Fuel options: a disciplined route to better decisions
Choosing a maritime fuel involves balancing emissions, cost, compliance, risk and operational considerations. A structured decision-making approach could help owners navigate the options – while pressurised LNG offers an intriguing addition to the fuel mix.
Adopting fuels with lower Greenhouse Gas Emissions (GHGe) is seen as vital to achieving the IMO’s goals. However, must shipping costs skyrocket to reduce emissions? Let’s take a graphical look at data extracted from DNV’s 2025 Maritime Forecast to 2050, with the addition of Pressurized LNG (PLNG) (see Fig. 1)
Ocean-going trials decades ago and extensive research by ExxonMobil have proven that a switch to PLNG will greatly reduce liquefaction costs and environmental impact. In fact, a GasTech’24 paper by Don Victory of EnergyFlex and Mona Setoodeh of CH-IV confirmed how switching to PLNG from conventional LNG liquefaction cuts costs in half and reduces Scope I GHGe by >90%.
Looking at fuel cost, it is relatively easy to see what CO2 pricing does to that important decision factor. Typically, the variations in fuel cost when burdened by CO2 penalties are minor (Fig. 2) - however, fuel cost is not the only factor driving fuel choice.
How to pick the right fuel for our ship, fleet, and future?
DNV’s Maritime Forecast to 2050 provides a considerations graphic that covers topics from Emissions Compliance to Delivered Power (Fig. 3). Unfortunately, a list of considerations (even a PROS v. CONS list) is not adequate for Quality Decision Making. If your firm wants to make a high-quality decision, you can turn to world-class decision-making methods. In this article, we briefly mention simple multi-criteria ranking approach and Decision & Risk Analysis (D&RA), which is used widely by big pharma and oil industry majors for asset risk management and strongly supported by Stanford University. Then, we consider application of the Analytical Hierarchy Process (AHP). The AHP was conceived by University of Pittsburgh’s Dr. Thomas Saaty in the late 1970s and has global adoption across many industries. Saaty and Zoffer’s February 2013 article in Notices of the American Mathematical Society cited how AHP was used by the Israeli Air Force to prioritise conflict resolution strategies and decide which jet to adopt for its next generation of air defence.
Both D&RA and AHP require disciplined approaches to characterising the decision challenges facing your company. D&RA is powerful but requires complex monetary risk input such that the resulting evaluation generates risked financial outcomes for each possible choice. The AHP allows both preference and monetary considerations. If necessary, the AHP can even be used to bring in preferences and expert perceptions after completing detailed D&RA assessments when the financial predictions do not provide strong enough cases for selecting one option over any of the others.
For simplicity, we will focus on the AHP in this brief note. By allowing preference ratings, the AHP can speed up complex decision-making when cost data is difficult to acquire. For example, it may be difficult or at least very time-consuming to fully assess hazards costs.
Whether one is using D&RA or the AHP, Quality Decision Making requires a clear definition of the objective or goal. From that, the decision support team can build a hierarchy of decision criteria (Fig. 4). One can have more high-level criteria and several layers of sub-criteria if the decision team believes more criteria are needed to fully define the high-level criteria. However, individual lower-level factors have a lessening impact on the goal.
AHP uses a top-level pair-wise comparisons process. First, the decision support team judges vessel cost importance versus fuel cost. Then, vessel cost faces off against each of the other three top criteria. Then, fuel cost is judged against these same criteria… and so on to build a weighted decision hierarchy under which we can rank the fuel options. Matrix algebra is used to distribute the weightings after all criteria have been compared.
It is possible to just assign weights through group discussions, but operations research has proven that this common approach in multi-criteria decision models to be deeply flawed. The rigors of the AHP make it possible to track and manage inconsistencies in judgments and perform sensitivity checks. Commercial AHP software (such as Expert Choice™) takes care of the math and provides many features that facilitate effective decision-making teamwork. Once inconsistencies in judging the criteria are adequately managed, we can compare the fuel options.
The author cannot attempt to determine the best fuel for your ship or fleet. This article simply introduces a disciplined way to deal with the complexity of the decision as well as a promising “new” fuel choice that greatly reduces GHGe while keeping down the cost of natural gas as a fuel choice.
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Main image: LNG tanker anchored in terminal. Credit: Shutterstock
Inline images – Figs 1-4. Credit: DNV/ CHARLES N WHITE