A sea-change in shipping?

By We Mean Business coalition | October 22, 2020

Despite talk of deglobalization and falling trade volumes in recent years, the international trade in goods continues to rise by historic standards and most of it is still powered by fossil fuels. 

At the center of this – and of globalization generally – are the immense container ships that transport over 70% of consumer and manufactured goods, and the smaller tugs, barges and inland vessels that aide them. International seaborne trade alone, not to mention domestic sea and river freight in certain countries, has risen to well over 10,000 metric tons per year, from around 3,000 in 1975. And this is why shipping now accounts for around 3% of global emissions. 

Notwithstanding the significant headwinds from a global downturn caused by Covid-19, the International Transport Forum expects global freight demand to triple by 2050. Under a business-as-usual scenario, this means that shipping could represent a full tenth of global greenhouse gas emissions by 2050. So it’s little wonder that ships are now coming under the decarbonization spotlight; as firms, manufacturers and governments try to agree strategies for full decarbonization.  

It’s true that progress in shipping has been slower than other parts of freight, where its international scope has often meant exclusion from carbon accounting norms.   

On the heels of the UN International Maritime Organization’s (IMO) 2018 goal to cut CO2 emissions from shipping by 40% by 2030 and 50% by 2050, a welcome development is the creation of a Sustainable Freight Buyers Alliance (SFBA). SFBA is now exploring industry standards on freight emissions, collaborative initiatives that look at developing promising technologies, and bringing buyers together to create a ‘united market demand signal for low-carbon freight’.

In terms of technologies, there are a number of possible options, with a recent American Bureau of Shipping survey finding that Hydrogen and LNG were the current industry favorites in terms of technology adaptation.

For shorter distances, batteries now have sufficient range to lead the solutions. And it’s here that the first promising signs of innovation are appearing.  For example, Finnish company Wartsila is launching a network in the Netherlands enabling ‘emissions free’ inland barges (where inland water freight accounts for 5% of total emissions in the Netherlands) to use renewable powered battery packs that can be swapped or recharged easily. Wartsila says the batteries could also be used onshore to stabilize the local electricity grid. Its first network customer will be Heineken.  

But battery power is not yet advanced enough for transcontinental shipping and instead, solutions being explored include hydrogen fuel-cells, ammonia and transition biofuels and synfuels.  

The third largest shipbuilder in the world, Samsung Heavy Industries, is working with American Bloom Energy to develop fuel cell-powered ships that could be potentially operational by 2025. Fuel cells convert chemical to electrical energy and would initially run off Liquified Natural Gas before being (potentially) converted to running off zero-carbon hydrogen. And with support from the Norwegian Government, Wartsila is now testing the use of ammonia in traditional shipping engines which it says is the world’s first long term, full-scale, testing of ammonia as a fuel”. 

Scale and speed are important, though, and in terms of research, freight giant Maersk has recently joined forces with commercial giants Cargill, MAN Energy Solutions, Mitsubishi Heavy Industries, NYK Line and Siemens Energy to form an independent  “Center for Zero Carbon Shipping” with the aim of “accelerating the development of selected decarbonizing fuels and powering technologies”.  

Maersk is also leading the way with its own ambitious commitment to be net-zero carbon across its operations by 2050

Most radical and exciting perhaps is the proposal coming from a major commercial freight player for fundamental structural changes to the industry.   

As the European Commission and Parliament pushes through the inclusion of shipping in its EU Emissions Trading System, Dutch commodities trader Trafigura – one of the largest users of international freight –  has published proposals for the IMO that shipping be subjected to a carbon tax to enable rapid technological change.   

Trafigura says that “only through the introduction of a significant levy on carbon-intensive fuels can sufficient progress be made towards the decarbonization of the global shipping industry’, arguing that a levy of $250-300 per ton of carbon could be imposed on carbon intensive fuels, revenues from which could be used to subsidize the use of low and zero-carbon alternatives. 

Even if shipping has been slower to adapt to decarbonization than other sectors, the advances and ideas of recent months show a real sea-change in attitude and promise much for the future.

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