Companies Aim to Use Only Zero-Carbon Ocean Shipping by 2040

by Ingrid Irigoyen, Taylor Goelz, Clarke Williams and Dana Rodriguez (Aspen Institute) ... This unfortunate spotlight gives us an opportunity to draw awareness to important issues in the maritime industry, including its massive carbon footprint. It also offers a chance to showcase the important work being initiated today by a group of climate-leading consumer goods and retail companies that are standing up to call for faster decarbonization of ocean transportation. Not only are they calling for policymakers and others in the shipping value chain to take action, but they are also setting ambitious targets of their own. Their ambition is the uplifting part of the story. The Aspen Institute Energy and Environment Program (EEP) is honored to be a part of this historic and urgent moment.

In 2020, EEP launched the Aspen Shipping Decarbonization Initiative (SDI) to address the mighty challenge of maritime shipping decarbonization. Through conversations with leaders in shipping, it became clear that there was a need to engage shipping’s customers, in particular climate-leading cargo owners, to help accelerate the pace of change. Multinational cargo owners then helped us understand the levers they can pull. These include sending demand signals for the rapid deployment of new zero-carbon shipping fuels and technologies that are in urgent need of a boost, bringing to the table their own expertise in problem-solving and scaling solutions, and advocating for policy solutions that can reduce cost and regulatory barriers to a speedy transition. But first, they told us they needed a sense of common purpose, a target around which they could start to rally.

To create a space for them to do this work, Aspen SDI began to work closely with a network of cargo owner companies to develop a new initiative we call Cargo Owners for Zero Emission Vessels or coZEV. It is a platform specifically for climate-forward cargo owners to develop concrete collaborative projects to advance zero-carbon solutions. This work puts the high ambition cargo owners’ role and interests at the center.

Today, coZEV is pleased to publicly announce its inaugural act: a first-of-its-kind ambition statement, signed by nine multinational companies, that states their intention to transition all of their ocean freight to zero-carbon shipping by 2040. Through this coZEV 2040 Ambition Statement, they define zero carbon as fuels that release no (or very little) greenhouse gases from a lifecycle perspective.

2040 may seem far away, but experts in this hard-to-abate sector know that vast new zero-carbon fuel supply chains must be built and numerous actors must come together to launch the first large scale projects—from financiers to fuel producers, ports to individual ship owners, carriers, and of course, their customers, the cargo owners whose business underpins the entire enterprise. They also know of the need for policy support, regulatory reforms, new fuel standards, updated procedures and protocols necessary to bring zero-carbon solutions to scale.

These experts also understand that the resources needed across the supply chain to enable zero-carbon shipping are an investment in our individual and collective futures, whose benefits far outweigh the costs of inaction to address climate change. And the savvy will see that there are new business opportunities to be had, and a chance for the maritime sector to support a just and equitable clean energy transition, one that protects the human rights of seafarers and creates new economic development opportunities around the globe.

And they are keenly aware that none of this work will advance on the timelines needed to avoid global climate disaster without cargo owner support. That is what makes this bold new statement so important.

Together, these companies are committing to aligning their ocean shipping with the 1.5°C goal, and are sending a critical demand signal for the adoption of zero-carbon fuels. READ MORE

Excerpt from Bio Market Insights: In a LinkedIn post, Maersk chief executive Søren Skou dubbed the pledge a ‘bold commitment’, though he added that greater global regulation is still needed to help ensure the low-carbon transition.

“A key lever to incentivise the much-needed green transition in our industry would be global regulation. In that sense, we have high expectations of the world leaders attending the COP26 in Glasgow.”

“Incentivisation of fossil fuels must stop,” he added. “We ask for a market-based carbon tax of at least 150 USD per ton CO2 equivalent.” READ MORE

Excerpt from Argus Media: Candidates for zero-carbon marine fuels include green hydrogen and green ammonia. The industry is also looking at marine biofuels, green methanol and synthetic LNG as a way of reducing GHG emissions. But as it stands, zero-carbon fuels are not yet used anywhere in the world, not least because a lack of bunkering infrastructure and supply makes then prohibitively expensive.

The price of 0.5pc sulphur fuel oil, the most widely used marine fuel at the moment, averaged $609/t and $581/t in Singapore and Rotterdam respectively in the week to 15 October. Over the same period, Argus assessed green ammonia in northwest Europe at $2,660/t on a 0.5pc fuel oil-equivalent basis. Even LNG, which is growing in popularity as a marine fuel, is significantly more expensive than existing bunker fuels. It was assessed at $1,444/t in northwest Europe on a 0.5pc fuel oil-equivalent basis in the week to 15 October.

Shipping firms are taking steps to explore the different types of zero-carbon fuels, but these efforts have brought into sharp focus the supply problems associated with decarbonising the maritime sector. For example, Denmark's Maersk, the world's biggest bunker consumer in 2020, recently ordered nine containerships that will be able to operate on green methanol in the future. But the firm estimates that it will need 350,000 t/yr of green methanol to run those nine ships, whereas global production is forecast at just 30,000t this year. READ MORE