Shipowners poured US$38Bn into alternative-fuelled newbuilds in H1 2022, ordering a record 628 vessels that will be built to burn LNG, methanol or ready for hydrogen or ammonia when they are available
As a result of investment in more eco-friendly vessels, 61% of all newbuild orders by tonnage (22M gross tonnes [gt]) placed in H1 2022 were for ships that will burn alternative fuels, according to Clarksons Research.
The wave of greener newbuilds comes as shipping pushes to align itself with new international environmental regulations and cut CO2 emissions from operations. Shipping accounts to 2.4% of global manmade CO2 emissions and 1.8% of all greenhouse gas (GHG) emissions.
IMO has set targets of reducing CO2 emissions per transport work by 40% by 2030 and 70% by 2050 compared with 2008. Some shipowners have pledged to reach net-zero emissions by 2050.
Overall, Clarkson’s shipbroker’s Fuelling Transition report and monthly data series showed LNG dual-fuelled tonnage dominated, representing 59% (226 orders of 21M gt), followed by 1.6% methanol-fuelled (five orders of 0.6M gt), 0.3% ethane-fuelled (two orders of 0.1M gt) and 0.8% with battery-hybrid propulsion.
Summarising the new technology uptake and fleet renewal taking place, Clarksons Research managing director Steve Gordon said, “Excluding LNG carriers, there were 174 alternative fuel-capable units ordered of 11.9M gt and US$18.4Bn ordered in the first half, equivalent to 46% of orders based on gt capacity (29% and 51% in numerical and value terms).”
Getting ready for ammonia
Shipowners are also preparing for the emergence of ammonia as a marine fuel. Clarksons reported 16.3% of orders were ’ammonia ready’ (66 orders of 5.8M gt), 0.8% were ’LNG ready’ (12 orders of 0.3M gt) and 0.1% were ’hydrogen ready’ (three orders of 15,000 gt).
The shipbroker noted an increasing trend to order vessels that are built to be capable of handling multiple fuel types “to provide future optionality. For context, in 2021 31.7% of newbuild tonnage ordered was for alternative fuel capable vessels (459 units), up from 211 orders in 2020 and 46 orders in 2016.”
Green fleet grows
The uptake of alternative fuels has continued to progress, with 4.7% (2021: 3.9%, 2017: 2.2%) of the fleet on the water and 41.3% (2021: 27.8%, 2017: 11.8%) of the orderbook in tonnage terms capable of using alternative fuels or propulsion. “We are projecting that 5% of global fleet capacity will be alternative fuelled by the start of 2023,” said Mr Gordon.
Of the orderbook, 37.3% of tonnage is set to use LNG (741 units), 2.2% to use LPG (87 units) and 3.3% due to use other alternative fuels (about 220 units; including methanol (24), ethane (nine), biofuels (seven), hydrogen (six) and /hybrid propulsion ( about 180)).
Over 307 ships in the fleet and 98 on the orderbook are designated ’LNG ready,’ while there are now 115 ’ammonia ready’ and eight ’hydrogen ready’ vessels on order.
Scrubbers still an option
While orders for exhaust gas cleaning systems have cooled, they still represent about 4,730 ships in the fleet (24.5% of total gt). Clarksons reported scrubber retrofitting activity has slowed from about 100 per month in June 2020 to about 15 per month as of June 2022. The shipbroker said, however, newbuild uptake grew slightly in 2021, with 268 newbuild orders for scrubber-fitted units reported across the full year, including 198 container ships; 26 scrubber-fitted units have been ordered in 2022 so far.
“The current price differential between HSFO and VLSFO is significant (/Singapore: US$/US$513), close to previous highs (Jan 2020: ~US$330),” said Mr Gordon. “We expect the share of global tonnage with a scrubber to grow marginally to 24% by the start of 2023.”
“As pressures builds globally to find solutions to moderate climate change, the green transition will cause fundamental change to shipping, trade, offshore and energy,” said Mr Gordon.
