International Shipping Industry Accelerates Green Transformation

The 80th meeting of the International Maritime Organization’s Marine Environment Protection Committee was held in London, England a few days ago, and the meeting adopted the latest global strategy for reducing greenhouse gas emissions from ships. The strategy proposes to peak the greenhouse gas emissions of the international shipping industry as soon as possible, and to achieve net zero greenhouse gas emissions around 2050, taking into account different national conditions.

The shipping industry undertakes about 80% of the world’s trade and transportation tasks. Some analysts believe that compared with the emission reduction goal set in 2018 as “by 2050, the total annual emissions of the international shipping industry will be reduced by at least 50% compared with 2008”, the new emission reduction strategic goal shows greater determination and strength, which is conducive to the green transformation of the international shipping industry and helps the world achieve sustainable development goals.

A more ambitious emission reduction strategy

UN Secretary-General Guterres said in his speech at the meeting that when it comes to climate issues, humanity is in a critical state. “Science shows that it is still possible for humans to limit the increase in global temperature to 1.5 degrees Celsius, but this will require a huge global effort immediately, and the reduction of emissions from the shipping industry, which accounts for nearly 3% of global emissions, will play a key role.”

In order to gradually achieve the goal of net zero emissions, the latest emission reduction strategy has set up two phased verification indicators: by 2030, the total annual greenhouse gas emissions of international shipping will be reduced by at least 20% on the basis of 2008, and strive to reduce by 30%;

The emission reduction strategy clearly requires that the energy-efficiency design of newly-built ships needs to be improved to reduce their carbon intensity; by 2030, the carbon dioxide emissions of a single transportation task in international shipping should be reduced by at least 40% on average compared with 2008. At the same time, more efforts should be made to adopt technologies, fuels or energy sources that can achieve zero or near-zero emissions of greenhouse gases. By 2030, clean energy should account for at least 5% of the energy used in international shipping, and strive to reach 10%.

The International Maritime Organization emphasized that emission reduction measures should take into account the impact on countries, with particular attention to the needs of developing economies, especially small island developing States and least developed countries. As such, the Emissions Reduction Strategy specifically highlights 12 related initiatives, including the IMO Integrated Technical Cooperation Programme, the Multi-Donor Voluntary Trust Fund, to achieve the goal of “leaving no one behind”.

Lim Kitak, Secretary-General of the International Maritime Organization, believes that the adoption of this emission reduction strategy is a milestone and will open a new chapter in the decarbonization of the maritime sector. He said that this plan is not the end, in many respects, “this is exactly the starting point of our efforts to increase efforts in the next few years and even decades.”

Accelerate the development of alternative fuels

In the face of increasingly stringent greenhouse gas emission reduction standards, shipping companies in various countries have improved ship energy efficiency and reduced carbon emissions through technological or operational means such as transforming hulls, adjusting ship speeds, optimizing voyages and berthing time; on the other hand, they are actively developing new ships powered by clean fuels.

The results of a recent survey of international shipping companies by the consulting firm McKinsey show that 46% of the companies have adopted at least one low-carbon fuel as an alternative fuel for pilot projects and have formulated relevant development plans. Eighty percent of enterprises believe that the output and price of alternative fuels and the adjustment of international shipping regulatory policies will play a key role in the green transformation of the international shipping industry.

The core of emission reduction in the shipping industry lies in the production and supply of alternative fuels. According to reports, over the past three years, 57% of the world’s newly built ship capacity can be partially or fully powered by alternative fuels, while the actual proportion of alternative fuels used is only 10%.

At present, the choice of alternative fuels for shipping is mainly concentrated on methanol fuel, hydrogen fuel and ammonia fuel. In recent years, methanol-powered ships have developed rapidly and are moving towards application. In June, the global shipping giant Maersk Group of Denmark and Jiangsu Yangzijiang Shipbuilding Group of China signed a contract for the construction of six methanol dual-fuel container ships, bringing the number of ships that can be powered by methanol to 25. Recently, the world’s first methanol dual-fuel container ship scheduled to be built by the group in 2021 has been successfully delivered. It is reported that the global order for methanol-driven ships has exceeded 100.

According to Det Norske Veritas, the current global biofuel production capacity represented by green methanol is about 11 million tons of oil equivalent per year. The agency forecasts sustainable and economically viable biofuel supplies of 500 million to 1.3 billion tons of oil equivalent per year by 2050. If the use of biofuels is combined with energy efficiency measures to fully decarbonize the shipping industry, it is estimated that by 2050, 250 million tons of oil equivalent of biofuels will be required per year.

John Butler, CEO of the World Shipping Council, said that the latest emission reduction strategy has sent a strong investment signal to the international shipping industry, and international shipping companies have begun to invest in ships using renewable fuels.

Industry decarbonization task remains arduous

The international shipping news website “Ship Technology” pointed out that although methanol, hydrogen energy, ammonia and other alternative energy sources have high hopes in the decarbonization of the shipping industry, the green transformation of the shipping industry cannot be achieved overnight. A new green shipping value chain needs to be established, including new infrastructure, relevant regulatory standards, and the willingness to coordinate the green transformation of the entire industry.

At present, there are still uncertainties in the technical guarantee and market price of clean fuels. For example, the leakage of ammonia fuel will produce toxic gas and the combustion utilization rate is not high, and methanol fuel is prone to fire and corrosion risks. The McKinsey report also pointed out that from market data, the cost of zero-carbon emission fuels is still much higher than that of traditional fuels, which will increase the total cost of shipping by 40% to 60%.

A recent research report released by the United Nations Conference on Trade and Development pointed out that technological innovation is crucial to promoting the energy transformation of the shipping industry and requires substantial investment from manufacturers, suppliers, power and fuel producers, and other stakeholders. In order to realize the “fourth industrial revolution” of the shipping industry and promote the integration of related goals of the shipping and energy sectors, governments need to strengthen research and development support and investment in innovation in related fields.

During the 80th session of the IMO Marine Environment Protection Committee, disagreements over the pricing mechanism for shipping’s greenhouse gas emissions persisted. Some participants reiterated their concern that the relevant pricing will increase trade costs and affect commodity exports. The British “Financial Times” commented that if the carbon pricing system is properly designed, it can provide a large amount of funds for the reduction of emissions and the green transformation of the international shipping industry. “Developed countries need to do more to facilitate a just transition.”