Green shipping hits rough seas

KLANG: The shipping industry's push towards greener fuels has hit rough waters, with scarce alternative-fuel supply, inadequate bunkering infrastructure and limited access to green financing slowing the transition.

The biggest constraint is the limited global supply of green methanol, which is emerging as a key bottleneck in the maritime sector's shift to cleaner fuels.

Malaysia Shipowners' Association chairman Mohamed Safwan Othman said that more ships are returning to liquified natural gas (LNG), which is not a fully zero-carbon fuel.

"We have data that showed in 2024, more than 60 per cent of the ships orderbook was methanol-powered. But things have shifted now and we see more ships are going back to LNG.

"We realised this is mainly because it is not easy to get methanol supply globally.

"Even the biggest port, which is our southern neighbour, is currently trying to source methanol from outside this region," he said at a panel discussion at the Green Ports 2026 International Conference held here today.

Besides constrained fuel supply, transition cost is also a major hurdle for industry players.

Safwan noted that although industry players want to comply with international regulations like the International Maritime Organisation's (IMO) Net Zero Framework, the framework's main concern remains the economic costs of the transition.

The framework is a global regulatory package aimed at reducing greenhouse gas emissions from international shipping to net zero by 2050.

"As shipowners, we want to go green and we have the technology to go green. But again, the bunkering facility and to get the right supply of fuel is really a challenge.

"And if you look at the IMO's framework, it clearly treats the ship owners a bit unfairly, especially when you talk about the imposed penalty of fines towards ship owners that do not have green fuel," he said.

Safwan underscored that shipping needs access to green financing but they are usually blocked by the Poseidon Principle.

It is a global framework that allows financial institutions and marine insurers to assess whether their ship-financing portfolios align with international climate goals.

"We had a lot of engagements with Bank Negara Malaysia in the past year. And I hope that we continue the discussion with the central bank in terms of access to green financing," he said.

However, Safwan said green transition does not always translate to high capital expenditure.

The association often advocates operational efficiency to its members to curb the rise in costs for green adoption.

He said many of the associations' members have installed a vessel fuel monitoring system, where in house data have shown that it lowered fuel consumption by more than 70 per cent.

State members at the IMO postponed the adoption of the framework last year mainly due to opposition mainly from the US, Saudi Arabia and other oil-producing nations on the framework's pricing that would raise costs for consumers and shipping companies.

The framework called for ship owners to increasingly adopt cleaner fuels from 2028 or face financial penalties.

At the April IMO meeting held in London, High Commission of Malaysia stated that Malaysia continues to advocate for approaches that are "practical, equitable and implementable" taking into account the diverse circumstances of all member states.

Johor Port Authority senior manager Ahmad Syahrir Ashaari said there are various types of methanol that can be used as fuel and the IMO's regulations call for total green fuel adoption starting from the source, which presents a challenge.

"As a port authority, we need to look back on this because in layman's terms, it means no fossil fuel from the source.

"We have to look at this thoroughly and strengthen our regulatory framework for this type of fuel," he said.

He added that the ideal fuel for the industry would be green methanol but its production is costly.

"And the market is uncertain. Ship owners will think that if they build their ships mainly for methanol or ammonia whether there will be adequate bunkering facilities?," he asked.

Under Johor Port Authority's watch, Port of Tanjung Pelepas has adopted the refueling of vessels with low-carbon fuels.

It commenced pilot bunkering operations in 2024 and completed the first operation for a Maersk dual-fuel methanol container vessel.