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US unveils plan for creating GHG emissions-free shipping corridors

15 April 2022 Amena Saiyid

The US unveiled its vision of a GHG emissions-free "green shipping corridor" as part of its effort to reduce the carbon footprint from one of the hardest-to-abate sectors, but the announcement stops short of setting a target date for achieving such a shipping lane.

A day before the start of the 7th Our Ocean Conference in the small Pacific Island state of Palau on 13 April, the US Department of State released a framework that shipping companies, states, countries can follow in establishing these low-emitting green shipping corridors.

These include, most importantly, establishing a baseline of lifecycle of GHG emissions across equipment, materials, and fuel infrastructure as well as ports and vessels and setting up implementation dates for targeted reductions.

Recognizing that shipping is responsible for 3% of global GHG emissions and counted among the hardest to abate sectors, US Special Presidential Envoy for Climate Change John Kerry called for greater action in achieving reductions.

"If shipping were a country, it would be the eighth largest emitter in the world," Kerry said in his opening remarks at the conference. "That must change."

Climate change advocates and analysts agree that action is needed now to enable the shipping sector to reach net-zero by mid-century as the US and other countries would like.

However, creating a green corridor is fraught with obstacles because the supply chains for low-emission fuels are not yet developed at scale. The first ships powered by ammonia and methanol for deep-sea trade are only expected to hit the water in the next two to three years.

That's why the green shipping corridor concept is so important. Its purpose is to "spur early and rapid adoption of fuels and technologies that, on a lifecycle basis, deliver low- and zero-emissions across the maritime sector, placing the sector on a pathway to full decarbonization," the State Department wrote.

The concept of setting green shipping corridors was enshrined at the UN COP26 meeting last November in Glasgow, UK, where the US joined 21 other countries in signing the Clydebank Declaration.

At least six seaborne lanes

The declaration, which Singapore also adopted a month ago, called for creating at least six green seaborne trade lanes where vessels can access zero-emission fuels on a pilot basis by 2025 before scaling up to more and longer routes, or more ships in the same corridors.

Prior to the Clydebank Declaration, the heads of US, Australia, India, and Japan held the first leaders' summit of the countries in September, a group that calls itself "Quad". At this meeting, the leaders agreed to set up a shipping task force that would be charged with forming at least "two to three two to three low-emission or zero-emission shipping corridors by 2030."

However, the State Department did not reference the 2025 target in the target or the Quad target of 2030 though in its framework. Instead, it wrote: "The United States envisions green shipping corridors as maritime routes that showcase low- and zero-emission lifecycle fuels and technologies with the ambition to achieve zero greenhouse gas emissions across all aspects of the corridor in support of sector-wide decarbonization no later than 2050."

State Department shies away from a target

The lack of a target makes the State Department's vision "vague," University College London (UCL) associate professor Tristan Smith who specializes in energy and shipping with the UCL Energy Institute, told Net-Zero Business Daily by S&P Commodity Insights.

"Instead of explicitly stating a target for creating these corridors or providing an explicit definition of what is meant by a green corridor, the State Department has provided a vague statement of its vision," Smith added.

The idea of creating a green corridor is to encourage early adoption of low-to-zero emissions technologies for long-haul shippers, he said. But setting the goal for the creation of a green corridor "no later than 2050" isn't pushing ahead of other aims for achieving net-zero carbon levels for the entire shipping industry by mid-century.

According to Smith, the shipping industry consumes 200 million tons of fuel each year in transporting goods across the globe.

If ships continue to use fossil fuels and remain unregulated, they could be responsible for 17% of global CO2 emissions by mid-century, according to a 2015 study by NGOs Seas At Risk, Transport & Environment (T&E) and the Marine Conservation Society.

The only way to reach the net-zero goal in 2050 is to make sure at least 5-10% of the bunker fuel consumed by this sector by the end of the decade is of the zero-emissions variety, such as green hydrogen or ammonia.

However, Madeline Rose, climate campaign director for California-based nonprofit Pacific Environment, is a little more optimistic. She told Net-Zero Business Daily the Pacific sees the State Department's statement as a "call to action" to US ports, states, and shipping companies to start the process of creating green corridors.

Granting flexibility to industry

The State Department said there are multiple pathways outlined in the framework through which a full decarbonized sector can be achieved and that offer maritime stakeholders the flexibility "to choose their path that suits their needs."

For instance, it said implementation of decarbonized corridors can be met through setting up alternative refueling or recharging infrastructure to support zero emissions port and terminal equipment operations; using support vessels and commercial harbor craft using low- or zero-emissions fuels and technologies; employing ocean-going vessels using low-emissions technologies and developing zero-emissions fuels; boosting greater use of electrified vessels; and increasing energy efficiency in vessel and port operations.

Los Angeles, Shanghai acting proactively

Already key ports and cities are taking notice, and not waiting on national governments to act.

In late January, the cities of Shanghai and Los Angeles in partnership with their ports, C40—the nonprofit forum for nearly 100 cities committed to tackling climate—and industry partners, which include shipping lines and cargo owners in China and US, committed to deliver an implementation plan by the end of 2022 for a green shipping corridor.

The trans-Pacific corridor is among the busiest container shipping lane globally, and it moved about 31.2 million, 21-foot equivalent containers across the Pacific Ocean in 2020, according to the 2021 UN Conference on Trade and Development.

The two ports intend to phase in low, ultra-low, and zero-carbon-fueled ships through the 2020s, with plans to introduce the world's first zero-carbon trans-Pacific container ships by 2030 by qualified and willing shipping lines.

The partners include A.P. Moller-Maersk, CMA CGM, Shanghai International Ports Group (SIPG), COSCO Shipping Lines, the Aspen Institute's Shipping Decarbonisation Initiative, facilitators of Cargo Owners for Zero Emission Vessels (coZEV) and the Maritime Technology Cooperation Centre-Asia.

Danish shipping giant A.P. Moller-Maersk is already part of a number of zero-emission coalitions, including the Zero-Emission Shipping Mission that has set an interim goal of putting at least 200 zero-emission vessels in operation, and having such ships account for 5% of bunker fuel consumption in deep-sea trade globally, before 2030.

Following through on its commitment to greening its fleet, Maersk inked a deal 10 March to power its newly ordered fleet of 12 vessels with 300,000 metric tons of green methanol that Danish utility Ørsted will supply from a site it is looking to develop in Texas along the Gulf of Mexico and have online by late 2025.

Shipping companies investing in fossil fuel-fired vessels

In Rose's opinion, the shipping companies are "the biggest problem" because they are investing multimillion dollars in fossil fuel assets instead of zero-emissions fleets. There are 600 ships on order right now, of which only 12 of those are carbon-neutral, she added.

"The shipping companies need to stop building out their fossil fuel business lines and only build and procure new zero emissions ships," Rose said.

Both Rose and Smith said there are actions that can be taken today that will reduce GHG emissions.

For starters, Rose said, "every single ship on the water can slow down" by employing the "slow steaming technology" that can result in a 10-30% of GHG emissions reduction per voyage.

On the international front, Rose said, the governors of California, Washington, and Oregon should champion a trans-Pacific zero-emissions free corridor. Likewise, New York and New Jersey can also push for something similar on the Atlantic. Domestically, "we see a fantastic potential to electrify the inland shipping corridors like the Great Lakes region, the Mississippi or even around the Juneau, Alaska," she added.

She said major retail owners like Amazon, Ikea, Walmart, and Target should commit their freights to green corridors. Pacific Foundation, Rose said, has been running a "Ship at Zero" campaign that calls on these companies to abandon fossil fueled ships and to only put their products on the world's cleanest vessels.

Amazon already has committed to electrify its fleet of on-road delivery trucks by 2030, Rose said. "We have been calling on them to extend that same commitment to the seas and move their products to zero emission ships, she added.

Posted 15 April 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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