Readying ABS for a Decade of Change

Between the IMO’s goal for net-zero emissions by 2050 and rapidly evolving technologies, the marine and offshore industries are facing a complex decade of change.

On this episode of Setting Course, Vassilios Kroustallis, ABS Senior Vice President for Global Business Development and Global Marine, joins host John Snyder, Managing Editor for Riviera Maritime Media, for a broad discussion on how the industry and class societies are reacting to the decade of change. Vassilios also discusses the technologies and alternative fuels poised to impact the industry.

To learn more about how ABS is supporting the maritime industries, visit www.eagle.org.

Key Points

• The maritime industry is undergoing rapid changes to meet IMO's net zero targets by 2050.
• New ships, low- and zero-carbon fuels, new engines and technologies, digitalization, and seafarer training are all factoring into the industry’s decarbonization journey.
• ABS and the class process are evolving to focus on sustainability and digitalization.
• The industry is moving toward a multi-fuel future, with a mix of alternative fuels depending on the type of vessel and operation.
• Safety considerations and crew familiarization are crucial in the adoption of new technologies and fuels.
• ABS is supporting the industry's decarbonization journey through joint development projects, developing rules and guidelines, talent development, and the establishment of sustainability and technology centers.

Guest
Vassilios Kroustallis is Senior Vice President, Global Business Development and Global Marine for ABS, responsible for client relationship management and business solution development across the ABS operational hemispheres. Previously he served as Vice President, Global Business Development of Europe for ABS, responsible for client relationship management and business solution development within the region.

Chapters

• 0:00 Introduction
• 1:39 The Decade of Change for Maritime
• 2:52 Technological Developments for Digitalization and Decarbonization
• 5:04 The Availability and Adoption of Alternative Fuels
• 6:47 Economics and Availability of New Technologies and Fuels
• 10:17 The Path to a Multi-Fuel Future in the Maritime Industry
• 11:47 Safety Considerations in the Adoption of New Technologies and Fuels
• 14:48 The Role of ABS in Driving Sustainability and Digitalization
• 15:01 Concluding Thoughts

Transcript

John Snyder (0:00)  
You're listening to Setting Course, an ABS Podcast. Join us as we navigate the latest trends, developments and challenges facing the rapidly evolving maritime and offshore industries. Catch every episode at www.eagle.org and podcast platforms everywhere. 

John Snyder (0:29)
Hello and welcome to the show. I'm John Snyder, Managing Editor of Riviera Maritime Media, And I'll be your host, with the marine industry undergoing rapid changes to meet IMO Net Zero targets by 2050, more stringent international and regional regulations, designed to lower CO2 and greenhouse gas emissions from shipping, are driving the uptake and investment in new ships, low- and zero-carbon fuels, new engines and technologies, digitalization and seafarer training. Clearly, the industry is in for a decade of change. To offer valuable insight into these changes the state of the industry, and how ABS and class are responding, we have with us Vassilios Kroustallis. Vasilios is the Senior Vice President for Global Business Development and Global Marine at ABS. Vassilios, welcome to the show. Vassilios, let's jump into it right away. Certainly, in this time of rapid change, how is class changing? And how is ABS responding to that change?

Vassilios Kroustallis (1:39)  
OK, John, I do believe you mentioned the decade of change. That's a very good term that you mentioned. Yes, indeed, we're inside now this transformation. We're in the decade of change. For a number of reasons, I can elaborate later on perhaps, but one is the need and the regulations, but also the capacity. We're capable of such a change because we’ve experienced technological innovation capabilities that humanity never had before. Relative to the change now, in response to all these technological advancements, the classification societies, like the American Bureau of Shipping, are evolving. They are increasingly focusing on sustainability and digitalization, the two famous words. Yes, and with the innovation that comes along in the maritime technology. ABS is adapting by developing new standards and certifications for green technologies, enriching — enhancing, actually, digital services for ship performance and performance analysis, and working on guidelines for alternative fuels and energy-efficient designs.

John Snyder (2:52)  
Now, Vassilios, you mentioned new technologies and digitalization. What do you see, I guess, as the most important developments and technologies and digitalization to help industry meet IMO Net Zero targets?

Vassilios Kroustallis (3:11)  
OK, so, let's start from the beginning here. First of all, there is the need. I'm mentioning the need because need is always the father of innovation, right? Many will say. So, the need is the climate change and the regulations. The regulations are not just the IMO — they start from the United Nations then go to the IMO, yes, but then become regional also like EU ETS and many others — the Chinese regulations, even the USA regulations and so on. And then the other element we'll have to think about is the capacity. We're capable nowadays, for a number of reasons again, one of the most important, yes, it is the technology. I should mention the satellites. They have become powerful nowadays, and they can transmit data, big data, like we’ve never experienced before in humanity. So, we can move ahead with the 5G technology that comes along and the artificial intelligence and the big data analytics to autonomous ships to new engines to new fuels to new materials even. So, all this together is what is helping us to develop and comply with IMO's net-zero targets. And, of course, other significant drivers, because you did mention drivers, will include geopolitical factors, like international trade dynamics, regional regulations, as was spoken, economic considerations to push sometimes for energy independence and security, and particularly in the context of volatile global politics and fluctuating oil prices also plays a crucial role in accelerating the shift toward alternative fuels and energy-efficient technologies.

John Snyder (5:04)  
So, in regard to maritime decarbonization then, is it a question of our ability to deploy technology in time? Or is it our ability to deploy technology we already have at scale?

Vassilios Kroustallis (5:22)  
Very good question. I will say, is it technology or economics and the availability? I want to give an example here, perhaps. Consider how many ships we have now that are dual fuel. I mean, how many ships we have in the water, right? It's many. But the question is, out of all these dual-fuel ships, how many are really burning an alternative fuel? Very few. So what does it tell me? It tells me that the technology is there. The technology, in a percentage, if you will. It's there. We have the ships ready, in the water, trading, fully capable of burning an alternative fuel. The question is why they don't? And if you search around, you will see and they will go around toward availability, because it's not always available, and pricing. Even if it is available, it is expensive in comparison to anything else you have for now. So, I will say it's rather, economics and availability that will dictate when we're going to have. Here is a good indicator, perhaps, if you’d like to consider, will be how much green electricity we can produce, because you need the green electricity to produce the alternative fuels at a scalable level at a reasonable price.

John Snyder (6:47)  
Right, so, do you see then in — how are you guiding your clients in regard to the transition? If they, for example, you have mentioned, there are a large number of dual-fuel ships now being built, which, of course, gives them the flexibility to burn these alternative fuels, whether they're low- or zero-carbon fuels when they're available. But how are you advising your clients in regard to that path on decarbonization?

Vassilios Kroustallis (7:20)  
OK, there are a number of items here that we need to consider. First of all, we're running our Outlooks to see how all these alternative fuels will evolve. Let me give you some statistics here. Last year, I mean, 2022 — if you examine 2022, newbuildings, you will see 50% of their of them were dual fuel and 86% out of it was LNG. Okay, now, if you examine next year 2023, you will see again, 50% of all the bookings are dual fuel ships, but now the LNG is 68% because methanol comes into the picture now with 31% of all the ships ordered last year, 2023, being methanol dual fuel. OK, this gives you just a flavor, if you will, of how the fuels are developing. Our long-term prediction, 2050 — I'm not talking about the next decade now, but longer term — is that oil will not be the major fuel but methanol and ammonia will be the major fuel. Of course, LNG is here and will stay here as it is and in a more stabilized manner. So, one thing is you have to consider how the fuels are evolving, how the availability of them evolves. What is the limits and the capabilities of the technology? As said, we have technology on LNG or have technology on methanol. We're almost there on ammonia. We have biofuels. We have already two hydrogen carriers. The hydrogen comes in as the mother of fuels, many will tell you. And, of course, in all this, we should not underestimate the batteries and the technology that comes along. The batteries are evolving. We're not yet to a technological state that we have big ships with batteries, but we very well have many, many hundreds of ships already fully electric. And you have regions like Singapore, to name one, that has specific requirements by 2030 for all harbor ships to be zero emissions. This means you're going to have 100% biofuel or 100% electrical or 100% hydrogen. Some of the key drivers of the technology, perhaps the small ships and small distances is one of the first sectors of the market that we totally decarbonize because it's easier. So, we are around the LNG, the methanol, ammonia, biofuels, hydrogen and batteries. This is where we are now. Of course, the nuclear ships is another technology that comes along. It's considered much more safe than before. I don't know anybody who's going to build a nuclear ship next year, but it is too interesting to be ignored.

John Snyder (10:17)  
Now, you, Vassilios, it sounds like we're headed for a multi-fuel future. Is that how you see the path depending on the type of service, type of vessel, type of operation?

Vassilios Kroustallis (10:35)  
Yes, John, we don't have a golden solution. There is nobody who's going to tell you this is the fuel. So, until we discover it, or we're capable of achieving whatever we want to achieve with one fuel, we're going to have a mix. We're going to have a cocktail of various fuels, depending on the geographies, of the type of the vessel. If you have an LPG, what are you going to burn? You're going to burn LPG. And if you have an LNG ship, you're going to burn LNG. So, you're going to have a mixture of all these alternative fuels that we're talking about. Please remember, the only alternative fuel now, with a significant infrastructure, is LNG and nothing else. We're building up, I don't want to underestimate the strength of the other fuels — the other two is ammonia and methanol — but today, John, the only significant infrastructure we'll have available today is LNG. So, this will be there, will stay there. The other fuels will keep developing. How fast we can go, I cannot really tell you, but definitely, we're going to be living in the next decade and more with a cocktail of various fuels.

John Snyder (11:47)  
Vassilios, with all this new technology coming, in all these new fuels, you know, what kind of safety considerations are there?

Vassilios Kroustallis (11:55)  
Yes, John, this is a very, very valid question and a fundamental question for ABS, as the common denominator on everything we want to do is, of course, the safety. So, the unknown elements of new technologies to be used is something that bothers me, that bothers us big time. And there's a number of elements here on the safety. Let me name one. One is the familiarization of the crew. How familiar is the crew to use, to be on board a ship burning ammonia, or burning methanol or hydrogen carrier? We don't have that much experience as humanity on these ships. On ammonia carriers, we do. On ammonia burning, we don't. We're learning now. So here comes the technology, of course, among other stuff. And I would like to mention two elements. One is the simulation technology that ABS has developed. Very much it will have a simulation. Now, the Global Simulation Center is in Singapore. Simulation technologies are helping us to experiment, to make, to play, to put different scenarios. And so, we're avoiding time and — but above all, a lot of big investments. And we can do it fast and in a very efficient way and a number of simulations and simulate what is happening.

John Snyder (13:23)  
Vassilios, how is ABS changing to support the industry's journey toward decarbonization?

Vassilios Kroustallis (13:33)
Yes, John, is a very valid and good question. In many ways, I will say. Let me start with the joint development projects. We're participating in hundreds of joint development projects, many of them are quite pioneering in the field of very large ammonia carriers, in the field of LNG/ammonia carriers, in the field of carbon capture, of liquefied CO2 carriers, many of them, of the projects I've mentioned is — our projects that we have announced and are publicly available. We, of course, are developing the rules, the guides and relevant documents and the approvals in principal. Papers have come along. In all these, we keep developing our talent, we have to develop our talents relative to the new technologies and get talent if we need to get talent. And we created a new company belonging to ABS, of course, Wavesight, to deal with digitalization. This is our digital front. Then we have another organization inside ABS, the sustainability group of ABS, which has set their sustainability centers on a global reach, one in Houston, one in Denmark, one in Athens, one in Singapore, one in Shanghai. These sustainability centers are assisting our clients, working together with our clients on the new fronts relative to sustainability. I want to give you another example, the recently opened LNG Academy in Qatar. It is a state-of-the-art training facility using the latest technological methods. All ABS surveyors will pass by this academy for the LNG training, but also its open to our clients. We have already clients taking the courses. It's two modules you have to do in your office and one module that we do at the academy. At the academy in that location, because there is where we have most of the LNGs on drydock. So, they'll have more that will include two special surveys on the actual ship on board the vessel during drydock. That's the only chance you have to get to see the cargo tanks as well. So, we are about to announce a number of safety centers, dealing with safety concepts for all these technological developments. We are announcing the technology centers. They're going to be dealing with materials with engines, with technologies, strategically located not only Houston, we're opening up in the places that technology happens. And this is the China, Korea, Japan. And we have, of course, the simulation centers. One I mentioned in Singapore, we'll have one more in Europe and we have the Global Ship Systems Center. All these centers, the technological advancements and developments are giving you, I believe, a flavor of how ABS is involved. Nothing of this existed in ABS 10 years ago.

Vassilios Kroustallis (16:43)  
Vassilios, with only a few minutes left in our podcast, did you have any closing thoughts that you'd like to share with our listeners?

Vassilios Kroustallis (16:51)
What comes into my head is this — we're in a decade of change. The changes we have in front of us are dramatic, big and fast. We’ve never experienced this before in the last 40 years in the shipping industry, at least, because if you really think about the last time there was a real revolution in shipping was when we changed from perhaps steam turbines to diesel engines. So, we've changed the fuel in the past, but at that time, we knew the fuel. Now we don't even know the fuel. So very challenging times ahead of us. But it's a great chance for all of us to deliver a better world for the next generation.

John Snyder (17:34)  
Terrific. Vassilios, well, thank you for joining me today on Setting Course, an ABS Podcast.

Vassilios Kroustallis (17:41)  
Thank you very much.

John Snyder (17:43)  
Thank you for joining us today on Setting Course, an ABS Podcast. If you're interested in learning more about today's topic, or listening to more episodes, visit www.eagle.org