Steve Laybourn, Chartering Manager Europe and Head of Energy Transition Projects at Ardmore Shipping, shares his thoughts on Ardmore’s Energy Transition Plan (ETP), which addresses shipping’s need to decarbonize.
The world is used to energy transitions. Within the context of ships and shipping, the pre-industrialized world relied on humans with oars, before the arrival of sailing ships in the 15th century which provided the catalyst for the Age of Discovery and the advent of global trade.
Industrialization brought with it coal and steam ships, before we finally emerged into the modern age with the use of petroleum products in internal combustion engines. However, the adoption of the Paris Agreement in December 2015 signaled the start of the latest, and most important, part of the energy transition to date. This transition is the decarbonization of the global energy sector, by moving away from fossil fuels in favor of renewable energy.
A 2020 study by the International Maritime Organization (IMO) estimated that, as of 2018, CO2 emissions from shipping accounted for 2.89% of all global emissions. Therefore, shipping has a significant part to play in the energy transition. Over the last year, Ardmore worked on developing a response to shipping’s need for decarbonization. The result is the Ardmore Energy Transition Plan (“ETP”), which was published as part of our 2020 Progress Report and is available on our website.
Our ETP has been developed as a logical extension of our current strategy in view of the changing landscape for tanker business and forthcoming environmental regulatory changes impacting shipping. Our core business of product & chemical tankers will continue to be front and center with the ETP intended to enhance performance, create long-term growth opportunities, and augment our business with potential new revenue streams.
While some of the initiatives we have planned will yield results in the short-term, this is fundamentally a long-term plan which will unfold over years not months, which is in keeping with our stable and consistent approach to strategy.
The plan entails three elements: technology, projects and sustainable cargoes. In terms of technology, we strongly believe in working with technical and commercial partners to develop solutions addressing the energy transition including onboard energy efficiency and future fuels (zero-carbon or carbon-neutral). This requires us to look with fresh eyes at all solutions to improve hydrodynamic efficiency, electrical load reduction and substitute power sources, main engine and power transmission efficiency, operational efficiency improvements. Additionally, dual-fuel engine technologies, generator substitutes, fuel cell and ancillary technology applications are all areas worth considering when looking at retrofitting vessels and fleets.
At Ardmore, we believe in listening to our customers. We take a consultative approach when assisting customers in addressing their own energy transition priorities by partnering in the research and development, construction, financing, and operating of vessels for long-term time charter. This might involve the application of devices and systems developed under Energy Transition Technologies to newbuilding’s, newbuilding construction supervision and other advisory services in addition to arranging green financing and subsidies available to capitalize transition projects. It is essential to work as a team in ensuring the best way forward.
In terms of sustainable cargoes, Ardmore Shipping has a long history operating chemical tankers and cross-trading MRs into chemical tanker trade. Presently 25% of our cargoes are “non- fossil fuel,” i.e. other than gasoline, diesel, jet, and fuel oil which will continue to decline. These cargoes include organic and inorganic chemicals, vegetable oils, and bio-fuels which we believe are “sustainable” in the sense that demand will grow through the energy transition and they will themselves be sustainably produced.
By embarking on this journey, we are setting out a clear sense of purpose; to play a pivotal role in the energy transition by leading the way toward true sustainability as a tanker company. We relish taking a proactive approach to the ongoing energy transition and look forward to change, progress, and innovation.
For more information on our energy transition plan, please see our latest annual reports here: http://ardmoreshipping.investorroom.com/annual-reports