Class NK says need to work out volume of ship yards

Japanese classification society ClassNK has crunched the numbers to work out the volume of ships yards will have to churn out in order to comply with the indicative checkpoints agreed at this year’s new International Maritime Organization greenhouse gas (GHG) targets. In short, 80m gt of zero-emissions vessels will need to be handled by shipyards – both as newbuilds and retrofits – each year between 2027 and 2040.

The 36-page report analyses the allowable lifecycle GHG emissions for international shipping and the required introduction amount of zero-emission fuels and zero-emission ships to achieve the targets and indicative checkpoints in the 2023 IMO GHG strategy.

To achieve the indicative checkpoints for 2030 and 2040, approximately 25% then 72% of the fuels used in international shipping must be zero-emission fuels according to ClassNK.

ClassNK estimates it will be necessary to introduce 85m gt of zero-emissions ships annually from 2027 to 2030 through a combination of newbuildings and retrofits. To meet the 2040 targets, an annual introduction of 77m gt of zero-emission ships will be required in the 10-year period from 2031 to 2040.

Given that the 25% introduction of zero-emission fuels is required to achieve the indicative checkpoint for 2030, achieving only a 5% to 10% introduction of zero-emission fuels, as outlined in the 2023 IMO GHG strategy, would make it “challenging” to achieve the indicative checkpoint for 2030, ClassNK suggested.

Even if the indicative checkpoint for 2030 is not achieved, an annual introduction of 80m gt over the 14-year period from 2027 to 2040 will still be necessary, something the class society maintained was entirely possible from a shipyard capacity point of view.

After many years of contracting shipyard capacity, the global yard scene is finally expanding amidst record-long orderbooks, and a growing acceptance that much of today’s fleet will need to be replaced to meet new green regulations.

According to data from Maritime Strategies International (MSI) carried in class society ABS’s recently published 2023 Outlook, shipyard capacity grew 1.8% to 67.1m gt last year with MSI forecasting this figure will rise to 69m gt by 2025, and will peak at 81m gt in 2030 (see chart below). While this is significantly above current levels, it remains 26% below the 2011 peak.

The Review of Maritime Transport 2023 published by the United Nations Conference on Trade and Development (UNCTAD) last month urged shipyards to expand quickly to aid with shipping’s green transition.

Looking at repair yard capacity rather than newbuilds, class society Lloyd’s Register (LR) has just published an engine retrofit report in which it argues a lack of yard capacity and capability could compromise the maritime industry’s retrofit ambitions.

A maximum addressable retrofit market of 9,000 to 12,900 large merchant vessels was identified up to 2030 in the report, after which it is anticipated that all vessels will be built with net-zero or near-zero carbon fuels capability.

Fuel retrofits are more complex than most projects undertaken by repair yards, the study made clear. Converting the engine itself is a relatively straightforward process of installing prefabricated engine components.

LR has identified a group of around 15 yards capable of handling alternative fuel retrofits. Allowing a 60-day conversion period, these yards could be capable of handling up to 308 conversions in total each year. Another factor for consideration in understanding the capacity for retrofit projects is slot availability in repair yards. Repair capacity is already constrained, according to LR, while the authors of the report warned there were other constraints on the supply chain with engine builders needing to balance the demand for newbuild engines with the growing demand for engine retrofit packages.