Shipping plays a pivotal role in the global economy.
Ships crisscrossing the oceans are the primary transporters of energy, food, and materials. Emitting less than 3% GHG emissions every year seems like a small price to pay for driving 90% of world trade. In 2022, emissions from the international shipping sector grew by 5%, on the rebound from the sharp decline in 2020. They are back to the 2017-2018 levels and rising. Shipping must decarbonize. The mandate is real and urgent but with many challenges. These are due to the technical complexity of the explored measures to enhance efficiency and reduce emissions, given that governing regulations are still evolving.
The new Strategy’s enhanced ambition calls for immediate action. IMO’s revised Strategy on GHG emissions has provided the shipping industry with a pathway on what decarbonization progress must be expected. In addition to the ultimate net-zero ambition for 2050, the indicative checkpoints aimed at reducing GHG emissions from international Shipping by “20% striving for 30% by 2030” and “70% striving for 80% by 2040”, compared to 2008 levels, are percentages that will become increasingly debatable in the years to come. Adopting interim goals for 2030 and 2040 indicates the need for tangible and measurable actions. Action and progress must happen now. 2030 is just 6.5 years away. The entire fuel life cycle must also be accounted for, from production to combustion. Lifecycle assessment of the fuels prevents the shifting of emissions from the sea to the shore. A fuel produced with renewable energy but transported to its final use point using fossil fuels may have a higher lifecycle emissions profile than a more GHG-heavy fuel produced and consumed locally. The Strategy also mandates a just and equitable transition without leaving any country behind. GHG Strategy must meet the two-pillar test of Effectiveness and Equity. An impact assessment will assess the socio-economic impact of the mid-term market-based measures on food security and their ability to reach the reduction targets. The Strategy keeps within reach the Paris Agreement target of limiting global warming to 1.5 degrees °C by the end of this century.
So far, the Strategy does not provide any guidance. That task is left for the next IMO meetings, picking from a basket of mid-term measures, such as a proposed fuel standard and a carbon pricing mechanism, coming into force in 2027 at the earliest. Carbon pricing will reduce GHG emissions and make Shipping’s energy transition more equitable, provided revenues are strategically channeled back to those countries that may struggle the most with Shipping’s decarbonization and climate change. Across Shipping, pioneers have already started the transition. The sooner companies plan the journey, the better off they will be. Shipping must utilize existing technology to reduce its carbon footprint today. Zero-carbon or carbon-neutral fuels are not available at present at feasible costs. Upscaling of their production is required. It will take more than ten years to improve their availability and price. Viable alternatives such as wind-assisted propulsion, air lubrication, and operational measures such as voyage optimization and weather routing can be employed today. Monitoring and systematically measuring GHG emissions opens the door for benchmarking and improvement, leading towards more efficient operation and increased safety, setting the foundation for better decisions in the challenging transition to zero emissions.
IMO is not the only player. National, regional, and industry forces are also on the stage. Shipping must meet the reductions mandated by the EU ETS and FuelEU Maritime. Other stakeholders, such as investors, bankers, insurers, and cargo owners, will exert significant pressure. Financing will be coupled with strict environmental, social, and governance criteria. Shipping companies must demonstrate alignment with the green doctrine to get funding. An essential prerequisite for success is that the shipping stakeholders must be willing and convinced to invest in the transition. Investment in modern technologies and alternative low and zero-carbon fuels will spill over to other land-based sectors. National governments and international regulators must create legislative frameworks that make zero-emission Shipping and green fuel production commercially viable and globally available. The next IMO meetings will introduce a global fuel standard setting a price on emissions. The “Sine qua non” requirement bridges the cost gap between conventional fossil fuels and their so-called low or zero-carbon counterparts. The pricing mechanism of the global fuel standard will generate the funds to reward the pioneers, promote research, and support developing countries. Immediate action is needed to mitigate the effects on vulnerable communities and economies. Shipping is willing to transition to a zero-emission future and has provided clear signals to fuel suppliers and cargo owners.
New buildings ordered today must be capable of running on zero or low-emission fuels by 2040. The success of the Strategy relies on the shipping response and the forthcoming development of global measures by IMO. The implications to existing and new ships and the energy industry are that the average ship’s GHG intensity will be reduced by about 86% by 2040. The shipping sector enters a new phase along its decarbonization journey. Adopting scalable zero-emission fuels should start rapidly supported by corporate, national, and regional actions. Shipping’s use of alternative fuels, including biofuels, hydrogen, ammonia, and electricity, must increase to get on track with the Net Zero Scenario. Innovation is vital to ensure that zero-emission oceangoing vessels are made commercially available soon. Scaling up low-emission fuels is the key to decarbonizing international Shipping. Historically, fossil fuels have constituted over 99% of the total energy demand for international Shipping. By 2030, low-emission fuels must constitute about 15% of the total energy demand to meet the target. The use of alternative fuels will be facilitated by developing low-emission fuel production, preferably close to seaports, bunkering infrastructure, innovative onboard storage tanks, fuel delivery systems, engines, and emission after-treatment like carbon capture.
Orders for new ships are already showing a trend towards alternative fuels. Many ship owners opt to build or retrofit their fleets to include multiple-fuel vessels. Alternative-fuel-ready vessels solve the lack of technological readiness of engines, ship designs, and bunkering availability. These vessels, at present, can run on conventional fuels, but in the future, limited modifications will enable them to run on alternative fuels. Classification Societies issue guidelines for ships burning alternative fuels, covering ship layout, fuel containment systems, and safety systems. Approval-in-Principle is the first step of a ship’s certification process, being the equivalent dictum of acceptable technology. Ships must be built with consideration of the IMO’s future GHG reduction goals, which will become a reality within the lifetime of these new vessels. The most common fuel choice for new cargo ships is methane – in the form of LNG. Most ship operators hope to reduce emissions even more through a transition to bio-LNG and zero-emissions by using e-methane.
Decarbonization of Shipping is more politically and financially challenging. One potential route is to use wind to help propel ships. Like their ancient forebears, modern vessels can be partially driven by wind. Harnessing wind with sails, kites, and special rotors is possible only on certain types of ships with open deck space. In the case of biofuels, plants absorb carbon dioxide as they grow. Synthetic fuels can be made using carbon dioxide removed from the air or the exhaust funnels. The result in either case is to reduce, or even eliminate, the total amount of emissions. The combination of slow steaming, wind assistance, and low-emissions fuels in Shipping can significantly cut emissions toward the 2030 target. The changes would increase shipping costs above current levels. But those costs are a small price to pay in comparison with the expected damages of climate change. A further challenge will be to ensure that the maritime industry can recruit and train the people needed to implement and operate these innovative technologies.
Efficiency improvements and operational measures will not be enough to get global Shipping to net-zero emissions by 2050. Decarbonizing Shipping is a multitrillion-dollar endeavor and will require technological advancements, which are not yet mature or adopted in commercial operations. The shipping industry will need up to 3,000 terawatt-hours of renewable electricity annually, almost equal to the global total of wind and solar electricity output. Rolling out green fuels will also require building pipelines, storage tanks, and port refueling stations. Sun-rich emerging economies will flourish with the chance to make lots of cost-effective green hydrogen, which will pave the Way for Zero-emission Shipping.
The question of which alternative fuel will establish itself and prevail eventually remains open. The decision is associated with many risks for each owner. The availability and scalability of low-carbon and zero-carbon fuels will be a challenge. The effort to decarbonize Shipping is not an attack on its role in the economy. The objective is to collaborate within the shipping industry, governments, and supply chains to navigate the transition toward decarbonization. This transition is not only about increasing costs but also about fostering sustainable development by investing in renewable energy and green technologies. It is essential to strike a balance between economic growth and environmental responsibility. We need further political efforts to create conditions that accelerate the production and distribution of alternative fuels and make them available to the maritime industry as quickly as possible. Until low/zero carbon fuels become available, we must try to operate and optimize the fleets more efficiently, pushing them to their sustainability limits.
* PhD Bureau Veritas Technical Director