Trend: Shipping sails toward decarbonization
The following is adapted from State of Green Business 2020, published by GreenBiz in partnership with Trucost, part of financial information and analytics giant S&P Global.
After decades of steering clear of specific climate commitments, the international maritime industry — responsible for 3 percent (and growing) of annual global greenhouse gas emissions — is navigating a course to halve its footprint by 2050. Not since Italian explorer Christopher Columbus set course for the New World in 1492 has the global shipping fleet faced such an uncharted challenge.
The voyage embarked in mid-2018 when the International Maritime Organization (IMO), the United Nations agency that sets policies and standards worldwide, embraced its inaugural decarbonization strategy. This course falls short of what’s needed to achieve the 1.5 or 2 degrees Celsius temperature mitigation goals set by the Paris Agreement. Still, it is an important chart for the future.
The first port of call came in early 2020, when a regulation capping sulfur emissions took effect, forcing ship owners to start phasing out the low-cost bunker fuels that have been keeping fleets afloat but that have exacerbated air pollution in coastal cities. "As a bilateral agreement, it may be the best we can get," observes Ned Harvey, managing director of Rocky Mountain Institute, in charge of the think tank’s work on pathways for heavy transport. "No goal is a disaster. A science-based goal is optimal."
Like the jetliners that transport business travelers and vacationers around the planet, the 50,000-vessel tanker, freighter and cargo ship fleet that floats trillions of dollars worth of goods across Earth’s oceans sits outside the decision-making authority of any one nation. But its impact on climate change is titanic. More than 90 percent of global trade is tied to international shipping: We’re talking more than 10.7 billion metric tons per year. What’s more, activity could triple by 2050, due to the boom in e-commerce, infrastructure investments (especially in China and India) and the ambition of emerging nations rich in natural resources (think Africa) finding their place in the global economy.
When the IMO set its compass heading in 2018, some countries such as the Marshall Islands, which controls the second-largest ship registry after Panama, called for higher ambition. Others — notably Brazil, Saudi Arabia and the United States that rely heavily on exports of natural resources — refused to agree to any emissions reductions in absolute terms. China has been setting progressively tighter emissions controls.
Rough seas are ahead, in part because of the huge technical and financial challenges. The IMO’s head of air pollution and energy efficiency, Edmund Hughes, put it this way: Achieving a 50 percent reduction by 2050 requires every existing ship to reduce its individual emissions by up to 85 percent.
Complicating matters is the decades-long life expectancy of the existing fleet, a fact of life being addressed by banks that finance those assets. U.S.-based Citi, France’s Societe Generale and Norway’s DNB have teamed with two of the world’s largest carrier companies, A.P. Møller-Mærsk and Cargill Ocean Transportation, to create the Poseidon Principles, which apply climate change considerations to ship financing decisions. Supporters include the Netherlands’ ING, France’s Credit Agricole and Britain’s Lloyd’s Register.
"Shipping’s decarbonization will require unparalleled innovation," says Søren Toft, chief operating officer and executive vice president of Mærsk, the world’s largest container shipping company, when the Poseidon Principles were launched in June.
Maersk hopes to cut emissions 60 percent before 2030 and is steering toward a zero-carbon future by 2050. That will take billions of dollars of investment. "A modern ship is a highly capital-intensive asset with a typical life span of 25 to 30 years," Toft notes. "To deliver on ambitious climate targets, zero-emission vessels will need to enter the fleet by 2030. This leaves us only 10 years to develop the new marine fuels, propulsion technologies and infrastructures that will be required."
The short-term efficiency approaches being embraced by carriers and ship owners are myriad — ranging from relatively simple gestures such as applying paints from companies such as AkzoNobel that enable vessels to glide through water more smoothly; using digital services from the likes of Flexport or Freightos that aim to streamline logistics to optimize loads; and outfitting ships with futuristic retrofits, notably rotor sails that harness the power of wind to assist with propulsion.
One company gaining notoriety in the latter space is Finland’s Norsepower, which is testing 30-meter, cylindrical mechanical sails. During a year-long test on a Mærsk tanker, the sails cut fuel consumption almost 8.2 percent.
Over the long term, sustainable shipping will require major breakthroughs in low-carbon fuel and propulsion technologies. "When I look at the landscape of alternative propulsion technologies, I don’t think there’s going to be any one silver bullet," says Nico De Golia, sustainable transport collaborator with BSR.
What’s on the horizon? Some ideas making waves for their audacity are Vindskip, a hybrid vessel design using wind and liquid natural gas (LNG) that mimics the aerodynamics of an airplane wing; or Ecoship from NYK, which combines "flapping foil" propellers with hydrogen and solar power.
Practically speaking, however, the prime driver of what’s viable will be energy intensity: Any fuel replacement must be easy to store on-board without compromising safety, weight or a ship’s carrying volume. Among options being discussed actively are LNG, a big focus for U.S. carrier Crowley and certification body DNV GL, although most in the industry see this as bridge fuel; biofuels, problematic from an availability, infrastructure investment and sustainability standpoint; and hydrogen and ammonia, which carry special storage considerations that are a downside.
Aside from the IMO directive, carriers are being rocked by a rising tide of action, represented by the Clean Cargo alliance, a working group that includes big consumer products companies including Amazon, BMW, H&M Group, Heineken, IKEA and Levi Strauss, as well as massive carriers such as Mærsk, Crowley and Cosco, China’s largest carrier. Several of those companies have allied with Mærsk and Norwegian car transport carrier Wallenius Wilhelmsen on an initiative to test a blend of ethanol and lignin, a bioproduct of papermills. Testing is expected during 2020.
Will that bold pilot have a ripple effect? This sort of corporate ambition will help the shipping sector set sail in the right direction, but to reach the elusive Port Zero Emissions will take expert navigation in untested waters.