The adoption of alternative fuels and energy efficient technologies will likely become more critical under an increasingly stringent regulatory landscape. In its latest outlook, ABS explores the latest order book trends for alternative fuels.
The maritime industry faces the challenge of how to manage the competing demands of rising energy consumption to meet increasing consumer demand and regulatory pressures to minimise and ultimately achieve net-zero carbon emissions.
Alternative fuels are a crucial component for solving this puzzle. But as the industry attempts to pick winners from the raft of potential alternative fuel options, it is increasingly clear that it is the availability and scalability of fuel production that will be the decisive factor in their uptake.
Economics need to become favourable
This year’s Outlook by ABS, titled “Beyond the Horizon: Carbon Neutral Pathways and Transformational Technologies”, explores the carbon-neutral fuel pathways and the transformational technologies that will support the maritime industry’s challenging journey to 2050. The publication highlights the pivotal role alternative fuels and energy efficiency technologies play in reaching 2050 while also highlighting the need to consider more novel technologies such as carbon capture.
Achieving net-zero emissions by 2050 requires that the economics of using green fuels and carbon capture technologies become favourable well before 2050, through a combination of progressive cost reduction and a carbon price/tax high enough to transition all liquefied natural gas (LNG), ammonia and methanol production to renewable fuels.
Fuel flexibility dominant trend
The general uncertainty in the industry over fuel availability ensures that the need for fuel flexibility will be the dominant trend for the foreseeable future, as operators look to hedge against geo-politically driven price volatility and patchy global bunkering arrangements.
Dual-fuel ships represent 27 per cent of the number of vessels currently on order or about half (49 per cent) of the order book by gross tonnage (GT). This will increase as the available fuel mix widens this year, with methanol retrofit trials beginning in earnest and ammonia engines becoming available early next year.
As a powerful combination of regulation, technology, geopolitics and shifting global supply and demand patterns shake up the landscape of international trade and shipping, ABS is continuing to focus on the safety consequences of the energy transition. Whatever the emissions-lowering potential of alternative fuels, it is safety in their transport, handling and consumption that will be the hallmark of a truly sustainable industry.
Order book highlights
When it comes to the current order book, ABS gives the following highlights per fuel type:
- Methanol shows a remarkable increase to 203 vessels from just thirty, with significant uptake in container ships and a new introduction to bulkers and tankers.
- Ammonia usage sees an increase and the e-ammonia pathway has the potential to reach carbon net zero as a long-term decarbonisation option.
- Sustainable biofuels are deemed as short- and mid-term options for the existing fleet, the challenge is how closely the supply of biofuels can meet the demand.
- LNG usage is set to increase significantly in the order book with 837 new vessels. There is a substantial increase in container ships adopting LNG, likely due to lower emissions compared to traditional fuels.
- LPG, ethane and hydrogen show moderate increases. LPG sees a slight decrease, while ethane remains specialised. Hydrogen sees a small uptick, reflecting its potential future growth as technology and infrastructure mature.
- Battery-powered vessels remain consistent, indicating steady, but not explosive growth. This may reflect ongoing developments in battery technology, which might not yet be ready for mainstream large-scale adoption.
The full report can be downloaded here.
