The World Shipping Council, a liner lobbying group, announced on February 10 its six critical pathways to zero-carbon shipping. In a press conference, Rolf Habben Jansen, CEO of WSC member company Hapag-Lloyd, positioned the pathways as important steps the International Maritime Organization (IMO) should consider in determining how to move forward on decarbonising global shipping. Jansen said that players in the shipping industry need “firm decisions” to tackle the “massive amount of work ahead of us.”
WSC CEO John Butler outlined the pathways, referring to them as elements that must be part of the IMO’s updated strategy on decarbonisation.
The first pathway – the global carbon price – is to be used to “put future fuels on a competitive footing with fossil fuels.” The WSC is not recommending a number for this price. “To get that number right,” said Butler, we need more research and development. “This carbon price setting needs to be done relatively soon, but it also needs to be done based on data and analysis, not simply plucked out of the air.”
We have to build in mechanisms into the regulatory regime that incentivise green fuel production
The WSC believes that the entire GHG emissions profile of the fuel cycle, from production through use, must be considered in setting standards. This second pathway will help ensure that fuel choices are low-emission across the cycle. Further, though, well-to-tank and the tank-to-wake segments need to be measured separately, because “there may be fuels that are good long-term candidates for green production that are today produced with dirty energy.”
Elements three and four –fuel supply development and green corridors –are related. “In concept,” said Butler, “both of these elements are designed to address the fact that maritime demand alone for new fuels is not sufficient to drive the investment needed to produce future fuels at the required scale. And, similarly, those fuels are not going to become available all over the world at the same time.
“The IMO’s regulations need to reflect that reality, and we have to build in mechanisms into the regulatory regime that incentivise green fuel production and the use of those fuels first where it’s most technologically and economically feasible.
“We need to take advantage of those countries and those situations and those companies that are ready to move forward earlier and give every incentive to those folks to take those steps.”
Pathway five relates to future standards for newbuild vessels. As the next phase of standards is developed by the IMO, the WSC wonders when it will force new builds to be made to use next-generation fuels. That standard will have to tie into the availability of new fuels and technology readiness.
The final element is research and development investment. There are many challenges ahead to address the containment, handling and safety issues related to the production, storage, transportation and use of new fuels. Solutions can be found to overcome the challenges, but that work will take time. “The sooner R&D is done, the faster we can decarbonise and the cheaper it will be to decarbonise,” said Butler, “because we can avoid stranded investments in technologies that don’t work out.”
Jeremy Nixon, CEO of Ocean Network Express, noted that the WSC represents all of the major container shipping companies, and the green-strategy paper is thus an “industry-unanimous agreement” on a strategy to decarbonise container shipping. “We want to work with the regulators – the IMO – as an industry to decarbonise as quickly as possible and to reach quick consensus and agreement around what will be the regulations and what will be the protocols needed to accelerate that.”
Nixon pointed out that carriers in container shipping are the vessel owners and operators, “directly linked to some 500,000 shippers and consignees around the world. We have a lot of skin in the game.”
Tom Crowley, CEO of Crowley Maritime, said that having a clear path forward would enable companies to make investments and avoid stranded assets. Crowley, which has been investing in LNG energy solutions, acknowledged that there are many issues to address in the production of LNG, but its use is reducing emissions in the meantime.
Hapag-Lloyd has also made investments in LNG. Jansen noted that its use reduces not only GHG emissions, but also sulphur oxide and nitrogen oxide emissions. “I do believe,” said Jansen, “that it can, certainly as a bridging fuel – or when we get to eLNG, maybe even in the somewhat-longer run – help us to accelerate at least our short-term efforts to decarbonise.”
Butler emphasised that the WSC’s paper is “not a set of final answers. What we’re trying to do here is to invite the countries that participate at IMO and the rest of industry, our fuel suppliers – everybody who’s involved in this decarbonisation effort – to face the hard questions, to put them on the table, to build them into the IMO revised GHG strategy, so that, as we go through that process, as we hopefully rather quickly set this regulatory structure, we go into it from the beginning with, not just a political pathway, but a technical and regulatory pathway that can put the industry writ large into a position to invest as we need to invest.”