Global shipping wishes to go green. But an absence of fuel is hindering its strategies

Denmark’s Maersk, the biggest container shipping company worldwide, prepares to have carbon-neutral ships on the water beginning next year. But protecting the proper fuel for these next-gen vessels exists its own set of difficulties.

The business has 13 ships on order from South Korea’s Hyundai Heavy Industries that operate on green methanol, which is thought about greener compared to the nonrenewable fuel sources that have actually powered worldwide shipping for years.

This belongs to Maersk’s wider strategy to have net-zero greenhouse gas emissions by2040 However, obtaining the vessels is just one part of the difficulty. Getting them totally functional with green fuels is another.

“It is a chicken and egg type situation,” Morten Bo Christiansen, Maersk’s head of decarbonization, informed CNBC.

“The vessels will arrive prior to the fuels, which is of course not ideal quite frankly. When we ordered the vessels, there was no supplier whatsoever,” he stated.

“One of the points of ordering the vessels was actually to put a demand signal in the market so that the fuel production will start.”

In March the business signed collaborations with 6 energy designers worldwide to increase their production of green methanol.

Christiansen stated that Maersk anticipates to have all 13 ships working on green fuels by 2026 at the current. In the interim, the ships might operate on nonrenewable fuel sources however “the intention is clearly that these ships will be operating on green methanol.”

Maersk’s competing CMA CGM is pursuing a comparable course and just recently revealed the purchase of 6 methanol-powered ships.

A representative informed CNBC that the business has “pledged that alternative fuels, like biomethane, will cover at least 10% of ships’ consumption by 2023.”

Shipping business will require appropriate quantities of green methanol or other greener fuels to power these ships to make a significant distinction to their carbon footprint.

If Maersk and other companies need to utilize nonrenewable fuel sources in the interim to run their brand-new ships it would mark an avoid from their decarbonization objectives. The shipping market is accountable for almost 3% of the world’s emissions.

Faig Abbasov, shipping director for the non-governmental company Transport & & Environment, stated that the quandary dealing with the shipping market resembles that of the early days of electrical cars and trucks and whether carmakers would construct lorries to promote the advancement of charging points or vice versa.

“We need to send the demand signal before well in advance, so both the ships and the fuel manufacturers are ready to put their investments in place. We need to guarantee the demand with a mandatory regulation because if we leave it to the market, the market will not favor green fuels,” Abbasov stated.

Many markets have actually set targets for decarbonizing or reaching net-zero emissions, with 2050 being a repeating target, Abbasov stated, however it is still an ambiguous objective.

“The 2050 decarbonization date is great. It’s sort of a signal but in practice it doesn’t mean much because 2050 targets set globally or at the European level are not enforceable on individual companies. It is an aspirational, overall impersonal target,” he stated.

Strict policy is what will drive the need for greener fuels, he included.

One such law boiling down the track is the European Union’s FuelEU Maritime Regulation, which sets targets for ships to considerably decrease their greenhouse gas emissions over the coming years. It is anticipated to be in impact in 2025.

“The nice thing about that regulation is it provides a guaranteed demand for these new fuels in a quantity that’s predictable and that makes it a lot easier to invest in ships, the infrastructure that you need on the ship and onshore,” Bryan Comer of the International Council on Clean Transportation, informed CNBC.

“Right now there’s just no way for the cleaner fuels to compete on price with fossil fuels.”

While Europe is simply one cog in the large worldwide shipping market, Comer included that local policy will drive others to do the same, such as in the U.S., Asia and eventually at the level of the U.N.’s International Maritime Organization.

Maersk has actually hitched its aspirations to green methanol however there is no complete agreement on what alternative fuels the market need to be pursuing to decarbonize the world’s logistics paths in the long run.

“The other alternative we look at is ammonia. It is hailed as the big fuel for the future and it may well be,” Christiansen stated, including that facilities on ships to support ammonia is still some years away.

“The other challenge with ammonia is that it is a gas. It is complex to handle, it’s expensive to handle, and it is highly toxic both to human beings but not least to the marine environment. It means that safety on board is an issue.”

Comer stated that the fuel that will have “the least regrets in my mind” will be green hydrogen however that likewise provides its own difficulties.

“The issue with green hydrogen is that to store enough of it on board the ship, it almost certainly has to be in a liquefied state, so it has to be very cold to begin with, and then you store it in very insulated tanks,” Comer discussed.

“That takes up space and the fuel itself is already low energy density by volume so you’ll have to refuel more often and you’ll need to make sure that the areas in which you’re operating have supplies of green hydrogen for you to fuel in.”

This gets to heart of the concern. It is not simply a matter of constructing the ships and sourcing the fuel, the land-side facilities for refueling and upkeep needs substantial financial investment too if the market is to satisfy its decarbonization aspirations.

“It’ll really depend not only on the size of the ship, the type of the ship, but also how it operates,” Comer stated.

“We don’t have the luxury that we can just use one technology, we will need to use a host of technologies to solve the problem,” Christiansen included.