Why collaboration is key to decarbonising the maritime sector

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

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Shipping emissions are increasing with demand, but legislation and regulation should help put the industry on course to a more sustainable future.

Mads Peter Zacho is Head of Industry Transition at the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping.

Around 90% of the goods consumed around the world are transported by ship and that probably includes the screen you are reading this article on.

Today’s maritime trade also generates around 3% of global carbon emissions and is an industry that is stubbornly difficult to decarbonise. And with the OECD predicting global maritime trade could triple by 2050, the challenge is becoming increasingly urgent.

Against this backdrop, the International Maritime Organisation (IMO) has set stringent emissions targets to halve greenhouse gas emissions from shipping by mid-century. Moves to clean up shipping have caused a sea change among vessel owners eager to embrace greater efficiency, alternative fuels and low-carbon marine technologies.

The task ahead is to build on this momentum to create a net-zero-emissions shipping sector. And I believe this will only be achieved through industry collaboration.
A holistic viewpoint

Resolving these challenges forms the basis of our work at the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping. This not-for-profit collaborative research center is at the forefront of efforts to develop – and make commercially viable – new fuels and low-carbon technologies to bring about sustainable shipping.

The center draws expertise from partners across the industry, including technology providers Siemens Energy and Alfa Laval, shipping companies Stolt Tankers and NYK Line, and marine engineers Mitsubishi Heavy Industries (MHI) Group. Chemical engineers, naval architects and other scientists work together to remove the barriers to decarbonisation, including developing onboard and portside safety procedures for new fuels and working with policymakers to put regulatory measures in place that accelerate the transition to cleaner shipping.

It’s important to look holistically at decarbonisation. An effective shipping transition isn’t simply a case of replacing fossil fuels with cleaner alternatives like ammonia or methanol, for example. The entire emissions generated throughout an alternative fuel’s life cycle must be considered using what we call a “well-to-wake” approach: from generating the electricity that helps produce the green methanol (the well), to the greenhouse gases a marine vessel (the wake) creates using the fuel.

Legislation is vital

While the technology needed to decarbonise maritime operations exists, the business case for many of these solutions is yet to be proven.

 

The cost gap between fossil fuels and more sustainable alternative shipping fuels is currently too wide, and will remain too wide for decarbonisation to happen through market forces alone. This is one of the main challenges facing the industry.

But legislation could provide a part of the solution. The EU Emissions Trading Scheme (ETS) could help bridge the fuel cost divide by making marine emitters either pay to pollute or find more sustainable ways to operate. While the ETS currently only applies to industrial emissions, discussions are underway to extend this European carbon tax scheme to cover emissions from other sectors like transport.

Applying a cost to carbon emissions could help close the fuel price gap and make this a faster transition because the technology and the willingness are there, but the business case also has to work. Still, at current ETS price levels, it would not be able to stand alone and need support from other measures. Therefore, a strong carrot is needed in form of return of maritime revenues back to the sector to support first mover projects along the whole value chain.

Another initiative that could help the shipping industry’s quest for sustainability is FuelEU Maritime.

Scaling up production of clean fuels will bring down the cost, making them more commercially attractive. Policymakers with emissions targets could put measures in place to compel vessel owners to use cleaner fuels as part of efforts to reduce emissions.

But, rather than set quotas or targets to encourage a certain type of fuel to be used,
FuelEU Maritime establishes maximum levels of greenhouse gas intensity for the fuels ship operators use. This allows fleet owners and operators to choose which fuel to adopt, and incentivises them to invest in fitting their vessels to run on cleaner fuels. Ambitious reduction targets in combination with strong support to alternative fuels will be key.

These two complementary pieces of legislation need to go hand in hand with other parts of the Fit for 55 package – especially the support to alternative energy infrastructure (AFID) and the support of alternative energy production (REDII). Only an ambitious package can make a significant change to how Europe’s shipping sector works.

Rising to the challenge

That’s not to say the route ahead has no challenges. While legislation is vital to efforts to decarbonise, it could create complications that negatively impact European ports and goods.

It’s possible that regionally imposed carbon pricing on shipping emissions could lead to retaliatory responses from other parts of the world.

Ship operators could choose to avoid EU ports that impose a carbon tax and find other ways to route their goods, creating “carbon leakage” into non-EU controlled areas.

Sea freight carriers could simply pass on carbon tax levies to their customers. As shipping costs often account for a small proportion of overall product prices the impact may be negligible and would undermine efforts to reduce emissions.

It’s important for policymakers to create a level playing field and I think there’s a real European willingness to lead and show the way into this transition.

In the absence of a global carbon pricing system for shipping, the EU-wide ETS scheme could become a blueprint for other regions of the world to use.
This reinforces the importance of global alliances like the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, which enables experts from different parts of the maritime sector to join forces and help bring about necessary change.

It also sends a clear signal to the shipping industry about the direction of change and the measures that will be in place to transition to a more sustainable future.

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