Industry Panel Talks | Future Fuels Without a Global Rulebook: How Can Shipping Move Forward?

In this episode of BetterSea Industry Panel Talks, we hosted experts from across maritime compliance, future fuels, energy and risk to discuss how shipping companies can make better decisions in an increasingly uncertain regulatory and commercial environment.

Featuring:
Chris To, S&P Global Platts
Joey Ng, Braemar
Tue Raguse (formerly Nielsen), Ofiniti

Moderated by:
Dr. Gordana Ilic, BetterSea

The conversation explores:

⚓ What makes a good future-proof vessel investment
⚓ Why optionality and multi-fuel capability may matter more than picking one “winning” fuel
⚓ The growing role of LNG, bio-LNG, methanol, ammonia, ethanol and biofuels
⚓ How FuelEU Maritime is creating a new compliance economy and new commercial opportunities
⚓ Why data, total cost of ownership and long-term modelling are becoming critical to investment decisions
⚓ How regional carbon regulations could evolve if a global framework remains uncertain
⚓ FuelEU surplus pricing, market transparency and the risks of entering the market too late
⚓ Why visibility into fuel availability, compliance balances and market activity will become increasingly important toward 2030

The panel also reflects on how quickly shipping has already evolved from emissions accounting and alternative-fuel infrastructure to entirely new markets built around compliance balances.

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Transcript

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Hello and welcome to another episode of the Industry Panel Talks. And today we gathered experts within our industry at the intersection of compliance, future fuels and energy and risk. And we will try to look at the intersection and what we can do today. Everyone knows what are the problems I had, what are the uncertainties? We know about the geopolitical situation, but I would like to focus on how can we, with what we are doing in our own roles and with the knowledge that we have. Push the agenda further and do something actual about it. So please help me welcome my panel, speakers and co-host. I would make them all my co-host. We have Chris Toh, who is the global lead specialist for Alternative marine fuels from S&P Global Platts. Welcome Joy Inc, global head of decarbonization and fuel transition at Bramer and to a Nielsen CEO of affinity. Thank you for having us. Thank you for having us here. With all that we know and with the environment that we know today, what makes a good future investment. So maybe let me. First jump in and and I can take all the pressure off. I think when you look at the order book, ah, it's fair to say that if you order a conventional ship, the collective intelligence will tell you that you can fail together. It will all make the wrong decisions together. There's no wrong decision. I would like to propose a different thesis, that those people who have done dual fuel ships have the most flexibility and optionality to go figure out what the cheapest fuel can be within a set of parameters. But we start Well, I believe that we'll start. We will start to see people pull off or pull away and start to really do well. When you see intense periods of volatility in fuel prices or in in the lack of availability of certain fuels at ports, there could be operational challenges in the beginning, but I think we are getting fairly good at the bunkering of alternative fuels, I imagine so, so I don't think it's necessarily a good or bad thesis. I think we need to look at the optionality and how we can toggle between different fields. I absolutely reciprocate the kind of multi fuel future that has been painted for, for the shipping industry in particular. Um, you know, a lot of people kind of label the maritime industry being in more a privileged kind of sector because we have those different production pathways of those different fuels that we can look at. But, you know, there's less versatility in options for things like aviation. And, you know, it's very, very difficult to kind of ascertain what to look at right now if you are looking at a future investment, because obviously, obviously the instability that we're experiencing, maybe if you speak to us in six months time, there could be a different conversation that we have. But yeah, um, you know, statistically, of course it is conventional fuels. Um, that's there's still, you know, the go to the standard setting, really. Um, but then you cannot deny that the incredible rise of, you know, LNG and the capabilities with, you know, things that we recognize in bioenergy cannot be ignored. So, you know, trend wise, you would say that that looks like that there. But then, you know, there are distinct concerns about the availability of that. And, um, you know, the fossil LNG conversation won't go away in terms of how compliant it will be, under which compliance framework, um, in 10 to 15 years time. So the other two future fuels that we haven't mentioned, the methanol bunkering option and the ammonia bunkering option are still prevalent in people's heads. It's just, you know, the sentiment is in such flux right now in terms of where you make those commitments and where those commitments don't make sense without the the compliance framework in place. And that's why we're in such a weird precipice right now in the industry. How do you see people that you work with today make decisions if there's no global framework? Uh, what do they use to anchor themselves? I think it would be fair to say that we are for data people here in the room. Right? So we all look to data and we all try to find answers and data. I would like I would like to come back to one of your points at a later stage on sort of where we stand. But one of the things that we see is, well, the decisions are being made, right. If we look at the order book and we look at the actual gross tonnage, the decision is predominantly LNG, right? And a lot of that is coming from the very large containers, the gross tonnage. So you have 50% of the gross tonnage being built right now, selecting LNG either as the single fuel or as the dual fuel. And then you have that option of, well, do you go for gas oil ultimately, or do you go for LNG? Um, and then well, Matt Nolan, ammonia is coming. And unfortunately, right, with the instability that we've seen in industry over the last six months, 12 months, both with the current crisis that we have and with the postponing of of the IMO decision on a global scale, you have seen some of those order now switching to pure conventional or, well, uh, orders of new fuel vessels being dropped or alternative fuel vessels being dropped. But I think data suggests that the decision is, is made very much on LNG. I think ammonia and methanol are still going to be relevant. And I think it's, uh, it's an energy evolution. More it's an energy transition, right? It's an evolving, uh, energy mix. And then I think we also have to look at, well, at a global scale, How big is the problem, really? Right. Because we are in a world where, yes, there's a lot of insecurity and vulnerability in the industry and there's a lot of change. But at the same time, we are also an extremely facility in the industry, right? We have a tendency to work stuff out, whether it's a container vessel sitting across in Suez or it's going decades back. It's any oil crisis that we've seen. The industry is super resilient going through financial crises, going through geopolitical crises. It has this magic ability to work itself out. It balances supply and demand and infrastructure. Yeah, I. Kind of trying to go back to what points to people look at in decision making. I mean, the cynic enemy will always say that nobody really looks at it, and then they just go with a gut feel. I think more and more people want to understand the cost to the like a TCO approach, almost when you're looking at the total cost from the credits, the levies, the fuel pricing from different perspective. Whether you use, let's say, one price indication versus the other, or let's say if you look at CTF versus GM, if you're looking at LNG, how they go about doing it, it's a bit more tricky because the the understanding and the ability to model out all these different pathways change quite dramatically as you go from, let's say, a liner company to, to, let's say a different industry. And then the big players in the small player is that understanding is also quite huge. I think what people can take, I guess, kind of some comfort in is that regardless of whether they can or cannot do the calculation, a lot of that has been operationalized in how we we've gone through one year of new EU maritime. So it will get simpler, it will get easier. But instead of people believing that there's no measurement is being made. I think there are a lot. The question really becomes, how do we get proficient, get good at it, and have enough people that can claim to do that work properly. So I feel like you're looking at evolution in in what the industry really needs. And if you look at 2019, nobody talks about. People don't talk about fuel efficiency as much as people do today. And that's how I look at the role of measurement. The role of understanding psi or measuring your fuel consumption in the next few years, that would change dramatically as well. I also can reflect on our journey when we were starting Battersea, and initially we were thinking of providing visibility across a few regulations across the EU, ETS, fuel, EU and so on. And there was at that time, three years ago, there was not that much understanding. Why do we even need this now? But now in this year that we are in with fuel EU now completing the first cycle, like people are more and more looking into that holistic view and understand why it's important to look at things from a little broader perspective. Longer term perspective. To make decisions today also whoever we talk to it like from the regulator's perspective, they were all super happy with how people picked up for you. And okay, we can argue about the price someone would like more or less, but but overall, there is this sentiment that there is a good uptake of it and it is moving the needle where it should with understanding that it's a first year. So we are all learning on the go and adapting. Maybe I will provide context of how fast and how far we've come in a very short amount of time. And I had one conversation with a with one of the bigger owners who we were talking about the concept of additionality, about the voluntary markets from a shipping perspective. If I go back to 2019 and look at the things we talked about, I still remember one conversation we had with a retailer, and we were really happy with the stuff we've done. And we go like, look, you know, we have achieved 30% emissions reduction within 30 minutes. An email came back to say, you're wrong. It's 20 actually, and this is how you go about it. And now we are telling people about carbon intensities for different jurisdictions looking at LCA, which is way more sophisticated than anything that's out there. And you're looking at what, four years to five years and this industry is maybe realistically 20 years old. So it's a lot of different things that are happening to shipping right now. I, I came into shipping at a point where shipping was described as a dinosaur, and a lot of old people with long beards kind of like slowly moving around. But the reality of the last maybe 6 or 7 years for me in shipping really shows me something a little bit different. It could be just the work that I do, but the progress from an emissions accounting or reporting standpoint has been so ridiculous that I think people need to. If it's not a win, at least people understand how much we've done to to really start to tackle the problem. I see the same things, right? I think it's also not just one person's decision. It's not one company's decision. I think this also speaks to the complexity of the industry that we are in. Right. You have cargo owners, you have charters, you have owner operators, and then you have so many different segments in the shipping, right? Whether it's a cruise liner in the US, who does this from an environmental perspective or you have somebody doing it purely from a compliance perspective? So one of the things that we see sort of very closely in the bunkering space, well, you have people who've gone from this at a regulatory driven approach, but you also have people who've gotten at this from a value driven approach. And I think you should not mistake that those can be the same thing, but it can also be very different things. Regulation doesn't mean that it has to be expensive always, right? LNG can be an alternative fuel. From a cost perspective as well as it can be. From a regulatory perspective and same I think will eventually be for ammonia and methanol hopefully. Right. Did we get to a point where this is not only regulatory driven, this is also value driven. And I think that's super important and something I would really like to hear. How S&P sees data. Right. And what's the actual price. Right. And what's the actual value. And how do we not only make it a regulatory discussion. Yeah absolutely. And you know, that's kind of the work we do is, you know, the one thing that I confront people a lot about when we're educating them and, you know, education is probably the key word for this particular period pertaining to fuel at U is that, you know, we have a new economy in play. You know, we just got over this idea of EU ETS, people just swanning out their books recently. As far as I'm aware, even though it's been going on for 2024. But now very, very soon after we have a new economy in play in fuel EU and we have that economy and it's known as compliance balance. And that compliance balance is calculated with, you know, the difference in the required GHG intensity and the actual instance GHG intensity multiplied by the energy output of your fuels. And it's a very, very simple formula. It's a very simple formula for one to kind of ascertain work out in MRV, work out in their data, and work out what their end total is, and work out how they can commoditized that. And that is the most important thing is once you understand that you are getting some particular benefits of decarbonizing, which you can monetize commodities and play a market in, a lot more people get interested. You know, a lot of these brokers get interested. They understand this. It's not a credit, it's surplus units, but they get interested in this. And that's where we get a new circular economy of how we can decide to play this market, or whether we decide not to play this market. It is our choice. But the fuels allow us to play that choice, play that card if you choose. That's what it really sounds like. So I'll give you an experience that. When? When I was at a working in the ship owner, the responsibility of buying a ship was really simple. You look at kind of the equipment maker list and you do a few things here and there. You sign and then kind of. That's it. A few other things. But now it feels like you are responsible for the fuel, the way you put the fuel on the ship, what kind of fuel you're going to put on the ship. How you tell people what fuel you're going to put on the ship, and the list goes on and on. But it also feels like shipping is no longer burning. Essentially fuels that only shipping gets access to. It feels like you're competing with everyone else. Road transportation. If you're looking at LNG or CNG, if you're looking at ammonia, you're looking at potentially pet cam fertilizers, for example. And I've always believed that shipping has to start expanding how we understand the energy kind of portion of it, that we no longer can insulate ourselves and go like, you know, that'll be realizable at somewhere. For example, like if we can start to figure out with more education, with different good sources of information, and with good platforms to tell us where the bunkering can occur, it gets to a point where it truly becomes, even if it's not economical at first, it becomes a competitive advantage. And I think that is kind of where I hope industry can get to in the next few years. But but I think it has to be everybody working together, sitting down. Yeah, 100%. There's this this big, uh, topic right now of moving from fuels to duels, right. And that's super interesting. What does it mean? What does the future mean if you have a more compliant, lesser emitting and cheaper fuel? Why not? Right. Then it's just a question of how fast can we build the ships and how fast can we get the molecules out there? I'm going to ask you guys a question. Sorry, I'm taking over your job now. Feel free. Yeah. A lot of people this week in Singapore, maritime week one, a time of recording have been asking us, what are you guys doing about ethanol? Yeah. And, you know, it is one of these nascent areas in which, you know, we have not converted in our heads as a fuel that goes into a ship because it is not non-compliant under fuel. You write as a first generation crop, but a lot of people are saying, no, this is a new field in which you should be looking at, um, and, you know, I'm just picking up on your point about, you know, where those bunkering infrastructures are. You'll take a snapshot of it right now, and you will be downtrodden by looking at, uh, should I invest in methanol? Where can I get it from? Only 2 or 3 places. What am I what I'm subject to in to strategic operational risk by doing that ammonia. Let's not go into it. But even LNG, the infrastructure is just kind of not there. And then the only thing that's in play right now in terms of your confidence, relative confidence in terms of where you can lift lower carbon fuels, it's biofuels and biofuels has a relationship with ethanol and therefore is there something in play or growing where we can potentially incorporate ethanol into a marine fuel umbrella? We didn't mention bio LNG as an option. Oh, sorry. Biology. I guess I am kind of tethered to the LNG side of things because you have to get that liquefaction terminal. Again, uh, how the finite availability of that maybe. Okay, sure. Yeah, sure. Maybe I can kind of give a bit more context on the ethanol pathway. So there was two submissions to the MPC 84 that highlighted the Gen one pathway, but also the second generation pathway to corn, for example. So that was that kind of pathway available. And I think a lot of people are, especially when you look at, I believe it was either volley or real that all the ethanol methanol really ships and and really big ones as well. I think the global axis. I think when I look at it, at the end of the day, we should be fuel agnostic and figure out what works really, really well for your supply chain and go down the path of figuring out what secures fuel for your ship so that your ships can keep running, because that's really what we're looking at. And I think we should just use whatever that reduces emissions, given that we understand the trajectory. The reason why we haven't all gone into it, I think the reality is that we, a lot of us actually didn't know that that was an option, to be fair. A lot of us don't know what the underlying carbon intensity is. We have a little bit of a better idea now, but the challenges will come out as as you need to really run the calculation for it. And I would say that with the snapshot, try to do a snapshot snapshot over time. And when you add the time series to it, you get a lot more confident because the number of bunkering infrastructure, bunkering assets, the different means of bunkering, whether it's track the ship ship, the ship terminal, the ship is going to be far away. But if you add all those options available and how quickly they got online. I think it's one thing that I feel should give people more confidence than not. And going back to buy LNG, the different options is you're not burning one fuel, you're burning right now, you're burning nearly. It's 4 to 5 different versions on a on a dual fuel ship. And that true optionality is what I think people need to. It's a lot more difficult to manage. It's a lot of pain. I can I can start to imagine different tanks having different guys looking at it, doing inventory lists. But but at the end of the day, if I go back to 2019 with IMO 2020 and everybody screaming that we need more optionality, so now we have the optionality. We just need to figure out how we can maximize that, that benefit. Yeah. Sorry for that. I think it speaks level to the resilience that I was talking about earlier. Right. And and the industry being able to adapt and adapt to this. So you saw IMO 2020 and everybody was, as you said, right? Screaming what will happen? We will never get through the scrappers. Oh so many different options. And here we sit today right. And then the world shipping is still running. Um, so so I. Think. There is a lot of resilience. We are an industry who continues to wild, sometimes moving slow. But as you say, you put that into a time series and look at how fast the industry is actually evolving. Like, look, we are 2026 and we have an order book where 50% of the gross tonnage on the order books is alternative field. That's a massive shift from just a few years ago. So I actually think there is a lot of facilities there. There's a lot of willingness. Part of that comes from the regulatory driven market. Part of that comes from a value driven market. But there is a lot of resilience. There's a lot of willingness actually to change. And I think we've actually been quite successful as an industry. And the participants. Right. We are not the industry. None of us here in the room is really the industry. We are here to enable the industry. We are here to guide the industry through this transition that we are going through, this evolution that we're going through. But it's not us, right? It's the industry. And we have to respect that industry. I really think so. To add on to the ethanol talk, I do recall, uh, like five years ago, I was at Maersk and there was, you know, the whole movement, okay, ordering the methanol ships and so on. And we had the future fuel teams. Um, and one of them was like, hey, what about ethanol? Like, it just came as the early, you know, nudge, like, maybe there's something to this. And recalling like ten years before that, like, Chris Chatterton already was championing methanol and like he was one of the main, uh, pillars of the Methanol Institute. So there was like a decade at least, probably more. He would tell me, probably more. He told me once, a Slight diversion. Like I was going to this conference. I was the only one talking about it. Everyone would leave and I was the one giving the last speech. And ethanol is kind of, I think, a little bit more mature than that. And obviously now we have people who have already done it for Matt to put it on the agenda. But that's the reason, I think, why there's no more talk. And and I think we are getting there. But I think that from the regulatory perspective, um, there would be revisions and inclusion of it if it's if it turns like it's promising, like the industry is ready to pick it up, uh, because we saw that also with other things and even technologies with different technologies that are, you know, championing their way into regulation as well. Is the value there. For. For ethanol? Well, probably not yet, but we'll get there. You think we. Will? I think so. And it will be the proper use case. Well, again, I think we have probably a decade more to investigate further. Well, see, I think we we've now gotten to a point where before people understood indirect land use change. I just read this new term called direct land use change, and it's starting to blow my mind every single day. And the pace of evolution for carbon accounting, it's so rapid that and it's rapid. Not in the sense that it's becoming better or worse or more sophisticated. We are covering different geographies at the same time, so that when you look at kind of how we are doing and how quickly we're doing it, I think even if we we will find a way to burn. I imagine the most cost efficient fuel that provides the lowest carbon intensity. I'll provide that. That is a specific target we're going to hit. And if the benefits that we can draw out of it, like the EU maritime, I think people will find a way to kind of insert that into the system because I feel ethanol is not a. Ethanol is not a kind of nascent field. It's actually quite well. Used in the whole of the US. Yeah. So it's one of those fields that I feel like going back to a lot of maritime. When you look at all these feedstocks or molecules or commodities, these are not new commodities. These have been moving around for for ages and ages. It's just new to shipping and not new to the combustion cycle as well. So I do feel I do hope that that we have in our solutions that that can help the industry kind of move forward with confidence. Makes sense. One thing that was very interesting to me about fuel oil and back to bio LNG is that some suppliers, uh, kind of tied that to pulling rights. And then they were saying to some of their customers, well, if you don't pull with me, I'm not gonna provide bio entry to you. So you cannot generate a surplus the way you plan to. And these are, I think, some novel dynamics that we see in the market. Also how, uh, because there is a market, it invites more players to it. It invites for creativity in commercial and business models as well. And overall, I think we are all, you know, learning how to adapt it, but it's a positive sign of progress. Yes, I agree and more. When you look at the commercial structures where people are willing to sell, buy LNG at LNG pricing and take on all the compliance benefit, it shows how how it's possible that if you measure if you understand the fundamentals, you can take a position, whether long or short, and then generate kind of a whole new circular economy. Because I think the tricky part is that if you don't see the value out there, you will never try to chase it. But there are people who have shown that it can work. And to me, that's one of those things that I wish we had more chances to do case studies and everybody reads it and everybody understands it. And going back to the resilient.11 chart that I always love is that if you look at the pace of regulation, the use of LNG as a marine fuel, interim guidelines with ammonia, with methanol fuel cells, it all happened during Covid. All of it happened during the war. The challenges around this embarking crew right now, we've got essentially the war again, a different war. And you're looking at regulations pushing ahead despite having no rest, despite having people talk about blog straits, talking about all the different challenges. And I think resilience is, well, resilient and hopeful probably is hopeful is what I would add on to it. Yeah. I will not comment on that. I think that's wise. Do you have opinions about the the kind of the blockade, let's say, of the, um, the mass balancing of bio LNG outside of EU for use within red. Um, that is one thing that is also causing a little bit of maybe problems with the release of so much renewable natural gas in the US being viable for fuel. You if the union database does not recognize mass balancing, um, how does that, uh, conversation unfold in the next year or so? Uh. I don't on a podcast, I. I think, well, I think you need to start somewhere. And if you go to the extreme where you go on book and claim, I think it creates even more issues. Whereas if you deliver the physical molecule into the flange of a ship and you start from that point, at least you have a a fully clear trail and you can go back and audit, you can go back and check it. There are issues with, with with doing it that way because it terminals are not built to kind of isolate green molecules or green molecules. It's all co-mingled anyway. But if there is a starting point, I think people can figure out guidelines, audit processes or even compliance processes to make sense of all of it. Once it's too fungible, too flexible as what we're looking at maritime. With all the options out there, it gets too hard to follow. And without guidelines or guardrails that make it maybe a bit more difficult to kind of run around the, the platform or the or that kind of guidelines. Uh, I think this might be the, I don't know, something that may not be the the best, but definitely not the worst. I think if you look at it, the majority of the actual delivered bio LNG is in Europe, coming from from those sources. I made a LinkedIn post that said that this too shall pass. Uh, with regards to the to the straight and the crisis that we have in that region at the moment. I think you see an equal cutoff of of LNG as you do to crude. Right? It's approximately 18 and 22% on LNG. And then on the crude, I think over time again, coming back to the Brazilian, the market will work itself out. We'll travel longer, we will move cargoes longer. And well, volatility creates opportunity. And that's a very cynical take of course. But but I think maritime has a good way of of making the world go around. Still even when you cut off that much of LNG, LNG is still being bunkered, LNG is still being delivered and LNG is still viable from a price perspective in the majority of ports. Otherwise it would not be delivered. Um, so so I think, um, in general, I don't see the, the, uh, immediate, um, complications of, of this trade in the LNG bunkering viability. It's going to be coming back to your point on us LNG, it's going to be super interesting to see how that market evolves right outside full EU and how that will be booked and how that will be claimed. And to see the LNG market in the US and in general in America as developed, but also here in Singapore. I think it's going to be extremely interesting to see how the market will develop in Singapore. Now, with the new licensing coming up, with more and more vessels being added. I think we're going to see some interesting movements also in the Strait of Malacca. I think you're going to see Indonesia coming online as well. I think a lot of interesting things are happening in China when it comes to LNG, but also in methanol and also on ammonia. I think you see the interesting things coming out of Hong Kong. So in general, I mean, we focus a lot on Europe, especially because EU is is leading on regulation. But I think it's super interesting to see what actually happens from a value driven perspective outside of Europe and in this region especially. I think that's super interesting. I think also, Regardless of what happens to the global framework, if we end up in a situation where we have many regional regulations that will sort itself out, I think, you know, it will be addressed at one point or another. And again, it will invite for more alignment and standardization across even different regulations, I believe. Maybe question to you what what markets do you see develop or which regions do you see developing the fastest and when do you. Where do you think we will see the next set of regulations? We were speaking of cam on on Panama and their proposal and, and we know there's maybe something coming from Singapore. And so what do you see developing and how will it be the same or it will be completely new version of Ulu. I mean, I think many have learned from this process, and I think the industry also likes not to learn too much again and again. Right. So they would probably try to adapt, uh, whatever is, you know, whatever whatever comes to, uh, whatever exists. Just because, again, human nature is quite an important factor and you don't want to be retraining people to do more or less same things over and over again. I think Singapore has quite a unique position because it's small and nimble, and there's a very close collaboration between all the maritime stakeholders to to drive meaningful change and to, uh, also culturally, they are so used to transparency and, uh, systems. I would disagree. I think as a nation, there is a lot of transparency in the way that data work and being able to to see everything and track it down and go granular. So I think that gives an edge, uh, to Singapore like okay with with EU. That's already kind of. Existing. Yeah in China as well. Yeah. Yeah I can tell you the worst I've seen in the. And maybe the, the middle ground. The most difficult carbon regulation for shipping I've seen involves the regulation evaluating the carbon levy for other regulations, making an adjustment. And it crosses the threshold. That's another adjustment to be made with an escalating factor that looks at a CPI number and changes every single year. Um, that would be the worst version, the most difficult version, because you then have to allocate that based on the amount of cargo you carry from one from that previous port to this particular port. That is impossible to calculate. I mean, it's just really, really challenging. Um, and to your point about if we all have regulation and we cover half of the emissions to to one port eventually to prevent either carbon leakage or double counting. You want to go back to a DCS and IMO global kind of reporting framework anyway. And then we're going to land on either a flag driven singular, either reporting system or calculation system, or fragmented one that lists within something that's a little bit easier to manage. Hopefully we get the right one, but I would say that if you if you take out different parts of it, you're going to have to deal with the consequence of of that particular part. That may not hurt the industry directly, but there will be a lot of things to manage, and I wish to spend more time talking about it, not only from an industry standpoint, but really sit down and measure the impacts from different perspective. Um, and it shouldn't just be a cost issue or it should be something that I think, um, to borrow the the just and equitable transition as well from the IMO, I think these are the things that I really hope the industry kind of learns a little bit more. It's challenging. It's a really nice, fluffy thing to hold on to, but when I know costs are going up for everybody, but but it's one of those things that we have a really small window to do something really, really great, and then we push it down the wrong path. It could just become another thing that we do a tick and then we forget about it. Yeah, yeah. I, I very much reciprocate that, um, you know, the possibility of a mushrooming of different regional kind of carbon schemes would cause an ultimate headache. And that was a theory, you know, posed by some experts who have shared with us that, like, you know, if the idea is not going to move forward this this year, as the expectation is that they won't, that yes, there will be in actions from these individual government states to create these ETS schemes that mushroom kind of adjacent to each other, so to say. Um, one individual actually said to me that would be actually the preferred choice for member states to do that because, you know, with the current IMO. Net zero framework structure. Yet all of the accrued remedial units are paid into the Net Zero fund. What is the net zero fund going to actually fund? Um, you know, why is the transparency in that instead of these ETF structures that are going to be funding for member states, the governments. And therefore that might be an actual situation where you get the quick movers. Um, you know, you heard, uh, Singapore, I heard China, I heard Turkey. I've heard African Union potentially incorporating maritime into their ETF structures, just like the EU has. Um, and, you know, that would cause so much headache because, you know, we've not even spoken about carbon prices. Um, you know, the how much of a headache is the carbon border adjustment mechanism causing right now? Because there is a misalignment between ETS prices globally. Imagine what happens if okay, we try and ship something into and out of EU, but okay, the prices aren't aligned. Someone doesn't disagree or disagrees on the carbon misalignment in terms of pricing, how is that going to be settled? And that's why this global framework is such a crucial thing to to find alignment overall. And, you know, just had a conversation earlier today that maybe they do want this global framework to pass, but they don't want it to look like the way it does. And then, you know, we can talk now about the proposals that are on the table for PC 84. But yeah, people don't actually want the IMO. Net zero framework to look the way it does it seems, which is why there could be a veering towards the no vote to come. And it was not only one country, right? We have the tendency to paint it on one country, but there was a lot of member states that didn't want it in its existing form. Uh. I well, if we looked at the votes, uh, you're looking at a very vocal minority. And I think if you look at the I want to say 70 to 80 member states have voted. I think you're looking at somewhere between 16 to 17 nodes and a majority Support. I would also say that if you look at the support, some of the support was contingent on the zero, Z, Z fund and the application of it, and some wanted to go even further by removing the that surplus units and going all the way into just paying one number. I would say that and maybe not to kind of um, to say good or bad to certain policies. I think the good parts of it. The characteristics of the hallmarks of a good policy is predictability in the, in what we're trying to achieve. So in the case of, for example, carbon reduction, we need a stable trajectory that we can look towards to. And we can go like look this is the target. This is the goal. Whenever that that trajectory shifts violently. One of the big problems is that you cannot make any investment decisions because you have no idea what drives that that shift in the trajectory. The other parts are really then around whether or not the surplus units follow the pulling mechanism, where you need to have a ship at the end of it. Or would you rather to have it tokenized where you can trade out that individual credit, and whether that credit has an expiration date that forces essentially an active market? Because one big problem I do see with the field in maritime is it almost feels like an OTC product, that there's no information and there's no kind of liquid that I can tell. Oh, today's that surprise. Because if you talk to different people, the prices can be one and then the other. I've heard prices. Um, I've heard the arbitrage between Asia and Europe go as high as two and a half times and. Yeah. Yeah, I mean, we try to combat that with the index, right. But the main reason to that is the lack of knowledge, because what we've seen also interacting with the market is that, uh, generally Asian companies were not as aware of the regulation and its implication on them until very late. And then you had traders in the market that took advantage of that. So we we also saw that, uh, like in the platform for some of the deal clearances that we've done, in addition to marketplace trades where like companies that came from exotic regions, also somewhere in Africa and so on, like they paid a lot more than they should have, like prices of 400 and more. Um, because, you know, they came at an urgency. They, they didn't know about regulation. What is this? What do I need to pay? Okay. I don't want to have the penalty. Okay. Let me sort out the topic now. And this has been, I think, a chance in the very beginning when again, uh, some of the early movers took advantage of the lack of knowledge from some of the even LNG, uh, ship owners, right, to get the surplus at very low rates and to lay, to resell them. And then also now at the end where you have companies like, okay, I have deficit, what do I do now? And they don't know anything about it. They just need to solve it. And unfortunately these exotic birds will then pay the price. I would say this is again a part of the first year or maybe first two years, and then eventually the market will have a more stable benchmark. Don't look at me. I think it will be ironed out eventually. Right. And to a large extent, I think yes, there is a lot of this. So there is on buying fuel, right? Uh, different buyers get different prices of different fuel. If you come on one day notice and you need bunkers in Singapore, they will be more expensive. And I think it's the same for fuel. EU and uh, the credits, if you come on eight days notice, you all of a sudden discover, hey I, I need something. Then the price will be more expensive. Right? Its supply and demand. As simple as that. Yeah. Well, to me that's a benefit. And it's one of those funny things that you have to sit down and measure. And you have to know what the benefit is. And I do think a lot of people, um, and I think maybe just to kind of drag this a little bit on the wayside to to go back to this kind of notional hidden market that people don't know, a lot of funny behaviors come out that if, let's say, a pool gets the fact that somehow people want to just sell, they're going to drop the pricing. And it's I think the difficult part is really if you don't actively look at it, and if you don't actively sit within the market and talk to the people around it, you will get a very different, I guess, kind of version of what the market really is and you may lose value out of it. I think people are okay to live with that, but I do think that as we as we draw down the trajectory in 2030, you're going to see a massive decline in the amount of credits generated in general. And unless we suddenly switch to biofuels tomorrow. I think we're going to see a lot of challenges around securing credits or finding the right people to work with, and over time, we also need to start figuring out who are the good people in the pool that know what they're doing versus people that don't know what they're doing, that lose their credit somehow, or fill up the wrong thing or don't have the right information. That should also have a premium tied to it. Almost like these people can generate the credits they claim. So it's going to take a long time, I think, in terms of sniffing everything out, trying to figure out who's good, who is bad. But when I say long term, I'm thinking kind of one year or two years. I, I think people are going to be smart about the whole thing. But these are things I feel going back to the. Net zero framework, people should look at and and see the benefits of such systems and not only look at the cost as generated, but the opportunities generated in the space of energy, and try to figure out what's the best way to, I guess, kind of develop such a market circular economy. If I was to ask you on one of your points that you made. Please correct me if I'm wrong, but you you believe there will be potentially a structural deficiency in credits towards 2030? Can I ask you to elaborate on your thinking as to what you posit will happen to that compliant surplus economy as we move forward towards 2030? So I do feel like compared to supply demand, that when you look at regulation, it's really very much like a mathematical equation. You know the lines, you know, the availability of biofuels be 20 to be 100. And you can figure out who can comply to what bits. And when you start to see the big drop off in the targets, or rather the emissions reduction kind of shoot up very quickly, unless everybody suddenly gets a hold of the right biofuel and the right amounts at the same time, you're going to find people that go into Europe kind of facing deficit challenges. I think it's that when people are going to start to look, okay, hang on, maybe we should have done something instead. But it's one of those things I feel like you can very easily measure out and get a sense of. I'm not sure if you guys know the kind of biofuel statistics globally, but from what I understand it's not as much as people think. It's not little, but it's one of those things that when you want it, you can't find it. Because now we're competing with aviation with with the CF pathways. And even if you wanted to get a hold of HVO, it sounds like it's one of the most difficult things to do. Even that, even though that's one of the more premium products available. Yeah. Okay. This is such an interesting perspective because, yeah, I mean, a lot of the conversations that I had across most of 2025 was we don't know how long or short the market really, really is because then you're forgetting about LNG. It's a compliant fuel. You're forgetting about bioenergy, which can generate massive amounts of compliance balance. And we don't really know how much they're locking away. We don't really know how much they're designing the push until maybe we get to that period where they expect the buyers to come in. We thought it was right now, but it's not. It's going down. And that's why it's kind of like, right, okay. The length and the shortness of this market can be looked at, in a sense, with how much fuel there is right now. But we don't know how much these guys have just locked in and signed the push. Or maybe they actually want to push anything. They don't want to bank as much and they want to push it out. Now I see it's so hard to say. I think if I can add one point. Right. And I think it was super nice segue into the actual stuff happening on the ground. And what's the actual availability of, of these products, and what do we actually see in the market, and what do we actually see being purchased and being delivered? And I think one point to what you were saying, LNG is a compliant fuel and don't quote me on the exact number, but I think we did an analysis and we looked at the LNG fuel fee. Then there's still 300 400 vessels approximately that still haven't made the switch. That's fair. So I think there is the potential for a lot of these buyers to actually switch on and start buying LNG, but then the availability have to be there, the infrastructure have to be there. So I would really like your perspective on how do you see the buyers right now. What are they buying? What's the sort of availability and and what's the actual infrastructure looking like. Can we get there. So so maybe I can start with bio LNG because that one I think is the easiest to pass out. And if you really wanted to build a kind of ground up supply demand model, you really start with the liquefaction capacity of green liquefaction plants. So gate that's one. There's a few others you can quite easily kind of figure out. And I don't think you're looking at anything more than half a million tonnes a year, give or take, within the European market. And then you can start to kind of figure out biofuels and all these little parts. Um, so that's kind of the fuel fueled energy equation in terms of the ships, I think the, um. I think it's fair to say that a lot of people that have gone to a few may not have essentially gone 100%, and they may go on varying percentages anywhere from, let's say, 25% all the way to maybe half that can change. But I also see that when you when you look at the the way the prices have moved from from a few EU maritime perspective, it does feel like there's been enough offloading from from an access credit point of view that people are shedding all the way to enough compliance for my my, my own tally. So we are forgetting that a lot of owners are actually there to insert the credits within their own fleets. And I do feel a lot of people are at the point where they have enough for themselves, and they're really trying to kind of balance out that kind of net position where they're going. Anything access. Let me just quickly push it out to the market. Yeah, I can I can confirm that. So I mean, on our side, the index is based on executed trades because we have visibility visibility in all these contracts. So um, and there has been a situation where if it's originating from LNG, it's usually used for internal fleet or banked. Um, bio LNG has been the most dominant in terms of creating, uh, compliance balance for sales externally. Uh, some biofuel. But then those who generated surplus by biofuel did not meet the wanted price. So they usually would either use it internally or again like bank it for when the times are hopefully better for them in terms of price. Uh, but I do still think that, um, as I said, like there's still so many who are just not aware that they're even affected by the regulation. So I'm curious to see the final numbers in details, to actually see how many end up paying the penalty. Uh, because even, uh, your commission will tell you. Okay. The purpose of this was not actually that they paid the penalty. We hope that as every time, you know, the deadlines are strict, everyone panics. You will not meet the deadlines. But at the end, most of them make it so. I'm really curious to see now the final numbers and then to to see if the surplus that was floating in the market was good, or if there's just like a huge gap in the market that was not addressed due to timing. Do you have an estimate? I mean, we have visibility onto like into the ships that are on our platform, but that's about half of the market. So I still don't know where the other half is in the way. Okay, okay. But you don't have like a virtual estimate. Sorry. So you don't look at the rest of the market and make an observation of where you think it is. I think that there's a very strong element of marketing in the market. So what I've also seen is that, for example, if a certain buyer goes out in the market and says, I'm buying 10,000 tons. At some point. Previous. Right. The whole market runs around like crazy selling. But in many cases, all these different traders, uh, intermediaries, whatever, they're actually selling from the same source. So then to the buyer, it feels like, oh my God, there are so many offering this much. But actually they're all just echoing that 1 or 2 entities, and that creates noise and it makes it difficult to deduct what is the reality versus what is the illusion. And that's why I'm careful to to comment on on that, because I can only comment from what we see. And we have continuously seen that there's so much of this, uh, in the market. I'm going to help a bit more color. One of the funny things is that the policy is there to incentivize the. The cheapest form of compliance. So as the fossil fuel prices rise for LNG, for example, the cost to generate the credit goes up. Which also means that when you want to sell into the market, you want to basically push the pricing up. If you look at the biofuel, for example, the E fuels, the prices are a lot more stable because they're not affected by, for example, Strait of Hormuz issues and other issues. And you might even get to a point where you're basically generating the credits at a severely lower price than everybody else. Yeah, that was what we saw like three weeks ago. Right, exactly. IO being cheaper than. Exactly. So I do think you're going to get to a point where you need to start to stratify all the different credits that are available in the market from a pricing standpoint, but I would say that you can't look at it from a snapshot. You need to look at it from kind of the life of the ship, because at the end of the day, you have to risk. So a lot of people that, for example, keep enough for five years, you may run the risk of essentially not having enough credits when the when the field doesn't generate a surplus anymore. And then what are you going to do in that situation? One thing that's been severely underestimated is the ratchet effect of the 10%. Every extra noncompliance is 10% and a 10% and a 10%. A lot of people are just waiting to deal with that further down the road. But when you get to 20% to 30% to 40%, if you kind of try to model out the whole 2050 thing on the maximum, you can get hit by an extra 250%. So a lot of people don't want to be in that position. Not even 10%, not even 20%. So I think you're going to start to see a lot of shifting and movements. But I also feel like that's the kind of challenge when you look at all the different fields. But all these fields naturally migrate to Europe, either by putting on the ship to send it to Europe or by production within Europe. And that's kind of, I think, not about the political part of the discussion, but this is why it's so interesting when you develop policies to figure out what the kind of outcome is. and we're seeing a policy being kind of happening right in front of us and seeing how all these will change, kind of how energy is developed where you can find it. But I think people will quickly learn that if you have cheap green energy that you can trade out, you're going to see a lot of proliferation. But I think the data suggests that it doesn't move to your right. We still have a lot in both Singapore and China as. It goes on a ship that goes into Europe. Yeah. True. Yeah. True. True. Yes. Correct. Yeah, yeah. The challenging part really then becomes visibility. Can somebody come out and say, oh, you know, this is really the marketplace. We're looking at all these different moving parts and provide color because I think honestly the, the, the challenging part is that having sailed on the ship for two weeks, which is not very long, if you go out any time after 8 p.m., you cannot see in front of you. And I think that's where everybody is. And even if you had a matchstick torch, like even if you just took out your phone, you have so much more visibility and just gives people that degree of comfort. Like driving a car. Only being able to look in the rearview mirror. Exactly. Oh. Do you? I'm not gonna say I tried it, but yes, I know. And I think we briefed on it, but really, kudos to you. 50%. Wow. And educating the market and doing this. I really think so. Like, uh, I hear so many listening to the podcast and the podcast. I would call it what you want. Right. We were we were joking and passing before the recording started. But really, kudos to you on educating your market, on giving that visibility, on getting to 50%. I really think that's that's very well done. Thank you. Well, since we are out of time, uh, thank you very much for your time today and a very fruitful discussion. You made my work very easy. Uh, so thank you for being gentlemen in that regard. And, uh, hopefully we continue this again. Sounds good. Thank you. Thank you for having us. Thank you. Appreciate it. Thank you.