"SHIPPING 2020" TECHNOLOGY INVESTMENTS IN THE NEW MARKET REALITY - Tor E. Svensen, President DNV Maritime and Oil & Gas - Anave
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“SHIPPING 2020” TECHNOLOGY INVESTMENTS IN THE NEW MARKET REALITY Tor E. Svensen, President DNV Maritime and Oil & Gas
CONTENTS
WHY "Shipping 2020"
METHODOLOGY
FINDINGS
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“Shipping 2020” – DNV’s predictions
Newbuildings in 2020 will emit up to 30% less CO2 than today’s ships
- The EEDI will be a driver for two-thirds of this reduction
1,000 newbuildings will be delivered with LNG engines towards 2020
- Assumes an LNG price that is 30% lower than that of HFO
- This represents 10-15% of the expected newbuildings (tankers, bulk carriers, containerships,
offshore supply vessels)
Distillate fuel is the most likely choice to meet ECA emission requirements
- Scrubbers not a significant option before 2020
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WHY
"Shipping
2020"
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WHY "SHIPPING 2020"
What is “Shipping 2020”?
QUESTION:
What technologies should be installed to meet
new environmental regulations and higher fuel
prices given the uncertainties associated with
market trends and drivers, fuel choices,
technology developments and other variables?
CHALLENGE:
The wrong investment decisions
will be detrimental to both the industry
and individual shipowners.
Wrong decisions impact the financial
bottom line and the environment.
ANSWER:
"Shipping 2020" aims to indicate
which technologies are
most likely to be adopted by the
industry by 2020.
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WHY "SHIPPING 2020"
Megatrends and external drivers
World economy and demand for transport
Environmental regulations
Technology trends
Fuel trends (price, mix)
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WHY "SHIPPING 2020"
Difficult choices ahead
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METHODOLOGY © Det Norske Veritas AS. All rights reserved. 8
METHODOLOGY
Variables included in the simulation
SHIP TYPE/SEGMENT TECHNOLOGIES
Number of ships Capital & operating expenses
Age distribution Retrofit capital & operating expenses
ME & Aux power Fuel reduction ME & Aux
Number of aux engines Learning rate
Ballast water capacity
Existing ships ME & Aux SFC
Newbuildings ME &Aux SFC
INPUT
PARAMETERS
SHIP OWNER
& OPERATIONAL PROFILE SCENARIOS
Days in cruise Fuel price variables
Days in ECAs Fleet development
ME & Aux engine cruise load (newbuildings, scrapping)
Investment horizon CO2 price trends
Discount rate Regulatory requirements
Share of fuel paid
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Technologies have been assessed against relevant regulations
MOTIVATING REGULATION
ENERGY BALLAST
TECHNICAL MEASURE RETRO-FIT SECA 1%S SECA 0.1%S GLOBAL 0.5%S NOX TIER III EEDI
EFFICIENCY WATER
Low sulphur heavy fuel oil
SOx scrubber
Distillate fuel
Pure LNG engine 20 %
Dual-fuel engine 20 %
Exhaust gas recirculation
Selective catalytic reduction
Propulsion efficiency devices 2%
Waste heat recovery 4%
Shaft generators 0-1%
Hull shape optimisation 5%
Contra-rotating propulsion 4%
Air cushion 6%
Wind power 2%
Smaller engine/de-rating (speed reduction) 10 %
System efficiency improvement
Hybrid propulsion system (Diesel-Mechanical-Electric)
Ballast Water Treatment System
Water injection Considered, but not selected due to limited impact/effect
Water in fuel Considered, but not selected due to limited impact/effect
Low NOx tuning Considered, but not selected due to limited impact/effect
Lightweight constructions Considered, but not selected due to limited impact/effect
Considered, but not selected due to limited impact/effect
Reduction of seawater ballast capacity
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Scenarios have been created
ECONOMIC
GROWTH
HIGH
SCENARIO A: SCENARIO B:
FULL STEAM AHEAD KNOWING THE ROPES
High economic growth High economic growth
High fuel prices, with MGO twice Cost of CO2 emissions up
HFO and LNG 10% higher than HFO and on the rise in 2020
Little regulatory or stakeholder LNG price decoupled from oil price and
pressure on environment is significantly lower, 30% of HFO
REGULATORY
AND
LOW HIGH STAKEHOLDER
PRESSURE
Low economic growth Low economic growth
Little regulatory or stakeholder Limited implementation of MBM gives a
pressure on environment medium price on CO2 emissions
LNG price decoupled from oil price, High fuel prices, with MGO twice HFO
at about 70% HFO and LNG 10% higher than HFO
SCENARIO D: SCENARIO C:
IN THE DOLDRUMS SINK OR SWIM
LOW
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Illustration of model: simulation of individual ships
Simulates fuel
MGO
prices on a
monthly basis
until 2020 HFO
Generates a LNG
representative
sample of the ECA Tier III NOx
current world fleet
ECA 0.1% SOx ECA 0.1% SOx Global 0.5% SOx
EEDI Phase 1 EEDI Phase 2
LSHFO LSHFO LSHFO LNG LNG LNG LNG LNG LNG
Improve Dual fuel
Simulates annual sys. eff. engine
retrofit and fuel
Improve
decisions for all prop. eff.
existing ships until
2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Adds newbuildings Simulates annual
to the fleet each retrofit and fuel Removes
year decisions for all scrapped ships
newbuildings until from the
2020 simulated fleet
each year
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FINDINGS
Finding 1
With low LNG prices, 1,000 newbuildings
will be fuelled by LNG within the next 9 years
1,000 ships equal 10-15% of the expected newbuildings (average before 2020)
Includes ships with either pure LNG or a dual-fuel engine with full flexibility
Larger vessels will benefit more from LNG CUMULATIVE UPTAKES OF LNG ENGINES
than smaller vessels
25%
In 2018-2020, about
SHARE OF SHIPS BUILT
20%
30% of newbuildings 2012 - 2020 15%
will be delivered
10%
with LNG engines
5%
0%
2012 2013 2014 2015 2016 2017 2018 2019 2020
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Finding 2
A global sulphur limit in 2020 will result in a demand for
200-250 million tonnes of marine distillates per annum
This equals the total US distillate fuel oil consumption in 2010
The current annual global demand for marine distillates is 30 million tonnes
A 0.1% limit in ECAs is expected
to increase the demand
WORLD FLEET FUEL MIX
to 45 million tonnes
100%
SHARE OF TOTAL FUEL USE
Consumption of HFO will plummet 80%
from about 290 million tonnes in 2019 60%
to only 80-110 million tonnes in 2020
40%
20%
0
% 2012 2013 2014 2015 2016 2017 2018 2019 2020
HFO LSHFO MGO LNG
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Finding 3
Newbuildings in 2020 will emit up to 30% less CO2
Most of the reduction will be found on tank, bulk and container vessels
Two-thirds of the reduction will be achieved through regulatory drivers (EEDI),
while one-third of the reduction will be motivated by cost-efficiency alone
No significant costs for ship owners expected until 2020. From 2020, more
measures are to be implemented and costs are expected to increase sharply
Most common compliance options before 2020:
- Hull shape optimisation
- Reductions in installed power
Most common compliance options starting in 2020:
- LNG engines
- Propulsion efficiency devices
- Hull optimisation
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Finding 4
LNG becomes a cost-efficient option for vessels
spending more than 30% of their sailing time in ECAs
When the 0.1% sulphur limit is enforced in North America and Northern Europe
in 2015, approximately 40% of the world fleet will be affected
Small tankers and general cargo carriers which spend all their time
in ECAs will be significantly affected
The threshold for LNG being a cost-effective compliance option
is when the vessel spends about one-third of its time in an ECA
Very low LNG prices can reduce the threshold
to 20% of time spent in an ECA
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Finding 5
Distillates preferred for ECAs - scrubbers not a significant option before 2020
A low LNG price compared to HFO favours investing in LNG engines
rather than in scrubbers
A limited proportion of the global fleet will spend enough time in ECAs
to justify retrofitting a costly system
When the global sulphur limit enters into force in 2020,
scrubbers may potentially be fitted to several thousand ships
There are, however, significant uncertainties, particularly concerning costs
and expected cost reductions due to learning effects,
which are high in the initial stages of technology innovation
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"Shipping 2020" – Summary
Newbuildings in 2020 will emit up to 30% less CO2 than today’s ships
About 30% of sailing time in ECAs can justify an LNG-fuelled engine
1,000 newbuildings will be delivered with LNG engines towards 2020
Distillates preferred for ECAs and scrubbers not a significant option before 2020
In 2020, the demand for marine distillates will be 200-250 million tonnes
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and the environment
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