The shipping industry is under pressure to reduce emissions after environmental groups urged the European Commission to exclude liquefied natural gas (LNG) and biofuels as sustainable alternatives for vessels in an upcoming maritime fuel law in the European Green Deal.

In a letter dated May 12, 17 NGOs told the Commission to “explicitly exclude biofuels and fossil natural gas” from the scope of FuelEU Maritime, an initiative to increase the use of sustainable alternative fuels in European shipping and ports under the bloc’s Green Deal, which aims to make Europe climate neutral by 2050.

Instead, they call on the EU to focus on green electro-fuels produced from renewables such as hydrogen and direct air capture if the production of CO2 is required.

The group argues that biofuels should not be promoted in the shipping sector because they have sustainable feedstock limitations, while natural gas should be ruled out as it causes higher greenhouse gas (GHG) emissions than diesel when considering upstream and on-board ship leakages of methane – a GHG far more potent than CO2.

“The EU’s current relevant legislation ignores methane slip and leakages. Certain stakeholders with vested interests are aiming to maintain it like that,” the letter reads. “This runs the risk of the EU investing billions of euros of public money in fossil natural gas infrastructure and ships, which are doomed to become stranded assets if the EU is to reach climate neutrality by 2050.”

To prevent this, the EU must end its support for maritime LNG and ensure that FuelEU Maritime covers all emissions, including methane and is based on full life-cycle analysis, it adds.

Methane leakage is acknowledged by the European Parliament in an April document about the progress of FuelEU Maritime.

“When risks of leakages along its life-cycle are factored in, GHG emissions from LNG-run ships can be worse than those from ships running on conventional marine fuels,” it states.

However, it adds that given the availability and prices of alternatives, the fuel solution for a vast segment of international shipping for the immediate future remains a choice between a variety of fuel oils or LNG.

“Currently, LNG is the cleanest fossil fuel available at scale… running on LNG requires important investments both into the ship and into the port bunkering infrastructure. However, LNG, which is mostly methane, cannot much contribute to shipping’s decarbonisation.”

Maritime transport is responsible for nearly 3% of global GHG emissions, according to a 2020 report by the International Maritime Organization (IMO), the UN agency responsible for regulating shipping.

In 2018, the IMO set out ambitions to reduce shipping’s GHG emissions by at least 50% by 2050 compared with a 2008 baseline. It also aims to cut the carbon intensity of international shipping by 40% by 2030.

A spokesperson for the IMO tells GTR: “All options are on the table in terms of future fuels. Any proposals for regulation in favour of one or the other would need to come to the IMO for discussion.

“We know that low and zero-carbon fuels will be needed. A transition to a decarbonised future is required to meet our ambitions.”

They add that the IMO also has projects which are undertaking pilot studies into different fuels and auxiliary power, such as solar.


Moving along

The recent developments follow last month’s calls from the maritime industry for governments to tax carbon emissions from vessels to support shipping’s decarbonisation.

Shipping bodies BIMCO, CLIA, International Chamber of Shipping (ICS), World Shipping Council, along with other industry groups, submitted a proposal to the IMO, calling for it to bring forward discussions around market-based measures (MBMs).

“The common rationale in support of MBMs is to put a price on CO2 emissions in order to provide an economic incentive for a specific sector to reduce its emissions by investing in more efficient technologies and/or by operating in a more energy efficient manner,” reads the proposal dated April 21.

The shipping bodies, however, warn against unilateral carbon pricing initiatives like that of the EU’s Emissions Trading Scheme (ETS), which may soon extend to ships, as they create a “market distorting” solution to a global problem.

But for carbon pricing to work, viable alternatives to fossil fuels including LNG must be available; these alternatives do not yet exist for large trans-oceanic ships.

“Development of alternative technologies would be enabled by a massive acceleration of IMO co-ordinated R&D – to be financed by the industry – so that ocean-going ships will be able to switch to new fuels,” reads a release by ICS.

IMO member states and industry have put forward a proposal to create a US$5bn fund to provide the R&D needed to create the technologies to decarbonise the sector, it adds.

Other initiatives and efforts are also being rolled out to encourage the sector to reduce emissions.

The Poseidon Principles, launched in June 2019, is an agreement between banks and the shipping industry to integrate climate targets into ship financing.

The principles have established a global baseline to quantitatively assess and disclose whether or not financial institutions’ lending portfolios are in line with adopted climate goals such as those of the IMO.

At present, 26 financial institutions, including BNP Paribas, Citi and SMBC, are signatories to the principles, representing a bank loan portfolio to global shipping of approximately US$185bn – nearly 50% of the global ship finance portfolio.

Elsewhere, technology companies are making it easier to track ship emissions. At the end of last year, Pole Star, a maritime technology firm, partnered with carbon accounting solutions provider CarbonChain to integrate its emissions calculation tool for vessels into Pole Star’s PurpleTRAC platform.

Through the PurpleTRAC system, clients of Pole Star can screen and track ships for emissions levels as well as possible sanctions exposures.

Factors used by CarbonChain to determine the sustainability level of ships include fuel consumption, cargo weight and voyage distance. “We’ve found similar vessels can have a circa five times difference in emissions,” Adam Hearne, CEO and co-founder of CarbonChain, told GTR in December.