Maritime Decarbonization Strategy 2022

The first chapter of the Maritime Decarbonization Strategy takes stock of how the maritime industry is progressing towards zero. Recent momentum demonstrates that the sector already has the most important component of any decarbonization strategy – a willingness to act. But current actions are not enough, and the industry must turn to take even more drastic means to bend the rising emissions curve.

Today, we are very far away from aligning with the Paris 1.5 °C trajectory. International and domestic shipping uses approximately 12.6 EJ of energy each year, corresponding to around 300 million tonnes of fossil fuels resulting in ~1.2 GtCO2eq emissions from a well-to-wake (WTW) perspective. To reduce our emissions by 45% in 2030 compared with 2010, we must limit our fossil fuel consumption to ~6 EJ of the total energy demand from the global fleet.

Shipowners and operators can apply a host of solutions to increase energy efficiency today. Utilizing these measures will immediately reduce emissions and help break the maritime emissions curve while alternative fuel pathways continue to develop. Energy efficiency measures often provide savings in the long term, so they are a no-regret move that the industry should treat as an immediate necessity. Various commercial and technical barriers are currently limiting uptake. However, we can overcome these barriers with clear regulatory action and new collaborative business models based on transparent data sharing.

Uptake of operational and technical energy efficiency measures varies across vessel categories and segments, as shown in Table 1. There are some areas of growing application, particularly in the passenger, cruise, and container segments. In the fragmented bulk and tanker segments, although leading operators are applying energy efficiency measures, overall adoption remains low. As a result, the industry still has substantial potential to save onboard power, reduce energy consumption, and limit emissions.

Due to feedstock availability and technology limitations, no single alternative fuel can fulfill demand from the entire maritime industry in the short term. As a result, we expect the fuel landscape to utilize a mix of alternative fuels over the coming decades.

This chapter discusses the status of the four major alternative fuel pathways, their challenges, and how current forecasts for fuel supplies and demand from the shipping industry compare. Finally, we identify how we can use alternative fuels to break the emissions curve this decade and how scaling up production can bring us closer to the Paris 1.5°C trajectory.

It is clear that shipping is currently investing more in alternative fuel technology than fuel producers will be able to supply. This disconnect is partly because on-land investments in production infrastructure are much larger and riskier than investments in onboard technologies for alternative fuels. In the following decade, projected supplies will be unable to meet the total demand, with a yearly shortfall of up to 20 million tonnes of alternative fuels. Furthermore, although the outlook indicates there will be a surplus of ammonia, methanol demand may outstrip supply by up to 80 million tonnes.

For industry wide decarbonization to become a reality, we must overcome the barriers that are preventing alternative fuel scale up and widespread application. Executing the critical actions for methane, methanol, and ammonia in Figure 11 will allow the industry to move swiftly from ambition to implementation and scale-up, so alternative fuels can play a wider role in decarbonization. Across the industry, work towards these critical actions is already underway. Still, we must increase our efforts to be ready for scaling at the end of this decade

If all the largest owners made net zero pledges and worked to make them a reality, the emission abatement impact could be significant, amounting to up to a 40% reduction by 2050. However, the number of commitments is currently too small as, worryingly, not all the top companies have set targets. Furthermore, the number of targets is growing too slowly. And even if all the leading shipowners made commitments, this still would not decarbonize the entire industry or align with the Paris 1.5°C trajectory.

Well-to-wake is a simplified methodology that builds on conventional life cycle assessment (LCA) and is well suited to policy and regulations. It considers emissions from the entire fuel lifecycle, from energy harnessing (from, for example, wind, solar, or biomass) to producing fuels and using them onboard. Tank-to-wake, on the other hand, only includes emissions from onboard use (see Figure 13).

As the table shows, class societies are well underway with developing new rules and guidelines. Furthermore, industry organizations and first mover ship operators, ship designers, shipyards, and port authorities are working through hazard identifications (HAZIDs), hazard and operability studies (HAZOP), and quantitative risk assessments (QRAs) to enable new solutions. However, many rules and standards are still interim drafts or need further development.

The maritime industry must support first movers and fast followers to safeguard the transition and accelerate progress. The faster first movers can form and execute on investable pathways, the more interested other industry players will be in following their actions, and the faster the industry can align with the Paris 1.5 °C trajectory.

Green corridors lay the foundations for scalable long-term decarbonization solutions by demonstrating what it takes to build alternative fuel supply chains, providing platforms for further scaling technologies, and showcasing new business models for operating zeroemission vessels at scale. They also offer opportunities to try out de-risking mechanisms and exemplify safety standards and prerequisites for using new technologies and alternative fuels.

Book & Claim allows first-moving shipping and fuel companies to access a broader market for their services, leading to more certainty around revenue streams. It will enable large and small shipping companies to finance their fleet’s transition via the additional revenue generated. Furthermore, firstmoving cargo owners can use their capital to support alternative fuel supply chains. In this way, a Book & Claim system could be used alongside market-based measures like carbon pricing to share the cost of the transition. When Book & Claim and green corridors are used in combination, the uptake of alternative fuels can be funded through cargo owners who are not even active in the specific geographic area where the green corridor is operating