In the second edition of the SMF Fest Confidence Index, published yesterday, biodiesel topped the poll, pushing the 2023 winner, LNG-biomethane, into second place, while LNG e-methane retained its third position in the rankings.
Apart from the three frontrunners, confidence levels appear to have dropped across the candidate fuels year on year. Confidence in green methanol has fallen from 53.5% in 2023 to 40.6% and green hydrogen, from 42.7% to 29.2%. Moving to the bottom of the Index, confidence in blue hydrogen dipped from 34.5% to 18.8%, and grey hydrogen, from 33.2% to 13.9%.
In 2023, confidence levels in methanol-fuelled shipping were very measured, in spite of a clear upswing in orders that year for methanol fuelled-vessels. However, last year's confidence levels in this fuel now look to have been quite bullish in comparison with 2024 voting, as green methanol has retreated from the ‘quite confident' category into the ‘little confidence' zone.
Among the green fuel variants, green ammonia moved up the pecking order, swapping places with green hydrogen, while there was little movement year-on-year between the blue fuel variants.
For the grey fuel variants, methanol retained its 2023 position, ammonia moved up two places from the bottom of the Index, while grey hydrogen dropped into last position.
The first SMF Confidence Index was launched at the inaugural Sustainable Marine Fuel Fest held in Valencia in November 2023, with the intention to provide a ‘moment in time' indication of how confident shipping and marine fuel industry stakeholders are that the groundwork required for maritime's energy transition, including its infrastructure and technology, is in place. It is not a forecast of how likely it is that the shipping sector can meet the IMO's decarbonisation end of decade milestones, out to 2050, but it does fill an information/perception gap that currently exists in the sector.
The Index charts and compares changes in industry confidence in shipping's energy transition according to four key criteria (Technology, Infrastructure, Commercial and Environmental Credentials) and across five deep sea vessel segments: containerships, dry cargo, gas carriers, passenger vessels and tankers. These criteria/vessel segments are considered in relation to the use of 12 marine fuels (including grey/blue/green variants).
The new edition of the Index shows that the dial on shipping's decarbonisation has moved in some important respects as industry stakeholders are become more informed about the energy transition process and its challenges. There is increased awareness of the environmental credentials of the alternative fuel options, and the conversation is moving on to focus on the commercial landscape for these energy sources, in terms of their availability, scalability and cost.
Voting for the 2024 Confidence Index and discussing its outcomes was a key element of this year's ‘by industry for industry' Sustainable Marine Fuel Fest (SMF Fest) which took place in Porto in October. The framework for the Index was developed by the event's industry partners who represent companies that that are proactive in delivering shipping's fuel transition. The industry partners involved in the 2024 event were Bureau Veritas, GTT, Hapag-Lloyd, SGMF and Wärtsilä. The participants in this year's Fest represented a wide range of stakeholders across the marine fuel value chain.
The results of the 2024 Confidence Index can be seen as a fair reflection of the tenor and tone of the many conversations in Porto.
There was close discussion about the production processes for the new fuels in shipping's energy mix as well as the availability (and cost) of green variants of these fuels. ‘No-one will pay more than they have to for the new fuels' was an oft-repeated phrase in conversations. Some participants also questioned the near- and longer-term future of the blue iterations of ammonia, hydrogen and methanol.
A lack of demand signals for fuels from shipowners was a key topic and a strong element of ‘uncertainty' among different stakeholders was perceived as stymying progress in the development of a robust, global fuel supply infrastructure. Shipowners are unsure about future fuel choices because they are not getting clear messaging from charterers about fuel preferences and routing schedules. Owners may also be ‘buying time' and opting for the cheapest fuel solutions while they decide on future fuel strategies, but there was consensus in the room that those owners and operators who can pass through fuel costs are better placed to take earlier and bolder decisions on new fuels.
Concern was also expressed over the future volumes of low and zero carbon fuels, particularly over the time taken for final investment decisions on production projects to be taken and the fact that only a small percentage of such projects stay the course and move to commercialisation.
The increasingly complex landscape of regulation and legislation also loomed large in discussions, particularly in relation to compliance obligations and cost implications, with the consensus being: We don't need any more regulation – work with what we have.
A key takeaway from SMF Fest 2024 was that decision-making on future fuel strategies remains slow and cautious – while there are some (large and small) first movers at this stage in the energy transition, there are still not many ‘close followers'.
The Confidence Index will be fully updated at the next SMF Fest which will take place in autumn 2025.
Source: SMF Confidence Index