Lloyd’s Register (LR) has launched a five-level framework for assessing the actual readiness of a vessel for the transition to zero carbon fuels.
Published by LR’s Maritime Decarbonisation Hub, Zero Ready Framework – helping to ensure shipping can deliver our zero-emissions future ranks vessel readiness for zero carbon fuel operations from 1 (highest level of readiness) to 5 (lowest level of readiness), and measured on a well-to-wake basis.
Level 1: This means capable of bunkering and operating with fuel with lifecycle emissions of net zero for all energy sources and in all modes of vessel operation. LR calls these ‘near net zero’ to allow for the reality that even fuels without a carbon molecule may involve a small unavoidable release of some GHGs somewhere in the end-to-end supply chain.
Level 2: These are ships that are capable of bunkering and operating today for primary propulsion in most operating modes, often dual fuelled. They may use fossil pilot fuels or operate mainly using fossil fuels where zero carbon fuels are not yet available. At present most of the level 2 ships in service are methanol capable, typically dual fuelled with a 2-stroke diesel engine.
Level 3: These are vessels that cannot use zero carbon fuels today but have some of the components needed in place already. This shows that the asset has advanced beyond the design stage and work is underway to make the vessel capable of propulsion with zero carbon fuel, albeit recognising there will be further conversion costs later.
Level 4: Many vessels that are described as ‘ready’ are just at the design stage. This may be a high-level conceptual design with general arrangement drawing showing how the layout would change, or a detailed design with complete equipment specification. Either way there is much to be done to make the vessel ready and usually the investment case is unquantified.
Level 5: Marine engine manufacturers are increasingly developing modular engines that can be retrofitted to run on a different fuel, but this represents a very low level of readiness as major investment is still required.
The framework has been created to offer clarity around the term “readiness” which is used in multiple ways across the shipping industry. The rankings were developed based on observations that some shipowners have had a design for conversion to zero carbon fuel done as a paper exercise, without a plan for how the conversion would be carried out. Others have some or all the required equipment (for example: engine, tank, pipework, fuel management system) already installed. Another group of vessels have a dual fuel engine that could run on a zero-carbon fuel but may require an engine retrofit to do so.
An assessment of a container ship route in Southeast Asia by the LR Maritime Decarbonisation Hub found that, despite pushing forward of new initiatives by financiers, insurers and ship charterers to achieve zero emissions, 27% to 30% of vessels newly built between 2022 and 2050 will still require conversion to a different fuel in order to meet zero targets.
Charles Haskell, Director, LR Maritime Decarbonisation Hub, said: “As ships built today will still be in service in the 2040s, it’s essential for shipowners to understand the full implications of actual vessel ‘readiness’ for zero carbon fuels to meet the industry’s 2050 decarbonisation targets. These differing standards and classifications of ‘readiness’ across the industry have made it difficult for owners to conduct a transparent assessment of their vessels’ commercial prospects in a zero-emissions future.
“In view of the significant structural and technical complexities of vessel conversion, we developed the ‘Zero Ready Framework’ to help investors, charterers, insurers and prospective shipowners better understand and assess the risks and conversion costs of both existing and newly built fleets.”
The framework has been developed through cross-industry consultation through a series of workshops with industry stakeholders.
Haris Zografakis, partner at the law firm Stephenson Harwood LLP, who’s involved in various maritime decarbonisation projects and is an expert in the contractual aspects of decarbonisation, said: “Many aspects of decarbonisation suffer from an absence of accepted standards and precise definitions; for example, in relation to measurement of emissions, the specifications of new fuels, and their fitness for purpose. Another nebulous area is the commonly used term ‘zero-ready’ vessels (either newbuilds, or following retrofits), which has no classification or regulatory definition.
“Standards and clarity are not merely desirable for debates, policies, technological progress, or investments. They are also critical in the world of contracts: shipbuilding, ship conversion, chartering, but also finance, where uncertainty and ambiguity always gives rise to disputes, for example in relation to pre-contractual misrepresentations, or breach of contractual warranties.”
