The stalled energy transition – Dagfinn Lunde

Showered with cash like never before, what is it that containership owners know that the rest of us have yet to work out?

Newbuild prices are considerably elevated and most of the shipowning community cannot, hand on heart, say with any conviction that they know what the fuel of the future is. And yet our boxship friends have piled in with more orders for new ships than ever before. Granted many of these new ships are alternatively fuelled – for which read LNG bar a handful of Maersk methanol dual-fuellers – but really we are still so far away from being able to order tomorrow’s ships with any confidence. Where will the green methanol come from? Where will all the green hydrogen come from? Fortunately, the dry cargo owners are sensible and are holding back so we can see a healthy demand-supply relationship in the dry cargo area for a few years ahead.

Shipping is obliged to become green but cannot do it on its own. The world seems to not be joining the dots – demanding zero emissions without establishing the requisite infrastructure.

Of course, the regulatory tardiness does not help. I am very worried about EEXI and CII rules coming in. This bodged legislation will not necessarily put us on the green path we need to be on fast. It will, however, make older ships go so slow, potentially great news for owners as rates will rally.

It’s not just shipping that has struggled to keep a resolute green path in 2021. The global energy transition has stalled this year – witness the extraordinary growth in coal use this year, in no small part due to high gas prices.

One final point relating to finance. You might have read recently about the big drop in syndicated marine loans this year. While this is a clear trend, don’t think for a moment that this translates into the finance taps being turned off for shipowners. There is still a massive inflow of capital from every other source. Whatever project you look at these days, four or five bids come from non-banking sources. Shipping is attractive again and there will not be a lack of funding anytime soon.

This article first appeared in the latest issue of Maritime CEO magazine, published this week and in Splash 247. You can read it here.