In a recent sustainable fuel panel discussion, I once again found my self sucked into the sustainable fuel chicken and egg conundrum.
I have discussed it before; shipowners will not buy ships that use a fuel for which no viable supply chain exists and fuel suppliers will not develop supply chains for which no buyers exist.
In general, it is very difficult to break a chicken and egg conundrum, except through a direct directive or through, often very large, subsidies.
Often direct directives leave the problem solution to the market. As such, when IMO tells shipowners thou shalt achieve such and such maximum CO2 emissions by such time, there may be many solution approaches and depending on how the ships fall (pun intended) there could be one or more dominant solutions. However, there is no guarantee that these solutions are optimal.
One of those solutions may be a very dangerous fuel that happens to be most economical to a specific ship owner, but places unfair burdens on crews. Another fuel may be useful in one specific segment, but does not interact with other segments and thereby develops inherent inefficiencies with the suppliers who need to supply multiple fuels.
The public may not care and simply say, well that is the shipowner and fuel supplier’s problem, but nothing is further from the truth. Generally, that truth remains hidden for a period of time and then a major disaster occurs and we are off to the Exxon Valdez/Ozone Hole/Chernobyl races again.
The public should have a say in the solution, but the public as a whole is very bad at coming up with solutions. So is government. Is there anything out there with sufficient power to at least drive the solutions into a rational and equitable direction?
While shipowners are discussing sustainable fuel options, so far, I have not noticed any such discussions by the ports. Interestingly ports may be able to break the chicken and egg conundrum. Sustainable fuels are not just ship concerns, they are also very much shore-based concerns where the fuel need to be manufactured, stored and distributed and not just for ships. Ideally such fuels should also support shore based stored fuel needs.
This may suggest that a major port may be the chicken and egg breaker by simply stating: “We have looked at all the aspects of sustainable fuel and we think it should be Fuel X and will only support that fuel.”
Interestingly there is a relatively recent and very powerful example where one player made a statement like this, and changed the world very much for the better. It occurred in the US OPA90 decision to only allow double hull tankers into its ports. The USCG let the market argue for a little, suggested that they would only allow double hulls and even told the market that they would accept solutions that were superior to double hulls. When no one came up with a better solution the USCG simply told ship owners operating in US ports that double hulls would be required.
Nobody knows if double hulls actually were the best solution (actually, ironically, the best solution is getting rid of fossil fuels), but this one powerful player quickly made the rest of the world follow suit. And the world became a much better place.
In this case one power player is not enough, that would be like somebody inventing email but not having anybody to email with. Email worked because a small group of smart people started to use it and then set the example for the rest of the world.
As such, from a game theory point of view we should find a small group of influential players who get together, do the hard work, and come up with an approach that serves all best.
Such players need to be big but do not have to rule the world. It would appear to me if, say, New York and Rotterdam agree on the optimal fuel, and then make a commitment to only support that fuel, that the adoption of that fuel would spread. If LA/Long Beach, Singapore and Shanghai support the same fuel it will almost certainly lock in on a worldwide basis.
This may not be easy, but let me paint the alternative. Shipowners are running helter skelter between different fuels, and every port makes a minor investment in all of those fuels and sure enough we will have the same fuel mess we have lived with in the last 50 years and which has only gotten worse with IMO directives (Low sulfur, biodiesel, LNG).
We can do better, if we agree on one sustainable fuel and go from there, we can gain great efficiencies and save untold billions. Undoubtedly the pinheads (engineers like me) will argue one fuel is theoretically more efficient than another in certain circumstances. However, specific efficiency is not the same as full system efficiency. Even if one fuel is somewhat less efficient or somewhat more expensive, once considered on an overall system level it almost undoubtedly will be more efficient if it is the single sustainable fuel.
Interestingly, Ports are the multiplayer interactive location that can best identify the best overall efficiency solution. Let’s deconfuse the ship owners, and let the Ports provide a clear course on sustainable fuels. At the very least, let’s hear from the Ports what would make them happy. Happy ports; Happy ships; Happy public.
For each column I write, MREN has agreed to make a small donation to an organization of my choice. For this column I choose the Maritime Association of the Port of New York and New Jersey, https://www.nymaritime.org/ Their alternative fuels panel is making a first pass at this issue.