AP Photo
The container ship Volga Maersk passes the city of Kronstadt after leaving the seaport of St. Petersburg, Russia, April 4, 2022.
The Inflation Reduction Act (IRA) allocates $3 billion in grants over the next five years for greener American ports, a positive step for domestic ports and the international shipping industry that relies on them. But decarbonization of the shipping industry as a whole will require more aggressive investments and international cooperation.
Ocean shipping was left out of the Paris Agreement on climate change, and again escaped being put under binding climate targets during last year’s COP26 in Glasgow. But there has been some forward movement. Shipping companies plan to operate 200 green ships by 2030, and there will be six “green shipping corridors” by mid-decade. Also, the United States and Norway announced a “Green Shipping Challenge” for COP27 in Egypt, to encourage nations to put forward concrete plans of action for full shipping decarbonization by 2050.
These are positive steps, but they do not yet match the scale of the challenge. The 200 pledged ships represent about 0.4 percent of the industry’s fleet, which numbers over 50,000. Given that the industry has earned record profits the past two years in association with the supply chain crunch, they certainly have the working capital to accelerate the transition.
There are also challenges with sourcing the fuels to drive sustainable ocean vessels. Maersk, the world’s largest shipping company, has ordered 12 ships that run on green methanol, a biofuel, to be ready by the end of 2025. That’s only about 2 percent of its current fleet, but it would require over four times the world’s current annual production of methanol.
The shipping conglomerates likely won’t commit to these plans if they turn out to be bad for business. Maersk has admitted that these green ships might first sail with fossil fuels. With the viability of new fuels uncertain, and a lifespan of 25 to 35 years for each ship, the shipping industry may find building ships that can only run on green fuel to be too big of a risk.
“We’re talking about an investment of roughly hundreds of millions of U.S. dollars,” said Stavros Karamperidis, professor of maritime economics at the University of Plymouth, explaining the shipping industry’s possible thought process. “So can you imagine that you’re investing $100 million and you don’t know what’s going to be the future fuel? What’s your choice? Go with what you know.”
Maersk has a stated goal of net-zero greenhouse gas emissions by 2040. According to Maersk’s North American head of environment and sustainability, Lee Kindberg, its current plan is for all new ship orders in the next decade to have the capability to run on green methanol, but Kindberg was cautious not to say that the company will “absolutely” commit to this plan, citing the need for reliability.
“Maersk is actually a bit ahead of the curve because they’re kind of building the ships for the fuel to catch up,” said Elise Georgeff of the International Council on Clean Transportation (ICCT). “I think trying to make bold moves in a very transitionary period is going to open [the company up] for a lot of judgment.”
The shipping conglomerates likely won’t commit to these plans if they turn out to be bad for business.
Shipping companies Maersk, CMA CGM, and Cosco are collaborating with the C40 Cities Climate Leadership Group to create a “green corridor” between Los Angeles and Shanghai, in alignment with COP26’s Clydebank Declaration for zero-emission maritime routes. Green corridors such as this would at their best serve as proofs of concept by establishing the infrastructure and regulatory regime for net-zero shipping between a few select ports.
However, while that’s going on, the rest of world trade will still run on fossil fuels, and there may be no easy way for other routes to adopt lessons from these corridors. Different green fuel sources might not be readily available near specific ports, or scalable for use in long-haul ocean shipping. And there are likely to be different levels of commitment to decarbonization for the stakeholders of each route.
If green shipping is limited to these corridors, the impact “will be zero or very little,” said Wim Naudé, a professor of economics at the University of Cork’s Environmental Research Institute. “You need to scale it up and this is the fundamental challenge.”
In an extensive study on what it would take to get to net-zero emissions by 2050, the International Energy Association was optimistic about the speed at which new technology would be adopted in shipping, with ammonia-, hydrogen-, and bioenergy-fueled ships gaining traction in the 2030s, and overtaking fossil fuels as a percentage of the fuel in the shipping sector by 2040. But even in this optimistic scenario, the shipping industry does not reach net-zero emissions by 2050.
“Green” methanol, the fuel Maersk plans to use and has contracted sourcing for, does release carbon when it is burned, but since its carbon can be sourced from carbon capture or other renewable means, it is considered a low-carbon fuel. However, most methanol is currently sourced from natural gas, and it’s easy to imagine industry reaching for fossil fuel–derived methanol, particularly if green methanol remains or becomes scarce. Likewise, hydrogen can be greenwashed by production through electricity generated by a fossil fuel–reliant energy grid. Scrutiny will need to be continually applied to the shipping industry to make sure touted decarbonization efforts are in good faith.
To ensure a green transition on a global scale for shipping, the International Maritime Organization (IMO), the U.N. agency responsible for setting international shipping standards, will be pivotal, due to the international nature of the industry and the practices ocean shipping companies use to get around national laws and standards.
On this point, parties that might normally be in opposition to each other agree. “I think that the major pressure that we can put on these companies is through the IMO,” said political economist Charmaine Chua of UC Santa Barbara, who is deeply critical of the shipping industry’s exploitation of workers. Lee Kindberg, of Maersk’s environment and sustainability department, said, “We have encouraged [the IMO] to be more ambitious … and also put more teeth into [their decarbonization goals] … We would like the entire industry to continue playing on a level playing field.”
The IMO has set a goal of a 50 percent reduction in carbon emissions for the shipping industry by 2050 compared to 2008 levels, but missed an opportunity, according to Naudé, to aim for 100 percent net zero at COP26. The U.S. and Norway’s Green Shipping Challenge is likely an attempt to fill that void, but the IMO could still tighten its goals. Such a move may galvanize efforts for a green transition, and reverse current trends, which predict between 90 and 130 percent of 2008 emissions from the shipping industry by 2050, potentially accounting for 17 percent or more of total global emissions as other sectors more easily and quickly decarbonize.
Transitioning the world economy away from fossil fuels to support not only domestic needs but the needs of global trade is a tall order, and will require aggressive domestic and international policies. But closer to home, the IRA can take strides to make ports greener. Funding could go to projects that electrify port equipment, like cold ironing, which connects ships to the grid while they’re docked so they do not burn fuel. Smaller support vessels could likely run on batteries, or more easily adopt zero-emission fuel technologies.
The $17 billion to improve ports from the bipartisan infrastructure law, including $450 million for replacing outdated equipment, will also go a long way toward port decarbonization and making surrounding communities healthier. These efforts would be complemented by industrial policy meant to reshore certain industries, reducing the reliance on ocean shipping.
Still more funding is likely needed to complete the transition in the United States; the American Association of Port Authorities claimed $50 billion was needed for green infrastructure projects in the next decade. With the creation of green fuels and their infrastructure, building of green ports, and construction of green ships all left to be done, interventions like the IRA and bipartisan infrastructure law need to be a starting point, not an end.
