The race to decarbonization is gathering pace, with a plethora of impending regulations presenting an opportunity to the industry to work towards a common denominator, but there is no room for complacency as more needs to be done to overcome the hurdles, industry experts said at a DNV webinar.
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In 2019, only 6% of the new building orders were with alternative fuels, Cristina Saenz de Santa Maria, regional manager Southeast Asia, Pacific & India, Maritime, DNV, said Jan. 25, adding that this figure jumped to 12% in 2020.
"Now it is even higher. So hopefully, we are growing, and the growth is exponential and not linear, and we will get there," she said.
BHP as an organization has led the way in creating LNG-fueled Newcastlemaxes, with the first of its five 209,000 dwt bulkers set to arrive in Singapore on Feb. 7, Rashpal Bhatti, BHP vice president Maritime & Supply Chain Excellence, said.
"We know we have a fuel [LNG] that delivers 30%-40% abatement, we know that from a cost perspective we can match or beat VLFSO, yet VLFSO vessels are still being ordered," he said.
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"So that tells you from a mindset point of view, there are those people that are waiting for a silver bullet," he said. "Our view is that you don't look past good to wait for perfection and LNG is the good solution that's here today."
In addition to LNG, BHP, which is also a founding member of the Global Centre for Maritime Decarbonization, is exploring other fuel choices too.
"I see very clearly on our roadmap, we will have LNG vessels, we will probably have some kind of biofuels, we will probably be looking at vessels where we try ammonia, we try hydrogen," Bhatti said.
GCMD on Jan. 26 said it was advancing with an ammonia bunkering safety study, set to commence in February and expected to take 10 to 12 months to complete.
Regulations: opportunity or burden?
Regulations are important and do not pose a burden, Johan Munir global director, Corporate Strategy & Planning at AET, said. Munir said he was "cautiously optimistic" about the industry's progress so far.
"The momentum is there... we need to make sure that the momentum goes forward rather than stay as it is," Munir said, adding that if he was to put a number on shipping's decarbonization progress, "I think we might be about 25%-30% [there]."
"A roadblock is our [industry's] mental mindset and our fear as shipowners because there is an uncertainty creating an idea of let's wait, let's wait for the perfect solution and I think that is wrong," he said.
"The right thing to do right now is to invest in technology," he said.
DNV's de Santa Maria said regulatory certainty was imperative as was greater industry collaboration to hasten maritime decarbonization.
"We're certainly talking about cross-sector and the global shipping industry. That's not an easy task," she said, adding that a "lot" of public-private investment and large-scale testing of these new fuels was needed to ensure they are safe to use.
Bhatti said regulations should be viewed as an opportunity rather than a threat because they create a common denominator and platform for people to work towards.
But innovation was set to drive regulations rather than regulations steering outcomes, Bhatti said.
BHP is tackling the impending regulations at three levels -- embracing zero carbon fuels of the future, establishing innovation as a pillar and leveraging its chartering position, he said.
As far as innovation is concerned, BHP sees rotor sails on its vessels, hull coatings and drop-in biofuels as aids for carbon abatement.
"So that innovation work is happening now and not in the future, and it is not dependent on anything," Bhatti said.
When it comes to chartering, people think that from the abatement perspective the only lever is to slow down vessels but that is not true, he said.
A vital part of this exercise is how one can influence vessel owners and other industry stakeholders to get the best data on what a vessel is actually delivering from a fuel perspective, bringing that data back to the chartering team and encouraging them to ensure that not only the safest and the lowest cost vessel but also the highest abating vessel comes into the supply chain. There is also a need to reward that behavior and those people in the ecosystem who make it happen, Bhatti said.
"We should be positive about it [the decarbonization journey]. I think the momentum is very good," Bhatti said, adding that there was no scope for lethargy as the industry moved from a "homogenous to a heterogenous world" with multiple fuel solutions and outcomes.