Ken Silverstein Senior Contributor
The shipping industry is hard to decarbonize, fueled by diesel oil, and challenging to electrify. But shipping giant Maersk is trying to ride a new wave, and it has ordered several ocean-going ships that run on cleaner fuels so that it can hit its net-zero goals by 2040.
Shipping is a linchpin in the global economy, with 50,000 vessels carrying 90% of the world’s cargo. But the sector is a heavy polluter, necessitating innovative solutions to curb emission levels — especially because the maritime trade’s deliveries will triple by 2050. Now is the time to invest in alternative fuels and ports. Indeed, the industry aims to be carbon neutral by 2050. Can it achieve these goals?
“The most progressive technologies use advanced duel-fuel engines,” says Allyson Browne, climate campaign manager for Pacific Environment, in an interview with this writer. “The engines must run on something other than heavy fuels or liquefied natural gas — like green ammonia or green methanol, which are stepping stones until green hydrogen is scaled up.”
She points to A.P. Møller, commonly known as Maersk: the shipping sector emits about 1,000 million tons of CO2 annually, equating to 13% of the greenhouse gas emissions from global transport. Maersk has ordered at least 13 new ocean-going ships using only carbon-neutral fuels, which will arrive between 2023 and 2025. It sets out to operate the vessels on carbon-neutral e-methanol or bio-fuels. But it will be challenging because methanol production has to ramp up.
Once Maersk hits the high seas with its new carbon-friendly vessels, it says that its CO2 levels will fall by 1 million tons or 3% — a respectable cut in its current CO2 levels of 33 million tons. It invests in green methanol produced from sustainable biomass as well as biodiesel and green ammonia, which makes no greenhouse gases.
While Maersk’s investment is more expensive than traditional vessels that run on fossil fuels, it is what its customers want: AmazonAMZN -1.6%, Disney, H&M Group, HPHPQ -1.6% Inc., Levi Strauss & CoLEVI -2.6%., MicrosoftMSFT -1.5%, Novo Nordisk, The Procter and Gamble Company, PUMA, Schneider Electric, Signify, SyngentaSYT 0.0%, and UnileverUL 0.0%. More than half of Maersk’s 200 largest customers have set – or are setting – ambitious science-based or zero-carbon targets for their supply chains.
“We have set a new 2030 target to align with a Science Based Targets initiative 1.5°C pathway. And also by 2030, our target is to have industry-leading green customer offerings, including 25% of ocean cargo transported with green fuels, 90% green operations for contract logistics and cold chain, and at least 30% of air cargo transported with sustainable aviation fuel,” says Søren Skou, chief executive of Maersk.
The Green Ammonia Stepping Stone
In its Hydrogen Economy Outlook, Bloomberg New Energy Finance says that green hydrogen for power plants and transportation could supply 24% of the world’s energy demands by 2050 while cutting CO2 levels by 34%. But fuel prices — generated by wind and solar — must drop significantly to gain market share.
Until then, green ammonia is an interim step for shippers — a fuel that wind and solar power can produce and that traditional engines or fuel cells can use. DNV GL predicts that widespread adoption of ammonia fuel will begin in 2037 — expected to make up 25% of the maritime fuel mix by 2050.
The problem: today’s vessels are not equipped to use it, and producing green ammonia to make fertilizers or chemicals is a carbon-intensive process. But Samsung Heavy Industries, Lloyd’s Register, and MAN Energy Solutions are developing an ammonia-fuel ship.
Meantime, Yara will produce 500,000 tons of green ammonia yearly, powering emission-free shipping fuels and decarbonized food solutions. Norwegian oil giant, Equinor, is a prospective customer.
“We all know that the industry-wide movement is vital, and new zero-carbon fuel technologies, such as ammonia fuel, are to be brought on the table, in order to take action proactively on maritime GHG emissions,” says Joon Ou Nam, chief executive of Samsung Heavy Industries.
To be clear, ships’ engines use heavy fuels. But they also have auxiliary engines to run equipment and kitchens. At the same time, once the ships reach the dock, they must load and unload, requiring trucks and cranes that can also run on electricity. For example, the Port of Los Angeles has spent $500 million beefing up its infrastructure and is now electrifying its yard equipment.
The Long Haul
The Long Beach and Los Angeles ports, which oversee about 4,000 heavy pieces, want to hit net zero by 2030. Both are decarbonizing their equipment — the kinds of things that move containers after they have come ashore.
Moreover, the two ports have joined with the Port of Shanghai, China, to create the world’s first transpacific green shipping corridor. The goal is to reduce greenhouse gases by using ships operating on carbon-free fuel by 2030. “These ports are making steps toward investing in zero-emission fuels and electrifying onshore power. We need them to send a clear market signal to accelerate this transition,” says Pacific Environment’s Browne.
International shipping moves commerce, but it makes up 70% of the sector’s energy emissions. If global maritime were a country, it would be the sixth- or seventh-largest CO2 emitter, says the International Renewable Energy Agency. It adds that renewable energy is necessary to decarbonize the sector, including onsite distributed power.
But what about using carbon credits to offset emissions? Under this system, credits are awarded to shippers if they produce fewer pollutants than the regulations allow — credits that can sell to those companies unable to attain those results. It’s essential for shippers, which use low-grade, inefficient fuels. Such a trading scheme implores them to do better.
For example, Europe compels utilities, airlines, and manufacturers to buy permits for each ton of carbon they emit — permits priced high enough to motivate them to invest in the best-available technologies instead.
The European Commission added shippers to the list in December 2022, which forces the maritime sector to buy carbon permits to cover 40% of their releases in 2024 and 100% in 2026. The agreement adds all greenhouse gas emissions emanating from European voyages but only half of them for international trips. It’s a closed-loop system, meaning all carbon credit earnings are re-invested in Europe. If companies do not meet the thresholds, they will buy pollution permits from those who can. The credits are now priced at about $84 a ton.
Nothing precludes those shippers from buying carbon credits that support rainforest nations so they do not cut down trees for timbering or farming. If they choose to go this route, not all carbon credits are created equal — as this column has asserted many times.
Companies want to avoid purchasing proprietary credits that do not fully disclose how they dole out the money. However, if the Paris climate agreement has adopted the credits, they are safe for businesses to buy. REDD+ sovereign credits have been scrutinized and verified by the UN Framework Convention on Climate Change.
“Shipping’s zero-emission transition will transform ports from hotspots of fossil fuel pollution to thriving hubs of sustainable economic development and environmental protection,” says Browne. “Shipping decarbonization will drive billions of dollars into clean energy infrastructure development and sustainable job creation, while simultaneously improving the health of local communities through reduced air, water and land pollution.”
It will be a long haul to net zero for the shipping sector. Maersk has set the pace with modernized ships that can run on cleaner fuels. And the Los Angeles and Long Beach ports contribute by electrifying their infrastructures, while Europe will force shippers to buy pollution permits and carbon credits. Now is the time for climate action — to keep temperatures in check and ensure the long-term growth of the maritime industry.