In an interview with Maritime Fairtrade, Rostom Merzouki, director, global gas development, American Bureau of Shipping (ABS), said although biofuels are the future of decarbonization, there are risks and complications, which still affect trends and supply chains which come in conflict with rapid growth.

Rostom Merzouki, director, global gas development, ABS. Photo credit: ABS

What are your thoughts on biofuels, and Fatty Acid Methyl Esters (FAME), readily available but unstable? 

Biofuels are the easiest way for existing vessels to reduce their emissions using alternative fuels in a stepped manner without having to go through expensive modifications. Blends B10 and B20, using 10 percent and 20 percent of biodiesel respectively, are already available in the market. Engines using these blends do not require any modification, although higher concentrations will require modification of the engine and fuel supply system. 

Using biofuels onboard sea-going vessels will require new operational procedures for bunkering and storage. In essence, co-mingling is to be avoided, biodiesel temperature should be kept above 30 deg Celsius, and storage longer than six months should be avoided. 

Regarding FAME, these are the first-generation biofuels. Second generation biofuels, HVO (Hydrogenated Vegetable Oil), referred to as renewable diesel, are free of FAME. Therefore, these new generation fuels are more stable and do not have the same issues. 

Commercially, the marine sector will be competing with the land-based transportation on fuel volumes and prices. In addition, the supply chain still needs to be scaled up.

What are key trends in decarbonization?

The decarbonization of the shipping sector is a multi-dimensional problem. The first dimension is related to the vessel’s energy efficiency. Ships will have to continue improving their energy efficiency profiles through both design and operation. For example, a lot of residual heat is still wasted through exhaust gases and to the sea through cooling systems. 

From an operational perspective, loaded vessels are still idling at destination ports or waiting for orders after sailing at full speed to maintain contractual performance and avoid claims. While these practices might make commercial sense, from the eyes of the environment they are nonsense. These practices need a paradigm change and might be the hardest to achieve.

The second dimension is the use of the alternative fuels with lower carbon footprint compared with traditional HFO such as LNG, LPG, biofuels, e-fuels, methanol, ammonia, hydrogen and even nuclear. While the focus during the last few years was on methanol and the potential of ammonia and hydrogen, we may see the comeback of LNG as fuel for large vessels and those on irregular trading patterns. Shipowners, like any investors, are looking for proven technology, a reliable supply chain and a cost-effective energy source. The majority of green fuels have so far failed to provide this assurance.

The third dimension is the digitalization of the maritime industry. Using digital tools should enable free-flow of real-time information which is controlled across the stakeholders’ ecosystem. Potential improvements include: enhanced performance through benchmarking and analysis; increased reliability through AI-assisted predictive analysis and forecasting of failures; open reporting to internal stakeholders within the company and to external ones such as charterers, flag administrations, ports and lenders.

The fourth dimension is enabling carbon capture and/or the offsetting of vessel emissions. Several onboard carbon capture systems (OCCS) have been tested within pilot projects to prove the technology and to allow for scale-up for maritime applications. 

While vessels on a short haul and regular trade can potentially benefit from OCCS, for large vessels and long-haul routes, OCCS faces three main challenges:

• Excessive onboard footprint
• Large energy consumption to run the plant
• Storage capacity of the carbon captured

Due to the difficulty of scaling up OCCS, more stakeholders in the industry support the development of an offsetting mechanism which would allow owners to ‘capture’ the equivalent emissions directly from the air on a shore facility using renewable energy.

How can different stages of the supply chain pivot to align with these trends?

This is a complex question that goes beyond the simple supply and demand analysis when analyzing alternative fuel supplies for ships. One needs to understand all stakeholders’ interests, including individual nations. 

Countries that have set their own emissions reduction targets according to UNFCCC (The United Nations Framework Convention on Climate Change) reduction targets will first look to implement measures to achieve this rather than trying to decarbonize an international sector like shipping. As IMO members, they will play a role in the process but regulatory measures will exist within national priorities.

One can then understand why future green and blue fuels most probably will be prioritized to be used within a country’s industrial and consumer sectors rather than onboard international vessels. Any investments in the supply chain of alternative fuels will need to get firm volume orders to justify the business case to lenders, and shipowners will need to have the assurance of a well-established bunker supply chain before ordering vessels. 

Even when final investment decisions are made, the other challenge facing the supply chain is the time required for production, supply chain and distribution facilities to be built and start production for the marine sector. It is expected to take a few years before fuels are produced at a scale large enough to give shipowners confidence that they can place orders of dual fuel ships with a peace of mind.

Share your thoughts on whether rate of development of industry can keep up with demands of IMO’s emissions targets.

The marine sector faces a dilemma whenever emission reduction regulations are adopted. Ship designers and suppliers of engine and other technology are challenged to put in the market products that were not allowed to fully mature as per a traditional product development lifetime raising legitimate concerns on equipment performance and reliability. 

On the other hand, marine environmental regulations have had little to no impact on the supply chain of alternative fuels so far. As previously noted, countries are prioritizing their own emission reductions rather than those of international vessels. 

In short, even though technical challenges are putting more operational risks on owners and ship operators, the commercial risks related to fuel availability are unacceptably high. Creating mechanisms to manage financial risks for investors in alternative fuels will have to be developed quickly if the industry hopes to meet IMO 2050 targets, as the window of options is narrowing drastically.

You will be speaking at Gastech 2024 in September, what is your message?

In ABS, we have a duty to our environment and we are committed to supporting the shipping sector through these uncharted waters. We will be sharing our analysis on LNG carriers of the future that will be adapting to meet the changing LNG market landscape. We will be also addressing the impact of both ammonia and hydrogen as low carbon fuels in meeting future energy demands and the impact of these trends on marine fuels and their availability. 

The forecasted exponential growth of liquefied carbon dioxide carriers will be a major focus too. Gastech 2024, is expected to be more impactful in terms of attendance and provide clarity on what alternative fuels are available for the next decade and beyond.

Top photo credit: Pixabay/ makabera