Why ‘green fuels’ are nothing more than magical thinking for the shipping industry

A recent report revealed that shipping is creating more pollution in some UK port cities than cars. When ships are out at sea they are out of sight and out of mind. But this and the sheer scale of GHG emissions linked to shipping — around 3% globally — is an issue that concerns us all, especially with the heavy particulates emitted from shipping and their risk to human health when these vessels are alongside in our port cities.

Alternative or ‘green’ fuels such as ammonia and hydrogen receive a great deal of attention when it comes to discussions about how we can reduce emissions in shipping. These fuels are promising but in the case of ammonia in particular, there are serious concerns around handling the fuel – including its extreme toxicity and the lifecycle emissions from its production.

These fuels are also not drop-in solutions. We need vast amounts of funding to build new ships, or convert the engines of existing ships to run on these new green fuels. We will also need to see huge investment into land-based infrastructure for refuelling and storing the fuel.

These fuels are simply not immediate solutions.

Do ‘alternative’ fuels alone make commercial sense?

‘Green’ fuels don’t currently stack up economically but they are receiving significant amounts of investment and being positioned as the primary means to lower shipping’s emissions.

At COP26, the Clydebank Declaration set out the need to establish green shipping corridors as a possible mechanism to accelerate emissions reduction from the maritime industry. Its focus was on clean maritime fuels, but also clearly stated the importance of alternative propulsion systems to support a rapid transition.

Despite the good intentions, COP26 was over two years ago, and while some progress has been made, there are still gaps in making green fuels an attractive customer proposition. Other types of propulsion like wind have received very little attention. As an industry, we are not even completely aligned on what we mean by a ‘green corridor’.

A lot of research is going into alternative fuels but the commercial drawbacks are clear. A massive shift to alternative fuel production would require true green renewable energy for their production — that infrastructure just isn’t yet ready or sufficient.

Mass adoption will also require the shipping industry to retrofit new, larger engines on existing fleets – a process that is only appropriate for about one in ten vessels. Even for the vessels that do qualify the process is lengthy, taking 12 to 14 months and costing $5-15m per ship. Every day that a ship is docked to undergo exhaustive renovations is a day without revenue being generated.

Meanwhile, at ports around the world, significant investment would need to be made to land-side infrastructure to accommodate alternative fuels.

There is also still no consensus on the ‘best’ fuel and whether current supply can meet demand. Shipping is not the only sector vying for the supply of alternative fuels and ship owners will once again have to contend with scarce supply and market volatility as they do now with fossil fuels.

The focus on alternative fuels might be getting sharper, but in reality, we are not yet seeing any meaningful emissions reduction in line with science.

Breaking Big Oil’s monopoly

The industry has a big open secret, which is the reason why a fuel-centric approach is being pushed to reduce shipping emissions — Big Oil. Take the fact that 40% of shipping trade is fossil fuels and the conflict of interest becomes apparent. There is a symbiotic relationship between the fossil fuel industry and shipping; the result is that ship operators are understandably reluctant to sideline their primary customers.

The shipping industry has been calling for clarity through regulation to make greener investments with confidence, which will reduce its environmental footprint. However, the conflicts of interest we see with shipping and the fossil fuel industry and the financial implications tied up in this relationship make it hard to break.

Without coordinated international agreement on how to curb emissions in shipping, what we’re likely to see is nations like the US, China and the UK follow the EU bloc in bringing shipping under their own reduction regulations, creating a greater degree of market fragmentation.

The winds of change

Nevertheless, wind is slowly but surely entering into mainstream conversations as an essential part of the fuel mix for vessels.

It is a very different solution to alternative fuels — once a ship is equipped with the right technology to harness wind power, there is no cost for usage as wind is free at the point of use, and abundantly and exclusively available to wind-assisted ships. This de-risks the uncertain future for ship owners as it provides them with a degree of autonomy by partly decoupling their energy supply from volatile commodity markets. Wind routing software also allows ship operators to quantify the value of using wind on any route for a ship as well as optimising routes to ensure fuel savings.

There are approximately 60,000 ships in the global shipping fleet and it is calculated that nearly two-thirds of them are suitable for wind technologies. We need to make an irrefutable economic case for an emissions reduction solution in shipping and wind fits the bill. This is because by retrofitting ships with wind-harnessing technology, which can be done quickly, shipowners don’t need to buy new ships but can keep their existing fleet in use for longer. Solutions that work for shipowners can reduce uncertainty in the short term, help them meet regulatory compliance and reduce the time ships sit in port being modified.

We simply don’t have the time to wait for regulation or alternative fuels to catch up, nor do we need to wait when wind and speed optimisation technologies are straightforward solutions. We can help shipping reduce its emissions in line with climate science and these solutions are right in front of us now.

Diane Gilpin is the chief executive of Smart Green Shipping