By Julius Melnitzer | July 23, 2022
Aviation tends to get the public’s attention when it comes to the transportation sector and greenhouse gas (GHG) emissions, but shipping, which is responsible for 2.9 per cent of emissions compared to aviation’s 2.4 per cent, is at least as much of a culprit.
“Very few people understand that shipping is the engine of global trade, moving more than 90 per cent of global trade and energy supplies,” said Carleen Lyden Walker, the Connecticut-based executive director of the North American Marine Environment Protection Association, which brings together industry, government, regulatory, conservation and educational organizations to help preserve the marine environment. “But think of the problems that the Suez Canal blockage caused, and shipping’s importance will immediately stand out.”
Indeed, shipping’s ubiquity means that even marginal trends and improvements can have significant environmental impacts. Fortunately, there’s a direct correlation between fuel efficiency and a vessel’s emissions.
“There’s a huge economic opportunity that we estimate at (US)$50 billion in potential savings,” said Matt Heider, chief executive of New York-based Nautilus Labs Inc., which provides artificial intelligence solutions to advance the efficiency of ocean voyages by, among other things, calculating the most efficient speeds and routes. “So, today, emissions are top of mind, when it wasn’t five years ago.”
Yet given the variation in size and types of vessels, and disparate shipping routes, the industry is still working out the best approaches to reducing emissions, as well as who among the stakeholders, including owners, charterers and cargo interests, will bear the costs of change.
“There is no simple way for the industry to decarbonize,” Antonia Panayides, a London-based partner in Reed Smith LLP’s transportation group, said.
Although the International Maritime Organization, a United Nations agency that regulates global shipping, has set ambitious decarbonization targets for the sector by cutting allowable sulphur levels in marine fuel and reducing carbon emissions by 40 per cent no later than 2030, challenges abound. Not the least of these is that alternative fuels for ships are not available at the size, scale or price the industry needs for wide-scale adoption.
“Our take is that the shipping industry is further ahead than the fuel manufacturers,” Heider said.
Shipping emissions rose 10 per cent between 2012 and 2018, but the difficulty from an environmental perspective is that shipping is a legacy industry.
“The way the entire sector works is outdated and difficult to regulate because of its multi-jurisdictional nature,” Heider said. “And although it’s safe to say the shipping industry is on the bandwagon with reducing emissions, the absence of foundational data makes it difficult to achieve the 30-per-cent savings that are possible by using software to calculate speed and route.”
For example, the “noon report” of logging data once a day, a 200-year-old tradition, still predominates, albeit with more sophisticated equipment.
“What we need are real-time datasets from the engine room, the bridge and nautical signals that we can combine with meteorological information so that we can train our software to make predictions about voyages that will use the least amount of fuel,” Heider said.
The irony is that routing has traditionally been based on history and weather patterns, rather than economic considerations.
“Traditionally, ships leave port going very fast by way of outrunning uncertainty about future conditions, and that may bring them to a port before a berth is available,” Heider said. “That’s a problem because every increased knot of speed ups fuel consumption exponentially.”
Accurate software predictions help ships cut consumption and emissions by travelling steadily at moderate speeds to reach their destinations on time. But the ultimate goal, according to Walker, is the digitalization of the logistic supply network.
“That’s the kind of thing that will promote innovations like just-in-time arrival, so we don’t have ships waiting around and burning fuel unnecessarily,” she said. “It’s interesting that Amazon is now in the maritime space, and nobody does logistics any better than Amazon, so we’ll see what kind of an impact their entry has.”
HD Hyundai Co. Ltd., through its subsidiary Avikus Co. Ltd., provided a glimpse of what’s to come when Prism Courage, its 122,000-ton, ultra-large natural gas tanker, sailed 12,427 miles — half of its voyage from Texas to Korea — under the control of an autonomous navigation system.
Apart from steering the ship, the system used Hyundai’s Integrated Smartship Solution AI system that compensated for weather and wave heights and also located and avoided more than 100 other ships. The system increased fuel efficiency by seven per cent and reduced GHGs by five per cent.
Alternative fuels are also being implemented, particularly liquefied natural gas (LNG), which is naturally low in sulphur. Alternatively, ships use “scrubbers”, which are exhaust gas cleaning systems that remove sulphur oxide from the engine and boilers.
Electric vessels are also on the horizon, encouraged by the prospect of offshore wind farms that could double as electric charging stations. For example, the United Kingdom’s Department of Transport has funded a project that will use an existing wind farm and its infrastructure to provide renewable energy to vessels.
“The increase of electrical charging points for offshore support will encourage vessels owners to switch to fully electric or hybrid vehicles,” Panayides said. “Ships have been semi-electric for some years now, with 80 per cent using a diesel-electric transmission.”
There are myriad other options, too, including methanol, hydrogen, synthetic methane, ammonia and nuclear-based fuels; outfitting ships with sails; modifying hulls and bows; and building bigger ships, thereby enhancing the cargo-capacity-to-emissions ratio.
But the disparate ways in which shipping companies are going about reducing emissions represents a quagmire in itself.
“The more vessels equipped with different types of fuel for propulsion, the harder it is to gauge the performance of the ships and understand the return on investment in the changes they make,” Heider said.
The upshot is that the choices are not at all clear.
“Right now, the industry doesn’t know which way to go,” Walker said. “There’s no silver bullet.”
Even the IMO is not currently working to a net-zero standard by 2050. Instead, its strategy is to reduce emissions by at least 40 per cent by 2030 and at least 50 per cent by 2050 compared to 2008.
“Although there are ongoing discussions as to whether net zero is achievable, this is an industry that does what it says and does not make empty political promises,” Heider said. “The IMO will not commit deeper until it has the mechanisms to do so.”
Meanwhile, stakeholders have emerged with their own initiatives. AP Moller Maersk A/S, which has more than 730 container vessels deployed, has committed to net zero across its business by 2040, as have other large global shippers such as Mediterranean Shipping Company SA and CMA CGM SA. Hapag-Lloyd AG, boasting more than 250 container ships, has vowed to reduce emissions by 30 per cent by 2030 compared to 2019 levels, and to reach net zero by 2045.
“Three or four companies comprise about 80 per cent of the world’s container fleet, and all have made individual commitments to net zero by 2050,” Heider said. “Overall, it’s astounding how many large shipping companies, many of them family-owned, have made the same commitment.”
Sam Davin, senior specialist, marine conservation and shipping at the World Wildlife Federation Canada, applauds the industry for its efforts.
“The shipping companies are doing exactly what they’re being told to do by regulators and the IMO,” he said. “Are they doing everything? No, but we appreciate their commitment to demonstrating the art of the possible.”
Ultimately, Davin said the regulators must lead.
“In terms of global change, the IMO is not moving fast enough,” he said. “It’s their job to achieve a proper framework and proper targets.”
Still, it’s not just the shipping companies that have a role to play. Port facilities and their policies can have a significant impact, too. A number of ports have provided incentives to lower emissions, but the Vancouver Fraser Port Authority (VFPA) is among those that stand out.
As part of its collaboration with Tacoma, Seattle and the Northwest Seaport Alliance to phase out port-related emissions by 2050, the VFPA has several programs to accelerate the transition to lower emissions. They include discounting harbour dues for shipping lines that take steps to reduce their emissions, and providing shore power facilities that enable ships to turn off diesel-powered engines and plug into low-emission hydroelectricity.
“To date, this has helped reduce more than 25,000 tonnes of greenhouse gases”, the VFPA said in an email.
The VFPA is also partnering with British Columbia to fund pilot low-emission fuel and technology projects, including using battery-electric-powered terminal trucks and biodiesel as a marine fuel.
The VFPA, in collaboration with stakeholders, has also established environmental requirements for container trucks accessing the port. And in partnership with Seattle, various Alaska destinations and major cruise lines, it is exploring the feasibility of the world’s first cruise-led green corridor, meant to accelerate the deployment of zero-GHG ships and operations between Alaska, B.C. and Washington.
Some observers are concerned, however, that in the rush to cut emissions, the industry may not be paying sufficient attention to more immediate concerns.
“Everybody in the industry is reacting to climate change, but we’re so focused on net zero that we’re way behind on the risk analysis that’s required by its immediate consequences, including wildfires, changing water levels, increased destructive weather and longer transit periods,” said Rui Fernandes, a partner at Fernandes Hearn LLP, a transportation, trade and business law firm in Toronto.
Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at [email protected] or https://legalwriter.net/contact.