After a cautious start, Greek owners and operators are now addressing shipping’s sustainability challenge in earnest, increasingly approaching ABS for support with advanced decarbonization projects as regulations and technology drive significant fleet investment, writes Vassilios Kroustallis, Senior Vice President, Global Business Development, ABS
The shipping industry stands at a point of change the like of which comes along perhaps once in a century.
Not as epochal as the move from sail to steam perhaps, but the transition from a single fuel to multi-fuel operations is at least as significant as the change from steam to diesel.
In the coming decade the industry will have to assimilate fundamental shifts in the fuel and propulsion technologies it can adopt to com- ply with the IMO’s targets and ambitions for decarbonization. There is no way of heading off the changes; the UN mandate, through the IMO to the industry makes clear that shipping must reduce its emissions and ultimately operate at net zero carbon.
How the leading industry players – and Greek shipowners in particular – are responding to this challenge does much to demonstrate the operational, technical and financial changes required across the broader industry, and we are seeing the Greek owners developing serious projects in significant volume now.
ABS has been at the leading edge of this process from the beginning, investing in broadening the capabilities of the Athens office with specialists in sustainability, alternative fuels and propulsion. We have created a world-leading center in sustainability, ship systems and digital capability. This makes us well placed to advise owners through the complex maze of regulation, finance and technology that makes future fleet development so challenging today.
The degree of potential jeopardy can be seen from the current situation at shipyards where an increasing number of industry projects is focussing on research into future solutions. Meanwhile owners are increasingly hedging their bets with investments in dual fuel designs powered by LNG, LPG and Methanol as well as studying and ordering ‘dual fuel-ready’ designs for future fuels such as Ammonia.
The transition towards a truly sustainable shipping industry comes with an enormous price tag – especially when the development of new fuels is included - and the investment decisions required mean there is little margin for error when it comes to managing financial and operational risk and achieving compliance.
As is so often the case, Greece’s shipowners have a vital role to
play. As owners and operators of tonnage across the spectrum of vessel types, from the simplest workhorses to the most technically advanced, they cross the spectrum of energy efficiency and trading patterns.
The process of understanding what carbon reduction targets mean for their existing fleet and newbuilding projects is accelerating, with owners beginning to evaluate all the options for primary and auxiliary propulsion as well as improving vessel efficiency.
In addition to investigating the use of new fuels, Greek owners are evaluating pathways to increased energy efficiency, dual fuel readiness and the first vessel to receive a new notation for sail power readiness. Some major names are even understood to be looking at investments and partnerships that will help them secure new types of vessel fuel.
Projects currently going through the ABS Athens office include aid to gas carrier operators with understanding decarbonisation and ESG strategy and discussions on evaluating sustainability for bulk carrier operators. The resources available to them represent the full suite of services, encompassing power and propulsion, fuels and sustainability as well as digital services.
Our conversations with clients – which include some of the best- known names in Greek shipping – are that new guidance, tools, services and partnership approaches will be needed from industry – including classification societies. This includes the traditional technology remit of class and also extends to new types of services designed to reflect the emerging landscape.
In the next few years, a raft of new technologies including those that support low and zero carbon fuels, will begin to mature and become available. The safety implications of these options will need to be fully understood and accounted for, and the value of each option will need to be assessed against the decarbonization goals of each asset and the wider fleet.
Drawing on its vast technical heritage, ABS provides external guid- ance and best practices to help owners effectively implement new technologies and operational changes.
Many of these projects have a connection to new and emerging digital capabilities which are having an increasing impact on client needs. Having conducted an increasing number of remote surveys over the past 18 months, we believe that digital services offer valuable efficiencies and potentially safer operations. ABS is a pioneer in this field with resources locally available from its Athens office.
In a new service, ABS is helping shipowners to access ‘green finance’ - provided to borrowers who can demonstrate their environmental credentials - with a program assessing the contribution of environmental technologies to the reduction of carbon emissions and intensity.
For borrowers, ABS will review their ESG guidelines and offer advice on which technologies may qualify them for green financing with a positive environmental contribution. For lenders, ABS can assess environmental technologies based on IMO guidelines and the terms of the EEXI and Carbon Intensity Indicator, with reference to the Poseidon Principles. It can also reflect a bank’s own ESG guidelines and advice for granting green finance to asset owners.
An industry undergoing a period of seismic change requires that class services evolve alongside it, supplementing survey and certification services with broader information around assessing technical and financial options for decarbonisation and ESG. These new services represent a further extension of ABS’s leadership in providing trusted solutions to industry challenges.
* Senior Vice President, Global Business Development, ABS