This interview was conducted with Tiago Braz, CEO of Wavelength Technology Center, as part of the Blue Compass project, organised by the Hub Azul Portugal Network, based on insights from the Hub Azul Dealroom, the leading digital matchmaking platform for blue innovation.

Which technological or digital innovations do you consider most important for improving efficiency, safety and sustainability in shipbuilding and ship refitting?

As regards the shipbuilding and/or refit process itself, shipyards will learn more about how to optimise their construction processes. As for the ships to be built or converted, the major areas of innovation and transformation in the industry, in my view, relate to the use of green fuels, such as e-methanol, e-ammonia or bioLNG. Another key area in the industry will be the use and implementation of WAPS (Wind Assisted Propulsion Systems), which enable reductions in fuel consumption with the aid of wind.

In my view, these would be the most significant technological developments driving disruption and innovation in shipbuilding and ship refitting.

In your opinion, which areas offer the greatest potential for growth and innovation (e.g. new materials, green propulsion, modular design, digital twins, automation)?

In my view, the areas with the greatest potential for growth are linked to digitalisation and green propulsion. In the digital sphere, there is still enormous potential for the digitalisation of administrative processes related to shipping, as well as significant scope for development in navigation support tools, such as route optimisation.

These tools will essentially enable more efficient use of ships, reducing waiting times and allowing for the optimisation of routes and sailing speeds in order to minimise energy consumption. A third aspect of digital development relates to the development of tools that enable energy management on board ships, through the optimisation of the ships’ own on-board systems.

In the field of green propulsion, the bulk of innovation and growth is actually set to take place on land rather than on board ships. At present, the "front line" of decarbonising maritime transport is being fought on land, through the development and implementation of projects for the production of green fuels.

This is, by far, the biggest hurdle to overcome at present. The use of green fuels in ships is intrinsically dependent on and intertwined with the development of a production and distribution chain for these fuels. In order to scale up the adoption of green methanol, green ammonia and bioLNG, consumers of these fuels need to develop their vessels in tandem with production and distribution.

At present, the global fleet already includes a significant number of methanol-powered dual-fuel vessels, a sizeable fleet of LNG-powered vessels, and the launch of several projects to use ammonia as a co-fuel on ships. Biodiesel is generally considered a "drop-in fuel" with the potential to be implemented without major modifications to existing ships.

This situation stands in stark contrast to the clear lack of large-scale projects for the production of green hydrogen, which is necessary for the production of green methanol and ammonia. In this regard, the major frontier of innovation and development to be overcome lies in the ability to produce green fuels at scale and in sufficient quantities, which, together with the regulations to be implemented, will make them viable.

To a large extent, the technology for using these fuels in ships already exists; it has been tested and works. The "early adopters" who have taken the lead in creating demand already have ships in service. What is needed now is to scale up the production and distribution of these fuels.

What challenges — technical, economic or regulatory — are currently limiting the adoption of more sustainable and innovative practices in the sector?

From a regulatory perspective, both the EU and the IMO have, in my view, succeeded in implementing policies that encourage decarbonisation and discourage the use of fossil fuels. Some will say they are not enough, others will say they are excessive, which suggests that the measures implemented and announced will be adequate and feasible.

In fact, in the regulatory sphere, the biggest challenge I see is the risk of non-compliance or even the risk of some of these measures being reversed, particularly at the IMO, which is currently facing unprecedented resistance and pressure from countries such as the United States, which are opposing the IMO’s plans to penalise CO2 emissions. In other words, the major regulatory challenge is to maintain the current trajectory, and it is essentially a diplomatic challenge in the face of growing pressure against the decarbonisation of the sector.

I do not believe that technical challenges act as barriers to the decarbonisation of the sector. The various technologies exist and work. The pace of implementation is not determined by scientific progress, but rather by the viability of their business models. Generally speaking, there is no technological "bottleneck" or scientific breakthrough that needs to happen to enable faster progress in decarbonising the sector.

The challenges lie in scaling up the adoption of existing technologies so as to enable technologists to standardise the adoption of their products and manufacturing methods, thereby reducing supply and implementation costs. This brings us to the economic challenges, which are what truly set the pace of adoption.

The very act of implementing changes in an industry is, in itself, an extremely complex process. The decarbonisation of maritime transport is not a sectoral transition as simple as switching from VHS to DVD or streaming, given that a ship is an asset with a lifespan of 25 years or more and costs tens of millions of euros. Added to the undeniable fact that all solutions for decarbonising ships necessarily result in higher operating costs (except those aimed at energy efficiency), all these challenges make economic considerations the number one constraint on the implementation of more sustainable practices.

Since the constraint is economic rather than technological, this means that the pace of implementation is determined by the speed at which regulations are introduced to push the industry towards adopting more sustainable practices. A "green" ship does not offer shipowners a competitive advantage unless the regulatory context or the end customer demands it. Therefore, technology is not the "bottleneck".

What trends do you think will shape the future of shipbuilding and ship refitting over the next 5 to 10 years?

Technological, commercial, and volume leadership, as well as expertise in shipbuilding and refit, lies primarily with South Korean and Chinese shipyards, where vessels of impressive size and complexity are built in months rather than years. I see no reason why this dynamic will change over the next 5 to 10 years.

The European shipbuilding and refit sector tends to play a more significant role in the supply of components and systems for ships – where there is greater technological added value – rather than in the ships themselves. In the ship components sector, Europe maintains a presence through a number of leading equipment brands, driven by shipowners’ preference for these brands and their focus on innovation and continuous quality improvement. The European ship repair and refit sector also has some presence, but faces strong competition from Asian shipyards and tends to focus on niche markets.

In this context, the innovations gaining ground involve the use of WAPS and solutions for energy recovery or improved energy efficiency on ships, with green fuels—such as methanol, ammonia and LNG—in the background, but with an ever-increasing trend towards adoption across the global shipping fleet.

Many of these innovations originate from start-ups or equipment suppliers in Europe, but also from other regions. Eventually, a tipping point will be reached where the adoption of green fuels becomes cheaper, at which point dual-fuel ships with WAPS will become the norm rather than the exception.

At this turning point, the adoption curve for green fuels will skyrocket and drive a boom in new component suppliers who will capitalise on the technological transition to push "legacy" suppliers – predominantly European – out of the market, as they will be unable to keep pace with the rapid rate of adoption.

Exactly the same "playbook" seen with electric cars, where the technological transition has created the disruption that is driving traditional suppliers out of the market in favour of new product brands. In this context of transition, the European shipbuilding and ship repair industry will be tasked with maintaining an ageing fleet of ships, whilst new shipbuilding continues to grow in China, but this time with components and systems from Chinese brands rather than traditional European equipment brands.

In short, the predicted trend in the shipbuilding and ship refit sector will be the consolidation of Asian dominance in shipbuilding, accompanied by a gradual shift away from traditional component brands in favour of new ones, driven by the energy transition.

The uncertainty lies in which new component brands these will be, and how innovation and the development of new green technologies might determine where this new wave of ship component suppliers will come from.