- Danish Ship Finance (DSF) advocates for transparency and benchmarking in maritime decarbonization.
- Achieving 2050 targets needs government support and alternative fuel investment.
- DSF proposes a fuel budgeting model to reward fuel efficiency and share financial risk.
According to a recent report by Danish Ship Finance (DSF), reaching short-term maritime decarbonization targets is achievable. However, meeting long-term 2050 goals requires structural reform, as well as government investment in alternative fuels and supportive regulations, reports Seatrade Maritime.
Government Support Essential for Alternative Fuels
DSF highlights that, historically, “no alternative energy source has achieved global prominence without some form of strong governmental support.”
DSF emphasizes that governments must mitigate risks and create a regulatory environment conducive to adopting new energy technologies to meet decarbonization targets.
Maritime Sector’s Limited Role in Fuel Development
As an effective niche player in the energy market, DSF notes that the maritime industry cannot lead in developing alternative fuels.
However, the sector can contribute to decarbonization by incentivizing efficiency through benchmarking and shared fuel efficiency benefits.
Transparency as a Decarbonization Catalyst
DSF identifies transparency and benchmarking as essential “catalysts” for widespread adoption of emission-reducing tools.
“The industry’s lack of transparency and benchmarking is currently hindering large-scale adoption,” according to DSF, emphasizing that published analyses, such as Carbon Intensity Indicator (CII) ratings, could drive industry-wide improvements.
Establishing Fuel Budgets and Efficiency Rewards
Transparency would allow the industry to define optimal standards and agree on fuel budgets per voyage. It enables shippers and carriers to strategize on fuel use.
Under this system, “cargo customers are offered a fixed price for a voyage.” The operators are responsible for efficient fuel use and technology retrofits.
Incentivizing Operational Efficiency
DSF suggests a simple mechanism where “fuel not consumed” would become an “equity kicker,” rewarding operators who surpass fuel efficiency standards.
This incentive could also encourage vessel ownership consolidation towards more energy-efficient operators.
Collaborative Risk Sharing Through Fuel Budgeting
Acknowledging that the maritime sector cannot set fuel investment priorities, DSF proposes a fuel budgeting system based on each route, distributing risks and rewards among carriers and shippers.
“This approach would also encourage sustained improvements in energy efficiency,” while aligning annual fuel budgets with global climate goals, DSF concludes.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Seatrade Maritime
