Government Policies Key to Fuel Shifts

The report predicts more variety in the types of fuels used

By 2030, heavy fuel oil (HFO) could shrink to anywhere from 47 percent to 66 percent of the market within the containership, bulk cargo and tanker sectors, with the ultimate level dependent largely on government policies, according to new Lloyd's Register report Global Marine Fuel Trends 2030.

"The marine industry has before demonstrated the ability to make the right decisions in times of uncertainty – through a combination of past experience, intuition and talent," said Tom Boardley, marine director at Lloyd's Register.

"What is perhaps different today are the rapidly changing environmental challenges, new regulatory policies and the fuel/technology choices available to address the challenge and comply with regulation."

Evaluating sectors that make up 70 percent of the shipping industry's fuel demand, Lloyd's Register modelled market demand considering fuel prices, transport demand and technological availability, cost, and technical compatibility, assuming that decision-makers seek to maximise profits and comply with regulations.

The analysis found that a "status quo" model would result in standard HFO dropping to 47 percent of the market, while liquefied natural gas (LNG) and low-sulfur heavy fuel oil (LSHFO) would gain market share.

A second model, "global commons," in which environmental concerns and issues of wealth distribution prompt international cooperation, shows HFO dropping to 58 percent of the market and a jump in the use of hydrogen fuel between 2025 and 2030.

The last model, "competing nations," in which protectionism and global conflict slow economic growth, predicts that HFO will retain 66 percent market share while marine diesel oil (MDO) and marine gas oil (MGO) represents the main alternative.

Across all scenarios, fuel demand would approximately double.

"This is mainly due to the increase in transport demand (and subsequently energy demand) requirements and shows that relative to this underlying growth in demand reductions in energy demand due to energy efficiency improvements and speed reductions are small," the report said.

A recent Wood Mackenzie study predicted that LNG will represent 10 percent of the bunker market by 2030.