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Regulation
FUELLING SHIPPING’S ENERGY TRANSITION
Shipping is in the midst of a necessary, albeit challenging, transition, says the GAC Group
The need to switch to more sustainable fuels and reduce the sector’s greenhouse gas (GHG) emissions is now a key operational consideration across every segment of the industry, from shipowners, to ports and the vessels themselves.
With no silver-bullet solution for radically reducing GHG emissions across shipping supply chains, and particularly for fuelling vessels of all types, the maritime industry must rely on collective efforts to reduce emissions across the board and transition towards a sustainable future.
The rapid development of ‘greener fuels’, such as hydrogen, ammonia, LNG and bio-methanol, as well as innovative technological solutions, are helping to build the foundations for this transition. However, these developments are still in the early stages and real-world applications remain small scale.
The International Maritime Organization (IMO) aims to halve the total annual GHG emissions from international shipping by 2050. To meet this target, there needs to be a major upscale in terms of infrastructure, investment and incentives.
Alternative fuels push
The GAC Group is looking to play a proactive role in this market transition. The global shipping and logistics services provider is present at thousands of ports in more than 50 countries, working with vessels, shipowners, ports and bunker suppliers to keep ships moving.
Fuel suppliers require a guaranteed demand to fund their projects, and customers must know what supplier projects are underway to plan their future procurement.
“As an intermediary between shipowners and fuel suppliers, GAC has the expertise and knowledge to communicate and meet the needs of both parties while helping them achieve progress in their respective sustainability journeys,” says Nicholas Browne, global director of GAC Bunker Fuels, the marine fuel and lubricant procurement arm of the GAC Group.
“As shipping becomes more environmentally conscious, it is important for us to partner local bunker suppliers to offer alternative fuels such as LNG, methanol, hydrogen, ammonia and biofuel for our customers.”
However, as alternative fuels continue to develop and become a more viable option for a greater number of vessels, there is the added challenge of catering to the volume of options currently available to shipowners.
Herman Jorgensen, managing director of GAC United Kingdom (UK), says: “One of the most complex problems we face at the moment is that there are so many different types of fuels being developed while a whole host of new vessel types are being designed.”
He adds: “There’s no number one choice at the moment. Our customers are driving their own development of fuels including LNG and hydrogen. We have to be adaptable to their needs and that means having the network in place to be able to service any type of vessel with any type of fuel anywhere in the world.”
Credit: GAC Group 8 The majority of
ships today still run on traditional bunker fuels, so ports and bunker suppliers still have to cater to those vessels
Green initiatives
In recent years, GAC has been developing a range of partnerships and service offerings to ensure that alternative fuels and technologies to increase fuelling efficiencies are available at ports and to vessels all over the world.
These include signing a Memorandum of Understanding with Dubai-based Neutral Fuels in November 2021 to offer a new biodiesel blend to the Middle East and African markets, and partnering with HullWiper to provide an eco-friendly Remotely Operated Vehicle hull cleaning solution at selected ports.
Meanwhile, GAC Norway was awarded the Eco-Lighthouse Certification as part of its efforts to align with the United Nations’ Sustainable Development Goals (UN SDGs), which included signing up for a national project, HyValue. Under the initiative, GAC Norway will draw on the wider GAC Group’s experience and expertise of low carbon and sustainable bunker fuels to support the development of strategies for the storage, handling and bunkering of hydrogen in maritime applications.
“The GAC Group is committed to a net carbon zero future, and GAC Bunker Fuels, the first bunker company to align with the UN SDGs, has also pledged to achieve zero oil-based bunker sales by 1 January 2030. This means embracing new types of alternative fuels and being early adopters of developing technology and infrastructure that ensure these fuels reach their full potential,” says Nicholas.
The role of ports
“The IMO 2050 is an ambitious plan. For it to be successful, strict regulations need to be implemented within ports,” Herman says. “And that means a whole host of logistical changes, such as introducing electrical cranes, improving low-carbon intermodal transport, cutting vessel emissions at berth and improving shoreside power.”
However, ports are often required to balance the economic and environmental benefits of working with vessels that use both traditional and alternative fuels.
He elaborates: “In an ideal world, ports should be able to mandate vessels to meet a certain environmental standard before they are allowed to dock and berth. However, port competition is stiff. Rejecting a vessel based on its environmental impact takes courage because it could mean losing business if the vessel has to dock elsewhere. That could also result in an environmental situation somewhere else.”
That said, a number of ports have introduced green incentive programmes to encourage vessels that berth there to focus on becoming more sustainable. In May this year, Singapore introduced its Green Port Programme that reduces port fees for vessels using zero carbon fuels, while also offering financial incentives to any of its flagged vessels if they adopt IMO efficiency standards or green fuels.
Meanwhile, the UK launched its Clean Maritime Plan in 2019 to boost the UK maritime industry’s drive to zero carbon. The initiative seeks to implement a number of green incentives, such as a Renewable Transport Fuel Obligation, to encourage the uptake of low carbon fuels in the maritime sector.
GAC has signed up for the Green Award (GA) Foundation’s scheme to offer GA-certified ships a 10% discount on the company’s ship agency fees at ports in Belgium, Greece, Netherlands and the UK.
Impact on uptake
Caution is urged when considering the wider impact of the global energy transition when using such incentives.
Herman says: “You can create an incentive that looks good on paper for the port but if you don’t consider the global environmental economics at the same time, there may not be a huge uptake in vessels docking at that port or using alternative fuels.”
It is a precarious balancing act. Almost all parties in the supply chain know what role they can play in shipping’s energy transition, but they must also factor in the financial implications of doing so. The majority of ships today still run on traditional bunker fuels, so ports and bunker suppliers still have to cater to those vessels.
Shipping’s switch to alternative and greener fuels is underway, but it is not as simple as flicking a switch. Largescale infrastructure needs to be in place and the vessels need to be developed. Most importantly, the motivation of everyone in the shipping chain needs to be bolstered. There needs to be an understanding that every contribution, even if it is from a small business, will have a wider impact on the shipping industry.
Major shipping and logistics players are playing an increasingly vital role in the energy transition as smaller players turn to them for guidance, be it technological, financial or technical. After all, if the maritime industry is going to meet the IMO’s 2050 deadline, it is going to need that leadership, and that unified collective effort, sooner rather than later.
8 The GAC Group
