Shipping is the lifeblood of the world economy. A highly efficient mode of transportation, it enables more than 80 per cent of global trade, moving everything from smartphones to clothes to cars across the planet.
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But here is the catch: The industry pumps around 3 per cent of the world’s annual greenhouse gas emissions into the earth’s atmosphere, fuelling climate change. If shipping were a country, it would be the sixth-largest emitter globally.
With global trade as well as awareness over the industry’s environmental impacts on the rise, the maritime sector has come under tremendous pressure to devise sustainable ways to transport people and goods. Two years ago, the International Maritime Organisation (IMO) heeded growing calls for change and established a target of halving the sector’s carbon dioxide emissions by 2050 relative to 2008 levels.
Change is not new to the sector. Over the centuries, technological progress has enabled seafarers to transition to ever more efficient energy sources. Coal-fired steam engines largely replaced paddles and sails two centuries ago, only to see oil take over a century later.
Technology is poised to play a key role yet again as the industry sets out on its decarbonisation journey, and the solutions needed are already out there today. But despite the waves that clean fuels, green propulsion systems and energy-efficient vessel designs are making, shipping’s path towards sustainability is far from clear-cut. With consensus lacking on how the maritime industry will evolve in the years to come, it is headed for uncharted waters.
The shipping sector is beginning to grasp that its carbon footprint is a challenge unlikely to be tackled through innovation alone, because it ultimately hinges on more than individual industry players switching to climate-friendly technologies.
So, what exactly does a transition to sustainable shipping mean?
Sustainable shipping puzzle
Today, fossil fuels power virtually all commercial shipping activities. A staggering 82 per cent of shipping’s energy needs are met by heavy fuel oil, with marine gas and diesel oil making up the remaining 18 per cent.
As the sector races to switch from climate-disrupting fuels to cleaner alternatives, many industry players tout liquefied natural gas (LNG) as a bridge fuel that could help shrink shipping’s climate impacts while enabling ship owners to comply with the IMO’s new sulphur cap. However, LNG is still a fossil fuel. Not only are the emissions cuts it can deliver insufficient, but the technology also grapples with leakages of the climate super-pollutant methane.
As such, the industry has pinned its hopes on truly clean fuels to replace polluting ones. Potential candidates include various biofuels and synthetic fuels generated from clean energy, such as methanol, hydrogen and ammonia. All come with their strengths and weaknesses.
Hydrogen, for instance, if generated from renewables, eliminates carbon and sulphur emissions when combusted or used in fuel cells. But the technology needed for hydrogen applications onboard ships has yet to come of age. Its volumetric energy density is lower than that of fossil fuels, and its storage requirements are costly.
Other clean alternatives present their own challenges. Biodiesel may be the readiest green fuel, but it is difficult to raise its production volume to levels needed to meet global demand. While methanol is easy to transport and handle, it is space-hungry and toxic, and its costs are currently inhibitive. Ammonia emits no carbon or sulphur when used in fuel cells and does not have special storage needs, but it is costly to produce as well as toxic.
Electric propulsion has been proposed as yet another important piece of the sustainable shipping puzzle, but it too faces barriers. Infrastructure is still in its infancy, as few ports provide charging facilities, and with the current state of battery technology, electric vessels are generally unable to travel more than around 95 kilometres.
This means big battery-powered bulk and container carriers are currently out of the question, which is important, as 85 per cent of shipping’s carbon dioxide emissions come from large vessels. While the energy density of batteries is forecast to increase, experts do not expect electric solutions to become commercially viable for bigger long-haul ships for many years to come.
To overcome such obstacles, the industry is exploring ways to pair electric drives with other technologies, such as hydrogen-powered fuel cells, in hybrid systems. But, either way, without adopting clean fuels, the sector will not achieve the emissions reductions needed, according to a new report by Singapore’s Nanyang Technological University and the Singapore Maritime Institute.
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We have spent too long turning this into an engineering problem.
Dr Tristan Smith, energy institute, University College London (UCL)
Yet switching to clean fuels is not the only way to address shipping’s climate impacts, and the current absence of market-ready alternatives to fossil fuels underscores the necessity not only to deploy energy-saving hull and propeller designs but also to rethink how vessels are operated.
“What the industry needs is a focus on operational carbon intensity, which measures the actual emissions produced for the amount of transport work that individual vessels do. We have spent too long turning this into an engineering problem, which distracts people from the fact that what matters is what gets emitted,” said Dr Tristan Smith of the University College London’s (UCL) Energy Institute.
Saving fuel can be as simple as slowing down. But although the idea of slow steaming has been around for years, few have embraced it—and the global economy’s dizzying pace is to blame, said Sanjay Kuttan, executive director of the Singapore Maritime Institute.
“The problem always is that buyers want their products today, so they require ships to travel at breakneck speeds. But the higher the speed is, the more fuel you burn. If everyone slowed down a bit, the industry could achieve significant emissions cuts with current technologies, clever designs and intelligent operations,” he told Eco-Business.
Unravelling the challenge
No matter how the industry will evolve in the coming decades, experts agree the transition to sustainable shipping will be hard to pull off, and it is easy to see why: port infrastructure around the planet needs adjusting, tens of thousands of ships must be replaced or retrofitted, and the world needs to ramp up the production volume of whichever clean fuel option it goes for. All this calls for a concerted global effort.
But what happens when no one knows which solution is the best way forward?
Until a particular technology looks certain to catch on, industry players will remain squeamish about investing in it. And as they bide their time, the switch becomes a chicken-and-egg problem, said Simon Bennett, general manager of sustainable development at the China Navigation Company & Swire Pacific Offshore Operations.
Each solution requires dedicated infrastructure, yet without enough demand for clean fuels or battery power from ships already using them, port operators are reluctant to build the logistics and storage facilities needed.
Conversely, without these supporting services, ship owners will not be able to make the switch. They cannot adopt hydrogen if ports along their routes lack bunkering facilities for the fuel. An electric vessel that cannot plug into the power grid onshore gets stranded.
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It is a big decision to invest significant capital in a project not knowing whether the technology will be mature a few years down the road.
Matthew Forrest, director, shipping and offshore, BNP Paribas
“It is a big decision to invest significant capital in a project not knowing whether the technology will be mature a few years down the road, so people are cautious because they do not want to risk ending up with stranded assets,” said Matthew Forrest, director of shipping and offshore at French banking group BNP Paribas.
Further complicating the issue is the different political agendas of countries due to their diverse geographies, climate conditions and resource endowments. Given its tremendous capacity to generate synthetic fuels from solar energy, Australia, for instance, may have a different vision for the industry than states well positioned to produce biofuels.
The problem with many different clean fuel and propulsion alternatives is that countries will struggle to scale up technologies to the levels needed to bring costs down, said Bennett.
“It is going to be difficult to get a consensus to deliver the same spread of infrastructure that we have for oil and gas at the moment. We are a long way away from the silver bullet to replace fossil fuels,” he observed.
What the switch to sustainable seafaring needs most, it appears, is better collaboration among industry players to align their decarbonisation strategies. “It is really about how the sector comes together and decides which way it should move,” Kuttan told Eco-Business.
That does not mean every single ship must be powered by the same technology. Forrest said: “For larger ocean-going vessels that are trading globally, you need a common fuel source that they can refuel wherever they are. The infrastructure must be available to support these ships. For more regional trade, you could have more regional solutions that suit regional demands.”
With its island-dotted seas, Southeast Asia, for instance, could be a prime location for battery-powered sailing, observed Soren Kvorning, president for Asia-Pacific at engineering firm Danfoss, which electrifies ferries around the world.
“There are a lot of ferries and smaller vessels travelling on short distances from island to island in the region, and on fixed routes. They could already be fully electric by now,” he said.
Over the next five years, global trade volume could grow at an annual rate of 3.8 per cent. Under business-as-usual, the sector’s greenhouse gas emissions could grow between 50 per cent and 250 per cent by 2050.
Ultimately, the market will select the cheapest and most technologically mature sustainable shipping solutions available. But the persisting reluctance to devote capital to them means the transition may stall. Without stronger regulatory intervention that can provide investor visibility, the sector may not get off fossil fuels fast enough.
Smith told Eco-Business: “The IMO’s initial strategy of greenhouse gas reductions was progress, as there was no such signpost before. But … the strategy does not elucidate whether the shift will happen overnight on 31 December 2049, or gradually.”
There must be a detailed timeframe that stipulates how quickly the sector’s fuel consumption must shift away from fossil sources in the coming decades, he said. “No one has clarity at the moment. The IMO needs to show that it is continuing in the direction laid out in the initial strategy.”
