The hustle and bustle of the world is all for profit. The power of "profit" opened the era of ship transportation. When the "coal era" withdrew from the historical stage, Marine fuel oil began to play an important role, and promote ship transportation into the heyday, especially in recent years, the market condition is not good, a variety of new ships, large ships emerge in an endless stream, labor costs increase, freight continues to fall, fuel costs become the key to the profit of shipowners. So what role will fuel play in the global shipping trade in the future?

Variation and constancy

The ancients used the analogy of "the moonlight and the wind, the foundation and the rain" to say that through certain signs, you can predict the direction of development of things. Predicting the future is to better adapt to and control the future and improve the ability to adapt to changes. The same is true for the shipping industry, which is an important part of its operations and is naturally essential to anticipate future fuel developments. As Tom Boardley, global Director of shipping at Lloyd's Register (LR), puts it, the shipping industry is undergoing a transformation to manage the increasing operating costs of "today" and achieve cost-effectiveness in meeting environmental requirements. Ship operators are required to make correct predictions about "tomorrow". There is no doubt that fuel is one of the most critical elements of market operation at this stage, and fuel cost control will directly affect profit margins. Various institutions around the world have also conducted forecast analysis of global energy in the next 10 years, 20 years and other different time periods, among which Lloyd's has also released the "2030 Global Marine Fuel Development Trend" for the shipping industry. So what does the report base its predictions on, and what kind of analysis does it use?

First, the entire analysis forecast is based on four major ship types: container ships, bulk carriers, general cargo ships and oil tankers. Why do you choose these four ship types? According to the report, the fuel consumption of these four types of vessels accounts for about 70% of the total fuel consumption of the global shipping industry.

At the same time, the analysis and forecast also make three assumptions about the control of the shipping industry in 2030: first, all external control conditions are basically unchanged, which is called the Status Quo scenario; Second, the scope of control is Global, which is called Global Common. Third, the world is "fragmented" in terms of management and control, and countries have their own management and control rules, which is called competing nations. These three scenarios represent the different development scenarios that the world shipping industry may appear in 2030, which may gradually become more global or more local from the current commercialization.

Based on the above ship types and assumptions, the report assesses the development potential of a variety of available fuels, both conventional and alternative. Traditional fuel refers to Marine fossil fuel, the representative fuel is Marine distillation oil (Marine diesel and Marine gasoline) and different components of residual oil, heavy fuel oil and low sulfur heavy oil. Alternative energy refers to liquefied natural gas, methanol and hydrogen energy, biological substitutes, etc.

The conclusion is that future-type fuel must have four characteristics: first, it must be available for ship use; Second, it must be cost-effective enough; Third, it must be competitive enough to compete with existing and upcoming energy technologies. Fourth, it must be able to meet current and future environmental requirements. So, under the three different scenarios, what are the different characteristics of the future prospects of different fuels?

Three patterns

First of all, under the status quo model, assuming no major changes in trade, steady economic growth, rapid control changes do not exist, shipping will develop, but to a limited extent. Assuming that the 0.5% low sulfur oil limit is still in place in 2025, heavy fuel oil will still account for more than half of the total fuel share in 2030. For most fleets, especially in the oil shipping industry, heavy oil is still considered the most cost-effective option. A significant proportion of the fleet, mainly older vessels, will rely on Marine diesel and Marine gasoline to meet ECA requirements. It may not be the best option, but for some ships it is still the only technical option available. From 2020 to 2025, the proportion of low-sulfur heavy oil use will increase, and in 2030, the proportion of alternative fuels will change significantly.

LNG applications will gradually increase, starting with chemical and product tankers, followed by bulk carriers and general cargo ships. By 2030, chemical tankers and oil product tankers will account for 30% of the total. Due to fuel prices and storage costs, LNG will be more suitable for small ships. While there will be some container ships fitted with LNG storage tanks, the percentage is small in the overall fleet.

In the "global Commons" scenario, we assume that there is a uniform requirement for sulfur content in fuels around the world, and this rule is the main reason for the continued use of heavy oil fuels. Unlike the status quo model, due to the price of low sulfur heavy oil, the proportion of high and low sulfur heavy oil will not be too large, on the contrary, more investment will be added to the technology such as scrubber equipment.

Carbon emissions will be more stringent, and hydrogen energy use will increase to 9% of non-traditional fuels by 2030, rising significantly by 2050, and making up a larger share of all ship fuels. The replacement of conventional fuels by LNG and hydrogen will first appear in bulk carriers, chemical tankers and oil product tankers. In other words, in the "global Commons" scenario, a significant increase in international trade could boost the use of LNG and hydrogen fuels. Under the "national competition" model, the report gives the smallest share of LNG applications, while traditional heavy oil, the report gives the figure of 60%. Compared to the "status quo" model, Marine diesel will have a smaller share of Marine gasoline from 2025. Due to the characteristics of their respective control laws and regulations, regulatory uncertainty and increasing barriers have added a strong color of protectionism. The application of LNG is not very clear, in the "national competition" model, requiring stable control rules and attractive prices, so traditional heavy oil has a price advantage.

Compared to the first two scenarios, the use of LNG in chemical tankers and product tankers will grow more strongly, reaching a share of 15% by 2030. Other ship types will also see similar trends, but in the tanker industry, the application share of traditional heavy oil is very large. This suggests that the market share of non-traditional fuels is driven by conventional fuel oil prices and emissions legislation, rather than independent commodity growth forecasts and associated transportation demand. In general, although the market share of heavy oil has decreased, the total use is still increasing, not decreasing. In 2030, heavy oil demand will be 23% higher than in 2010, which will have no positive impact on the control of greenhouse gas emissions from ships.

New energy substitution

According to Global Marine Fuel Trends 2030, close to half or two-thirds of tankers, bulk carriers and container ships will continue to use heavy oil by 2030, and as LR Environmental consultant Dimitris Argyros says, it will be a long transition from reliance on heavy oil to alternative fuels. What is the basis for this conclusion? We can see the leopard in two ways. First, from the point of view of the use of heavy oil, the study believes that the use of heavy fuel oil is still very high before 2030, accounting for about 47% of the market share in the "status quo" scenario, about 58% of the market share in the "global shared" scenario, and about 66% of the share in the "national competition" scenario. Second, in terms of the share of alternative fuels used by each ship type, chemical tankers and product tankers are likely to be the first to use LNG fuel, with LNG accounting for about 31% of the total fuel consumption of the ship type in the "status quo" scenario. However, for other ship types, the development prospect of 11% LNG was not realized at all in 2010. The 2030 Global Marine Fuel Development Trend believes that by 2030, global ship energy consumption is expected to double, of which new fuels will grow faster than heavy oil.

Overall, it will take many years for new Marine fuels to replace the current heavy fuel oil, and completely upending the current composition of Marine fuel will not be feasible in the next 16 years, LR said, adding that heavy oil will remain an important part of Marine fuel until 2030. Therefore, the proportion of heavy oil used in the future will not necessarily be reduced, nor will it be good to reduce it.