The fleet transition, retrofits and propulsion pathways panel at SIBCON 2026. Image Credit: Ship & Bunker

Nobody should order a single-fuel ship any more, because a dual-fuel engine is a hedge against fuel availability and should be seen as insurance that gets the fleet to 2050, the panel on fleet transition, retrofits, and propulsion pathways at SIBCON 2026 in Singapore heard on Wednesday.

When the IMO deferred its framework last year, owners switched orders back from dual-fuel to conventional, although LNG dual-fuel orders have only now picked up again.

But the delegates gathered were reminded that a ship ordered today arrives in three years, which leaves time to change the fuel choice if the IMO does decide on a pathway that narrows the options to two or three fuels.

Global regulation was called a "no-brainer" compared to the alternative of a regional patchwork because with "global regulation, you get a global playing field".

If a December consensus fails, regional rules will happen, with the EU standing firm and China believed to have a scheme ready, while an IMO fund that would collect somewhere between $10 billion and $70 billion remains the big question mark.

With five proposals on the table for the IMO to consider at December's Marine Environment Protection Committee (MEPC) meeting, any one of them is better than nothing, the panel heard.

The regulation already in force is producing odd results, delegates heard: FuelEU Maritime has a surplus of compliance credits cheaper than the physical fuel, a "cash cow" for the few owners who have to burn LNG or biofuel anyway.

That surplus was read both as demand drained from the physical market and as over-compliance that proves the targets are too low.

On availability, the pessimists were told to be more positive: in 30 years of bunkering, through every new emission control area and IMO 2020, there has never been a lasting shortage after a rule change, because the majors find a solution; it just takes time.

The panel was moderated by Wong Kai Cheong, senior technical manager and country manager for China and Hong Kong at INTERTANKO, with Dr Gu Hai, vice president, technology, Pacific, at ABS, Jens Maul Jørgensen, director at Oldendorff Carriers and board member of the Emirates Shipping Association, Kei Onishi, corporate officer, environment and technical strategy, Seawing, and fuel strategy at K Line, and Pernille Dahlgaard, chief impact officer at the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping.

Below are the key takeaways from the session that was held under the Chatham House rule, so what follows is reported without attributing any point to an individual speaker.

Where Shipping Stands

• IMO data put shipping's CO2 at 921 million tonnes in 2008 and about 650 million tonnes in 2023, on 211 million tonnes of fuel, a 30% cut in absolute emissions achieved almost entirely on conventional fuel through efficiency and operations.
• Of the four pieces of the readiness jigsaw, the 2050 target is set and the engines are largely ready; the pace of the path and the fuel certification signal are not, and availability of net-zero fuels, which needs renewable energy at scale, is the biggest gap.

Certification

• Recommendations for a fuel certification scheme and framework went to the IMO on Friday, developed with 30 member states and 15 industry organisations; not the final version, but the transition will not be perfect from the start and may go backwards to go forwards.
• Reporting has matured: EU MRV since 2018 and the IMO DCS since 2019 have moved owners from spreadsheets to digital reporting, and data quality and traceability have improved considerably, with gaps now the exception.
• Biofuel buyers should ask what they want to achieve and which feedstock they can accept, first or second generation fuels.
• Know your supplier, listen to the testing companies that now hold four years of data on blends, insist on ISCC certification and proof of sustainability, and burn the fuel soon, because a degradation study with MIT shows it gets worse over time.
• A technical department that was very cautious about biofuel in 2021 now needs no asking with ships now burning B100.

Ordering Ships

• A dual-fuel ship on its own does nothing for decarbonisation; it has to be run on the alternative fuel, with the conventional side as the fallback for the day supply or cost fails, which is what makes it the right first step.
• Three things make the dual-fuel case work: reliable fuel supply, ports where it can be bunkered, and environmental value that is recognised.
• Class can manage the technical and safety risk for early adopters through design review, approval, and verification, but approval and regulatory credit do not unlock investment on their own; the business case has to show real commercial value.
• Not everyone can plan the same way: a tramp owner with one client per voyage cannot plan like a liner company.
• The readiness to build LNG ships has been there for years, and a green solution would follow for any client offering a five- to 10-year contract between fixed ports.
• Investment in rotor sails and other efficiency technology was credited to class societies and consultants for making it possible.
• Some felt decisions on new fuels are on standby until regulation or long contract terms arrive.
• Ammonia is not on the horizon for the next several years, and methanol of doubtful origin is off the table: "if we want to be green, we have to be green".
• Dual-fuel ships are being set to run on LNG as the main fuel, with conventional fuel kept for emergencies, alongside low-carbon fuel already in use.

Regulation and Finance

• If the IMO framework comes with a fund, the money must go to stimulating production and supply of cleaner fuels as efficiently as possible; arguing over who pays and whether it is fair makes for ineffective regulation.
• Owners who do not want regulation because of the cost need not worry, as the cost will probably be passed on to their customers.
• The carbon cost is now a real line item in the P&L, and with the EU, the UK, and China each running their own scheme, every financial calculation has to cover several compliance regimes at once.
• Long-term regulatory clarity has a real impact on finance: clarity only five years ahead has little effect.
• The current geopolitics are bad for most things but they are pushing energy-security investment, much of which translates into green energy investments.

If December Fails

• Keep building the foundations that pay under any outcome such as efficiency technologies where the business case is clear, good monitoring and reporting, and planning for retrofits.
• A further postponement would be a disaster, according to some participants, but the industry would take a breath and carry on.
• Industry should remember the targets are already set: the 2023 GHG strategy has set the destination of net zero by around 2050, only the path to get there is up for debate.
• A common framework for verifying and recognising emission reductions would help owners whichever way the vote goes.