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Greek owners warn that multi-fuel future may end cheap shipping era

Union of Greek Shipowners’ decarbonisation report says that departure from a universal fuel could destabilise bulk and tramp shipping, accounting for 84% of maritime transport

‘First priority’ must be a massive R&D effort into new fuels and propulsion technologies but further investigation is also warranted into solutions based on carbon capture from fossil fuels

DECARBONISATION may spell the end of cheap shipping for the world if not properly handled, according to Greek shipowners.

The warning comes in a report issued by the Union of Greek Shipowners on technical aspects of decarbonising maritime transport.

It says the industry is embarking “on a long and uncertain period of transition into a multi-fuel low and zero carbon future.” The technical report underlined that the global shipping industry is “fully committed” to drastically cutting its carbon footprint.

At the same time the report looks to be a calculated corrective to simplistic calls for decarbonisation that avoid engaging with the practicalities or potential collateral damage.

“It may be easier to model the reduction of emissions as a linear trajectory. In practice, however, that is not the case,” it said. “Decarbonising the maritime transport sector is not a straightforward task and, certainly, not a task for a single market actor.

“Shipowners, charterers, shipbuilders, engine builders, fuel producers and distributors, infrastructure providers, ports and policymakers will all need to coordinate actions to deliver the ambition of the Fit for 55 package and its maritime initiatives.”

The “market co-ordination problem” needed careful actions from policymakers and market stakeholders, it said.

Uncertainty was highest for bulk/tramp shipping as it is “itinerant by nature” and thus heavily reliant on a universal fuel being available globally, allowing ships to call at any port.

“A proliferation of new zero-carbon fuels bodes ill for their global availability, which in turn casts doubts over the viability of the bulk/tramp shipping modus operandi and its ability to continue to operate as it has been operating for a century or so serving seaborne trade and supporting world economic growth in an incomparably cost-effective manner.

“Depending on the fragmentation of the future fuel landscape and the length of the transitional period towards a new era, the shift to a multi-fuel future may in fact herald the end of low-cost seaborne trade and its mainstay, the international bulk/tramp shipping model which is responsible for over 84% of global seaborne tonne-miles,” the report concluded.

The UGS said that “in the coming decades” it was likely that fossil fuels would remain “much cheaper” than zero-carbon alternatives, unless fossil fuels are heavily taxed or the alternatives heavily subsidised, or both.

The industry faced “a totally new situation” from disruption and economic implications stemming from departing from universally-used fossil fuels in favour of a number of more expensive new fuels and technologies.

The union argues that technologies capturing “most or all” of the CO2 from fossil fuels would likely cause less disruption and should therefore be investigated further.

However, emerging solutions using carbon capture and storage technologies were also “an ongoing process,” according to the report.

Despite the UGS’ wider concerns, the report stated that “the first priority must be a massive effort in research and development and a shift of technological paradigm towards safe and future-proof alternative fuels.”

The report follows hard on the heels of a call by Greece, fully supported by the national shipowners’ association, for the urgent establishment of a European research centre for this purpose.

The new technical report briefly surveyed all the main future fuel options being touted within the industry, including liquefied natural gas as a transitional option, as well as biofuels as a partial solution to industry needs and synthetic fuels.

“Significantly more research is required to develop cost-effective low-carbon and zero-carbon fuel options, which can be produced to scale,” it said.

The new generation of fuels and propulsion technologies that were needed “do not yet exist.”

However, “the greening of fuels and ships is the responsibility and area of expertise of out of sector stakeholders,” such as energy providers, engine builders and shipyards, the report maintained.

The development of new fuels could not take place in a vacuum, the UGS argued. Investments in infrastructure would also be required as well as parallel work to develop regulations and technical rules for safe design and use on board vessels.

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