The collapsing cost of renewable electricity means that many sectors of the economy can be decarbonised via electrification using zero carbon power sources. But that still leaves a big challenge in “harder to abate” sectors of the economy, where electrification is either not possible or likely to be very expensive. Long distance international shipping is one of those sectors.

    But as the Energy Transitions Commission has shown in its recent Mission Possible report, it is technically possible for global shipping to be zero carbon by 2050. Over shorter distances, battery-powered electricity ships and hydrogen will both play a significant role. Over long distances, biofuels or ammonia could power largely unchanged ship engines. And the hydrogen which goes into ammonia production can be zero carbon if it is produced via electrolysis using green electricity. The technical feasibility of zero carbon shipping is not in doubt.

    So what are the barriers to decarbonisation which have to be overcome? Three in particular need to be addressed.

    The first is the chicken and egg problem of how to drive technological development and large scale fuel production. Marine engine manufacturers have begun to develop ammonia-based engines, but they need certain demand from major shippers to make large scale manufacture economic. Ship owners can only commit to an ammonia or biofuels based future if they are certain that large-scale fuel production will be available to meet demand.

    Massively increased biofuel or ammonia production facilities, appropriately located to supply port refueling facilities, will be needed to supply the world’s container, tanker, and bulk carrier fleet.

    Second, unlike in some other sectors such as road transport, zero carbon ship operation is likely to be more expensive than today’s fossil fuel based system. Biofuels and green ammonia would currently be significantly more expensive than conventional heavy fuel oil, and while mass scale production will reduce the cost penalty over time, it may never be eliminated. In addition, since ammonia has a lower volumetric density than heavy fuel oil, more space would be needed for fuel at the expense of some cargo capacity.

    Given these realities, the ETC, drawing on previous analysis by University Maritime Advisory Services,1 estimates that taking the CO2 out of shipping might cost as much as USD150-USD300 per tonne of CO2 saved. This would make shipping one of the most expensive sectors to decarbonise, and would add significantly to freight costs.

    The impact of this on the costs of end consumer goods, and thus on global economic growth and living standards, is actually quite trivial. But for any one shipping company there is a problem: if they commit to decarbonise and their competitors don’t follow suit, they could suffer significant competitive disadvantage.

    Third, the fragmentation of the shipping industry complicates the process of achieving rapid change. The multiple different ways in which responsibilities can be divided between ship owners and operators, the multiple layers of regulation at port, national and global level, and the significant role of short-term charter contracts, can reduce the ability of – or the incentive for – any one company to make the investments needed.

    Given these barriers, who can do what to overcome them?

    The IMO has a crucial role, since its standards, applied to both new ships and the existing fleet, can force all operators to meet rising energy efficiency requirements, thus removing the competitiveness problem for those companies who want to take action. Over time this regulation could and should become more explicitly focused on carbon emissions.

    In addition, leading global ports such as Shanghai, Singapore, Rotterdam or LA, could impose emission standards on vessels using their ports, and might achieve still greater impact if they acted in concert.

    Customers of the major shipping companies – such as the world’s leading retailers – could also drive change by requiring their freight transport providers to meet stretching targets for emission reduction, accepting the small cost penalty that this would initially impose, and being able as a result to make credible “green shipping” promises to their customers.

    Cross industry coalitions also have a major role to play in arguing for decarbonisation, fine tuning analysis of the technological pathways needed to get there, and lobbying for the public policy and industry action needed to deliver rapid progress. The Global Maritime Forum, the Sustainable Shipping Initiative (SSI), the Clean Cargo Working Group (CCWG), Green Marine, Green Ship of the Future,, and the Clean Shipping Project all in different ways play this role.

    The challenge is to ensure that these activities, and the leadership being shown by some of the world’s major shipping groups, translate into adequately forceful actions.

    1University Maritime Advisory Services



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