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Expediting shipping industry’s decarbonization pathway warrants harsh regulatory intervention, uniform global rules with strict deadlines, and an entire eco-chain that fosters the adoption of zero-carbon fuels such as ammonia, Precious Shipping Limited, or PSL, MD Khalid Hashim said.

“Don’t give options, give deadlines,” Hashim told S&P Global Commodity Insights in an interview, adding that the International Maritime Organization needs to become “more ambitious” as a global regulator and undertake swifter action to stop the implementation of fragmented regional rules such as the EU ETS and the China ETS.

“We need a single regulator to make a single rule…otherwise it is going to become an impossible soup for us to work with,” Hashim said.

Hashim highlighted that the IMO must place a ban on fossil fuel burning ships from a specific date, say Jan. 1, 2025.

At the same time, older vessels must be recycled latest by 2030, he said, noting that this would carry multiple benefits. “They are the ones that have the maximum carbon footprint. So, you get rid of that by doing so,” Hashim said.

Secondly, it would shrink the availability of ships, leading to an increase in the value of existing fuel burning ships, subsequently drive higher earnings for shipowners, who can then invest in greener shipping, Hashim said.

Engine makers will become more proactive to get new zero-carbon fueled engines ready in time while it would also prompt shipyards to become more conscientious of different ship building aspects including sourcing and the quality of the steel, Hashim said.

An entire eco-chain is also required to expand the sustainable shipping footprint, and this is where the regulator comes into play, Hashim said.

Talking about ammonia, Hashim said, “I need rules for bunkering ammonia, I need ammonia availability and I need lots of bunkering ships to give me green ammonia…if the engine design is not ready, if the safety for burning ammonia is not good enough, I will not be able to use.

Complying with environmental rules

Currently, PSL uses only LSFO on its ships and MGO 0.1% in the ECAs. At the end of 2022, PSL had a fleet of 38 ships on the water including 8 Ultramax, 9 Supramax and 21 Handysize.

The company did not opt for HSFO with scrubbers for its fleet as an IMO 2020 solution because scrubbers simply transfer air pollution into the sea, Hashim said.

When it comes to using carbon capture as an alternative to scrubbers, Hashim said it was still largely “an untried, untested technology.” “Even if you get it, what are you going to do with it and how much carbon can you store in a ship?”

Meanwhile, PSL is also taking steps to increase energy efficiency, in line with EEXI and CII requirements, and has fitted energy saving devices such as the Mewis Ducts on its ships, Hashim said.

“We are trialing specialized paints, which are supposed to stay permanently polished, using special high performance hull coating and conducting trim optimization,” he said.

Achieving the right trim on the ship helps ensure stability, energy efficiency and cuts bunker fuel consumption. “We have placed sensors in all the key areas in the Engine Room on one of our ships, as a trial, to give us minute by minute non-stop data on the performance of the main engine, the speed of the ship in the water, the consumption of the ship, the main engine RPM, etcetera, which will be analyzed by a separate software company that we will engage but that is not involved in fitting the sensors…this software company will perform the data analysis that will guide us further and make us comply that much better with EEXI/CII regulations, and our own internal targets for GHG emission reduction on our ships,” he said.

Among the gamut of new zero-carbon fuels, Hashim said “ammonia was a better choice,” and PSL could opt for ammonia-fueled engines in future.

While some consider ammonia and methanol as competitors because they have a similar value in terms of their energy equivalence to fuel oil, methanol is still a carbon fuel, Hashim said. “So, even when you make it green, it still emits CO2.”

“In terms of value, if you take brown or grey ammonia, it is roughly $350/mt more expensive compared to conventional fossil fuels. When fuel oil was at $1,000/mt, its price was roughly equivalent [because the energy density of ammonia is 2.5 times lower than fuel oil], if you would have had a carbon tax put in by the IMO,” Hashim added.

The shipping industry has been known to be resilient, he said. Before the IMO 2020 rule, there were concerns over the compliance of the rule. “However, these worries were misplaced as there was an almost 98% compliance on Day 1,” Hashim said. “If the IMO makes the law [pertaining to decarbonization] clear and stringent, people will follow” Hashim added.