Marine Online - Incremental approach to fuel pricing is a slippery slope

Incremental approach to fuel pricing is a slippery slope

News | Published Friday, July 16, 2021 9:49 AM

Since netback pricing is not welcomed, stabilising prices will be a long shot

To date, nobody could agree on a standardised pricing model. It is fair to say an increment approach will be effective only after some aggressive price curbing. However, it is not likely to happen.

Emission Trading Scheme perimeters
A recent webinar involving shipping heavyweights call for a global setup, briefly before the European Union announced that shipping would be included in the bloc’s Emissions Trading Scheme. It also preceded the imminent start of China’s emissions trading scheme, billed as the world’s largest carbon trading market, later in July 2021.

Bud Darr, Executive Vice President of Maritime Policy and Government Affairs, from MSC Group, said both trading schemes could prevent the creation of any new global scheme. Wärtsilä’s Director of Decarbonisation Solutions in Asia, Sanjay Verma, agreed the global approach was essential. Berit Hinnemann, Head of Decarbonisation Business Development at A.P. Møller-Maersk, was supportive of having both global setup and regional measures as possible stepping-stones. She added regional action may be inevitable.

Dominik Schneiter, WinGD’s Vice President for Research and Development, stressed the importance of two-stroke internal combustion engine technology and its very effective energy conversion. However, initiatives to raise efficiency would require new optimised systems and energy management networks that would require careful integration. He added the focus would be on new fuels and their respective emissions.

Energy efficiency has a price tag
Darr stressed the need for energy efficiency will determine future fuel prices. “If you think about most of these truly decarbonised fuels that we all aspire to use, most of these down-range fuels have energy density challenges. So, the less of it you need to maintain the autonomy that is required for long ocean voyages, the more of these potential real long-term solutions do not look so far over the horizon.” Citing fuel cells as an example: they could offer a 35 per cent increase in efficiency over an internal combustion engine of a similar power rating. “That is a lot less fuel than needed,” Darr declared, noting both a saving in fuel cost and a reduced requirement for fuel storage on board. However, Wärtsilä’s Verma noted the potential to raise efficiency on existing ships. “If we can reduce a 10-year old vessel’s energy consumption by 30-35 per cent, a 35 per cent hike in fuel price is easily compensated,” he said. The webinar concluded with all agreeing fuels of the future will cost more. Agreeing is one, the real deal may not sit well with everyone without a fight.

Marine Online News Team
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