'Massive' financial support, uniform standards critical for shipping to meet net-zero goals

Half a decade into the energy transition, accelerating the shipping sector's shift toward alternative fuels and achieving net-zero emission goals still require "massive" financial support, standardization of rules and adoption of new technologies, industry experts said at the Asia Pacific Maritime conference in Singapore in the week ended March 15.

"To get us there, we need an open mind to understand that the shipping industry is very complex, and that there is no single fuel solution and risk mitigation framework that would work for everyone," the Sustainable Shipping Initiative Head of Decarbonization Andreea Miu said.

"We got a clear signal for change from the International Maritime Organization last year."

At a key IMO meeting in 2023, member states adopted a revised greenhouse gases strategy, comprising enhanced reduction targets.

"So, now we need the policy instruments to get us there, we need clarity on what the rules are likely to be and how they are going to impact the industry," Miu said. "Last but not the least, we also need collaboration and transparency."

Currently, the shipping industry has no uniform standards in manufacturing electric marine vessels, though the Maritime and Port Authority of Singapore is working in that direction, said Jan-Viggo Johansen, managing director, MarinEV, Yinson GreenTech. Yinson is among the first manufacturers of electric vessels in the city and is expected to start mass production in Malaysia-Singapore later this year.

Johansen emphasized on increasing the use of new technologies including data driven decision making to step up decarbonization efforts.

Market participants at the conference said that although electrification reduces emissions and also operational costs by 50%, it was more efficient for smaller ships such as barges, tugboats, and ferries, with Singapore alone having 1,600 harbor craft vessels. But for bigger commercial ships, alternative fuels need to be tested in a big way, that would involve investments of billions of dollars spread over several years, they said.

Greater flexibility is required in the use of dual fuels in vessels if the targets to reduce carbon emissions have to be achieved, said Torben Norgaard, head of energy and fuels, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping.

"We also need to establish a business model that allows for much quicker access through the value chain to allocate the risk all the way from the upstream fuel producers down to the end-users," Norgaard said.

A study released by Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping in December said that "enabling investments that reduce energy consumption could toward 2030 result in fuel production cost savings that are up to a factor 10 higher than the cost of implementing energy efficiency."

A lot of the energy transition initiatives require building infrastructure, such as for bunkering with alternative fuels, said Sanjay C Kuttan, chief technology officer at the Global Center for Maritime Decarbonization.

Investors must accept that favorable rates of return will not come immediately, reflecting structural issues, he said.

"If you put, for example, an ammonia bunkering vessel in a port, you are not going to be bunkering 100 ships on day one, you're going to be bunkering one or two ships. So, how does the company get their return on investment on the first of its kind vessel?" Kuttan said.

He said it was imperative to look beyond the return on investments and looks at the return on environment too.

Building many vessels with advanced technologies calls for more investments for long-term benefits said Johansen.

It is crucial for ports to keep pace with the manufacturing of alternative fuels and provide greater support to bunkering, berthing and anchoring of ships using them, said Hari Subramaniam, chairperson of the Nautical Institute.

Singapore leaps ahead

Singapore is the fifth largest shipping registry globally with over 100 million gross tonnage and the world's largest bunkering hub with marine sales volumes in 2023 hitting about 52 million mt. It is also among the world's largest transshipment hubs.

The city-state is adopting a multifuel approach so that standardized procedures are available for bunkering with ammonia and methanol, among others, said Kenneth Lim, Maritime and Port Authority of Singapore assistant chief executive, industry and transformation.

In March, the MPA said Singapore conducted the world's first marine fuel use of ammonia with diesel for combustion. This followed the MPA in 2023 completing the world's first ship-to-container ship methanol bunkering operation.

Singapore has set up green corridors with Rotterdam, Australian and Japanese ports and the Long Beach port near Los Angeles to test the best practices relating to the entire supply chain of alternative fuels, from bunkering to safety standards to port clearances and beyond, Lim said.

The MPA is also working with various maritime stakeholders including classification societies, shipowners, operators and insurers to expedite and disseminate knowledge sharing for the energy transition, while also ensuring that domestic infrastructure is ready for various alternative fuels including biofuels and for electric harbor crafts, Lim said.

Green corridors are a good testing ground for alternative fuels and technologies because they provide an opportunity to the seafarers and port community at large to accelerate the energy transition, Miu said.