FEATURE: Servicing the Maritime Industry Towards Net Zero

Martyn McMahon took over as global director of GAC Bunker Fuels in January. Image Credit: GAC Bunker Fuels

The growing swathe of environmental marine fuel regulations can make for tricky navigation for
some in the global shipping community.

From 1 January 2023, new mandatory measures came into force to support the International Maritime Organization's (IMO) objectives to reduce CO2 emissions by 40% by 2030 and 70% by 2050, compared to 2008 levels.

The first is the new Carbon Intensity Indicator (CII) requirement for all vessels over 5,000 GT to be rated based on their CO2 emissions per cargo unit.

The other requires existing ships to obtain approval in accordance with the IMO's Energy Efficiency Design Index, which was originally introduced to set standards for the technical design of new builds in 2015.

To comply with regulations, the industry is looking to transitionary fuels as a way to lower emission rates as a stepping stone en route to total carbon neutrality.

One is biofuels which have great prospects for rapid and widespread adoption as a lower-carbon bunker fuel. In recent years, hydrotreated vegetables, blend-in combustibles and biomethanol have already been used as drop-in power on some ships. Potentially, they could replace fossil fuels in the future.

However, amid global supply chain disruptions, access to these base materials has become a challenge for suppliers hoping to boost their biofuel output. Despite the fact that no modifications are needed for ships to use biofuels, its maritime application is currently on a small scale.

Working together

To switch to greener fuels, the industry must become robust in the face of global instability. This can be achieved, in part, through partnerships with alternative fuel suppliers to increase visibility of and access to resources.

"Everyone is under increasing pressure to adopt low-carbon fuels. Their availability is therefore fundamental," said Martyn McMahon, Global Director of GAC Bunker Fuels, the marine fuel and lubricant procurement arm of shipping, logistics and marine services provider GAC Group.

"To make the shift to greener and cleaner fuels happen, investment in alternative forms of energy need to increase. Collaborating with partners across the supply chain is the only way to make this happen on a scale that will make a significant difference."

Ship owners and operators require support to improve emissions performance both now and in the future. GAC Bunker Fuels is an example of how service providers can back such efforts by developing the capacity to offer alternative bunkering solutions.

It is constantly looking for new ways to enhance its offerings worldwide, including expanding its supply network focusing on fuels with lower carbon output, such as LNG, biofuels and other forms of low-emissions energy.

Last year, it opened an office in Westport, Connecticut to support global customers decarbonising in American ports. In 2021, it signed a Memorandum of Understanding with Dubai-based Neutral Fuels to market marine gasoil biodiesel blends across the Middle East and India and increase supply points throughout the Middle East and Africa.

GAC has been working alongside like-minded industry partners through initiatives like the Global Maritime Forum's Getting to Zero Coalition. The alliance of more than 140 companies across the maritime, energy, infrastructure and finance sectors aims to accelerate decarbonisation in shipping by developing and deploying zero-emission vessels by 2030.

McMahon notes that, with more than 30 years of experience supplying all types of bunker fuels and striving to adopt alternative fuels supplies, GAC Bunker Fuels has acted as an advisor, helping customers understand where and how they can access and handle greener fuels.

"Service providers are setting the stage for the industry to adopt low and zero-carbon energy
sources by offering much-needed advice and resources," McMahon said.

"Fuel efficiency standards becoming stronger incentivises shipping firms to make the operational change, but the means to do so is critical.

"Shipping's decarbonisation process has to be international, not unilateral."

Adoption challenges

But, as the world moves away from traditional combustion fuels to alternative sources, demand for raw materials is rising across other sectors.

"There is a growing gap between demand and availability of alternative fuelling capacity that has to be addressed," McMahon added.

"In recent years, several obstacles to investment in alternative energy have emerged, including the effect of Covid-related shutdowns on supply chains, and the impact of the Russia-Ukraine war."

Further, uncertainties remain over biofuels' credentials as a green alternative. They may not always be sourced from sustainable feedstocks or, in certain scenarios, may be produced on cleared lands that could otherwise support vital ecosystems or grow food.

Crucially, in the short-term, they are also significantly more expensive than traditional bunkering solutions – biodiesel costs anywhere from 70% to 130% more than traditional fossil fuels, according to Brussels-based non-governmental organisation Transport & Environment.

"Infrastructural inequity is also a major issue. Major developed ports like Fujairah, Singapore and Rotterdam have the infrastructure to service new energy sources, but ports elsewhere might not," McMahon said.

"That's why a global reach is so essential to balancing these inequities and facilitating energy transition goals."

On that note, the GAC Group's network of offices, sub-agents and carefully suppliers is strategically placed around the world to help meet requirements at both major bunkering locations and non-traditional refuelling ports worldwide.

Switching to a new energy form would mean retrofitting fuel infrastructure, not just on ships, and investment in supplying liquid biofuels to refuelling stations is needed.

This begins with feedstock production, which is not necessarily compatible with existing processes that support traditional bunker fuels. To meet anticipated demand, the entire lifecycle of biofuels requires an overhaul, and the energy, material and capital needed to make this happen are likely to vary considerably.

Each form of new energy comes with its own shortcomings. The issues of supplying natural gas have become apparent following the outset of the Russia-Ukraine war, and sulphur-based fuels are already facing regulatory strangulation in light of the consequences of releasing toxic elements into the ocean with open-loop scrubbers.

The industry is coming to terms with the fact that current consumption behaviour cannot continue indefinitely and low-carbon fuels can quickly become high-carbon if used at a greater rate. That is what is driving regulators to encourage investment in complete zero-carbon energy sources such as ammonia and hydrogen.

"We have several significant barriers to overcome if the adoption of alternative fuels in maritime is to become mainstream," McMahon said.

"But whatever solutions the industry develops and adopts in the future will come with costs and trade-offs.

"Nonetheless, efforts to make that change must press on, as the price of continuing to burn fossil fuels and ignoring emissions targets is ultimately far greater."

Consistency in chaos

Overcoming the hurdles to develop and supply alternative energy sources is possible. However, industry stakeholders are hedging their bets when it comes to investing in one particular green fuel choice and its infrastructure.

"So long as there is an economic argument and a downward pressure on alternative fuel prices, carbon emission reduction targets will be more than just legislative optimism," McMahon added.

"International zero carbon targets are here to stay, and industry collaboration is vital.

"Luckily, we have enough tools to achieve them, and suppliers and traders can play a part by lending their expertise and supporting the energy transition."

Despite being in its infancy, completely zero carbon energy is becoming more widely available. Its full adoption can become a reality when supply chain stakeholders, from regulators to shipowners, service providers and suppliers invest, collaborate and dedicate collective efforts to reshape operations on a global scale.