DNV Predicts Ship Propulsion Technology Uptake to 2020

Press Release
Tuesday, June 05, 2012
Tor-E-Svensen: Photo credit DNV

DNV simulation model used global shipping data and technology specific information to predict the deployment of emission reduction and energy efficiency technologies up to 2020

The results show that high fuel costs will result in a drive towards more energy efficient ships ahead of the EEDI regulatory timeframe. Fuel choices up to 2020 will be driven by the time spent in an Emissions Control Area (ECA), but distillate is a more likely option than scrubbers for most ships towards 2020.

Tor Svensen, DNV's President informs:

By 2020, it is expected that new tankers, bulkers and container vessels will be up to 30 per cent more energy efficient than today’s newbuildings. DNV predicts that one-third of the reductions will be cost effective for shipowners. The Energy Efficiency Design Index (EEDI) will be the driver for the remaining two-thirds of the efficiency gains.

These results have been obtained by examining the technology choices available to ensure regulatory compliance and how these technology options will be adopted based on simulated investment decisions for individual ships.

The model can support owners and managers in their business-critical decisions by providing a ship-specific scenario analysis as well as market predictions for specific ship segments or the entire world fleet. The model is not restricted to the newbuilding market alone, and offers insights on fuel choice, exhaust gas treatment and ballast water treatment for existing ships as well. Over 20 technology options have been included in the modelling process.

The results of a survey conducted March 2012 and involving a number of the world’s leading shipping companies have been used as the basis for the investment decisions. The model also factors in fuel availability, regulatory timelines and the net growth in the world fleet, amongst other things. This is not an optimisation model trying to predict the optimal choices for the world fleet, but a model that aims to simulate the most likely outcomes amongst a multitude of technology options and preferences in a highly uncertain world.

An analysis of fuel choices reveals that between 10 and 15 per cent of the newbuildings delivered up to 2020 will have the capacity for burning LNG as fuel. This equates to about 1,000 ships. Larger vessels will benefit more from using LNG than smaller vessels. Furthermore, a gas-fuelled engine can be justified if a ship spends about 30 per cent of its sailing time in ECAs. In 2020, the number of ships using LNG will increase significantly with the introduction of a global sulphur limit.

Incorrect investment decisions could be devastating for individual shipowners and collectively they could impact negatively on the environment as well,” says DNV President Tor Svensen. DNV believes the industry must work together to avoid a legacy of sub-optimal ships entering the global fleet in the lead up to 2020. This model gives shipowners a clear technology and market context to work in, with the opportunity for targeted analysis of individual ship profiles.

Current annual demand for distillate fuels is around 30 million tonnes. This will rise to 45 million tonnes when the 0.1 per cent limit comes into force in ECAs and will be around 200-250 million tonnes by 2020. Conversely, the demand for heavy fuel oil will plummet from around 290 million tonnes in 2019 to 100 million tonnes once expected global emissions regulations enter into force in 2020.

Shipowners' costs will increase sharply in 2020 when even more stringent air emissions regulations take effect. It will be unfamiliar territory for us all as the fuel market adjusts,” says Mr Svensen. The investment decisions made over the next few years will be critical preparation for this time and DNV is dedicated to ensuring that the industry as a whole is ready and able to make the correct decisions to ensure responsible environmental stewardship that also makes good business sense.

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