CARBON EMISSIONS OF THE SHIPPING INDUSTRY – GREEN DEVELOPMENT LLC LOOKS AT THE FUTURE OF SUSTAINABLE SHIPPING
Over the years, the world has evolved into an incredibly complex and interconnected web of trade. On any given day, a single consumer can find a recipe on their Chinese-built phone, drive their German-built car to the grocery store, pick up an avocado from Mexico, onions from Spain, and tomatoes from Chile to make guacamole ultimately served in a Canadian bowl on a dining table from Sweden.
The point is that we are all more reliant than ever on goods from all corners of the globe. While that access brings newfound opportunities, it also comes inherently with a troubling trend that’s gone largely unchecked: the shipment of all of these products over hundreds or thousands of miles carries an increased carbon footprint. The transportation of each product, notably by ships, spews climate-changing greenhouse gases (GHG) into the atmosphere at a time when world leaders are collectively looking to stem carbon emissions and prevent the worst of climate change.
The energy industry and personal transportation often grab the headlines, but the shipping industry presents unique opportunities for decarbonization. According to the United Nations International Maritime Organization (IMO), one billion metric tons of the annual carbon dioxide (CO2) emissions from human activity are attributed to the shipping sector. Reducing shipping industry GHG emissions is an attractive area of focus, but it is also particularly challenging.
Green Development LLC, a developer of large-scale renewable energy projects, relies upon the global supply chain as many U.S. companies do and therefore has been tracking the state of this sector, with some of the key observations to follow.
The State of Sustainability in the Industry
On any given day, more than 110,000 large ships are carrying goods across the oceans at a cumulative total weight of more than 100 gross tons, according to a recent report in NewScientist. According to Reuters, these ships carry about 80% of global trade products (everything from food to consumer goods to building materials and more). Their collective carbon footprint amounts to about 3% of total global emissions. While that may sound like a small slice, the truth is this sector is a critical one to tackle today. Energy producers can pivot to renewable energy, and smaller-scale transportation is shifting to electric vehicles (EVs), but the shipping industry doesn’t have as many readily available solutions.
This status quo for shipping is particularly troubling because of nearly every shipping vessel’s inherent reliance on fossil fuels. These ships are so large, carry such a high weight of goods, and must travel at such great distances that the energy density provided by petroleum products is incredibly challenging to replace through cleaner methods. While a family can readily tap into the power of electricity and batteries by buying one of the growing EV models on the market today, those same technologies are currently impractical for the immense needs of shipping. As such, at the high seas, fossil fuels remain king. Further, the shipping sector is even worse than traditional transportation when it comes to climate because the best shipping fuel is what’s called bunker fuel. As noted by YaleEnvironment360, bunker fuel is the pitch black and molasses-like “dregs” of the oil refining process, meaning it utilizes all the sulfur and nitrogen compounds that are removed from more refined oil products. When bunker fuel is burned to propel these massive vessels, it spews those harmful chemicals into the air. Not only are those carbon emissions contributing to the climate crisis, but the additional pollutants damage air quality and can readily create higher health risks for those living near ports. Bunker fuels can also cause irreparable damage to aquatic environments and the ecosystems that make their home in these waters.
As noted earlier, this sector is responsible for over one billion metric tons of emissions each year. Should business continue as usual, where populations and overall demands for goods continue to grow, the result would be shipping emissions growing by up to 50% by 2050, according to a study from the IMO. If that happens, S&P Global predicts shipping emissions will grow from that meager 3% of global GHG emissions to an alarming 17% by midcentury.
The shipping sector isn’t just being careless by ignoring the ever-present need to decarbonize. Rather, the right solutions are less readily available, so the global community has opted first to tackle emissions reductions from lower-hanging fruit. That said, it has led to less urgency—shipping was one of the very few sectors not included in the international Paris Agreement to address climate change. But there truly is limited time left for climate action. Even if the right solutions aren’t market-ready for several years, industry leaders must still begin planning, funding, and tackling the problem today.
Diagnosing the Problem and Taking Action Today
Despite how challenging action on shipping emissions is, the industry has certainly not turned a blind eye to the problem. The most significant step towards reforming emissions in shipping came in 2018 from the IMO when the international regulatory body committed to reducing GHG emissions in the global shipping industry. As part of the organization’s 2018 meeting, the IMO established three key “levels of ambition”:
Reduce the carbon intensity of each new ship, as measured by the energy efficiency design index (EEDI), via defined, phased-in design improvements for each ship type.
Reduce the overall carbon intensity of international shipping by at least 40% by 2030 and 70% by 2050 by minimizing the annual carbon emissions per weight per distance of current ships as measured by the energy efficiency existing ship index (EEXI). Based on EEXI results, each ship will be assigned a rating from A to E. Ships rated “D” or “E” for three consecutive years will be required to submit plans for correction.
Reduce overall emissions from the international shipping industry by 50% by 2050, compared to 2008 levels, and eventually phase out all GHG emissions.
The “level of ambition” targets listed above were supported by specific efficiency and carbon-reduction measures that must be implemented by 2023, all of which can be found in this outline from IMO.
Other industry leaders and stakeholders are taking note of the potential to address emissions in the shipping industry as well. This past fall, the much-hyped COP26 conference from the United Nations left some people disappointed that international agreements didn’t go further. However, one of the bright spots came from the shipping industry. Specifically, 22 countries signed the Clydebank Declaration for Green Shipping Corridors. By signing, those nations agreed “to support the establishment of green shipping corridors – zero-emission maritime routes between 2 (or more) ports.” The first of these net-zero corridors are expected by the end of the decade, representing real action towards the future of sustainability in shipping.
The Future of Sustainable Shipping
Moving forward, industry onlookers recognize that more can, and should, be done to bring sustainable shipping into reality. In terms of the immediate actions that are available, some of the best emissions-reductions tools include the following:
Optimized Logistics: The best way to reduce carbon intensity is with optimization software and logistical tools to ensure the maximum amount of goods are transported on each vessel. Improved logistics bolstered by modern software can also help ships avoid inclement weather or overcrowded ports, which might otherwise result in wasted time at sea and thereby mitigate fuel waste.
Targeted Energy Efficiency: Designing future vessels or retrofitting existing ones to operate with more fuel efficiency, such as hydrodynamic shapes used to cut through the water with greater ease, applying coatings to the exterior of the vessel that likewise reduces friction, or even more advanced strategies like Flettner rotors or blowing bubbles under the hull to lubricate its passage through the water.
Speed Reduction on Shipping Routes: In a world operating intent on high-speed delivery and reduced shipping times, one of the easiest to implement tools might be to ease off of those requirements and instead ensure vessels move at their most energy-efficient speed. By cutting vessel speeds in half, the industry can reduce fuel usage by nearly two-thirds, one of several strategies shipping giant Maersk is using to help reduce its fleet carbon intensity.
Implementation of Alternative Fuels: Long-term, one of the brightest potentials for emissions reductions is the implementation of less carbon-intensive fuels, such as green hydrogen, liquefied natural gas (LNG), batteries, or even electricity and batteries. Each of these alternatives has its unique challenges, ranging from the substantial weight of batteries to the high cost of green hydrogen, but may prove viable moving forward.
Pricing in Carbon Emission Externalities: Lastly, the shipping industry can take the lead from other sectors that have taken the economic approach of applying taxes/surcharges on carbon emissions. Part of the struggle with reducing emissions is that shipping companies seek to keep their costs as low as possible, and while the status quo of bunker fuels may emit high amounts of carbon, it also keeps prices down. If, however, shipping companies were required to pay a surcharge based on their ships’ carbon emissions, the status quo would be comparatively less financially viable, and exploring the alternative approaches above would make more business sense. Cap and trade systems have been successful in many places for industrial and power sector emissions, so the shipping industry could very well be next.
Looking Ahead
The shipping sector, in particular, has been hit with immense challenges in the fallout of the COVID-19 pandemic. Labor shortages, additional costs, and other logistical challenges create a myriad of supply chain disruptions. These events have made headlines with shipping vessels floating just offshore and goods being delayed from hitting the shelves.
The shipping industry finds itself at a crossroads with so much at stake, and the solutions will not be easy. But the long-term viability of the sector, and even the broader economy, rely upon finding ways to reduce GHG emissions without sacrificing past gains in supply chain efficiency.