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World Shipping Council identifies 6 key elements to decarbonize shipping

WSC submits emissions-reduction strategies to International Maritime Organization

(Photo: Jim Allen/FreightWaves)

The World Shipping Council (WSC) on Thursday identified six economic and regulatory pathways that are “critical” to decarbonize the shipping industry.

The WSC is a trade association representing the international liner shipping industry. 

“Not many industries have come together this way,” Jeremy Nixon, CEO of container shipping company Ocean Network Express, said during a press conference. “We have an industry unanimous agreement here” with a goal to work together with the International Maritime Organization and governments to decarbonize the shipping industry.

The IMO will consider revising its greenhouse gas emissions strategy in June at the 78th session of its Marine Environment Protection Committee. The WSC submitted a paper to the IMO outlining how certain regulations and standards could help decarbonize the industry.

WSC’s six critical pathways to decarbonizing the shipping industry are: 

  • Setting a global carbon price.
  • Evaluating fuels on a life-cycle basis.
  • Developing fuel supplies.
  • Establishing green corridors.
  • Setting newbuild standards.
  • Investing in R&D.

“We are now offering our perspective on the critical pathways the IMO should consider as it tackles this global challenge. Action is needed now by the governments of the IMO so as not to stall development but rather to support ambitious innovators and front-runners,” John Butler, president and CEO of WSC, said in a release.

Accelerating the transition, reducing the risk

A carbon price is an “essential element in any decarbonization plan,” Butler said during the press conference on Thursday. But it would require serious discussion to determine the right price. The purpose of a carbon price in maritime is to speed up the transition to sustainable fuels by bringing green fuels to economic equilibrium with fossil fuels.

The WSC emphasized how important it is to evaluate fuels on their well-to-wake emissions, or life-cycle emissions, in determining which fuels will lower GHG emissions for the sector. Looking at emissions that occur at every stage from production to combustion provides a clear picture of the overall emissions and could prevent the industry from adopting fuels that are only low or zero emissions at certain stages.

Sustainable fuels will not be available everywhere in the world at once, and the demand from the maritime industry doesn’t provide enough demand to scale these fuels as fast as they need to be scaled to decarbonize, Butler said. This means developing and growing the supplies of sustainable fuels and creating green corridors will be important.

Read:  World’s busiest trans-Pacific shipping lane targeted as green corridor

Butler said the IMO should incentivize companies and countries that are ready to adapt to cleaner fuels and establish green corridors to speed up the transition. Along with incentives come standards such as those for building new vessels. 

The WSC said that newbuild standards should support the energy transition. That includes standards that would require newbuilds to operate on zero-emission fuels or prevent fossil fuel-powered vessels from being constructed after a certain date.

But those types of standards wouldn’t be possible right now given that the industry doesn’t yet have a clear idea of which green fuels will be approved under future regulations.

Right now, companies are investing in sustainable solutions, but they are somewhat hesitant because they don’t want to waste millions or billions of dollars on advancing technologies for fuels that may not be approved or may never become economically feasible, said Rolf Habben Jansen, CEO of Hapag-Lloyd. 

Read: How can zero-emissions shipping be commercially viable?

It would speed up the R&D process and adoption rates for sustainable fuels if the IMO would make it clear which fuels would be approved in the long term, he said. 

Butler said, “We’re not saying we can’t do anything until we get a regulatory regime from IMO,” but regulations will be necessary to decarbonize the industry eventually.

The return on investment for shippers this year is well above normal, Nixon said, but that’s a good thing given the huge investments that will be required to decarbonize fleets. He said the industry “needs more clarity” to ensure that companies don’t end up with stranded assets after investing heavily in one potential fuel. 

Butler said: “Liner shipping understands the shared responsibility for GHG reductions in the maritime sector, and we don’t underestimate the challenge. We are committed to decarbonizing shipping and have multiple ideas and projects in the pipeline. But to be able to make these investments, to take the necessary risks, we — and all other maritime actors — need a regulatory framework that addresses the key strategic issues.”

These six elements are “not a set of final answers,” Butler said. Their purpose is to invite country members of the IMO, industry and suppliers to face the hard questions. The WSC said it looks forward to collaborating with all involved parties and seeing how the IMO will revise its GHG strategy in June.

Click here for more FreightWaves articles by Alyssa Sporrer.

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Alyssa Sporrer

Alyssa is a staff writer at FreightWaves, covering sustainability news in the freight and supply chain industry, from low-carbon fuels to social sustainability, emissions & more. She graduated from Iowa State University with a double major in Marketing and Environmental Studies. She is passionate about all things environmental and enjoys outdoor activities such as skiing, ultimate frisbee, hiking, and soccer.