Is getting to zero getting to be more fantasy than reality for the world’s commercial shipping fleet?
If that journey’s progress updates are any indication, then, yes, reaching that zero-carbon destination remains theoretical at best.
Consider the Global Maritime Forum’s (GMF) inaugural Impact Report.
Optimism should be its baseline. After all, the GMF was founded in 2017 with a commitment to “increase sustainable long-term economic development and human well-being” in global seaborne trade.
That commitment includes decarbonizing the maritime sector by 2050.
To that end, the GMF heads the Getting to Zero Coalition (GTZC). It also promotes such initiatives as green shipping corridors.
The Texas-Rotterdam Ammonia Carrier Corridor, for example, could be the first low-emission trade lane to use green ammonia as a shipping fuel.
But when is always the question.
Nonetheless, the GMF ambitions are laudable.
The marine shipping sector moves at least 80% of global cargo. Measured by bulk, it is the most environmentally efficient way to transport that cargo compared with air freight or other alternatives.
But in doing so, it generates an estimated 3% of the world’s annual GHG emissions. According to Razan Al Mubarak, the UN’s Climate Change High-Level Champion, if the commercial shipping sector were a country, it would have the world’s sixth-largest carbon footprint.
So, the GMF’s ambitions are laudable
But is zero-carbon shipping achievable?
The third edition of the GMF’s Climate Action in Shipping: Progress Toward Shipping’s 2030 Breakthrough report is not so sure.
It concedes that “despite some progress, the sector is falling behind in its goal of 5%-10% zero-emission fuel use by 2030.”
No surprise there. Only 7.5% of today’s global shipping fleet can operate on fuels other than heavy marine oil.
The tide is gradually turning in favour of lower-carbon options for ships: close to 50% of orders for new containerships have dual-fuel capabilities.
However, those new ships will still make up a small fraction of the overall fleet, and dual-fuel-capable does not mean a ship will use a low-carbon alternative fuel.
The GMF maps out some of the main getting-to-zero navigational hazards ahead.
They include the supply of scalable zero-emission fuels [SZEF] such as green ammonia and e-methanol.
According to the GMF, a SZEF must:
•be produced with a 90% to 100% well-to-wake GHG intensity reduction compared with fossil fuels;
•meet 200 million tonnes to 300 million tonnes of oil equivalent annual demand; and
•be cost-competitive with heavy marine bunker fuel.
While supply could theoretically meet the 5% to 10% SZEF goal by 2030, the GMF report points out that financing uncertainties for green ammonia and e-methanol projects weigh against SZEF availability.
Demand is key here. No demand, no investor interest.
And SZEF demand, according to the GMF report, “remains not on track.”
“Orders and deliveries of conventional-fuel only vessels,” it states, “[are] continuing at a rate that still significantly outpaces both the growth in SZEF-capable and SZEF-ready orders and deliveries as well as the rate of retirements (or conversions to SZEF capability) of conventional-fuel-only vessels.”
Not good.
So, along with finance “no longer on track with the 2030 goals,” the report concludes that the “overall progress towards the 5-10% SZEF 2030 goal remains only partially on track.”
In all, the report says 13 key factors on the 2030 goal’s to-do list are “not on track.”
Danish Ship Finance’s (DSF) most recent maritime shipping report shares GMF concerns.
It points, for example, to the challenge of de-risking investments in alternative fuel production. Building its infrastructure is extremely capital cost-intensive, so investors need to have long-term fuel uptake agreements to justify that investment.
“Yet in the fragmented shipping sector,” DSF points out, “few shipowners have the balance sheet strength or strategic mandate to enter long-term fuel procurement commitments.”
The DSF adds that a ship’s fuel costs are rarely borne directly by shipowners, while “others see fuel as a significant operating expense, rather than a value-generating asset. From an investor’s perspective, it is difficult to justify a major capital commitment against a cost line that offers no upside beyond regulatory compliance. ”
So, what alternative fuel is worthy of capital commitment today to keep shipping on course for a greener future?
How about no fuel at all?
Here are two no-fuel investment options:
•Add wind-assisted propulsion systems (WAPS) to existing ships or incorporate their design in newbuilds; and
•Increase ship operating efficiencies through hull and other design improvements and AI-assisted streamlining of service scheduling and vessel operations.
WAPS can cut well-to-wake greenhouse gas emissions intensity by up to 5%. And, depending on which way the wind is blowing, they can deliver significant energy savings. In some test voyages, those savings have added up to 32%.
Meanwhile, DNV Maritime CEO Knut Ørbeck-Nilssen has estimated that “operational and technical energy-efficiency measures can reduce fuel consumption by 4% to 16% by 2030.”
Neither option alone will get shipping to Destination Zero, because no option available today or tomorrow alone will get the fleet to that destination.
However, both options make bottom-line sense for shipowners, investors, and operators in a capital-intensive and difficult-to-decarbonize maritime cargo sector.
And bottom-line sense is the only incentive that will guarantee meaningful change in that sector.
www.linkedin.com/in/timothyrenshaw
@trenshaw24.bsky.social
@timothyrenshaw