KEEP THE CHARTERERS HAPPY
GREEN FUEL SHIPPING: GOVERNMENTS URGED NOT TO MISS THE BOAT
A new report published on November 15th from the Tyndall Centre at the University of Manchester highlights the major role the shipping sector will play in transporting the green fuels necessary to meet global climate goals. The report provides insights on the implications for the shipping sector of different global energy scenarios pushing to limit global temperature rise to 1.5˚C, in line with the Paris Climate Agreement and the opportunities for shipping to support the global low carbon transition.
To achieve the Paris Climate Agreement’s goals, the authors identify low-carbon hydrogen and sustainable bioenergy as essential. The study found that government policies, including guaranteed markets and prices for producers and consumers, were hampering investment in the shipping infrastructure needed to support the global energy transition.
According to the International Energy Agency, there is a huge gap between what is planned and what is needed for low-carbon hydrogen by 2030: already-announced projects will only produce 24 million tonnes by 2030. Only 4% of these projects have reached a final investment decision. Government policies must be strengthened to give low-carbon hydrogen producers, shippers, and consumers the confidence they need to invest. According to the report’s co-author, Professor Alice Larkin, the shipping sector is crucial in transporting green fuels to meet the Paris climate goals. To meet the Paris goals, we must scale up the production of green fuels. Bioenergy and hydrogen converted into ammonia are transported by shipping during this global energy transition. According to the study, ammonia and bioenergy could be transported by sea in the same way as gas and coal in the future. The green hydrogen supply chain would require around 20 large ammonia carriers every year. Due to the timeline of 2–3 years for building new vessels, shipping industry representatives said they needed certainty about hydrogen production as soon as possible. According to the report, governments should send “stronger market signals” to the shipping industry to reduce the fear of new ships not being used to transport low-carbon fuels. The International Chamber of Shipping commissioned and welcomed the report. In its report, the Tyndall Centre identified several ways that government policy can be made more effective at enabling investment. It may be necessary to create mandatory mandates for increasing the percentage of green hydrogen, to create production credits for hydrogen production, or to provide producers and consumers with guaranteed markets and prices. USA, Germany, and India have already tested such measures.
The International Chamber of Shipping Secretary General Guy Platten said: “The shipping industry knows it has a crucial role to play in reducing greenhouse gas emissions in the coming decades. Governments must develop much stronger policies to de-risk green hydrogen production before we invest. Both imports and exports of hydrogen must be supported by national hydrogen strategies. Despite the industry’s readiness, stronger market signals and infrastructure investment are urgently needed to make this happen. If the shipping sector can energize faster growth in sustainable fuels, it will be playing a pioneering role in closing the gap between grand theoretical plans and a real-world fit for future generations.