprising findings of the survey, as safety concerns and unfamiliarity were thought to keep interest in nuclear as a bunker fuel limited.

Most alternative fuel vessel orders have been placed for LNG and methanol dual-fuel ships in 2023, according to data from classification society DNV.

However, concerns around green methanol supply are still valid, as there is currently no significant production of the fuel. This represents one of the biggest challenges blocking or delaying concrete investment.

Methanol is considered “green” when it is produced by electrolysis of renewable power to become a zero-emission option, while methanol produced from fossil fuels, such as natural gas and coal, is called “grey”.

Grey methanol does not provide meaningful emission reductions compared with fuels available today, including LNG.

Engine producers MAN B&W and Wärtsilä aim to make ammonia engines commercially available in the next couple of years. A successful launch of ammonia engines could kickstart more dual-fuel vessel orders.

More than 85% of shipowners, charterers and operators believe the IMO should be responsible for a carbon pricing mechanism, while views diverged on how this mechanism should be funded, with 36% preferring a fuel levy and 32% choosing a cap-and-trade scheme as the most viable.

The European Union has agreed to include shipping in its Emissions Trading System from 2024. The bloc will earmark around $2bn for shipping-specific projects as part of the Innovation Fund and the Climate Investment Fund.

As the population of the planet grows and societies develop, the problem of managing available resources becomes more and more acute. It is now imperative, worldwide, to make the entire economic activity more sustainable and less wasteful. The transformation of the linear model of production into a circular one is the only solution to limit the use of material resources as well as the production of waste without limiting the process of economic development. This need is today at the center of the policy for sustainable economic development, environmental protection and dealing with the effects of the climate crisis.

Source:Loyds RR

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