A while ago I wrote a piece about shipping’s decarbonisation, in which I wondered who would pay for this great leap forward. The obvious answer of course is that you and I – the end consumers – will pay eventually. But which corporations, backed by which banks or funds, will sign the cheques, do the engineering, and run the next generation of low-carbon, then the next generation of carbon-neutral cargo ships?
The issue after all is not about technology. Ammonia, ethanol, ethanol, hydrogen, fuel cells, electricity and biodiesel have all been used as a fuel for decades – over a century in some cases. As of course has oil. But before oil there was coal (and before coal there was sail and oars pulled by slaves, but let’s stay in the modern era).
The cost of switching from one fuel to another is in large part the cost of acquiring the fuel and of building the infrastructure for fuelling ships. In the case of the switch from coal to oil, there were cost advantages. The oil was a residuum of the then rather simple oil distillation process. The refiners had to put it somewhere and offered it in particular to the British Royal Navy at a very low price.
The timing was opportune. In the late 19th century in the UK, Socialist tendencies were growing especially among coal miners. Their radicalism – and their strikes – represented an operational risk to the Royal Navy as Welsh coal was the best ship fuel in the world, being shipped around the world to Royal Navy fuelling stations. Switching from Welsh coal to Persian and Armenian oil would allow the Royal Navy to swerve the risk of striking Welsh coal miners shutting down the UK’s naval defences.
So the world’s biggest fleet at the end of the nineteenth century had sound economic and operational reasons to make the switch from coal to oil. But only by 1911 was an oil bunkering infrastructure built in enough ports to allow the Royal Navy to switch all new ships from coal to oil as primary fuel. Even then, it took years for the Royal Navy to fully convert to oil burners.
It took a good thirty years for the most efficient military-industrial power of the day to make the transition from coal-fired steam engines to oil-fired internal combustion engines.
One of the first coal-burning cargo ships to be retrofitted to burn oil was the SS Gretzia, converted in 1881. But retrofitting was rare, costly and risky, just as it is today. And this was in part because there was plenty of coal to be had, but limited supplies of oil fuels. As ever the risk in bunkers is to get the right fuel in the right quantities at the right spec in the right place for the right price.
In 1912 the Hamburg-SuedAmerika liner Monte Penedo was built with twin two-stroke internal combustion engines, manufactured by Sulzer Bros of Switzerland. This gave it a claim to be the first ever international cargo Motor Ship.
The first generally recognised oceangoing cargo Motor Ship was also delivered in 1912. MS Selandia was built in Denmark by Burmeister & Wain (B&W – still known for ship engines) for the Danish East Asiatic Company’s liner service from Europe to South East Asia. The shipbuilding contract included a clause to replace the diesel engines, if they failed to perform, with steam.
It took thirty years for oil fuelled ships to become the norm for non-military newbuildings, and many more years for coal to be phased out altogether.
The switch was funded, as was the development of the new fuelling infrastructure, by the military (the Royal Navy) and the big liner companies who, in a world before air travel of any sort, let alone affordable air travel, were the glamourous industrial stars of the day. The fuel providers, in those days the oil companies, partnered with the fleet operators and their financiers (Her Majesty’s Revenue and Customs and the UK Treasury) to build the infrastructure.
These days the UK is a basket case banana republic led by an English nationalist entryist party in thrall to an autodidactic iconoclast who takes long drives in the country to test his eyesight. It’s also in full dog-chasing-a-motorbike mode trying to manage its own Brexit and response to Coronavirus, so Her Majesty’s government won’t be paying this time.
The switch this time is being made with greater involvement from the fuel companies. Many oil companies wishing to decarbonise will invest only in fuels with markets. Shipping has to be part of a market continuum along with other forms of transport and municipal energy.
But although the fuel providers (think of Shell) are investing long-term with an acceptance that short-term returns are inevitably low to negative, they won’t provide the bulk of the finance. Neither will the ship owners. The big eight liner companies lift 80 per cent of shipping containers, but the tramp shipping wet and dry cargo markets are not nearly so consolidated. Early adopters can build the ships to burn the new fuels, but very few of them are involved in the fueling industry itself.
In fact, my own research for the new free-to-view website www.ship.energy which tracks shipping’s path to decarbonisation, suggests that it is the infrastructure providers who will support the majority of the investing and engineering until there is enough momentum in the global market place for them to stand back. And in the 21st Century that means activist governments supporting the bunker industry. The likes of Singapore and the Netherlands.
In fact, as three quarters of global bunkers are supplied in six countries: China, South Korea, Singapore, the UAE, the Netherlands and the USA – we should follow policy in those countries to build the roadmap to decarbonisation.
As for who pays- well, it’s still the end user, via taxation if not directly. No such thing as a free launch.