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COP27 casts light on shipping’s key role in decarbonisation

Climate talks in Sharm El-Sheikh highlighted how shipping’s decarbonisation can spur the process in other sectors, as well as support sustainable development.

14 December 2022
Shipping leaders at COP27. Credit: ICS

While concrete progress towards global targets was slight (apart from a last-minute agreement to plan a ‘loss and damage fund’ for climate-vulnerable countries), a series of pledges and projects revealed that shipping’s decarbonisation underpins wider ambitions.

New announcements were dominated by corporate pledges. They included a US$500 million decarbonisation investment from port operator DP World, as well as a brace of companies signing up to the First Movers Coalition. Members have committed to signing green technology purchasing agreements valued at US$30 billion by 2030, and now include 12 ship operators and several cargo owners, with Hoegh Autoliners and bulk charterer Rio Tinto the latest companies to join. To help make corporate pledges credible, the UN High Level Expert Group on Net-Zero Commitments published their guidance for non-government entities.

The ICS Clean Maritime Hubs initiative, designed to foster partnership between ports preparing for alternative fuels, announced three new government signatories, from Uruguay, Panama and Norway.

During the World Leaders Summit ICS Chairman Emanuele Grimaldi voiced the urgency to move promptly, “we have limited capacity in our shipyards and building the port and the people infrastructure needed is not a quick task, so both governments and companies need to start planning now so that investment happens at scale.”

Help for developing countries seeking to establish green corridors was another priority, with the US$1.5 million US Green Shipping Corridors Initiation Project a prime example. Pace is also picking up behind promises made to accelerate shipping’s energy transition a year ago at COP26 in Glasgow. The US and Norway-led Green Shipping Challenge collated 13 new and previously announced green corridor projects.

A Maritime Just Transition

There were also important moves to ensure that seafarers are a priority in shipping’s decarbonisation journey. The Maritime Just Transition Task Force was established by the International Chamber of Shipping (ICS), the International Transport Workers’ Federation (ITF), the United Nations Global Compact, the International Labour Organization (ILO) and the International Maritime Organization (IMO) at COP26. At this year’s talks the task force launched a ten-point action plan for upskilling seafarers to meet shipping’s decarbonisation goals.

Research commissioned by the task force identified that the jobs of up to 800,000 seafarers could be at risk by the mid-2030s without additional training in handling alternative fuels and new propulsion technologies.

Guy Platten, Secretary General, International Chamber of Shipping, said: “There is an urgent need to establish the infrastructure and training required to prepare our seafaring workforce, both in developed and developing countries, to help meet our decarbonisation objectives. This should be done as of today. Shipping cannot decarbonise without its workers. The action plan maps out a pathway for how this can be achieved.”

Part of the solution

Arguably the most novel aspect of this year’s talks was how shipping emerged as a pivotal player in the global energy transition. Not only will it be responsible for carrying the green fuel that will help to cut emissions in other hard-to-abate sectors, but its own need for alternative fuels can act as a crucial investment driver for the first projects.

Initial investments in infrastructure will be a valuable boost for developing countries. At a side event at COP27, World Bank Global Director for Transport Nicolas Peltier-Thiberge explained how its ‘client countries’, which include some of the world’s poorest economies, stand to benefit.

“Given their strategic geographic locations and energy resource endowments, there is a large untapped potential for zero-carbon fuel production in many developing countries,” he said. “Developing green fuel production in these countries will significantly advance economic development and yield climate co-benefits such as jobs, innovation and air quality improvements, at the same time putting client countries in a position where they can achieve many UN Sustainable Development Goals.”

Dr Charlotte Kirk of renewable power company Fortescue Future Industries attended COP27, hosting discussions and tracking the emergence of clean energy projects. Reviewing progress at the event, she explained that shipping’s demand for green fuels can spur a viable alternative fuels business that other sectors can benefit from.

“It was really positive to see how we are starting to think of shipping as part of the climate solution,” she said. “By building resilient global supply chains, providing an early source of demand and participating in early bankable offtake projects, shipping can enable the scale up of the green hydrogen industry and have a much broader impact on hard-to-electrify sectors.”

Host country Egypt also unveiled a slew of announcements, including eight green hydrogen projects, including a 100MW plant to be developed by Scatec under an agreement between the Egyptian and Norwegian governments. The role that shipping can play in such projects, not least how it accesses the green fuels it will need, will be one element for discussion under a partnership agreement between ICS and the Suez Canal Authority.


Evolving markets

Building on the growing awareness of shipping’s pivotal role in global decarbonisation, a side event organised by ICS explored how energy and shipping markets will need to evolve to align with the Paris Agreement goal of keeping global temperatures under 1.5°C above pre-industrial levels. Professor Alice Larkin of the Tyndall Centre at the University of Manchester revealed highlights of new research commissioned by ICS.

Larkin pointed out the gap between future renewable energy demand in the future and production capability today. Even considering projects already announced, only 4% of which have a final investment decision, there could be a 126 million tonne gap between production capability and demand for low-carbon hydrogen in 2030.

To fulfil that demand, and the increasing need for biofuels, shipping will also need to prepare for a shift away from conventional energy transport markets. The report identified that sea transport of ammonia and bioenergy in the coming decades could match shipments of gas and coal today.

The investment requirements at sea are as daunting as those on land. The report suggests that to carry the volumes of green hydrogen needed by 2030 – in the form of more easily transported ammonia – up to 20 ammonia carrying vessels a year will need to be built. To drive the development of green fuel production and transport infrastructure, strong policies and incentives are needed, and the report urged governments to act fast to enable the necessary investments.

Larkin concluded by encapsulating the understanding that had emerged across maritime discussions at COP27. “If the shipping sector can energise faster growth in sustainable fuels, it will be playing a pioneering role in closing the gap between grand theoretical plans and a real world that’s fit for future generations.”