14 April 2025
Navigating the future of shipping
The path to net-zero GHG emissions
The International Maritime Organization (IMO) has adopted the stringent target of ‘Net-Zero’ Green House Gas (GHG) emissions by the year 2050, for international shipping. The industry recognises that carbon-neutral operations will not be achievable without shifting towards alternate energy sources. Improving operational and design efficiencies and market-based measures, while continuing to use the conventional fossil-based fuels, appears to be only adequate for achieving the short-term and medium-term GHG reduction goals.
While it is universally accepted that the movement to low carbon and zero carbon fuels is essential for the long-term GHG reduction targets, the complexities associated with these are also well realised by various stakeholders and already a part of the experience of using some of the newer fuels.
Hull and Machinery and War Risks Market Update Q2 2025
We’re pleased to release the Q2 2025 edition of the Gallagher Marine Hull & Machinery and War Risks Market Report. As expected, the start of 2025 has been characterised by a gradual softening of Hull and Machinery rates.
Future fuel options
For powering the ships, various options of new fuels and energy sources are under different stages of consideration and adoption. Industry is witnessing endeavours at harnessing the potential of Liquified Natural Gas (LNG), Methanol, Liquified Petroleum Gas (LPG), Ammonia, Hydrogen, Wind Power, Solar Energy, Biofuels, Renewable Fuels of Non-Biological Origin (RFNBO), Carbon Capture, Shore Electric Power, Nuclear Power, and other means for serving the energy requirements on board ships to varying extents, partially to completely, with long-term sustainability in view.
Technological and commercial potentiality
Each of the options has its advantages, limitations, complexities, and challenges. Further, the commercial viability and technological maturity vary from being hardly existent (say for nuclear power) to being fairly existent for fuels like LNG and Methanol, for which the internal combustion engines and boilers are well developed for shipboard applications.
It is also realised that the lifecycle GHG footprint of the technologically and commercially viable low-carbon fuel options, like LNG and Methanol, still falls way short of being carbon neutral, besides also lagging significantly in the capacities of the production and distribution infrastructure, as needed in the long-term.
In fact, for zero carbon fuels like Ammonia and Hydrogen, the well-to-wake GHG intensity is an even bigger concern due to the highly energy-intensive production and distribution processes. Technologies that enable these zero carbon fuels to be produced from renewable energy and Carbon Capture for minimum lifecycle GHG footprint and to be used onboard for power generation are yet to mature, though various private and public organisations are collaborating in this direction.
While ammonia-burning engines are commercially available, these will have to go through a significant phase of experience-based improvements to prove long-term acceptability. The fuel cell technology to utilise Ammonia and Hydrogen is still nascent for shipboard utilisation and poses limitations to be utilised for high power requirements for large vessels.
Suitability - near future to long-term horizon
At this point, there is uncertainty and no universal view about which fuel or technology will dominate the transition to clean energy in the long run. In the short to medium term, LNG, Methanol, and Ammonia, to some extent, seem to be gaining acceptance. However, it is yet to be seen if over the vessel’s life cycle, these choices will prove to be commercially more favourable, in comparison to the vessels built for burning conventional fuels (and biodiesel), with a similar design efficiency (specific energy consumption per unit transport work) but with lower CAPEX and fuel costs, though offset by the high carbon taxations.
In the meantime, various factors will affect the evolution of one or more alternatives as most suitable for the long-term. It can’t be predicted whether the winners would emerge from these fuels (LNG, Methanol, Ammonia etc.) that show greater promise at this point due to technology availability, or entirely radical solution like nuclear power would gain acceptance, or the industry would fall back on the seemingly less likely option of biodiesel if production scales exponentially, complemented with offsetting by Carbon Capture, and market-based measures. The dynamic regulatory, technological, commercial, and global socio-economic landscape in this period will significantly impact this emergence and developments.
As it appears today, the industry needs to prepare itself for a multi-fuel future with different fuels suited to various vessel types, trade routes, and operational requirements. For example, LNG and Methanol would stay as the best options for the tankers for the respective cargos, while the vessels built for fixed trade routes would get designed for the fuels that have readily available bunkering facilities in the trading regions.
Implications – safety and operations
Meanwhile, it is key that for each alternative, the implications and challenges from its adoption are well assessed, and the appropriate measures are identified and enforced for safe and efficient operations.
LNG, LPG, Ammonia, and Hydrogen, the most likely future options, are all carried and stored in liquified or pressurised gas forms. Thus, the storage, handling, transportation, and bunkering challenges will need to be addressed with utmost attention to safety in the design of the equipment and systems and operations, with consideration to the specific saturation pressure-temperature characteristics and flammability concerns of the respective fuel. In addition, systems for fuels like Ammonia need to offer adequate protection against toxicity hazards, reinforced with safe and strong procedures and practices.
Industry alignment and collaboration
Overall, it will be essential that safety protocols and regulatory frameworks are updated suitably to address the requirements arising from these implications. Industry bodies need to collaborate closely to work towards such standardisation. Opportunity for cooperation also exists in terms of sharing knowledge, expertise, and best practices to accelerate the development and adoption of new fuels and technologies.
Further, there is a vast scope for the industry players to collaborate and jointly invest in projects to develop infrastructure and technologies for enhancing sustainable production and distribution of the new fuels. The development of crew training facilities and facilitation of onboard training on vessels equipped with technologies for burning new fuels is another area where the industry needs to come together.
Ship staff alignment
Crew preparedness will play a vital role in the successful adoption of clean energy. The ship's staff needs to be well familiarised with the hazards associated with alternative fuels and the mitigating regulations, practices, and procedures for the storage, handling, and usage of these.
Crew training on the technologies and systems employed onboard and the operation and maintenance of these will also need to be standardised and effectively conducted for a smooth transition.
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