BALANCING CONNECTIVITY REQUIREMENTS WITH ENVIRONMENTAL RESPONSIBILITIES

Like many industries, the shipping sector is coming under pressure to reduce its environmental impact. According to the IMO, shipping accounts for around three percent of global carbon dioxide emissions, with more than half of maritime emissions originating from ships berthed in ports.

In 2023, the IMO will introduce directives to reduce maritime greenhouse gas emissions and mitigate the environmental impact of ships, including carbon intensity indicator (CII) regulation, which will require fleet owners to calculate their attained Energy E ciency Existing Ship Index (EEXI) and report their annual operational CII and CII rating.

To meet these new requirements, shipping companies are being pushed to retrofit vessels with energy-e cient technologies and deploy alternate fuels such as low and high sulphur, LNG, biofuels, methanol, methane, ethanol, ammonia, and green hydrogen. Demand for dual-fuel vessels has also increased, as fleet owners look to hedge their options.

However, there are significant costs and risks to this process. Alternative fuels are more expensive than conventional options, reducing their commercial viability, and there is currently no clear path for an industry transition, so companies may need to look at developing a multi-fuel portfolio ahead of the emergence of an agreed industry standard. In addition, the shift to alternative fuels and low-emission shipping requires cross-industry support to be successful. Ports will need to provide alternative refuelling facilities and low-emission energy infrastructure, as well as increasing protection and clean-up resources to manage bunker spills and other emissions, to achieve environmental goals.

The long-term risk is the creation of a two-tier system of ports and providers in which only the elite minority can manage the transition to alternative energy and meet regulatory requirements. Such a scenario would further impact connectivity, by limiting the willingness of multinational corporations to use non-compliant shipping services and further reducing the viability of frontier ports outside of those in ‘green corridors.’

“It’s an interesting challenge, because most of the industry believes we should make the move to alternative fuels, but there isn’t a clear path to success as yet or business models to make the transition economically viable,” said one US-based maritime executive.