Blueprint for Zero Emission Projects from Getting to Zero Coalition
The Getting to Zero Coalition, which brings together more than 120 companies within the maritime, energy, infrastructure, and finance sectors, supported by key governments and IGOs, is warning that the maritime industry is running out of time to start efforts to meet the goals to half emissions by 2050.
The organization is launching a new report and series to provide a blueprint for the first wave of zero emission projects for the maritime industry. They believe it is urgent to launch a first wave of commercial scale zero emission shipping projects to test new technologies and business models.
“Shipping’s decarbonization cannot be achieved without collaboration,” said Randy Chen, Director and Vice Chairman, Wan Hai Lines and Co-Chair of the Getting to Zero Coalition’s Motivating First Movers workstream. “Forming consortiums will allow first movers to cooperate easily, diversify risks across multiple actors, enter into voluntary offtake agreements, and provide robust demand signals.”
To deploy zero emission vessels globally, new and existing stakeholders will need to work together in creating a new green shipping value chain, according to the coalition. Their new report catalogs the barriers to the early adoption of zero emission technologies throughout the entire energy value chain.
Prepared by the Energy Transitions Commission for the Getting to Zero Coalition, the report also calls attention to key actions that first movers can take to make tangible progress towards zero emission pilots over the next three to four years. Among the steps they are recommending is joining forces to fast-track technology trials and regulatory approvals. They are also urging the formation of consortiums with core value chain actors as other key action first movers can undertake to lower pilot costs.
They recognize that the decarbonization of shipping will require the creation of a new green shipping value chain. Though first movers will have to contend with higher investment and operational costs, the report contends that this can be mitigated through a green fuel premium, which would help distribute the additional cost throughout the value chain up to the end-consumer.
“Despite the higher business-to-business costs of operating zero emission vessels, the impact on end consumer prices is likely to be limited. The increase in the cost of a high-end athletic shoe will represent around 0.5-1 percent of the total cost,” suggests Michael Parker, Chairman, Global Shipping, Logistics & Offshore, Citi and Co-Chair of the Getting to Zero Coalition’s Motivating First Movers workstream.
The coalition is also recommending choosing pilot locations that offer privileged access to low-cost renewable electricity. Renewable electricity for the production of green hydrogen represents the largest share of the total pilot cost for the ammonia and methanol fuel pathways according to the analysis in the report. First movers they say can lower electricity costs at the outset by selecting the right geographical locations for the energy production and by entering into long-term corporate purchase power agreements to secure large volumes of clean power at the lowest costs.
To lower investment costs, they also recommend that early adopters also retrofit existing infrastructure, and establish industrial clusters of industrial sectors. Cost-lowering and de-risking strategies the coalition says can reduce the total costs of the first commercial scale zero emission pilots by 30-50 percent.
“The economics of zero emission shipping will depend massively on the cost of zero emission fuels. Commitments from cargo owners to procure “green shipping” services at a premium price will be crucial to unlocking the first wave of commercial scale projects. A combination of tactical corporate decisions reducing fuel costs, enhanced public support to investment, and collaborations across the maritime value chain can also boost the commercial viability of zero-emission shipping for first movers,” commented Faustine Delasalle, Director, Energy Transitions Commission.
To support the maritime industry’s energy transition the report also suggests that it will be critical for governments and shipping customers to play a crucial role in supporting the efforts. The report emphasizes that governments have to play a decisive role in supporting the shipping industry’s transition to zero emission. This ranges from direct grants, offering concessional loans to first movers, waiving electricity taxes and grid fees, co-investing in zero emission pilots, to exploring measures such as a carbon levy.
“By supporting first movers, governments can help generate the technology learnings and economies of scale that will allow the market to take over, similarly to the role governments has played within renewable energy technologies such as solar and wind,” adds Kasper Søgaard, Head of Research at the Global Maritime Forum, a Partner of the Getting to Zero Coalition.
The first wave of pilots will prove the technological and commercial case for zero emission shipping, create demand signals for fuel producers and engine manufacturers, set the template for regulatory measures, and provide the foundations of the long-term infrastructure needed for the decarbonization of maritime shipping. The analysis focuses on green ammonia and green methanol use in pilots involving containerships, but insights will be relevant for other potential zero emission fuel options.
Read the full report “The First Wave – A blueprint for commercial-scale zero-emission shipping pilots” online at the Getting to Zero Coalition.