BIMCO: Container Lines Are Leading the Way With Alternative Fuels
Shipowners are investing in alternative fuel propulsion, but the availability of green and blue fuels will determine whether the IMO's 2030 carbon goals are achieved, according to BIMCO.
The shipping association's latest forecast for green-power uptake has a positive outlook on alternative-capable and alternative-ready newbuild orders, especially in the container segment. About two percent of the global fleet by deadweight can burn alternative fuels. Another four percent of all tonnage is designed to be "ready" for less-impactful fuels. The most popular of these "alternatives" is fossil-based LNG, which reduces onboard CO2 emissions by 20 percent. As a general rule, these alternative-capable vessels are "dual-fuel" and can also burn bunker fuel when desired.
Two percent is a starting point, and it is expected to rise, according to BIMCO. 42 percent of the deadweight capacity on order will be delivered "prepared or readied" for lower-carbon alternatives, including LNG, according to BIMCO chief analyst Niels Rasmussen.
"Even if no existing ships are recycled, four percent of the fleet’s deadweight capacity will be prepared to burn alternative fuels once all the ships in the order book have been delivered in 2028. And another four percent will be readied for retrofit,” says Rasmussen.
That share should increase as older tonnage gets scrapped, BIMCO said. The ships headed for demolition will be fuel-oil dependent, so alternative-fueled newbuilds will have a larger effect on the total.
Boxship owners are leading the charge. Ocean carriers made a fortune during the pandemic and have plowed considerable sums into newbuild orders. Those ships are delivering over the next few years, and 55 percent of them are ready or prepared for alternative fuels. There is enough tonnage in that pipeline to boost the container fleet's alternative-fuel share to 23 percent (after all current orders are delivered). This outweighs the tanker and dry bulk fleets by a wide margin.
While LNG is the most popular alternative, there are questions about its green credentials, and other options - primarily methanol and ammonia - are also gaining traction. The real question will be availability.
"Whether enough blue and green fuels will be available for shipping in 2030 has remained a question but with COP28's call for a tripling of renewable energy capacity by 2030, it now appears more likely that sufficient green and blue fuels can be produced to allow shipping to meet the 2030 targets," Rasmussen said.
The COP28 target is a stretch goal: it would raise renewable energy capacity to 11,000 GW worldwide by the end of the decade, about 2,000 GW more than currently projected. According to think tank Ember, this would take an industry-wide growth rate of 17 percent every year for the next six years. The IEA puts the cost at about $1.2 trillion per year.