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40% by 2030. Parliament will next negotiate with and hydrogen will become increasingly the “real-
member states on what final shape the legislation istic” options further ahead.
takes. New research by classification society DNV
An Aframax tanker could be saddled with an GL agrees that while LNG will play a large role
extra $4,000 per day in costs to meet ETS criteria, in reaching nearer-term goals, cleaner alterna-
investment firm Clarksons Platou Securities has tives will win out in the end. It sees ammonia and
estimated. This figure assumes fuel consump- methanol dominating the market by 2050. But
tion of 40 tonnes per year (tpy), emissions of 3.1 hydrogen is not expected to see much use at all.
tonnes of CO2 per tonne of fuel, and an emis- In its Maritime Forecast to 2050, published
sions certificate price of €30 per tonne. This extra on September 22, DNV GL conceded that it was
cost would be significant for shipowners trading difficult to identify clear winners among the
on the spot market, as overall operating costs for many fuel options shipowners face. However, it
an Aframax carrier are approximately $6,700 per sees fossil fuel-based LNG gaining a significant
day. market share until regulations become stricter in
What is uncertain is whether the ETS will 2030 or 2040. By 2050, e-ammonia, blue ammo-
apply to a whole voyage to the EU or just the part nia and bio-methanol will emerge as the victors.
of it in European waters. Uncertainty about how However, DNV GL said there would be
the emissions trading system will be applied to relatively limited uptake of hydrogen as a ship
shipping has contributed to weaker vessel orders, fuel, because of both the fuel cost and the cost
Clarksons said. of developing engine and fuel systems. But
“A wait-and-see attitude has developed in hydrogen will have a use in producing other
recent years but the Commission’s plans seem carbon-neutral fuels such as e-ammonia, blue
likely to accelerate decision making” on which ammonia and e-methanol.
“The grand challenge of our time is finding
MEPS also want propulsion technologies and fuels are adopted, a pathway towards decarbonisation,” DNV GL
it said.
to see shipowners CEO Knut Orbeck-Nilssen said in a statement.
commit to Future fuels “Reducing GHG emissions is rapidly becom-
ing the defining decision-making factor for the
Shipowners have chosen various ways of meet-
lowering their ing the new IMO requirements. Some have future of the shipping industry. The pressure to
act decisively is mounting. Perfect is the enemy
invested in scrubbers, which strip sulphur parti-
annual CO2 cles from ships’ exhaust smoke, while others have of good, and so we mustn’t wait for an ideal solu-
switched from high-sulphur fuel oil (HSFO) to tion to arrive and risk making no progress at all.”
emissions by at low-sulphur fuel oil (LSFO). This said, “picking the wrong solution can
An alternative is using LNG as fuel, whose lead to a significant competitive disadvantage,”
least 40% by advocates say not only easily clears IMO stand- the report’s authors warned. “Planning for fuel
2030. ards but is also cost-competitive. The fuel emits flexibility could ease the transition and minimise
virtually no SOX or particulate matter, and 85% the risk of investing in stranded assets.”
less NOX than HSFO. It also produces 25% less DNV GL added that the uptake of car-
CO2. bon-neutral fuels will not be possible without
Hydrogen, methanol and ammonia offer a “clear and robust regulatory framework,”
other alternatives, especially when they are pro- which is not yet in place. “To drive the develop-
duced using renewable energy. But they are yet to ment of new technologies, the framework must
be proved as commercially viable, available and ensure global availability of large volumes of
scalable. carbon-neutral fuels; enable their safe use; and
Clarksons sees LNG serving as only a “transi- incentivise their uptake while retaining a lev-
tion fuel” over the next decade, while ammonia el-playing field,” the report said.™

Week 38 25•September•2020 www. NEWSBASE .com P13