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Developments in the Shipping Industry: Green Fuels, Clean Technologies, and Decarbonisation Efforts

Updated: Jul 31, 2023

The shipping industry plays a crucial role in the UK economy, with recent developments likely to have a significant impact on its future. These developments include the world's first commercial ferry operating on liquid hydrogen, the introduction of a high-speed catamaran passenger vessel that can operate on green alternative fuels, and the implementation of the Carbon Intensity Indicator (CII) rating system. Retrofit-ready clean technologies also offer an opportunity for shipowners to gain a competitive advantage in the industry's decarbonisation transition.


One of the most notable recent developments in the shipping industry is the MF Hydra, the world's first commercial ferry operating on liquid hydrogen. This ferry is currently operating in Norway and can reduce carbon emissions by up to 95%. It can accommodate 299 passengers, 80 cars, and 10 cargo trailers. This development is expected to advance the regulations for the handling and use of hydrogen-fueled ships, which could significantly reduce the shipping industry's carbon footprint.


Another significant development is the signing of a letter of intent between Gotlandsbolaget, a Swedish passenger ferry company, and Austral for the design of a high-speed catamaran passenger vessel that can operate on green alternative fuels, including hydrogen. The Gotland Horizon X is expected to be in service by 2030 and can carry up to 1,650 passengers and 450 passenger cars, making the journey between the Swedish mainland and Gotland, a popular tourist destination, in less than three hours. Gotlandsbolaget aims to make the traffic to Gotland climate neutral by 2045.


In addition to these developments, new data from Sea Intelligence suggests that the container shipping industry's schedule reliability is recovering. Global schedule reliability increased by 7.7% in February 2023, reaching 60.2%, the highest level in 30 months. The decline in volumes and the growing number of blanked sailings in 2023 have reduced pressure on container lines and ports, and many ports have cleared their backlogs. However, carriers have moved to idle ships, with the number of ships laid up reaching levels seen during the last downturn several years ago.


The implementation of the Carbon Intensity Indicator (CII) rating system has raised concerns in the industry. The regulation's focus on slow steaming to boost CII ratings

risks counterproductively increasing emissions by expanding fleets to transport the same volume of goods. This could become an unintended consequence of the system. The International Maritime Organization (IMO) is likely to incentivise other solutions to achieving A and B ratings, making the latter a mark of pedigree for shipowners. Retrofit-ready clean technologies, such as air lubrication systems, offer a means of improving vessel efficiency and reducing emissions to save on operational costs and to stay competitive.


Shipowners should consider retrofitting some of their existing vessels to improve efficiency, as building new ships would be too emission-intensive. However, it may be challenging to determine which clean technology or technologies can provide genuine efficiency improvements. Shipowners should consider technical feasibility, payback equations, efficient installation, resilience in supply chains, emissions data, and independent verification of emissions savings before retrofitting.


Overall, these recent developments in the shipping industry are likely to have a significant impact on the UK economy. The use of liquid hydrogen in shipping and the introduction of high-speed catamaran passenger vessels that can operate on green alternative fuels, including hydrogen, are expected to reduce the shipping industry's carbon footprint significantly, notably aligning with the UK’s net-zero greenhouse gas emissions target year off 2050. However, the implementation of the Carbon Intensity Indicator (CII) rating system has raised concerns in the industry, and shipowners must consider retrofit-ready clean technologies to improve efficiency and reduce emissions to stay competitive.


By Misha Vaikunthavasan






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