3 ways unique partnerships are decarbonizing shipping

Shipping remains one of the hardest industries to decarbonize, but at the same time, it serves a critical role in facilitating global trade, moving over 80% of internationally traded goods.

It is also one of the founding sectors of the First Movers Coalition (FMC), a collective of leading industry players from seven hard-to-abate sectors working to aggregate their purchasing power, prompt more investments in zero-emission solutions, and send out a signal to scale their production. Under the FMC, 16 companies within shipping have committed to having 5% of their deep-sea shipping powered by zero-emission fuels by 2030 or to move at least 10% of the volume of their goods on such vessels by 2030, increasing to 100% by 2040. If these commitments are met, it will remove an estimated 4.2 million tonnes per year in GHG emissions by 2030.

Partnership is key to tackling climate progress. Here’s how FMC members are working together in unique ways, shedding light on how collaboration can break down barriers to scaling zero-emission solutions.

1. Scaling deployment of zero-emissions shipping fuels

The maritime transport industry is focused on the importance of sustainable and low-carbon energy, with decarbonization being a top priority. Zero-emissions ammonia, produced from low-carbon hydrogen, is emerging as one of the next-generation fuels because it does not emit CO2 when burned.

To scale its distribution, Yara Clean Ammonia, the world’s largest trader and distributor of ammonia, and Höegh Autoliners, a leading global ocean transportation provider, have agreed on a future supply deal for clean ammonia. Last spring, the two companies signed a letter of intent regarding clean ammonia supply and distribution using Höegh’s Aurora-Class PCTC vessels. The 12 vessels are equipped to operate on zero-carbon ammonia and methanol and will be some of the most environmentally-friendly car carriers ever built. They will come into operation starting from 2024 and will support Yara in its efforts to slash more than 30% of its emissions by 2030.

This effort demonstrates the potential for clean ammonia as a future maritime fuel and its significant role in addressing global maritime transportation emission challenges. Tapping the global distribution and infrastructure these companies provide are key to accelerating emerging markets and unlocking green value chains. Magnus Krogh Ankarstrand, President of Yara Clean Ammonia, said: “Building clean ammonia value chains is critical to facilitate the transition to zero-emission fuels by enabling the hydrogen economy.”

2. Research that keeps zero-emission solutions and infrastructure on track

Partnership has made research possible that can help businesses scale action. In May 2023, the Western Australia-East Asia Iron Ore Green Corridor Consortium released the results of a special study on the feasibility of deploying ships powered by clean ammonia on current iron ore trade routes between West Australia and East Asia. The consortium, a collaboration between the Global Maritime Forum, BHP, Rio Tinto, Oldendorff Carriers, and Star Bulk Carriers, and a number of value chain partners (e.g., potential clean ammonia producers), found that more than 20 vessels could sail along the corridor on zero-emission ammonia, reaching 5% adoption by 2050. An estimated 360 vessels could sail this corridor by 2050.

The study drives home that the key technologies, such as suitable engines, are on track for development, enabling the deployment by bulk carriers such as Rio Tinto (one of the largest bulk carriers in the world) in the near term.

Such research helps to keep a range of stakeholders informed and on track for what’s needed next. “While there is no silver bullet,” said Rio Tinto’s Head of Commercial Operations, Laure Baratgin, “we believe that industry collaboration and a supportive, global regulatory environment are key to unlocking shipping’s access to zero-emission solutions.”

3. Demand and collective action through procurement

Collaborative procurement can help create much-needed markets for sustainable fuels. A number of examples show how the shipping industry is making this happen.

The Zero Emission Maritime Buyers Alliance (ZEMBA), initiated by the Aspen Institute, recently partnered with world-leading cargo owners to launch an RfP with hopes of attracting bids from suppliers of zero-emission ocean transport through signalling strong demand.

Amazon, a founding member of the FMC, has been instrumental in getting the ZEMBA RfP off the ground. With a goal of reducing its scope 3 emissions, the company is supporting joint efforts under ZEMBA to ship 600,000 TEUs (twenty-foot equivalent units) on zero-emission vessels over a time-span of three years – which will result in close to 1 million metric tonnes of carbon emissions reduction.

Support of the ZEMBA zero-emission fuels tender, said Amazon’s Head of Climate, Sustainability and Environmental Policy, Teresa Christopher, will provide clean fuels in the short-term while sparking industry-wide progress on the timeline needed. “Early adoption matters.”

Powerful signals through procurement is first and foremost also evident through individual FMC member actions. Maersk ordered the world’s first dual-fuel green methanol vessel back in 2021 and the vessel recently embarked on its maiden voyage, travelling a distance of 21,500Km from South Korea to Denmark. Green methanol can be derived from biomass or green hydrogen and can reduce emissions from vessels by up to 95% in comparison to traditional bunker fuels.

Maersk has just announced an agreement to purchase 500,000 tonnes of green methanal a year to power its dual fuel vessels – with production envisioned to commence in 2026. The company has also announced orders of 26 additional dual-fuel methanol-enabled vessels to be delivered between 2026 and 2027, with the aim of cutting its GHG emissions by an estimated 450,000 tons of lifecycle CO2 equivalent per year. Expansion of its zero-emission fleet will support Maersk’s goal to decarbonize transport of 25% of its ocean cargo by 2030.

Morten Bo Christiansen, Senior Vice President, Head of Energy Transition, A.P. Møller-Maersk, said: “Maersk is demonstrating its purchasing power by ordering zero-emission vessels and fuels in order to meet our target of net-zero emissions by 2040.”

Looking ahead

To accelerate the pace of progress, FMC members are engaging in programmatic activities that enable strategic action to scale and deploy zero-emission solutions in the run up to 2030. For example, a new focus on surfacing supply through the establishment of a supplier database is set to be launched during the World Economic Forum Annual Meeting in 2024. This database will be key because it will feature vetted suppliers of near-zero-emission products and services within the FMC scope to support member procurement efforts across all seven sectors.

This effort is complemented by a series of scoping workshops held in key emerging economies at the forefront of supplying clean fuels and technologies, with the goal of bridging gaps as 2030 approaches.
Source: World Economic Forum