The year 2021 has been busy with worldwide public-private partnerships announced to pursue shipping decarbonization.
In April, Singapore launched the Maritime Decarbonisation Centre, to be funded with S$120 million ($90 million), half of if coming from 6 maritime companies and half from the Maritime and Port Authority of Singapore (MPA).
In early June, the governments of the United States, Denmark and Norway, along with the Global Maritime Forum and the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, announced a new Zero-Emission Shipping Mission. It will also be supported by the governments of India, Morocco, the U.K., Singapore, France, Ghana, and South Korea.
The most successful and pioneering initiative for public-private collaboration on low carbon shipping, however, started internally in Norway 6 years ago. The Green Coastal Navigation Programme was established in January 2015. At the start, it consisted of 16 private companies and organizations as well as 2 government ministries. In the spring of 2019, the program changed its name to the Green Shipping Programme to highlight its international ambitions.
Today, the programme has more than 80 participants, including cargo owners, shipowners, shipyards, ports, equipment manufacturers, fuel providers, service providers and governmental agencies. It is financed partly by public allocations from the state budget and partly by the members themselves. Members can learn from partners and even from competitors, while reducing the cost and accelerating investments in the energy transition.
In late May, the Capital Link Maritime Forum Norway was held digitally, with a panel focusing on coastal and short sea shipping. The discussion was moderated by Narve Mjøs from class society DNV, who is also the Director of the Green Shipping Programme.
The programme was the background connecting the 5 pilot projects presented, part of a total of 33 currently underway. They include the use of ammonia and battery-hybrid propulsion in passenger and car ferries, a hydrogen-powered coastal bulker and battery-electric autonomous ro-ro barges.
Trond Kleivdal, CEO of ferry operator Color Line, summarized the necessary steps, in his view, to accelerate the green transition: “We need to increase research and development efforts in finding technical solutions and safety measures regarding the use of different zero emission fuels. At the same time, we need to find energy efficient ways to increase green production and distribution of zero emission fuels. And thirdly, we need to reduce, one way or another, the price of these fuels, making them more competitive than they are today.”
Lars Erik Marcussen, Chartering Manager of Heidelberg Cement, and Kai Just Olsen, CEO of Asko Maritime, expressed the perspective of the cargo owners.
Mr. Marcussen stressed that “in order to facilitate a switch towards greener, newer, more sustainable ships, we as charterers, we as customers, we as cargo owners, have to step up and realize that we have a role to play in this as well. We need to make it possible for our partners in the shipping industry to justify the quite heavy expenses in capital investments. Even with Norwegian State funding, this is going to be expensive. So, we have to think long term, we cannot be shopping around on year-by-year rates, we are looking at doing a long-term cooperation for up to 20 years on a time-chartered vessel”.
Through the programme, Heidelberg Cement, who ships mainly from West to East along the Norwegian coast, found that Felleskjøpet, a grain cooperative, moved its cargo mainly from East to West. This means they could, together, achieve a round trip fulfillment of vessels and lower costs for an emission-free newbuilding. “This very much is a cooperation between two companies who don’t really have that much in common – grain and cement – but who need to solve their logistic needs using the same transport platform. And it’s through this kind of cooperation that we see that it’s possible to even build something as fantastic as the world’s first hydrogen-powered vessel”, added Marcussen, concluding, “I believe the Norwegian Green Shipping Programme should be copied in every single country around the world”.
Asko is deploying two battery-electric autonomous unmanned vessels, nicknamed “sea drones”, for moving 16 groceries trailers across the Oslo Fjord. Kai Just Olsen agrees with Marcussen: “If the cargo owner is waiting for a solution, it will take a long time. I think cargo owners must get involved and set requirements for climate neutral transport. The cargo owner must set the environmental requirements for the carriers and commit to a long-term freight agreement.”
Andreas Buskop, General Manager of shipbuilder Vard Brevik, and Egil Haugsdal, President of tech provider Kongsberg Maritime, also highlighted the substantial costs and technological risks involved, but assured cooperation is the way forward. “We wouldn’t be able to be where we are today without the collaboration of the Green Shipping Programme and the partners that we have there”, said Buskop.
To highlight the pace of change, Mr. Haugsdal mentioned that “there is currently about the same number of carbon neutral ships being built as it has been accumulated so far in history, in the world”.
Panelists also agreed public procurement is key for the success of the green transition, as illustrated by the Norwegian ferry sector, a world leader in electrification. Public entities can provide the demand for scaling up pilot projects. In Norway, tenders for ferry crossing’s capacity contracts estipulate strict emission limits. As a result, 70 battery ferries are already in operation across the country. Andreas Buskop adds: “47% of these are pure electric”.
Latin America almost does not have deep sea shipping companies anymore. But there are coastal and inland shipping operators who could lead the way.
Most of all, the continent has heavyweight cargo owners. Let’s take dry bulk as an example. Brazil exports hundreds of millions of dry bulk cargo every year, mainly iron ore, corn and soy beans. Argentina is another big grain exporter, while Chile and Colombia play important roles in dry bulk mining exports. Cargo owners, such as mining companies and grain trading houses, must step up and share the responsibility of shipping decarbonization efforts with shipowners.
This is even more true for the cargo owners of container shipments, who are closer to final consumers and more exposed to the pressure to decarbonize their supply chains. It’s their responsibility to work together with container lines. The same principle applies for tankers, ro-ro cargo, ferries and so on.
Latin America also does not have as deep pockets as Norway, and leading the green transition is an expensive undertaking. But isn’t doing nothing even more expensive? As Mr. Marcussen summarized: “A couple of years ago, you were crazy to invest in solar panels and hydrogen. Today, you are crazy not to”.
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