Shipping looks to accelerate green fuels as efficiency drive stalls
The absence of any driver beyond market forces, flawed regulation and market failures, have all limited the incentive to go beyond the ‘lowest hanging fruit’ in efficiency
Shipping’s green coalition at COP29 climate talks is focusing government efforts on producing new policy to catalyse new supplies of new green fuels, but research reveals that the existing policy push towards more efficiency in the existing fleet has effectively stalled
EFFORTS to accelerate the adoption of zero-emission fuels are dominating shipping industry activity at the COP29 climate talks underway in Azerbaijan.
But the push for political alignment over new market-based measures to catalyse investment comes as new research makes clear that existing policy, which should be driving efficiency measures in the current fleet, has effectively stalled.
A broad coalition of over 50 shipping leaders on Tuesday called on governments to accelerate the adoption of zero-emission fuels with a commitment from the signatories to investment in “vessels capable of operating on fuels that offer the most significant emission reductions”.
The call to action, which extended a similar effort from last year’s COP28 talks, was part of a bid to demonstrate strong industry momentum to invest in decarbonization through scalable zero-emission fuel pathways.
Despite some notable absences from the industry coalition, notably Maersk, which had previously been front and centre in last year’s efforts, the green fuels call to action at COP29 represents a growing industry commitment towards decarbonisation.
However, new research due to be presented at COP on Wednesday reveals the shortcomings in existing efforts to improve efficiency measures in shipping before green fuel supplies emerge.
The research conducted by UMAS and University College London examines trends in international shipping emissions from 2018 to 2022.
It shows that the total greenhouse gas emissions from shipping have been rising over the last decade, nearing 2008 levels by 2022. This trend is driven by consistent growth in total transport work, which far outstrips the efficiency gains in the fleet which plateaued several years ago.
This is in stark contrast to the International Maritime Organization’s objectives to achieve absolute emission reductions of 20%-30% by 2030, compared to 2008 emissions levels.
While the industry achieved rapid efficiency increases across the global fleet in the period following the global financial crisis, that progress has now stalled, the data shows.
While carbon intensity continued to improve across most parts of the industry from 2012 to 2018 in line with fleetwide increases in average ship size, as well as improved design and operational efficiency, the pace of reduction slowed significantly towards the end of the period.
In addition, despite an initial decrease in total CO2 emissions from 2012-2014, by 2018 total CO2 emissions were returning to near 2008 levels, as overall transport work continued to grow in line with demand.
The pandemic led to a decrease in trade in 2020, resulting in reduced transport work, increased efficiency due to overcapacity, and lower overall emissions. However, a post-pandemic surge in trade from 2020 to 2021 reversed these trends, leading to a jump in transport work, faster average speeds, reduced efficiency and increased emissions.
According to the research, the low rate of energy efficiency improvements can be attributed to weak drivers of further efficiency after the initial efficiency ‘corrections’ on both ship speed and design in 2008-2012.
Known market barriers and failures effectively inhibited business cases, limiting industry motivation for efficiency improvements, the report suggests. Technical and operational efficiency measures have therefore been under-used and the regulatory efforts, including the Energy Efficiency Design Index and the much derided Carbon Intensity Indicator regulation, have so far failed to continue driving fleet wide efficiency improvements.
“The message from this analysis is that the fleet actually has a latent efficiency opportunity - because during the period to 2022, utilisation and speeds of many ship categories actually trended in directions countering efficiency improvements,” said Dr Tristan Smith, Professor of Energy and Transport at the UCL Energy Institute.
“But these are trends that can be rapidly reversed with minimal technological intervention and should also come with cost reductions to trade. The analysis also shows that market forces and weak regulation will not crystallise these potential efficiencies - increasing the stringency and efficacy of CII regulation will be key if 2022-2030 is to achieve the 20-30% GHG reductions committed to in IMO’s revised strategy.”
Industry efforts at COP29, however, continue to focus on securing the regulation required to catalyse new green fuel supplies rather than efficiency measures.
The joint industry statement, which includes Mitsui OSK Lines, Ocean Network Express, Trafigura and Fortescue, alongside several ports, ship managers and engine manufacturers, calls for “faster and bolder action to increase zero and near-zero emissions fuel uptake, investment in zero-emissions vessels, and global development of green hydrogen infrastructure, leaving no country behind”.
The Call to Action comes as the maritime industry awaits the Marine Environment Protection Committee’s milestone convening in April 2025, where global regulatory architecture will be set for a global fuel standard and a greenhouse gas pricing mechanism to achieve the IMO Revised 2023 GHG Strategy’s ambition of achieving net-zero emissions in the maritime sector by 2050.
The industry coalition efforts at COP are intended to send a strong signal to global regulators ahead of this convening that clearly defined regulation is needed to strengthen the business case to complement and amplify industry momentum towards decarbonisation.
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