The biggest driver towards decarbonization in the shipping sector will come from the market, although regulatory changes will also have an effect, according to Thor Hodne, business director maritime at DNV.
Speaking at this week’s IUMI conference in Edinburgh, Hodne said that decarbonization was really the name of the game at the moment. While IMO regulations and EU regulations would have an impact, market forces to decarbonize were stronger than anything. Hodne observed that five to 10 years ago the cargo owners didn’t really care about the environmental details of the ship, provided it was safe. Now all of that had changed.
The reason for this comes down to the three major factors pushing shipowners towards decarbonization are:
- access to capital
- value chain requirements
Hodne noted that IMO requirements were just an ambition at the moment, without any enforcement before 2026-27, cargo owners are being pressurised by their customers, so they were pressurizing the shipowners. The Sea Cargo Charter was an example of this.
Access To Capital was also likely to be a limiting factor for shipowners. If a shipowner did not have in place a decarbonization plan, they would be at a disadvantage. “Unless you have a plan you are unlikely to get the access to capital”, Hodne said. Lack of capital to shipping as a whole may also be a factor. The banks had formulated the Poseidon Principles, which were very similar to the Sea Cargo charter. This meant that shipowners have far more to think about than regulation. They will be under pressure from both their lenders and their customers to implement a cogent decarbonization strategy.
However, Hodne also warned that new fuels and infrastructure for ships would both be late and in short supply. “Infrastructure onshore will be about 2 to 3 times higher than the cost on the vessel. We think it likely that the fuel which will “win” will be one that is available for areas other than shipping, because this will provide a quicker route to economies of scale”, Hodne said, while noting that, for shipping to reach its 40% target by 2030 it would need too high a percentage of the fuels available. This, he said, was a very high bar indeed.