The energy transition needs to be profitable now, as well as in the decades to come, writes Mathieu Philippe, Marine Marketing & Sales Director at Bureau Veritas
Looking at the current challenges shipping faces, we think there needs to be much more focus on total sustainability – social, environmental and commercial sustainability. We need to find solutions that provide net benefits to people and the planet and, crucially, deliver the profits that businesses need to survive and perform. Shipowners need more confidence that ships they might order soon will not be underperforming assets before their time while recognising that there’s probably no such thing as a future-proof asset.
The challenges of decarbonisation and the energy transition have split the industry into sometimes opposing camps and polarised views. The role of LNG as fuel in the energy transition has been a good example—likewise opinions on nuclear energy. As a classification society, our role is to help clients and stakeholder make the best commercial and operational decisions based on our insight and verification of solutions for safety requirements and potential risks involved. We do not need to be either ‘for’ or ‘against’ any fuel, and we remain fully neutral. Our job is to anticipate and address risk.
There are no sustainable zero-carbon solutions available for deep-sea shipping today. We are working on them, as many are. BV has developed ammonia rules, methanol rules, hydrogen rules and rules for wind-assisted propulsion. We have projects underway for fuel cells. Batteries with our guidance are making progress for short sea applications and will become more relevant and standard for port operations. We may have to update our nuclear rules as technology evolves, and perceptions of risks and benefits evolve.
The future’s coming. Nothing will stop it. The question, really, is when? And how much will it cost?
In the meantime, to keep the world spinning, cargoes need to move. More cargoes will mean more ships and with a record low order book and an ageing fleet, at some point soon it seems likely we will see waves of new orders. For now, and for the immediate future – say a decade at least, new ships will be powered by conventional if evolving, internal combustion systems fuelled by either distillates, ULSFO, scrubbed heavy fuel oil or LNG.
So, if that’s going to be the case for some time, we need to focus on using a lot less fuel per cargo tonne mile to make progress in reducing our net GHG impact. Even when new e-fuels arrive, issues of energy density, the significant extra space requirements for onboard bunker storage and, of course, their likely cost and market competition to secure them, means that there will be a continued need to reduce the consumption related to actual work.
This means for a sustainable industry that a real concerted transition to creating new ship designs is vital – whatever propulsion systems are being used. And this is pretty exciting for our people and the experts we have in all disciplines. It’s less of a question of a rebirth for shipping than a need to evolve and do so faster by developing next-generation designs. We also need to be prepared for surprises and changes in direction, have the necessary agility to respond to new technology and be ready for new, unanticipated, challenges. Much will change in 10 years. Look what Covid-19 has done in months. So, 20 or 30 years ahead is well beyond the remit of planners. As commentators say, we only saw an iPhone in 2007 and who had any idea to what extent these connected devices would help dominate our lives quickly. What will be the impact of future technologies?
Additionally, a sustainable industry means we have to be ready to address some more holistic issues as well – underwater noise is a good example, and we can also see that over-water noise, in ports, is a problem seeking solutions.
Sustainability will also be about knowing and supporting your customer in a more transparent world as much as just being compliant. The development of standards is likely to be uneven. Different markets will require different standards. This is true today but will likely increase driven by local regulations, customer demand and initiatives such as the Poseidon Principles and Sea Cargo Charter.
But sustainability also means taking care of the people onboard our ships. The pandemic has shown that the industry was unable to protect its seafarers. This has demonstrated how weak we are on the world stage. A more sustainable industry needs to take care of its people to help secure its future. We need to address this. And one of the implications of this relative powerlessness of shipping – despite its continued and vital importance, is that it is unlikely that we will see shipping as a pioneer in securing access to sustainable e-fuels at sustainable prices ahead of, or even at the same time, as other stakeholders. At best shipping will transform and decarbonise at the same pace as the rest of society and industry.
As ever, the bottom line in all of this is the bottom line. The ships that shipowners order and operate need to generate a margin, a sustainable margin, to keep the world working. It’s going to take lots of incremental steps and a lot of work. New and more efficient ship designs and a focus on performance across supply chains will make a huge difference. Class will play a vital role in this process, reducing risk to maximise opportunity.