I will not immediately offer you the figures, however important, but I will try to interest you with the idea. Which is that of “green corridors” to make the main sea routes “cleaner”, with the aim of accelerating a green transformation of the sector and sooner or later reaching a perfect world without greenhouse gas emissions. The decarbonisation of ships is not a utopia, in the sense that it can be done and it is not a joke, in the sense that in addition to bringing imaginable benefits from an environmental point of view, it can also represent a significant business.
The above idea comes to me with the studio “The next wave: Green corridors”, created by Getting To Zero Coalition with the analytical support of McKinsey, in collaboration with the Global Maritime Forum, Friends of Ocean Action, the World Economic Forum, Mission Possible Partnership and the Energy Transitions Commission.
The scenery
80% of global freight travels by sea and, I read in the report, the demand for shipping is expected to continue to grow in line with global economic growth over the next three decades. Ships are not the worst in terms of C02 emissions per tonne-kilometer, compared to other types of freight transport: it is estimated that the sector is “worth” 3% of emissions, a percentage likely to increase as the decarbonisation of other sectors. And a percentage that could increase in emissions, up to 50% by 2050, if nothing is done.
What to do? Acting on demand management, such as reducing traffic volumes, and improving logistics optimization, the report could reduce industry emissions by 4-5%. Furthermore, improving the energy efficiency of ships, upgrading ship design and propulsion systems could theoretically reduce the intensity of emissions by between 15 and 55%. However, according to the experts who contributed to the study, a decarbonization strategy focused only on these levers would not be sufficient to achieve the objectives set by the International Maritime Organization (IMO), which wants to reduce emissions from the maritime sector by 50% between now and 2050, and even less the goal of full decarbonisation by 2050, sanctioned by the Call to Action of 200 leaders of the sector in September 2021.
So? To achieve these goals, the maritime industry requires the use of ships using fuels with zero greenhouse gas emissions. But zero-emission fuels cost much more for now than conventional ones. Now, we know that fuel is a notable item in shipping. And it’s not that simple to say: let’s lower the price. Different roles and incentives also take over, between shipowners paying to improve the efficiency of their ships and charterers paying for fuel costs.
The solution
Technologies to achieve zero-emission shipping are becoming more commercially available, but until they are on a large scale they will always be very, if not too expensive.. And then, there won’t be a fast enough transformation, because before everyone moves, fragmented as this segment of the world is, so heterogeneous and complex, it will take some. However, it is also true that we don’t have that much time if we really want to react and improve things.
Here, then, is the idea of ”green corridors”. Just imagine: large green “highways” that coincide with major global trade routes, in which a completely zero-emission maritime transport is experimented and then adopted. Green fuels, green logistics, green ships and – because this is also fundamental – customs, regulations and adequate tax consequences, we also say the latter are an active part of the green transformation.
The routes
The study examines two main routes, two possible green corridors, which are the route of the transporting ships ferrous ores from the northwest of Australia to the steel mills of Japan, and that of container ships that move between Asia and Europe, let’s say from Yokohama to Hamburg, with obviously intermediate stopovers. A third case study is that of the auto industry route, between Asia and the US, from Pyongtaek to Kobe and Yokohama to Long Beach. But the routes of steel and ferrous materials between Australia and China and between Brazil and China are also mentioned; then those of transpacific and transatlantic containers and, finally, those of green fuels such as ammonia between Saudi Arabia and the USA and methanol between Saudi Arabia and China.
The Asia-Europe container route
Here is an example, to understand. This route, which we know well, is the one that generates more greenhouse gas emissions than all the others. Now I have to spend a few numbers. So, Around 24 million twenty-foot container equivalent (TEU) units were traded on this route in 2019, carried by 365 vessels. The ships burned about 11 million tons of fuel, releasing the equivalent of 35 million tons of CO2, which account for around 3% of global emissions from shipping. The ships on the route operate on a schedule with a fixed port rotation at a fixed frequency. Shanghai is the largest port on the Asian side and Rotterdam is the largest port on the European side. Singapore serves as the main transhipment port on the route.
Be careful though. According to the report, the same route is also the one that presents the most promising conditions for the development of a green corridor. Because? Primarily, because there is a growing momentum among actors on the route to decarbonise container shipping as many freight owners have set emission reduction targets. Just to understand: 70 percent of the total TEU capacity deployed on the route is covered by five shipping companies, which are MSC, Maersk, CMA CGM, COSCO Shipping and ONE.54, all committed to reducing greenhouse gas emissions by 50 percent by 2050, in line with IMO targets. Maersk55 and CMA CGM56 have committed to even being carbon neutral by 2050
Second, the pipeline of announced green hydrogen projects, which amounts to 62 GW of hydrogen electrolyser capacity by 2030 in Europe, the Middle East and Australia (for bunkering in Asia) will likely be more than enough to make more green the corridor.
Third, the cargo characteristics on this route may allow participants to share the costs with final consumers without a significant increase in retail prices. And finally, there is also the will of politics along the way, pointing to the decarbonisation of shipping as a growing priority.
Yeah, but how? According to the report, on this route the most suitable fuels are green methanol and green ammonia (both zero-emission; remember that the other greeen fuels are hydrogen and synthetic diesel), with the latter having the advantage in terms of long-term costs. Here, but how much will it cost?
I remember the words of an Italian consultant to the British government that I met in Cardiff during an Ocean Summit of the Ocean Race, the round-the-world sailing tour for teams, according to which to have the “green” you need to be ready to spend a little more. In this case, for this route, the report calculates an increase in costs per ship from 35 to 45 percent. Okay, but there is a though. The EU aid package, the Fit for 55 planned for maritime transport, could reduce the cost gap to 25% in 2030. And recycling the corridor’s revenue share into support mechanisms for first movers could completely close the gap.
Hence, to a conclusion. “The Asia-Europe corridor offers the opportunity to establish coalitions of demand by freight owners, as well as to create reservation and request systems that allow them to efficiently aggregate and benefit from the use of zero-emission fuel” . And again: the establishment in this corridor of these key levers to make container shipping more environmentally friendly it could lay the groundwork for global adoption”.
Back to the beginning. But isn’t it nice to imagine a globe crossed by so many green routes?