Solvang’s Annual Efficiency Ratio development

If we look to the future, it seems obvious that we will need to comply with the EEXI and upcoming reduction targets for carbon intensity.

Our work with Solvang ECO gas carriers has demonstrated that systematic efforts towards all aspects of the design yields documented improvements. Furthermore, our systematic work to improve vessel operation continues to reduce energy consumption and related emissions to air.

IMO has defined a target of 40% reduction in carbon emission intensity from 2008 to 2030. Presently, the 2008 baseline is not defined, so we don’t know the starting point of the calculation.

The assumptions stated below are based on AER data for our own fleet, not for the world fleet, which otherwise would constitute the basis for the future requirement.

Solvang 2025

All our vessels are set to be recertified with EEXI certificates, and the carbon intensity factor is monitored closely in order to secure full compliance with the IMO reduction target of 40 percent by 2030.

Ethylene fleet

Solvang’s AER (efficiency indicator) shows that our ethylene fleet already delivers a 36 percent reduction compared to our reference level from 2009 (see graph on previous page). Based on this assumption, our ethylene vessels operate in the same pattern with continued focus on improved operational procedures, best practice and maintenance. As a result, our ethylene fleet scores far better than the required efficiency ratio in 2025.

LGC fleet

Solvang’s AER (efficiency indicator) shows that our LGC fleet has reduced its AER by 24 percent since the reference year 2009. Based on this assumption, our LGC vessels operate in the same pattern with continued focus on improved operational procedures, best practice and maintenance. As a result, our LGC fleet scores far better than the required efficiency ratio in 2025.

VLGC fleet

Back in 2009, Solvang recorded data for two Panamax VLGCs, which were delivered mid-2008 and Jan 2009. The third newbuild VLGC was introduced late 2009.

Solvang’s AER (efficiency indicator) shows that our VLGC fleet has reduced its AER by 15 percent since the reference year 2009. Based on this assumption, our VLGC vessels operate in the same pattern with continued focus on improved operational procedures, best practise and maintenance. As a result, our VLGC fleet would score better than the required efficiency ratio in 2025. Another factor supporting this projection is that Poseidon*  has established a reference level for gas tankers >50,000 cbm at 8.2 in 2020, and at 7.2 in 2025. The Solvang VLGC fleet reached 7.2 in 2020.

Solvang 2030

As in 2025, the carbon intensity factor will be closely monitored to secure full compliance with the IMO reduction target of 40 percent. The assumptions below are based on AER data from our own fleet, not for the world fleet, which otherwise would constitute the IMO baseline.

Additionally, we expect to see in place an improved indicator for documenting carbon intensity. There are several options, each representing advantages and disadvantages. Ship owners can control some of them and some are left to the charterers.

Ethylene fleet

Solvang’s AER (efficiency indicator) shows that our ethylene fleet already delivers a 36 percent reduction compared to the reference year 2009. Based on this assumption, vessels operate in the same pattern with continued focus on improved operational procedures, best practise and maintenance, giving us reason to believe that even our existing ethylene fleet will score better than the required efficiency ratio in 2030. The uncertainty factor relates to the IMO reference level.

LGC fleet

Solvang’s AER (efficiency indicator) shows that our LGC fleet has reduced its AER by 24 percent since the reference year 2009. Based on this assumption, our LGC vessels operate in the same pattern with continued focus on improved operational procedures, best practise and maintenance. Nevertheless, our existing LGC fleet would need speed reduction or other efficiency improvements to achieve a 40 percent AER reduction by 2030.

The main uncertainties again relate to IMO reference values, as Solvang´s average fleet age was merely three years in 2009. Assuming that a world average will be above our reference values, and that Solvang introduces efficiency measures on some of our mid-age vessels, we expect our existing fleet to reach an IMO AER target in 2030 without big investments.

Within a 10-year horizon, a renewal of our fleet is probable, as two of our oldest LGCs will reach 27 years in 2030.

VLGC fleet

Back in 2009, Solvang recorded data for two Panamax VLGCs, which were delivered mid-2008 and Jan 2009. The third newbuild VLGC was introduced late 2009.

Solvang’s AER (efficiency indicator) shows that our VLGC fleet has reduced AER by 15 percent since the reference year 2009. Based on this assumption, our VLGC vessels operate in the same pattern with continued focus on improved operational procedures, best practise and maintenance. Our VLGC fleet would not reach the 5.2 target value, assuming a 40 percent reduction compared to our own AER in 2009. Poseidon requires 6.1 in 2030 and 7.2 in 2025. AER for Solvang VLGC class was at 7.2 in 2020 which is in line with the Poseidon target for 2025.

By adding a small percentage of E-fuel/biofuel, our existing fleet could reach an expected AER target. When the exact 2030 target will be defined, it gets possible to plan in detail how to reach it in a cost-effective way. Three of our oldest VLGCs would reach 22 years in 2030.

Solvang 2050 - Clipper Future

In 2010/2011 Solvang started the project Clipper Future, through which we created the Solvang ECO-LPG carrier concept.

Goal: To design vessels as fuel-efficient and green as possible. With a reasonable write-off schedule, the investment would yield lower OPEX and reduced emissions. The vessels should comply with known and future regulations.

The scope of Clipper Future has been to identify the most cost-effective and smart solutions for the technical systems on-board. For instance, all parts of the vessels should be optimized. The ship owner has assumed that energy efficiency “from well to wake” will become crucial, and that all GHG emissions will have to be accounted for.

Through Clipper Future, we have realised that the question is not which fuel to use, but how to use it. Based on this, all our newbuilds delivered from 2013 are following the same vision:

GHG neutral fuels and
zero carbon fuels

The statement above is still valid. The challenge is to comply with IMO GHG emission targets. Commercial technical solutions are still not on the market. To achieve the targets, we need a zero carbon fuel. Except from a small amount of biofuel, the zero carbon fuel is not available in any amount needed today. So far, no one knows when it will be.

The challenges of the zero carbon fuel include cost and energy intensive processing which represents substantial losses. Alongside, we observe price factors of 4 to 10, compared to standard fossil fuels (IMO 4th GHG study 2020). When pertaining to standard fuels, a well to wake approach is crucial, unless we are willing to shift GHG emissions from shipping to oil power plants or coal burning facilities without sufficient emission handling.

GHG neutral fuel: On-board CCS

Alternative scenarios for on-board carbon capture storage (CCS) include CO2 being handled ashore and permanently stored beneath the seafloor, or the CO2 being reused to process carbon free e-fuels. Another option is to depose of CO2 in the form of solid dry ice in the deep sea. The CCS technology is still under testing, and according to the makers, the procedures can be carried out safely. In a cost perspective, such a technology is highly attractive.

GHG neutral fuel: Carbon offset

In a carbon offset scenario, the global cost of new fuels increases  to a level that legitimises trading carbon with sectors that have lower emission reduction costs. Carbon offsets are an instrument which actively contributes to climate protection by supporting emission reduction projects which would otherwise be unfeasible. Not all GHG emissions can be avoided, high-quality emission reduction projects can be used for compensation.

A market for carbon quotas is currently open, selling CO2 cuts to a fraction of the price for using alternative fuels.

Carbon offsets sourced through the open market today, can also be eligible for a future compliance market. Technologies range from the construction of community biogas digesters to geothermal power plants, forestry and coastal mangrove restoration. Carbon offsets can help reach the targets of supporting the SDGs, and to reach new customers looking for low-carbon offerings.

Future regulations

The political climate ambitions look unambiguous to the industry. We expect tighter regulations on emissions to air other than CO2, especially in port areas and close to shore, and especially SOx, NOx, CO, THC, and particles.

As reduced NOx emissions normally corresponds with increases in other greenhouse gases, the technological challenge of reducing total emissions is challenging. This is exemplified by TIR III, which requires an 80 percent NOx reduction compared to TIR I regulation. This is not achievable on a diesel engine by means of engine design and adjustments. Even costly modifications to bring down NOx emissions would result in higher GHG outlets, possibly ruling out compliance with other parts of the regulatory framework.

The conditions for future ship design and fuels will manifest itself through rules and regulations not yet defined. At the same time, charters will go to the lowest bidder, whether transporting LPG, petchem, ammonia or other gases. In this perspective we assume that transport expenses in the future will rise.

Design criteria for Clipper Future

Any vessel ordered today needs the possibility to operate on a GHG neutral fuel when this becomes available. At the moment, there is no alternative to our two-stroke directly driven main engines for propulsion. It features documented reliability, its fuel efficiency exceeds 50 percent, and it can be modified for operation on all fuels. The following examples illustrate that all foreseeable solutions today would be GHG neutral when using bio-fuel or e-fuel, without modifications.

Ammonia and hydrogen

Ammonia and hydrogen are other potential zero GHG fuels, given that processing is made with renewable electricity or fossil fuels with CCS. Ammonia-based propulsion is under development, still dealing with substantial safety and technical issues, and operation target is set to 2024/2025. Another option is to modify an engine designed for dual fuel LPG into running on ammonia. Such a setup would require a NOx handling system like SCR or EGR, as well as a system for handling ammonia slip. This would foreseeably take some sort of a scrubber, and the whole setup would roughly double the size of the fuel tanks.

Technical fuel specifications

The specific choice of fuel for Clipper Future would be made after careful evaluations of the alternatives above, which are currently projectable in terms of commercial operation, environment, technology, and operational expenses and revenues. There might be more alternatives to come, and some might be radical, like wind assistance, on-board carbon capture and air lubrication of the hull. They should all be considered in due time. As for now, Solvang believes that a combination of fuel options would grant us the best flexibility.

In line with technical specifications for vessels, we stick to the Solvang ECO vessel design, including the Optimization of Hull lines, cargo intake, cruising range, propeller/rudder design, heat recovery and others.