Koninklijke Vereniging - Société Royale



Striving for Cleaner Fuels

A major challenge for shipping is the move toward cleaner fuels, underwritten by a compelling alignment between regulatory and commercial drivers.

Last year, the IMO announced MARPOL Annex VI that calls for ships to cap their sulphur emissions at a 0.5% by 1st January, 2020, explained Angus Campbell, corporate director, energy projects, Bernhard Schulte Shipmanagement (BSM).

In addition, European Commission regulation 2015/757, (EU MRV Regulation), which was enacted on 1st July, 2015 calls for ships to report carbon dioxide emissions for their entire voyage from 1st January, 2018.

The MRV regulations will be enforced by Port State Control (PSC) and are phase one in a three-stage process. The second phase is to cap allowable emissions and the third phase is to draw shipping into carbon taxation territory.

This means all shipping companies must submit a monitoring plan outlining the methodologies chosen to monitor and report emissions and other relevant information for all their ships above 5,000 gt entering European ports to an approved verification organisation. The deadline for contracting with and registering an approved verifier was 31 st August, 2017.

In January, 2018 shipping companies must monitor fuel consumption, calculate carbon emissions and other relevant information for each ship on a per voyage and an annual basis in accordance with the approved monitoring plan.

From April, 2019 onwards, each shipping company must submit an audited electronic report on carbon emissions and other relevant information during the 2018 monitoring period for each ship under their responsibility.

This report must have been approved by the accredited verifier for the company. A document of compliance will be issued to acknowledge that the requirements have been followed.

The introduction of MARPOL Annex VI regulating sulfur content will trigger rapid change. The options available to the existing fleet differ significantly from those available to new ships. Viable solutions exist, which will allow the industry to transition towards cleaner fuel choices.

Campbell explained that BSM is developing a solution by promoting the use of LNG as an alternative cleaner fuel for the shipping industry. In conjunction with its partner, Babcock International, BSM has developed a gas supply vessel, (GSV), to provide safe, efficient and environmentally friendly delivery of LNG to ships.

Natural gas is available globally and reserves are predicted to last about 200 years, based on current consumption. The challenge facing the shipping using LNG as a fuel, is the lack of bunkering infrastructure for the cryogenic fuel. However, this is changing rapidly, as major bunkering hubs adapt to the new opportunities that this cleaner fuel will provide.

Investment in new bunkering infrastructure is nothing new and previous evolutionary changes have shown that shipping companies react to the advantages of investing in the right technology and infrastructure to protect business continuity. The operational efficiency gained from utilising cleaner fuels such a LNG improves the bottom-line, Campbell concluded.

Meanwhile, ahead of the LNG Bunkering Summit 2018 to be held in Amsterdam in January, organiser IQPC surveyed over 500 specialists involved in the LNG bunkering supply chain.

Taking the results over three annual surveys, it was found that there was a distinct increase in the number of respondents who thought that in general, LNG bunkering would increase.

For example, in 2016, 68% thought it would increase, for 2017 this figure had risen to 79% and for next year, it had gone up slightly again to 80%. For deepsea vessel, the percentages were 64%, 64% and 69%, respectively, while for the short-sea fleet the 2018 figure was 85%.

As to the question of the current low oil price affecting LNG bunkering expansion plans, in 2016 some 69% agreed, climbing to 83% for this year but interestingly, dropping to 59% in 2018.

The greatest hurdles were seen as initial costs for around 22% of the respondents for 2018, while infrastructure fell from 73%, to 56% to 46% in 2018. LNG pricing went up from 4% in 2016 to 13% in 2018, while funding was only a concern for 4%, having been at 25% in 2016.

Answering the question of what were the most important aspects, regulatory compliance came out on top at 37%, followed by profitability at 31%. Operational efficiency was next at 21%, followed by social esponsibilities at 8%.

Respondents were then asked what would help accelerate growth. Lower costs came out on top at 37%, followed by technological advances at 25%, partnerships 20% and funding at 18%.

As for tankers in the vessel type category, around 14% thought that this type of ship would benefit in 2018, down from 19% in 2017.

Around 49% of the respondents thought that Europe would continue to drive LNG bunkering going forward next year.

IQPC said that these results demonstrated that the LNG market continued to mature and had adjusted well to the continuing low oil price.




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