Global Initiatives to Decarbonise Shipping

Siddharth Kaul

9 years: Renewable & Low Carbon Fuels

In this video, Siddharth’s explains the complex challenge of decarbonising the shipping sector and the wide range of efforts underway to tackle it. He explores international targets led by the IMO, regional initiatives like the EU Emissions Trading Scheme, and voluntary market tools such as insetting, offsetting, and book and claim systems. He also introduces innovative proposals like the Green Balance Mechanism, offering insight into how regulation, market incentives, and collaboration across sectors are all playing a role in steering shipping towards net-zero by 2050.

Shipping Sector

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Global Initiatives to Decarbonise Shipping

10 mins 53 secs

Key learning objectives:

Understand the scale and complexity of decarbonising the global shipping industry
Identify the key challenges in shifting from fossil fuels to zero-emission propulsion in maritime transport
Outline the International Maritime Organization’s (IMO) 2023 strategy and emissions reduction targets for international shipping
Identify the role of voluntary market mechanisms like book and claim, insetting, and offsetting in supporting shipping decarbonisation

Overview:

Decarbonising the shipping sector is a complex but urgent challenge, requiring a mix of global regulations, regional policies, and market-based solutions. While small-scale innovations like the wind-powered Ceiba demonstrate progress, they also highlight the significant gap between ambition and current capabilities. The International Maritime Organization (IMO) has set clear emission reduction targets, supported by mechanisms such as fuel standards and carbon pricing, while the EU has integrated shipping into its Emissions Trading Scheme to further drive accountability. Complementary market-based approaches such as insetting, offsetting, and book-and-claim systems allow both industry and non-industry players to participate in decarbonisation. Initiatives like Alcom’s maritime fuel-switching credits and the World Shipping Council’s Green Balance Mechanism aim to make low-carbon fuels more economically viable.

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Summary

What is the current project aiming to create a clean cargo ship in Costa Rica?

A team of researchers in Costa Rica is working on the construction of Ceiba, anticipated to be the world's largest clean cargo ship. As of March 2024, this vessel is set to carry 190 metric tonnes of goods and will be powered by wind and solar energy, employing zero-emission propulsion. The design will primarily rely on wind power, with auxiliary electric motors for port manoeuvres and low-wind conditions. Expected to be completed by 2025, Ceiba represents a step towards decarbonising the shipping industry, despite its relatively small cargo capacity compared to larger commercial vessels like Panamaxes and NeoPanamaxes.

What are the key challenges in shifting from fossil fuels to zero-emission propulsion in maritime transport?

The transition to zero-emission propulsion in the maritime industry faces significant challenges. The cargo capacity of clean ships like Ceiba is much smaller compared to traditional vessels, highlighting the scale of transformation required. Moreover, achieving zero emissions involves overcoming technological and economic barriers, such as developing sustainable fuel alternatives and ensuring these solutions are economically viable for widespread adoption.

What is the International Maritime Organization’s (IMO) 2023 strategy and emissions reduction targets for international shipping?

The International Maritime Organization (IMO) has outlined a 2023 strategy to achieve net-zero greenhouse gas (GHG) emissions from international shipping by or around 2050. The strategy includes checkpoints to reduce annual GHG emissions by at least 20%, striving for 30% by 2030, and by at least 70%, striving for 80% by 2040, compared to 2008 levels. This plan involves a basket of candidate measures, including a technical element for reducing marine fuel GHG intensity and an economic element involving a maritime GHG emissions pricing mechanism.

What are some regional efforts to address GHG emissions in maritime transport?

The European Union (EU) has extended its Emissions Trading Scheme (ETS) to include maritime shipping from January 2024, targeting vessels of 5,000 gross tonnage and above entering EU ports. The scheme covers 50% of emissions from voyages starting or ending outside the EU and 100% of emissions between EU ports. The EU ETS includes carbon dioxide, methane, and nitrous oxide emissions, with the latter two covered from 2026. The cap on emissions decreases over time to align with the EU's climate objectives, requiring shipping companies to purchase ETS allowances for their reported emissions.

How do market-based incentives like book and claim, insetting, and offsetting support shipping decarbonisation?

Market-based incentives provide mechanisms for supporting shipping decarbonisation beyond regulatory measures. The book and claim system allows for decoupling verified decarbonisation claims from the consumer, facilitating carbon credits. Insetting involves transferring decarbonisation claims within the industry, particularly useful for ship owners with access to biofuels. Offsetting allows third parties outside the industry to purchase maritime credits, for instance, logistics providers seeking to reduce their emissions. Companies like Alcom are developing methodologies to generate high-quality carbon credits from fuel switching to encourage participation and compensate ship owners for higher decarbonisation costs.

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Siddharth Kaul

Siddharth Kaul is the lead carbon project developer for Alcom Carbon Markets, a renewable energy and sustainability company. With two years of experience, Siddharth focuses on life-cycle assessment calculations for biochar, carbon accounting, methodological developments, and general project management. He holds a bachelor's in business and economics from Singapore and an MSc in economics from LSE in London. He previously worked for an oil and gas consultancy, focusing on LNG demand and supply dynamics in Asia.

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