According to the World Economic Forum, the shipping industry accounts for over 80% of world trade and more than 1bn tonnes of greenhouse gas emissions per year, more than any but the top-five emitting countries.

Renewed impetus in the alternative-finding efforts for the shipping industry came from the International Maritime Organisation (IMO), a United Nations agency regulating the global industry, to at least halve their impact by 2050, compared to 2008 levels. Costas Paris, from the Wall Street Journal, states that so far only the United States and Saudi Arabia have formally pledged to work toward the IMO’s emissions strategy. In the biggest revolution for the industry since it switched from coal to oil over 100 years ago; this transition from bunker to zero-emissions vessels is estimated to cost the industry more than $3 trillion, according to Clarkson Research.

New solutions are presented ranging from ammonia and biofuels and hydrogen, though none are ticking all the required boxes yet to fuel the world’s 60,000 ocean vessels and smaller ships.

While certain alternative fuels are proven to be viable and less polluting, such as blue or green hydrogen, which is produced by using natural gas with carbon capture or renewable electricity creating only water as a by-product, they are most suitable to work at small scale with refuelling infrastructure in place. For a sector that is almost entirely made up by bulk carriers, oil tankers and container ships, around 85% according to reporting by Royal Dutch Shell, fossil fuel is still the most efficient and low-cost fuel for them.

Even though in the medium-term, shipping companies seem to focus on low-synthetic fuels and biofuels, critics highlight the limited resources available for biomethanol and the resulting environmental problems, in form of deforestation, water degradation, and the fact that it releases CO2 again when it is burnt. Thus, making this solution a less sustainable option.

Meanwhile, LNG has seemingly positioned itself as a more mature solution in the industry. Many consider it a bridging fuel for their fleet, such as CMA CGM and Hapag Lloyd. According to the IMO, its current global book order stands at more than 139 ships, 27 of which have been ordered this year. However, LNG is not without its critics. Others, such as Denmark’s AP Moller-Maersk, say these investments could prevent efforts to go fully green. It says it will not be investing in LNG as a bridging fuel and will instead opt for zero-emission alternatives altogether, stating “we don’t believe that LNG will play a big role as a transition fuel because it’s still a fossil fuel and we would rather go from what we do today straight to a neutral type of fuel”. It went on to say that new ship orders had not been placed as they are still figuring out the best course of action towards zero-emissions.

This sentiment was seemingly echoed when the World Bank, which is a major funding source, said in a report published this month that LNG “is likely to play a limited role” in decarbonising the industry and recommended that countries “avoid new public policy that supports LNG as a bunker fuel, reconsider existing policy support and continue to regulate methane emissions”.

While individual companies and countries, along with international organisations have set themselves clear targets, a clear path towards those goals has been largely missing and do not appear to be available in the short-term.

Source: Transport Intelligence, April 29, 2021

Author: Dila Cebeci

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