Researchers See Three Future Fuel Scenarios

New research from Lloyd’s Register and University College London’s Energy Institute explores the drivers for the future energy mix in shipping in 2030.

Global Marine Fuel Trends 2030 released by Lloyd’s Register provides insight into future fuel demand for the containership, bulk carrier/general cargo and tanker sectors - representing approximately 70 per cent of the global shipping industry’s fuel demands.

The three scenarios evaluated are:

Status Quo – The world will continue its current growth momentum with some booms and busts over the next twenty years.

Global Commons – A shift to concern over resource limitation and environmental degradation will see a desire for a more sustainable world being developed and fairness in wealth distribution. Governments will find common ground and accelerated economic growth, within a framework of sustainable development, which will follow.

Competing Nations – States act in their own national interest. There will be little effort to forge agreement amongst governments for sustainable development and international norms. This is a self-interest and zero-sum world with a likely rise in protectionism and slower economic growth.

So what does the marine fuel mix look like for containers, bulk carriers and tankers by 2030? In two words: decreasingly conventional. Heavy fuel oil (HFO) will still be very much around in 2030, but in different proportions for each scenario: 47 per cent in Status Quo, to a higher 66 per cent in Competing Nations and a 58 per cent share in Global Commons, the most optimistic of scenarios for society. A high share of HFO, of course, means a high uptake of emissions abatement technology when global emissions regulations enter into force.

The declining share of HFO will be offset by low sulphur alternatives (MDO/MGO or LSHFO) and by LNG, and this will happen differently for each ship type and scenario. LNG will reach a maximum 11per cent share by 2030 in Status Quo. Interestingly, there is also the entry of hydrogen as an emerging shipping fuel in the 2030 Global Commons scenario which favors the uptake of low carbon technologies stimulated by a significant carbon price.

"I think that the report underlines that any transition from a dependency on HFO will be an evolutionary process," comments Project Leader, Dimitris Argyros – LR’s lead environmental consultant. "LNG is forecast to grow from a very low base to a significant market share by 2030 - even if there is no major retro-fit revolution – most of the LNG take-up will be in new buildings. But it is important to note that an 11 per cent share in 2030 is the equivalent in volume of about 20 per cent of the bunker market today."

"What we can say is that the uptake of engine and alternative propulsion technology and the emergence of non-fossil fuels can only be driven by a society’s ability to create a world with lower GHG emissions – the technology is not the barrier. Key will be policy and markets. Shipping can control its own destiny to some extent – but shipowners can only focus on compliance and profitability. If society wants lower GHG emissions and cleaner fuel, change in shipping has to be driven by practical regulation and market forces so that cleaner, more efficient ships, are more profitable than less efficient ships with higher GHG emissions."