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This is a presentation covering the main points of the DNV produced report SHIPPING 2020. THis report covers the potential scenarios for the future of shipping till 2020.
Citation preview
27 September 2012
1
“SHIPPING 2020”
TECHNOLOGY INVESTMENTS IN THE NEW MARKET REALITY
© Det Norske Veritas AS. All rights reserved. 2
CONTENTS
WHY "Shipping 2020"
METHODOLOGY AND ASSUMPTIONS
BEYOND 2020
FINDINGS
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© Det Norske Veritas AS. All rights reserved.
More than 1 in 10 new buildings in the next 8 years will be delivered with gas fuelled engines
In 2020, the demand for marine distillates could be as high as 200-250 million tonnes annually
Newbuildings in 2020 will emit up to 10 to 35% less CO2 than today’s ships. The EEDI will be a driver for more than half of this reduction
Scrubbers are a significant option after 2020
Ballast water treatment systems will be installed on at least half of the world fleet
At least 30-40% of newbuildings will be fitted with EGR or SCR by 2016
"Shipping 2020" – SummaryFINDINGS
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© Det Norske Veritas AS. All rights reserved. 4
WHY"Shipping2020"
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© Det Norske Veritas AS. All rights reserved. 5
What is “Shipping 2020”?WHY "SHIPPING 2020"
QUESTION: What technologies should be installed to meet new environmental regulations and higher fuel prices?
ANSWER:"Shipping 2020" aims to indicate which technologies are most likely to be adopted by the industry by 2020.
CHALLENGE:Uncertainties associated with market trends and drivers, fuel choices, technology developments and other variables.
The wrong investment decisions will be detrimental to both the industry and individual ship owners.
Wrong decisions impact the financial bottom line and the environment.
© Det Norske Veritas AS. All rights reserved. 6
External drivers creates uncertainty about the future
Fuel trends (price, mix)
WHY "SHIPPING 2020"
World economy and demand for transport
Environmental regulations
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© Det Norske Veritas AS. All rights reserved.
The next decade poses some important questions for the ship owner
When should I install ballast water treatment systems?
Should I meet sulphur regulations through investing in LNG fuelled engines or scrubbers, or by fuel switch?
Do I need a NOx Tier III compliant vessel enabling global operation?
What is my cost-benefit of going beyond compliance on the EEDI?
How does this affect the ship owner?FINDINGS
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????
?
© Det Norske Veritas AS. All rights reserved. 8
METHODOLOGYAND ASSUMPTIONS
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© Det Norske Veritas AS. All rights reserved. 9
The process – the big picture
Technology trends
Investment profileand ship
characteristics
RESULTS
SIMULATION MODEL
ScenarioA
ScenarioB
ScenarioC
ScenarioD
Environmentalregulations
Fuel trends (price, mix)
World economy and demand for transport
METHODOLOGY AND ASSUMPTIONS
© Det Norske Veritas AS. All rights reserved. 10
Megatrends and external driversMETHODOLOGY AND ASSUMPTIONS
ECONOMIC GROWTH AND DEMAND FOR TRANSPORT
• Boom or bust?• Growth level and
level of contracting• Overcapacity of
vessels?
REGULATORY AND STAKEHOLDER PRESSURE
• Global or local regulations?
• Further requirements on GHG emissions?
• Rating schemes and requirements from charterer and public
FUEL TRENDS
• Sustained high fuel prices?
• LNG cheaper than HFO?
• Development of LNG infrastructure
• Impact of sulphurregulations
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© Det Norske Veritas AS. All rights reserved. 11
Scenarios have been created to captureuncertainties
METHODOLOGY AND ASSUMPTIONS
© Det Norske Veritas AS. All rights reserved. 12
Some of the assumptions used in the modelMETHODOLOGY AND ASSUMPTIONS
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© Det Norske Veritas AS. All rights reserved. 13
Technologies have been assessed against relevant regulations
METHODOLOGY AND ASSUMPTIONS
© Det Norske Veritas AS. All rights reserved.
Compliance and fuel efficiency are the main motivation, and cost and technology maturity are the main barriers
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Ship owner survey – motivation and barriersMETHODOLOGY AND ASSUMPTIONS
Main motivation Main barriers
Source: DNV survey (23 respondents)
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© Det Norske Veritas AS. All rights reserved.
Investment horizon (payback requirements) and how much of the fuel cost is paid by the ship owner impact the cost-effectiveness of many measures
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Ship owner survey – investment preferencesMETHODOLOGY AND ASSUMPTIONS
Source: DNV survey (23 respondents)
© Det Norske Veritas AS. All rights reserved.
Which technologies do ship owners envisage using in the future?
FIGURE 3: FAMILIARITY AND EXPERIENCE WITH TECHNOLOGIES FIGURE 4: LIKELIHOOD OF IMPLEMENTING TECHNOLOGIES
Low sulphur heavy fuel oilDistillate fuel
Shaft generatorsBallast Water Treatment System
Waste heat recoveryPropulsion efficiency devices
Hull shape optimisationSOx scrubber
System efficiency improvement (Aux)Smaller engine/de-rating (speed reduction)
Low NOx tuningReduction of seawater ballast capacity
EGR systemCounter-rotating propulsion
Dual-fuel engineSCR system
Hybrid propulsion systemPure LNG engine
Water emulsificationLightweight constructions
Air cushionHumid air motor/ direct water injection
Wind & solar power
Score HighFamiliarity with technology
Tested
Low1 2 3 4 5
Ballast Water Treatment SystemLow sulphur heavy fuel oil
System efficiency improvement (Aux)Hull shape optimisation
Waste heat recoveryPropulsion efficiency devices
Distillate fuelEGR system
Low NOx tuningShaft generators
Smaller engine/de-rating (speed reduction)Reduction of seawater ballast capacity
SCR systemSOx scrubber
Lightweight constructionsDual-fuel engine
Water emulsificationHumid air motor/ direct water injection
Hybrid propulsion systemCounter-rotating propulsion
Pure LNG engineAir cushion
Wind & solar power
Likely to be retrofitted
Likely to be implemented on new builds
Score HighLow1 2 3 4 5
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METHODOLOGY AND ASSUMPTIONS
Source: DNV survey (23 respondents)
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© Det Norske Veritas AS. All rights reserved.
Approximately 40% of the world fleet enters into the North America or Northern Europe ECA during a year
Half of these vessels spend less than 5% of their time there
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Time spent in ECAMETHODOLOGY AND ASSUMPTIONS
Time spent in ECA
Source: AIS data
Share of fleet
© Det Norske Veritas AS. All rights reserved.
201220132014201520162017201820192020
Assign each ship a ship owner investment profile
Remove scrapped ships from the fleet each year
Add newbuildings to the fleet each year
Generate a representative sample of the current world fleet
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Model illustration : simulation of individual ships
Annual technology and fuel type decisions per ship
Technology cost decreases with more installations
Results
Fuel price and regulatoryrequirements
Growth in seabornetransport
Technology alternatives
Investment profileand shipcharacteristics
METHODOLOGY AND ASSUMPTIONS
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© Det Norske Veritas AS. All rights reserved. 19
Assumptions and information sources
Parameter Distribution Scenario dependent SourceShip segment Number of ships Fixed No IHS FairplayAge distribution Parameterized No IHS FairplayME power Fixed No IMO GHG StudyAux power Fixed No IMO GHG StudyNos of Aux Fixed No IMO GHG StudyBallast water capacity Fixed No IHS FairplaySpecific fuel consumption Fixed No MANOperational profileDays in cruise Uniform No IMO GHG StudyDays in ECA Parameterized No AISME engine cruise load Uniform No IMO GHG StudyAux engine cruise load Fixed No IMO GHG StudyShip ownerInvestment horizon Parameterized Partly SurveyDiscount rate Triangular No Internal forecastShare of fuel paid Parameterized Partly SurveyTechnologies CapEx Uniform No ManufacturersOpEx Fixed No ManufacturersFuel reduction ME Fixed No ManufacturersFuel reduction Aux Fixed No ManufacturersLearning rate Uniform No IEA/othersExternal variables Fuel prices Stochastic Yes IEA/EIA/ClarksonFleet growth Fixed Yes IHS/SAICO2 prices Fixed Yes Internal forecastRegulatory requirements Deterministic Yes Internal forecast
METHODOLOGY AND ASSUMPTIONS
© Det Norske Veritas AS. All rights reserved.
Fleet used in the simulation model
In total 48,400 ships in 2011 comprising the international trading fleet except passenger ships and ferries
METHODOLOGY AND ASSUMPTIONS
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© Det Norske Veritas AS. All rights reserved. 21
FINDINGS
© Det Norske Veritas AS. All rights reserved.
More than 1 in 10 new buildings in the next 8 years will be delivered with gas fuelled engines
LNG price, sulphur limits and EEDI are the main drivers
From 2012-2019 the LNG price is the main contributing factor
When approaching 2020, EEDI and sulphurlimits will create additional motivation for LNG as fuel
- In Scenario D, 35% of newbuildings will be delivered with LNG engines
In scenario D, we foresee about 1,000 newbuildings from 2012-2020 and some 6-700 retrofits
Finding 1FINDINGS
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Share of LNG fuelled newbuildingsScenario D
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© Det Norske Veritas AS. All rights reserved.
In 2020, the demand for marine distillates could be as high as 200-250 million tonnes annually
A 0.1% limit in ECAs (2015) is expected to increase the demand to 45 million tonnes
- The current annual global demand for marine distillates is about 30 million tonnes
With a global sulphur limit HFO demand may drop from 300-350 million tonnes to only 80-110 million tonnes in 2020
- Depends on the number of scrubbers in use
- The use of LNG will not significantly impact the demand of other fuels
- Energy efficiency measure will only slow the fuel demand in the short term
Finding 2FINDINGS
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Fuel mix in 2020
© Det Norske Veritas AS. All rights reserved.
Newbuildings in 2020 will emit up to 10 to 35% less CO2 than today’s ships. The EEDI will be a driver for more than half of this reduction
Phase 0 of EEDI (2013) will encourage cost-effective measures
In Phase 1 (2015) and 2 (2020), up to half the reductions are motivated by EEDI alone
- Due to short investment horizon and low fuel burden, these reductions are not cost effective for the ship owner
- But in the long-term these are cost-effective
Small differences between scenarios- Fuel prices are already so high that any
variation does not affect uptake
Operational measures not included
Finding 3FINDINGS
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CO2 emission reduction on newbuildings
EEDI reduction on newbuildings
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© Det Norske Veritas AS. All rights reserved.
Scrubbers are a significant option after 2020
Few ships spend more than 30% of their time in and ECA justifying a scrubber before 2020
In 2020, with the global sulphurrequirements, scrubbers become a significant solution
- Scrubbers can be retrofitted and can take 25% of the market, 15-20,000 ship
- Still, 70% of ships will run on distillates
- In the short term LNG can only take a small part of the market
Uncertainty about the 2020 limit will slow technology development and uptake
Finding 4FINDINGS
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Ship owner investment profile
SOx reduction options in 2020
© Det Norske Veritas AS. All rights reserved.
Ballast water treatment systems will be installed on at least half of the world fleet
The Ballast Water Management Convention has not yet entered into force, but
- The schedule for mandatory treatment of BW is fixed (2019)
- The US has decided to implement a similar scheme for all ships in US waters (2013)
- Other countries have local requirements
This will motivate a significant part of the world fleet to implement a treatment system irrespective of BWMC progress
Finding 5FINDINGS
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Annual expected ballast water treatment installations
27 September 2012
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© Det Norske Veritas AS. All rights reserved.
At least 30-40% of newbuildings will be fitted with EGR or SCR by 2016
Both EGR and SCR are currently under development and need more time to mature
LNG is an alternative but does not seem to replace more than 25% of EGR or SCR installations
- Dependent on LNG price
Will a ship owner will opt for a Tier III engine even if the ship is initially not planned for sailing in an ECA?
- Lower second-hand value due to the loss of geographic flexibility
Finding 6FINDINGS
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NOx treatment installations
© Det Norske Veritas AS. All rights reserved.
Relative fuel price differences have a significant influence on uptake on LNG fuelled vessels
Regulatory requirements on EEDI and SOx in particular drives technology uptake
Fuel prices, investment horizon and fuel burden are important drivers
SensitivityFINDINGS
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Scenario D+ is Scenario D with increased fuel burden and investment horizon
Uptake of smaller engine/de-ratingUptake of LNG fuelled vessels
27 September 2012
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© Det Norske Veritas AS. All rights reserved.
The next decade poses some important questions for the ship owner
When should I install ballast water treatment systems?
Should I meet sulphur regulations through investing in LNG fuelled engines or scrubbers, or by fuel switch?
Do I need a NOx Tier III compliant vessel enabling global operation?
What is my cost-benefit of going beyond compliance on the EEDI?
How does this affect the ship owner?FINDINGS
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Future delivery capacity of technologies and fuel
Two-tier second-hand and charter market
© Det Norske Veritas AS. All rights reserved.
Ballast water and sulphur regulations set requirements on ships in operation
In 2020 60,000 ships have to switch fuel or clean the exhaust
- Are 20,000 scrubbers retrofitted between 2019 and 2020 possible?
- Will there be enough low sulphur fuel available and at what price?
- Will the availability uncertainty of LNG bunkering facilities slow uptake of gas fuelled engines?
By 2020 30-60,000 ships will have to install a ballast water treatment system
- How many ballast water systems can be retrofitted each year?
Future delivery capacity of technologies and fuelFINDINGS
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© Det Norske Veritas AS. All rights reserved.
Will there be a two-tier charter market, and which technologies would give a price premium?
Today’s ships will compete with increasingly more energy efficient ships
Ships built after 2016 with a NOx Tier II compliant engine will not be able to enter an ECA
Will a ship with a scrubber or LNG as fuel have a higher second-hand value?
Will many ship owners build beyond today’s requirements and aim for 2020 standards?
Two-tier second-hand and charter marketFINDINGS
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© Det Norske Veritas AS. All rights reserved. 32
BEYOND 2020
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© Det Norske Veritas AS. All rights reserved. 33
Future regulationsBEYOND 2020
Numerous regulations can become important after 2020
GHG- High attention today, but little progress
Black carbon and particulate matter- Increasing attention, but difficult to measure
and control
Hull bio-fouling (transport of alien species)- Guidelines developed, may results in
regulations over the next 10-15 years
Underwater noise- Raising concerns about possible impact on
ocean-dwelling mammals, but science remains unclear
© Det Norske Veritas AS. All rights reserved.
Safeguarding life, property and the environment
www.dnv.com
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