This just in: The latest radar gun reading for maritime shipping’s energy transition voyage: dead slow.
Dead slow but not full stop, because the voyage continues despite the navigation challenges ahead. These are, after all, uncharted waters, and, as DNV’s Maritime CEO Knut Ørbeck-Nilssen points out, “Progress isn’t linear.”
Yes, anything but – especially in the complex and competitive world of ocean carriers. Ørbeck-Nilssen’s maritime industry risk management company’s ninth energy transition outlook 2050 update details that complexity.
However, it also maps out some of that non-linear progress in a business that contributes 3% of the world’s greenhouse gas emissions while hauling more than 80% of global trade by volume.
Ørbeck-Nilssen’s foreword to DNV’s latest maritime energy transition outlook optimistically notes that innovation, collaboration and purpose are driving shipping’s energy transformation.
Regulation will be another fundamental driver. But policing regulation locally and regionally is complicated enough; instituting it internationally elevates it to world-class complexity.
That’s not deterring the International Maritime Organization (IMO). It has approved, in principle, what Ørbeck-Nilssen says is the first global pricing mechanism for greenhouse gas (GHG) emissions: the Net-Zero Framework (NZF) for shipping.
Set to be adopted in October, the NZF is a key lever in the IMO’s push for a 20% ocean carrier emissions reduction by 2030 compared with 2008 levels en route to net-zero emissions by or around 2050.
The math for the NZF’s GHG fuel intensity (GFI) and well-to-tank (WtT) fossil fuel values calculation is too inside-baseball for discussion here, but any pitch to set a global price on pollution and establish a framework for a fuel’s annual well-to-wake emissions is complex – operationally and politically.
For example, how will the estimated US$10 billion to US$15 billion IMO fund generated from NZF be allocated to initiatives such as developing and deploying new technology to accelerate shipping’s energy transition and the training needed for the 33,000 seafarers who will crew aboard alternative-fuelled ships?
Still, as Ørbeck-Nilssen rightly notes, a consistent agreed-upon calculation is “essential to ensure that those who are making real strides towards emissions reductions today are rewarded and not penalized.”
Any market for low-emissions and emissions-free fuel requires a credible, harmonized system. Without it, shipping’s dead-slow progress to a lower-emissions future will simply be dead.
The good news for B.C. and the rest of natural gas-rich Canada is that liquefied natural gas (LNG) is helping lead the way in what little progress is being made in shipping’s net-zero voyage.
In the containership category, for example, 359 dual-fuel LNG vessels have been ordered in 2025, which, according to DNV, is 171 more than were ordered last year
The IMO, however, is not big on LNG.
Ørbeck-Nilssen has criticized the many IMO roadblocks that make “the LNG pathway less attractive,” even though approximately 600 ships sailing today have dual-fuel LNG engines, and another 700 on order will have that technology.
“And it’s so important that we keep all the pathways to decarbonize shipping open,” Ørbeck-Nilssen said, “and LNG is one of those pathways.”
During the September 16 launch of DNV’s report, IMO Secretary-General Arsenio Dominguez conceded that LNG is a viable bridge fuel to decarbonization, but he told Ørbeck-Nilssen that LNG “is still a carbon-based fuel … [and] the negative emissions from LNG have to be addressed.”
B.C. is also home to Canada’s first ship-to-ship liquefied natural gas [LNG] bunkering service. Seaspan Energy launched it in January. Its Seaspan Marine fleet currently has three LNG refuelling vessels. As Seaspan Energy president Harly Penner said following the launch of the service, it “marks the introduction of a low-carbon fuel alternative from the Port of Vancouver and beyond.”
Availability of that alternative is fundamental to accelerating shipping’s energy transition.
After all, it is not the only transportation sector seeking cleaner energy options, and its energy appetite is huge.
Ørbeck-Nilssen estimates that to hit its 2030 20% emissions reduction target, the maritime shipping sector will need between one-quarter and one-third of the projected global supply of low-GHG fuels.
The DNV report notes that 1,539 ships in operation today can run on LNG options (bio-LNG or e-LNG). Encouragingly, 51.1% of new ship orders include dual-fuel technology. That is up marginally from last year’s 49.5%. Most of those dual-fuel orders are in the containership category, which, along with large tankers and bulk carriers, accounts for 50% of the world fleet’s emissions.
According to DNV numbers, while three-quarters of the orders for new containerships have dual-fuel technology, only one in five orders for new tankers and only one in 20 orders for large bulk cargo carriers will be dual-fuel capable. [See DNV Maritime Forecast to 2050 report graphic for percentage of the global shipping fleet outfitted with alternative fuel technology.]
Progress, yes, but minimal at best. Investment in new technology in a business where the average working life of a US$150 million containership is around 25 years is understandably conservative.
So, it is not surprising that, measured by gross tonnage, only 8.9% of commercial ships on the water today can use propulsion fuels other than heavy marine fuel oil.
Cost, as always, is a key consideration.
According to Eirik Ovrum, Lead Author, Principal Consultant, Environment Advisory, DNV, the IMO’s NZF will double fuel costs by 2036.
The current estimated annual cost to decarbonize maritime shipping ranges between US$8 billion and US$28 billion. If you throw in bunkering and other infrastructure needed to support that energy transition, you’d get closer to US$90 billion. Overall, the bill for reaching the IMO's 2050 zero-emission shipping destination is estimated at US$1.6 trillion.
However, higher shipping costs are here to stay, regardless of decarbonization investments.
Andy Dacy, the global head of J.P. Morgan Asset Management’s Transportation Group, pointed out during a DNV panel discussion that current charter rates are based in large part on the 80% of the global shipping fleet that was built before the pandemic at far lower costs than ships being built today.
Those rates, he said, are not financially sustainable, especially considering the investments needed for decarbonization.
“And it’ll take some time for the percentage of the fleet to reflect these higher costs [for] decarbonizing vessels that we’re all trying to focus on today. So that gap, just from a pure economic perspective, is something that I struggle with in terms of, how do you spend the money on all these different things that are so important when the charter rate market is still pricing off ships that were built in 2015?”
Shipping also has no direct route to zero emissions, nor can it tap any one technology to get there.
No silver bullet, as Ørbeck-Nilssen points out.
Alternative fuels are one piece of the puzzle. Others include harnessing wind power, electrifying port shore power and improving operational efficiencies with digital technology and ship design.
DNV has also floated the idea of establishing carbon capture corridors.
According to Ovrum’s calculations, 600 tankers operating with carbon capture technologies delivering carbon to as few as 20 major ports outfitted with CO2 receiving infrastructure “could reduce emissions from large bulker tankers and container ships by 19%, which would be the same as reducing the world's fleet emissions by 9%.”
DNV’s Maritime Forecast to 2050 report emphasized the need for a multi-pronged approach to decarbonizing the global shipping industry.
“There are many obstacles on the road to decarbonization,” Ørbeck-Nilssen said, “but I think we should approach this road with pragmatism. It’s difficult to find the perfect solution. … For some, biofuel makes the best sense; for others, LNG is the best choice. Others are exploring ammonia, hydrogen, batteries or other solutions. We need everything.”
Dacy added that, regardless of the monumental challenges, shipping needs to maintain its decarbonization course.
“As I said, there are going to be moments of two steps forward and one step back. I think the story is far from over here.… But should we be doing it? Yes, but let's buckle down because this is going to be a stormy journey.”
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