- In 2023, the maritime industry made significant strides in decarbonization, with increased vessel orders, retrofit conversions, and growing readiness for alternative fuels, backed by regulatory foundations and collaborative initiatives.
- The surge in methanol engine retrofits, progress in ammonia engine technology, and rising onboard carbon capture indicate a dynamic shift towards achieving long-term emissions reduction goals in the maritime sector.
In 2023, the maritime sector made substantial strides toward achieving long-range emission targets, with the International Maritime Organization (IMO) and European Union (EU) implementing strengthened decarbonization regulations. The IMO, in July at MEPC 80, established a revised greenhouse gas emissions reduction strategy, setting a goal to phase out GHG emissions around 2050. The strategy also outlined a 20%, striving for 30%, reduction in total emissions by 2030, with zero or near-zero carbon fuel use constituting 5%, striving for 10%, of total shipping energy use.
The EU Emissions Trading System (ETS) rules took effect, incorporating shipping emissions and imposing carbon pricing on voyages within the European Economic Area (EEA) ports from 2024. Simultaneously, FuelEU Maritime introduced penalties on ships using EEA ports if they failed to meet energy intensity reduction targets from 2025. These regulations now shape the dynamics of ship ordering, technology development, and fuel supply.
Vessel Orders and Retrofit Conversions
With regulatory frameworks in place, the maritime industry has witnessed a surge in vessel orders and retrofit conversions. In 2023, 143 new construction orders for methanol-capable vessels were placed, and more than 100 retrofitted vessels are set to join the existing methanol conversion. Ammonia engine technology advanced, with Wärtsilä launching its first ammonia four-stroke engine and MAN Energy Solutions conducting the first full-scale two-stroke engine tests. Firm orders for ammonia-fueled vessels increased, demonstrating the industry’s commitment to decarbonization.
Orders for vessels powered by fossil-based alternative fuels, such as LNG and LPG, surged, reaching the highest volume ever in 2023. The LNG-fueled fleet is expected to grow by 90%, reaching 1,938 vessels, and the LPG-fueled fleet is set to increase by 78% to 189 vessels. Onboard carbon capture technologies are also gaining traction, with 16 retrofits contracted in 2023, reflecting the industry’s efforts to comply with regulations without the need for fuel conversion.
Alternative Fuel Readiness
The realization of the IMO’s 2030 target depends on fuel availability and shipboard technology. The Zero Carbon Fuel Monitor from LR’s Maritime Decarbonization Hub highlights the technology, investment, and community readiness of key zero and near-zero emissions fuels. While there have been concrete developments in fuel supply, scaling up remains a challenge for many fuel candidates. The increased acceptance of carbon capture, renewable energy harvesting, and the rise in national hydrogen strategies contribute to the viability of alternative fuels.
Addressing Challenges and Building Green Corridors
Concerns about the scalability of sustainable carbon sourcing led to downgraded readiness levels for methane and e-methanol. Tackling methane slip emissions remains a challenge, with ongoing initiatives like the Methane Abatement in Maritime innovation initiative (MAMII) exploring solutions. The maritime industry is witnessing the growth of green corridors, such as the Silk Alliance cluster based in Singapore, projecting strong demand for methanol and ammonia from 2030 onwards. Implementation plans for these green clusters aim to bridge cost gaps and identify financing mechanisms to support the transition to zero or near-zero carbon fuels.
Collaborative efforts, innovative retrofit solutions, and increasing commitments to alternative fuels characterize the maritime industry’s progress toward decarbonization in 2023. Projects like Silk Alliance and MAMII, along with industry-leading rulesets, research, and classification, reflect Lloyd’s Register’s multifaceted commitment to supporting shipping’s decarbonization ambitions in 2024 and beyond.
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Source: LR
