A decisive decade for shipping
Many European Shipping CEOs have invested massively in improving their energy efficiency. Still, European shipping is a considerable source of greenhouse gas emissions. In 2018, maritime emissions represented 3.7% of total EU CO2 emissions and 13% of the EU’s transport emissions. To align international shipping with the Paris Agreement temperature goal by adopting a target of full decarbonisation by 2050, zero-emission fuels need to make up 5% of international shipping fuels and 15% of domestic shipping fuels by 2030. Achieving this challenge will require fundamental changes from the shipping industry and from governments and international regulators. From a technology and supply perspective, there is an urgent need to upscale zero-emission ships and zero-emission fuel technology. But a successful transition also requires economic incentivisation of zero emission fuels for the market to be able to solve these challenges.
This is a unique moment where we are seeing a collective, cross-industry call for ambitious regulation from the industry itself. The Getting to Zero Coalition, a platform that convenes more than 150 stakeholders from across the shipping and fuels value chain, launched a Call to Action asking the IMO (International Maritime Organisation) and other international regulators to commit to fully decarbonising shipping by 2050 and deliver the policies and investments needed to achieve this. Over 200 companies and organisations have signed the Call to Action, which was delivered to the COP26 Presidency on 27 October 2021. At the same time, the Getting to Zero Coalition launched a new transition strategy explaining how shipping can decarbonise by 2050.
Using the Fit for 55 leverage
Even though the private sector is taking concrete actions to make zero emission vessels and fuels the default choice by 2030, decisive government action and enabling policy frameworks, like a price on all relevant greenhouse gasses, are needed now to reach shipping’s 2030 and 2050 ambitions. The Fit for 55 proposals soon to be negotiated in the Council of the EU and European Parliament, will enable the EU to lead the way.
The reform of the EU Emission Trading System (ETS) is an important first step. In the future, the EU ETS will be expanded to also cover maritime transport emissions. However, the current EU ETS price level is not enough to bridge the gap between traditional bunker fuel (fossil fuels) and zero emission fuels and thus drive the uptake of scalable zero emission fuels. It is therefore important that a significant proportion of the funds raised are allocated to support the deployment of zero emission fuels, infrastructure, and vessels to drive down costs towards 2030, and ensure that we can get to zero by 2050.
The FuelEU Maritime initiative, a second important file in the Fit for 55 package, will be an important leverage to accelerate the decarbonisation of the shipping industry. Particular emphasis should be on speeding up the deployment of hydrogen derived fuels and ammonia for shipping. In terms of scalability, the hydrogen-derived fuels (such as green methanol) have the biggest long-term potential for rapid scaling in the following decades and should therefore be a significant part of the 2030 fuel mix. If we fail to unlock the full hydrogen potential, we will not be able to make the rapid scaling from 2030 onwards. With 85% of the required investment on land, this will also help accelerate the deployment of an EU hydrogen economy and create green jobs in Europe.
Setting the global standard
The shipping sector is by definition a global industry which requires a global approach if all emissions from the sector are to be curved. To ensure a level playing field and reduction of GHG emissions from international shipping, a price on carbon should be implemented by the IMO at global scale. EU regulation on a carbon price should therefore be designed to be able to be replaced with a global price on carbon.
Decarbonising shipping is urgent and it is achievable. We count on EU policymakers to carry this message loud and clear during COP26 and set an ambitious international standard with the implementation of the Fit for 55 package. The recent Global Maritime Forum’s Annual Summit and the current Glasgow discussions create the momentum to push for a carbon levy high enough to bridge the gap between traditional and zero carbon fuels. The technologies are there, and industry leaders are ready to act now.
Ludwig Criel, Chairman of the Royal Belgian Shipowners’ Association
Christian M. Ingerslev, CEO of Maersk Tankers, representing the Getting to Zero Coalition
Rasmus Bach Nielsen, Global Head of Fuel Decarbonisation at Trafigura
This opinion editorial was first published as a EURACTIV Note on 3 November 2021 here.