Wind installation and support ships have been burning diesel and counting it as green fuel. The justification is that the wind power they are installing more than makes up for all the carbon they emit.
But that is set to change as charterers, governments and financiers sharpen emission requirements. Owners in this Norwegian-centred industry are competing to be the greenest.
Shipowners are ahead of their wind farm customers in thinking about decarbonisation, say some, because wind farmers consider their project green by definition.
"The renewables industry really hasn't talked about the environment yet," said Jan Schanke-Jorgensen, chief operating officer at Oslo-based Fred Olsen Windcarrier. "The shipping industry has come further because of the IMO 2030 target."
But change is coming. And if shipping is ahead of renewables, the banks are ahead of everybody.
"Finance is driving us much harder than clients," Schanke-Jorgensen said. "The clients are just starting to understand the importance of decarbonisation now. And that's very welcome."
The race is on
Norway is an operational or financial hub for much of the world's wind farm installation, support and maintenance fleet.
The main Oslo players in offshore wind installation are Offshore Heavy Transport (OHT) and Fred Olsen. A close peer, Danish veteran Cadeler, is also listed in Oslo. In the wind logistics bracket comes listing candidate Edda Wind, a joint venture between Ostensjo Rederi and Wilh Wilhelmsen.
All are competing to green the wind vessel fleet, to please bankers and charterers and out of enlightened self-interest.
"The wind utilities can be very demanding when they put out long-term contracts. And there is pressure from the banks. But the wind vessel owners themselves are pressing to get assets that will remain climate-competitive for as long as possible," said Jan Boro of Norwegian export credit guarantee agency Giek.
The early leader may be Arne Blystad-controlled OHT, which recently secured a $135m "green" facility for its 48,000-dwt Alfa Lift — to be delivered in 2021 — from Norwegian banks DNB and Sparebank, helped by a guarantee from Giek. The Alfa Lift will be the world's largest vessel for installing offshore wind foundations.
OHT's five existing semi-submersible heavylift ships burn high-sulphur fuel oil and have scrubbers installed.
But the Alfa Lift features the world's largest marine battery pack and is set up to be adapted to burn methanol when that becomes feasible. A series of up to four wind turbine installation vessels (WTIVs) on order will be built hydrogen fuel cell-ready.
OHT's business started in offshore oil and gas and has turned towards wind work.
"By 2024, over 90% of OHT's business will be renewables," chief financial officer Tom Jebsen said.
Cadeler, with Andreas Sohmen-Pao as the largest shareholder, is the biggest European player in the space. In green newbuildings, it is close behind OHT, with plans to order two vessels in the second quarter of 2021, doubling its WTIV fleet.
It has yet to announce a choice of yard, and chief executive Mikkel Gleerup declined to share any news about the emissions or propulsion specifications. But he hinted clearly that there will be a green shift in its power solution.
Fred Olsen has also signalled plans to add a fourth WTIV, but its emphasis has been at least as much on upgrading existing vessels to accommodate the industry's ever-bigger turbines.
Scrubbing the fossils
OHT's moves to green its newbuilding programme drew applause from turbine maker and charterer Siemens Gamesa.
"Installation vessels that can handle the next generation of wind turbines and at the same time reduce emissions will fulfil our goal of minimising the environmental impact of new development projects," Siemens Gamesa chief executive Ben Bjorke told TradeWinds when the Alfa Lift was floated out at China Merchants Heavy Industry's shipyard in Jiangsu, where it is under construction.
But the Alfa Lift, like all ships in the space, will burn brown for now.
"For installing foundations and turbines, you still have to use fossil fuels," Jebsen said.
Chief executive Torgeir Ramstad has defended OHT's use of scrubbers with high-sulphur fuel oil as offering the cleanest available solution for older ships — cleaner than LNG.
The cost element is attractive as well. OHT completed $11.4m-worth of scrubber installations on its five ships in the first quarter of 2020 and by the time of its annual report had saved 67% of that, or $7.6m, in fuel costs.
