International Maritime

Energy efficiency , new fuels only route to 2030 goals : engine maker

Renewable fuel must make up 2 % of the mix in 2025 , 6 % in 2030 , 31 % in 2040 and 80 % by 2050 . Shutterstock . com

By Greg Knowler

COPENHAGEN , DENMARK — There is no way to reach shipping ’ s 2030 decarbonization targets without improving the energy consumption of vessels , while the longer-term CO2 reduction goals for 2040 and 2050 will only be achieved by using new fuels , according to an executive with engine maker MAN Energy Solutions .

Bjarne Foldager , head of two-stoke business at MAN , told the Decarbonizing Shipping conference in mid-May that once the International Maritime Organization ’ s ( IMO ) fuel standard is in place in 2027 , shipowners will have just four years to reduce vessel energy consumption by up to 40 %.

“ Demand for renewable fuels will be rising because the targets are constantly increasing .”

“ That is a huge task ,” he said . “ If we look at all the ships that are built today and even if we assume that 100 % delivered between now and 2030 will be powered by carbon-neutral fuel , and we assume that the fuel will be available , we still cannot achieve the 2030 target . It is simply not possible . “ Even if we retrofit thousands of ships , it will still not reach the 40 % reduction average required for every ship by 2030 ,” Foldager added . “ The only way we can achieve the 2030 target is by energy efficiency and energy savings .”

The IMO last July updated its emissions targets , with the global shipping industry now aiming for a 20 % to 30 % reduction in greenhouse gas ( GHG ) emissions by 2030 , 70 % to 80 % by 2040 and 100 % by 2050 .

But Foldager said the 2030 target of a minimum 20 % reduction in GHG emissions was set against a 2008 baseline , noting that the global fleet has doubled since then and will continue to grow .

“ So , in reality , we have 40,000 ships that by 2030 must reduce their baseline emissions on average by 40 %,” he said . From Jan . 1 , 2023 , it became mandatory for all ships to calculate their attained Energy Efficiency Existing Ship Index ( EEXI ) to measure their energy efficiency and to initiate the collection of data for the reporting of their annual operational carbon intensity indicator ( CII ) and CII rating .

The EEXI and CII were part of an amendment to the IMO ’ s International Convention for the Prevention of Pollution from Ships ( MARPOL ) Annex VI that entered into force on Nov . 1 , 2022 , to address the energy efficiency of shipping in the short term and reduce GHGs .

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Ships will be rated from A to E according to their energy efficiency , with A being the highest rating . A ship rated D or E for three consecutive years will be required to submit a corrective action plan to show how the required index of C or above would be achieved .

The view from carriers and analysts is that the CII regulation will accelerate the scrapping of older vessels and the fleet renewal plans of container shipping .

Data from shipping association BIMCO shows that compared with the 1990s , more than double the deadweight capacity was built during the 2000s , which is where most of the recycled capacity will come from in the next few years . Capacity built during the 2010s increased by a further 65 %, which could lead to even higher levels of recycling , but only in 10 to 20 years from now .

Adding financial pressure on shipping to rapidly decarbonize is the FuelEU Martitime regulation that will be imposed Jan . 1 , 2025 , designed to increase the share of renewable and low-carbon fuels of international maritime transport in the EU .

Nina Porst , executive director of maritime association Danish Shipping , told the conference the regulation will set concrete targets for GHG intensity in a ship ’ s fuel mix .

“ We know that demand for renewable fuels will be rising because the targets are constantly increasing ,” she said . In 2025 , the amount of renewable fuel required to be in the fuel mix is 2 %, rising to 6 % in 2030 , 31 % in 2040 and 80 % by 2050 .

Porst said the Emissions Trading System would also make it steadily more expensive for shipping to use fossil fuels , helping to accelerate the transition to net-zero fuels . But Foldager was not convinced , pointing out that although the regulations were aimed at increasing the price of conventional oil , the price spread would remain too wide for there to be any urgency in carrier efforts to boost their energy efficiency in the short term .

“ It is a problem that fuel is only $ 650 per ton today ,” he said . “ The payback calculation on using all kinds of different technologies to reduce fuel consumption at $ 650 per ton is simply too long . It can be up to 10 years and the contracts in the shipping industry do not cater for that .

“ If fuel prices were $ 2,500 per ton , then you would see some real energy efficiency and the whole value chain would find a way to reduce consumption ,” he added .

email : greg . knowler @ spglobal . com

June 17 , 2024 | Journal of Commerce 17