Shipping industry calls for ‘fair access’ to clean fuel

November 27, 2023, 2:57 AM

Egypt Turkey trade container ship Suez canal — Turkey was Egypt’s largest recipient of exports last year, as tradse between the two countries rose to nearly $6bn

2% of emissions from shipping
Oil serves 99% of fuel needs
Pressure on sector to clean up

Access to clean fuel is the biggest obstacle to the global shipping industry achieving its decarbonisation goals, but the Gulf region could play a key role in addressing this, according to the head of the International Chamber of Shipping (ICS).

The high-emitting shipping sector has historically burned “the kind of fuel nobody else wants” – the heavy fuel or maritime “bunker” oil associated with high levels of sulphur and other greenhouse gas emissions, ICS secretary general Guy Platten told AGBI.

“However, as we transition to a low-carbon future, we’re going to be competing for sustainable fuels with a lot of other hard-to-abate sectors like steel, cement, aviation and others,” he explained.

“Access to clean fuel is something we will have to address.”

International shipping accounted for 2 percent of global carbon emissions in 2022, according to the International Energy Agency (IEA) – a similar amount to aviation.

The figure was up 5 percent from 2021 following a pandemic-related decline amid low maritime activity. Emissions are now back up to 2017-2018 levels.

International Chamber of Shipping head Guy Platten

Pressure is mounting on the industry to increase its use of low-emission vessels, while working to make zero-emission vessels commercially available by the mid-2020s, the IEA says. Alongside this, scaling up clean fuels is essential to decarbonise the industry.

Historically, oil products have constituted more than 99 percent of total energy demand for shipping, with biofuels accounting for just 0.5 percent of the 2022 total, IEA figures show.

To meet the agency’s “net zero emissions scenario” by 2030, this figure will have to rise to 15 percent, comprising a mix of sustainable fuels including methanol, hydrogen, ammonia and electricity, as well as biofuels.

Regulator the International Maritime Organization (IMO) has set an industry-wide target to reach net zero emissions by 2050. The ICS, which represents around 80 percent of the world’s merchant tonnage via membership by national shipowners’ associations, has adopted the target.

“We’re saying, look, we can decarbonise, there’s no question about it, but we need fair access to clean fuels,” Platten said.

Looking to the Gulf for answers

The IMO is hoping the Gulf can help it achieve its goals, he added. The region is a centre for global maritime activity – Dubai ranks among the top five commercial shipping hubs in the Xinhua-Baltic international shipping centre development index, ahead of Hamburg, Tokyo and New York.

Shipping contributed AED129 billion ($35 billion) to the UAE’s GDP in 2022, up 18 percent from 2021, the country’s energy and infrastructure minister Suhail Al Mazroui said this month. Last year, UAE ports handled more than 19 million 20-foot equivalent units, or TEUs.

The UAE is one of the founding countries of the ICS’s Clean Energy Marine Hubs initiative, which launched last year and aims to de-risk and accelerate the production of low-carbon fuels at scale for shipping to transport and use.

“We’re looking strategically at where you produce these new fuels, what port facilities you need, the infrastructure and legislation in place, and there’s a real opportunity for the Gulf in this area,” said Platten.

“It’s blessed with an awful lot of sunshine, which you need to produce clean fuel through solar and other renewable energy, and the regulatory framework is such that projects can be completed in short timescales.”

Shipping is going to be critical in moving clean fuels around the world, Platten added. More than 50 percent of new green fuels will have to be moved by ship from where they are produced to the markets in which they will be consumed, according to Abu Dhabi-based Irena (the United Nations-affiliated International Renewable Energy Agency).

During the Cop28 summit next week, the ICS aims to engage with governments and tell them, “You’re going to need us to actually move these fuels”, Platten said.

“Countries like the UAE and Saudi Arabia, they are key shipping areas and ideally placed to assist with the energy transition. They understand the issues and are engaging with us.”

Another initiative the ICS is working on, with Irena, is the establishment of an “IMO Climate Fund” to help close the price gap between zero-carbon and conventional fuels.

The fund would come from imposing a mandatory levy on emissions from ships, based on tonnage of CO2 emitted. It will then reward shipowners’ uptake of clean fuels. The ICS aims to launch the fund next year.