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While the shipping industry has made a commitment to implement the International Maritime Organisation’s (IMO) ambition of reducing CO2 emissions by at least 70% by 2050, the sector is encountering obstacles in meeting this target. The capital-intensive industry is plagued by thin margins, limited technology and a high dependency on energy-dense fuels. While it already moves approximately 90% of world trade volumes, this volume is expected to almost double by 2030, making meeting these decarbonisation targets all the more important. As the global economy grows, exemplified by the expansion of trading capabilities of the Panama Canal and the Belt and Road Initiative, so too will carbon emissions from the shipping industry and therefore, pressure to accelerate decarbonisation. 

To reach this goal, commercially viable zero-emission vessels need to be introduced into the global fleet by 2030, and the fuel supply chain must be reexamined. This can only be achieved through existing coalitions and greater collaboration between the major players in the maritime industry, energy sector and governments, but are such commitments possible to reach these decarbonisation targets?

Shipping’s Complex Road Map to Decarbonisation

The shipping industry is large and ever-expanding, with shipping emissions having increased by 70% since 1990. It currently represents 2.7% of global emissions, with 85% of these emissions coming from bulk carriers, oil tankers and container ships. There are 53 732 seagoing vessels that run on highly polluting fuel with most using heavy fuel oil (HFO) or marine gas oil (MGO) which are both major sources of harmful emissions, such as nitrogen oxides (NOx), sulphur oxides (SOx), black carbon (BC) and particulate matter (PM), which cause substantial damage to human health and local ecosystems.

Some of the barriers to making the shipping industry more sustainable is that existing cleaner fuels are costly, and the feasibility of energy-efficient solutions, such as liquefied petroleum, remain limited. The industry is exploring several alternative clean fuels, including ammonia, hydrogen, methanol and biofuels, but major shipping players are concerned about not only their costs, but also their lower energy density and extensive storage needs.

Furthermore, given the 20 to 30-year lifespan of ships, those in operation today will still make up most of the global fleet in 2030. To meet the IMO decarbonisation targets, the industry will need to invest substantially in net-zero vessels. However, there remains reluctance due to a lack of clarity regarding future fuels and regulation that has exacerbated unwillingness to invest in new ships.

According to the University Maritime Advisory Services, it is estimated that for the shipping industry to meet the IMO carbon neutrality targets by 2050, the sector will need to invest at least $1.65 trillion, of which 87% will need to be dedicated to creating fuel supply infrastructure. 

Decarbonisation decision-making across the industry is complex due to the fragmentation of the global shipping fleet; 20% of the total shipping capacity is owned by 10 ship owners while the remaining 80% of the global fleet is owned by thousands of smaller ship owners, alongside different forms of company ownership. This makes it difficult to get consensus in the industry. However, this collaboration is vital to stimulate the development of viable technologies, cross-sector research and systemic change across the shipping supply chain.

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Coordination Orchestration: The Zero Carbon Research Centre

To deal with coordination efforts for the transition of shipping from ideas to action, orchestration of the industry stakeholders is vital. An example of this is the creation of a non-profit research centre, the Maersk Mc-Kinney Møller Centre in Copenhagen, Denmark, has a specific mandate to drive zero shipping emissions by stimulating greater collaboration across all segments of the shipping sector.

The centre is being guided by the shipping giant Maersk who themselves have managed to reduce their emissions by 41% relative to cargo moved by the end of 2017 with a reduction target of 60% by 2030 and carbon neutral by 2050, leading the decarbonisation agenda for the entire shipping industry.

Asides from Maersk, the centre was co-founded by several other leading global maritime industry organisations, including ABS, Cargill, MAN Energy Solutions, Mitsubishi Heavy Industries, Nippon Yusen Kaisha and Siemens Energy.

Brian Østergaard Sørensen, vice president at MAN Energy Solutions, says, “No technology or company can do this alone which is why we need to join forces across the supply chain to meet this challenge.”

The centre’s team will focus on collaboration in order to create solutions towards accelerating the development of selected decarbonising fuels, decarbonisation pathways and assist in the establishment of a legal, financial and commercial framework to drive the transformation across the entire shipping industry by working with industry, academia and authorities.

All Hands on Deck: Coordinated Industry Commitments

Much like the research centre in Copenhagen, new industry alliances are being created, such as The Net Zero Asset Owner Alliance and the Clean Cargo Working Group. However, there needs to be greater and more diverse collaborative efforts across the industry due to the complexity of the problems to reach the targets.

These stakeholders vary from across the maritime spectrum, including engine manufacturers, port authorities, ship builders and energy companies that need to share knowledge bases, define their R&D roadmaps, build on existing initiatives and develop new ideas to proactively support and utilise pilot projects necessary to mature new technologies and unlock fuel options.

While maritime organisations might compete with one another, there’s an opportunity to work together and build on the existing momentum to drive practical change towards reaching the decarbonisation objectives and create fundamental systemic change. 

Shipping associations have proposed creating a fund raised by the maritime industry with US $5 billion for research to develop cleaner technology to help the sector meet emissions-cutting targets. An ambitious target has been made for the industry to build a commercially viable zero-carbon ship by 2030. What are the obstacles in decarbonising the maritime industry?  

There have been calls by shipping associations for a mandatory contribution of US $2 per ton on fuel used by ships to raise money for the fund. The International Chamber of Shipping, an industry body backing the fund, says a $2 per ton fuel contribution would raise the $5 billion over 10 years, based on the fuel consumption of the world’s fleet of about 250 million tonnes a year. 

Shipping and Climate Change

The shipping industry is a vital part of world trade- 90% of goods are transported by sea. However, it is also one of the most carbon-intensive industries contributing to climate change due to its reliance on fossil fuel; according to UN shipping agency, the International Maritime Organization’s (IMO) GHG Study 2014, the industry accounts for 2.2% of the world’s carbon emissions. In light of this, the IMO has set a target of cutting the industry’s greenhouse gas emissions by 50% from 2008 levels by 2050, which will require development of zero- or low-emission fuels and new ship designs using cleaner technology. 

Along with this target, over 70 parties including the maritime industry, financing company and other stakeholders have formed a coalition, known as the ‘Getting to Zero Coalition’ that has committed to developing a commercialised, zero-emission fleet by 2030. 

The fund will focus on accelerating the research and development and deployment of low-carbon and zero-carbon fuels, energy sources, propulsion systems and other novel GHG mitigation technologies that are applicable to the maritime industry. It is primarily focused on transoceanic vessels as the current application is limited to ferries and small ships. An example is Ampere, which launched in 2015 and is the first commercialised electric-powered car and passenger ferry in the world developed by Norled. However, the ferry holds 120 vehicles and 360 passengers, a low capacity compared to a transoceanic ship carrying thousands of containers. 

Another company, Hurtigruten, is also exploring more technical pathways to reduce emissions. The company  launched the world’s first 530- passenger cruise ship- MS Roald Amundsen- in 2019 and continues to develop hybrid-powered cruise ships propelled by battery, liquefied natural gas and biogas from organic waste, like dead fish.  

What is Stopping Shipowners?

Although there are multiple measures developed to enhance ship operational efficiency e.g. wind assistance technology, complete decarbonisation requires a high cost of replacing the heavy fuel oil engines to other fuels and engines. A study from the Energy Transitions Commission estimated that decarbonisation may cost US $150- 350 per tonne, higher than that of aviation by at least US $40 per tonne. 

Another study conducted by Lloyd’s Register and UMAS sought to review and rank existing alternative technologies. The study also consulted shipowners and asked what they were looking for in considering the viability of onboarding alternative fuels. They wanted the options to be viable at a moderate carbon price (eg. $50 per tonne of carbon) and without too great an increase to the cost of the ship- no more than 10%. They also wanted reassurance that the impact of the carbon emissions weren’t simply being moved to the electricity generation or other fuel production processes.

Finally, the energy source should only be a possible solution if emissions can be nullified within the ship’s life cycle. However, these requirements are still unsatisfied due to prohibitively high voyage costs of existing technologies.  

What are the Options?

The study concluded that ‘advanced’ biofuel is economically outcompeting other alternatives to fossil fuel systems (‘advanced’ meaning that it can be manufactured from various types of non-food biomass, also called second generation biofuels). 

Synthetic fuels, including hydrogen and ammonia, were ranked second best. These fuels can be used to power internal combustion engines (ICE), electric motors and fuel cells. The ICE system powered by synthetic fuels can also be flexible during the period of fuel transition; of these three engines, ICE is regarded as the best option as it is compatible with different types of fuel. 

Yet, one of the major limitations of these fuels is that they have relatively lower energy densities, which means that they require more storage space. Technological advancements regarding fuel production and reducing on-board storage will help enhance the viability of these synthetic fuels.     

Apart from these technical barriers, Torben Vollemund, the spokesman for the Global Maritime Forum believes that the challenge also lies in the collective actions of multiple stakeholders in decarbonising the maritime industry. 

If the fund receives the backing of IMO member states, it could be in place by 2023. The proposal will be discussed by the organisation’s next Marine Environment Protection Committee at its next meeting in March.

Combating the climate crisis is a challenging task. Indeed, both technology advancement and stakeholder engagement are equally important in decarbonising the maritime industry. Financing research and development is a positive move, which will hopefully speed up the development of technologies that will aid in creating a more sustainable shipping industry. As demand for goods exponentially increases and trade increases accordingly, this is essential. 

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