Stockholm (NordSIP) – The international shipping sector accounts for roughly 3% of global greenhouse gas (GHG) emissions. However, with 80% of the world’s merchandise by volume transported by sea, it stands to contribute a far larger proportion if decarbonisation measures are not swiftly implemented. Danish shipping giant Maersk sent a strong signal to the market on 9 February 2024 when it announced the validation of its GHG emissions reduction targets by the Science Based Targets initiative (SBTi).
It is hoped that Maersk’s commitment to a rigorous programme of decarbonisation will be emulated by its competitors. A meeting in July 2023 of the International Maritime Organisation (IMO) resulted in an agreement to reduce the carbon intensity of shipping by 40% by 2030 from a 2008 baseline. The 175 nations involved were however unable to commit to the imposition of a carbon tax on shipping and environmental groups were dissatisfied with the levels of reductions proposed. The International Energy Agency (IEA) considers shipping to be “not on track” towards its 2050 Net Zero Emissions (NZE) scenario.
The dirtiest fossil fuel
Shipping has been historically reliant almost entirely on fossil fuels, in particular the Heavy Fuel Oil (HFO) used to power ships’ engines. HFO is a post-refining residue that is particularly polluting and generally forbidden for land-based use. The IEA 250 NZE scenario stipulates that 15% of the sector’s energy demand must come from low-emission fuels by 2030. The latter may include biofuels, methanol, hydrogen, ammonia, and electricity. Of these, methanol is the likeliest to be adopted in the near-term. In 2022 Maersk ordered 19 methanol dual-fuel containerships, a move that was followed by other major shipping firms including CMA CGM, Cosco, and Cargill.
The move towards greener fuels brings with it higher costs for the shipping companies. Maersk is calling for changes to the regulatory regime and financial support to cover the cost gap. Maersk Chief Operating Officer Rabab Raafat Boulos said: “To succeed, we are dependent on and working with the ecosystem that we are part of, including customers, suppliers, industry peers and regulators. Importantly, there is a need for global regulations from the International Maritime Organisation (IMO) to close the price gap between fossil and green fuels to secure a level playing field.”
Technological race to develop alternative fuels
Maersk’s SBTi-validated targets for 2030 involve a 35% reduction in Scope 1 emissions, Scope 2 emissions covered by 100% renewable electricity sourcing, and a 22% decrease in Scope 3 emissions. By 2040, the company intends to have achieved a 96% reduction under Scopes 1 and 2, and a 90% absolute reduction in total Scope 3 emissions. To help shipping companies achieve such reductions in GHG emissions, the industry continues to test various technologies to support low or zero-emission vessels. There are currently over 200 pilot projects involving ammonia, battery, or hydrogen fuel cell propulsion. Many shipping firms are hedging their bets by retro-fitting existing ships to incorporate dual-fuel capabilities, partly due to concerns over the supply reliability of these new fuels.
