In July of this year, the International Maritime Organization (IMO) revised its strategy for reducing greenhouse gas (GHG) emissions from international shipping .
The IMO’s new ambitious target is to reach net-zero GHG emissions from international shipping by 2050. This is a big jump up from the initial target of a 50% GHG reduction by 2050 – and a significant driver toward green solutions.
Also, the European Union will for the first time include international shipping in the Emission Trading Scheme (ETS) and set a price on ship GHG emissions. This is expected to be in force by the end of 2023. In the future, this regulation may be adopted by other regions.
Changes in fuel technology
The impact of the revised IMO GHG strategy can be clearly seen in the fuel technology transition of the maritime industry. Based on the DNV’s Maritime Forecast to 2050 report published in September 2023, 93.5% of currently operating ships use conventional fuel. In contrast, this share is only 48.7% for ships on order. The trend is clear.
The Switch contributes expertise
We at The Switch are seeing the results of this trend.
Permanent magnet (PM) machines continued to dominate the direct-drive shaft generator market in 2023. This widely adopted and proven technology provides high fuel efficiency and energy savings to support the marine industry as it moves into the future. The Switch is now the market leader in this field. We have sold more than 270 shaft generators since 2015, and over 100 are already in operation.
The transition toward sustainable solutions in the maritime industry has also boosted the sale of greener marine drives that slash fuel costs and emissions. The Switch launched a new generation of marine-specific drives last year, and the industry welcomed the offering. In 2023, we received orders from both existing and new customers.
Economic factors going forward
The global economy faces several uncertainties at the moment. As a result, defining clear scenarios for the future is not straightforward. Fortunately, it looks like inflation is going to settle down, and the pressure to raise interest rates has eased. We will see how the availability of financing influences business next year.
Positive outlook for the future
Industry has finally overcome the challenges caused by COVID-19, and supply chains are working again. Also, the world has reopened for travel. Because of the global nature of business, all this has helped the marine industry. In general, the market for maritime electrification looks promising. I expect another busy year in close collaboration with our customers.
As we sail into the new year, all of us here at The Switch wish you an electrifying 2024!
About the author
Juha Tennivaara currently works as VP, Sales at The Switch, Finland. He has nearly 15 years of experience in the industry, and his main responsibility is to lead and develop the sales function of the company globally. Tennivaara holds a M.Sc. (Technology) degree in Industrial Management and an Executive MBA degree from the Lappeenranta University of Technology (LUT), Finland.