Setting Their Own Direction: Shipping Companies Embrace Greener Futures

Friday - August 4 2023, 18:26 UTC - 1 year ago

The world’s largest shipping companies are beginning to shift to greener fleets as the International Maritime Organization (IMO) proposes a strategy to reduce international shippings’ greenhouse gas emissions. Ship owners and operators have already build and placed orders for container ships with alternative fuel use such as methanol or liquefied natural gas, and the industry must now address creating an operational fuel supply network for these alternative fuels. Maersk’s new dual-fueled methanol vessel is a prototype for larger alternative-fuel containerships currently in the pipeline.

The world’s largest shipping companies are starting to update their fleets for a greener future. Maersk received the world’s first dual-fuel methanol container ship in July 2023, and dozens more container ships that can run on alternative fuels are currently on order.

The industry – responsible for about 3% of global greenhouse gas emissions, more than Canada and Ireland combined – has reasons to act and to have some confidence in its multimillion-dollar investments.

On July 7, the 175 member countries of the International Maritime Organization, a United Nations agency that regulates global shipping, agreed to a new climate strategy that includes reaching net-zero greenhouse gas emissions "by or around, i.e., close to, 2050." .

The strategy’s language is vague, obscure and almost noncommittal. But it points the industry toward a cleaner future. New European Union rules will also soon go into effect that will significantly raise costs for ships burning highly polluting sulfur fuel oil.

I spent several years working in the shipping industry and follow it as a researcher and analyst. Here’s what I see changing.

Setting their own direction .

The new IMO strategy does not explicitly set a new fuel standard, but it seems to indicate that less reliance on cheap, environmentally harmful, heavy-sulfur fuel oil is the best direction, and possibly less use of low-sulfur fuel oil.

What the strategy does is set goals to reduce international shippings’ greenhouse gas emissions by at least 20% by 2030, compared with 2008 levels; by at least 70% by 2040; and to reach net-zero emissions around 2050. The IMO also commits to implement a greenhouse gas emissions-pricing mechanism – a carbon levy or tax – by 2027, and to develop a goal-based marine fuel standard. At this time, that’s the only direction the IMO has provided regarding the emissions-pricing mechanism.

While the new strategy may not have been as clear or restrictive as many people hoped, the IMO may be providing the maritime industry an opportunity to set the direction itself.

A number of large ship owners and operators have already built and placed orders for container ships with some sort of alternative fuel use, primarily methanol or liquefied natural gas, and there is some interest in hydrogen. LNG is still a fossil fuel, though it’s less polluting than traditional sulfur fuel oil. Methanol, however, can be made from either natural gas or renewable sources.

Maersk’s new dual-fuel vessel – to be powered in part by green methanol – is small and plans to operate in the Baltic Sea, but Maersk may be using this vessel as a prototype for larger alternative-fuel containerships expected to be delivered next year. Evergreen, also among the world’s larger shipping companies, has ordered 24 dual-fueled methanol ships.

Purchases like Maersk’s and Evergreen’s are an indication that the maritime industry will be moving in the direction of greener fuels. They also indicate that the industry is willing to follow the IMO’s focus on well-to-wake emissions, meaning not just emissions from ship operations but also from fuel production.

Building a supply chain .

The other significant issue the maritime industry must address is creating an operational fuel supply network for alternative fuels like methanol and LNG.

This will involve investing in production facilities for methanol, LNG, even hydrogen and building infrastructure systems to transport and store the fuel for transoceanic operations.