Claudio Ferrari: The shipping industry meets the challenge of climate neutrality

The main challenge for the maritime transport and related logistics industry in the coming years is undoubtedly the energy transition process. It is estimated that about 90% of international freight traffic uses maritime transport and that it contributes a few percentage points to the CO2 produced globally, from 2 to 4% depending on the source; nevertheless the choice of multilateral bodies in charge of regulating the sector, the IMO in primis, has been to aim for carbon neutrality by 2050, a horizon that appears rather close in time if one considers the average lifetime of a ship. At the regional level, the European Union in order to facilitate this transition process is funding some research projects (e.g. PIONEERS. MAGPIE, PERMAGOV, etc.) and has approved two instruments: the application of the Emission Trading Scheme (ETS) to maritime transport by extending the scope of the EU ETS (Directive 2003/87/EC) and the adoption of the FuelEU Maritime Regulation (Regulation (EU) 2023/1805) aimed at promoting the use of renewable, low-carbon fuels and clean energy technologies for ships.

Both provisions apply to ships calling at a European port and for this reason they have not been exempt from criticism by shipping companies operating on routes and markets that may be subject to competition from neighbouring ports but belonging to non-EU countries and therefore not subject to these requirements. This does not, however, seem to be the case for those operating in the Baltic Sea as all the countries facing it are members of the European Union with the sole exception of Russia, towards which strong trade sanctions have been imposed limiting its role in the geography of maritime cargo traffic, at least in the current scenario.

Achieving carbon neutrality in the shipping industry will require work on several fronts, as no truly green solutions - in a weel-to-wheels logic, i.e. including energy production and use phases - are yet ready, or at least not to the extent necessary to reduce the global shipping industry's CO2 production to zero.

Therefore, while maintaining the ultimate goal of carbon neutrality, it is necessary to define a pathway - it is no coincidence that this is referred to as a transition process - for its attainment with a significant reduction in emissions as the first objective. Approaches include the search for lower emissions through the use of new fuels (from LNG, which is already widespread in shipping, to biofuels, methanol, ammonia, etc.), batteries, rotors, sails, and the use of shore power systems while in port, as well as the search for lower fuel consumption through hydrodynamic solutions and innovations in propulsion systems that can ensure greater efficiency of ships. In addition, there are technologies for the recovery and treatment of the emissions produced, such as the widespread use of scrubbers and other solutions for carbon capture and storage; solutions that are also suitable for ships already in service in order to avoid excessively onerous retrofitting costs.

This concise and by no means exhaustive list shows how the sector is faced with a variety of possible solutions that makes the choice of the technological solution to invest in particularly complex and risks creating a ‘surplace’ situation that delays the necessary investments. In fact, it depends both on elements internal to the shipping company – as the type of ships used, the characteristics of the routes on which the ship is expected to operate - and on external elements involving the other players in the supply chain, from ports to terminal operators to the land-based logistics. This is a situation that is neither new nor uncommon in network industries and that can be addressed by working at the supply chain level, thus in the case of shipping through the creation of corridors around the sharing of a particular technological solution. This may be the case, for example, with corridors developed around the use of batteries that will involve not only investment in battery-powered ships but also the provision in the ports called by such ships of equipment that will allow batteries to be recharged or replaced (e.g. through the use of container battery storage), as well as dedicated battery yard spaces and battery maintenance services. This is similar to what is being done with regard to the corridors for the use of green hydrogen and its derivatives, methanol and ammonia, as fuels for ships. This way of proceeding may provide useful insights into the scalability of the technological solutions pioneered by each corridor, but it does not eliminate the risk for operators of investing in technologies that may fail to take off in the market or that may be overtaken by other technological solutions. To try to overcome this risk, it is necessary to involve regional or global stakeholders who should have an interest in not investing in a wide range of different technological solutions, but rather in replicating the choices already made on new corridors and new routes in order to exploit some kind of scale or scope economies.

Lastly, it should be borne in mind that the energy transition process is partially changing the role of ports which will tend to become nodes where energy production, storage and distribution are concentrated and that this process sees maritime transport as the first and main counterpart but in some ports the volumes of energy produced may well exceed the needs of maritime transport alone, thus being able to be offered to land-based logistics operators as well as to other industries of households settled in port regions. It is therefore possible that decisions on the technological solution to be invested in could be concerted by the shipping industry together with the regions forming the hinterland and foreland of the ports connected by a sea route, thus helping to reach the dimensional thresholds of demand that would justify the investments in energy production, storage and distribution while reducing the risk associated with the technological solution chosen. 

While the goal of shipping's carbon neutrality is now clearly identified and is shared by all players in the shipping industry, the road to achieving it seems still long and not without its pitfalls, but thanks to the cooperation of all players involved, including the new players in the energy and IT sectors, this goal can be achieved.