U.S. Push for Carbon-Neutral Ships Expected to Reveal Industry Divisions

Posted by Francisca Macias

The Biden administration is calling for drastic cuts in shipping emissions, but some developing nations may not be on board

A new U.S. push to cut ship emissions will kick into high gear a multibillion-dollar quest for nonfossil fuels to power oceangoing vessels, but likely will face a backlash from Asian and South American nations that fear rising export costs.

The U.S. has stayed on the sidelines of a multiyear effort by the International Maritime Organization, the United Nations’ global maritime regulator, to slash CO2 emissions from ships by half in 2050 compared with 2008 levels. But in April, U.S. Special Presidential Envoy for Climate John Kerry signaled a change of stance, saying the IMO should push for the tougher target of zero emissions in that time frame.

“The United States is committing to work with countries in the IMO to adopt the goal of achieving zero emissions from international shipping by 2050 and to adopt ambitious measures that will place the entire sector on a pathway to achieve this goal,” Mr. Kerry said during a virtual climate meeting.

The move is part of the Biden administration’s policy to address climate change after bringing the U.S. back into the Paris Agreement to limit greenhouse-gas emissions. Under the Trump administration, the State Department told the U.N. in 2019 that it would pull out of the accord.

The American U-turn is set to bring to the fore divisions among IMO members when the body meets in 2023 to consider revising the 50% emissions-reduction target, which was agreed to in 2018, according to shipping executives and government officials who are involved in the organization.

Some members, including Japan and some Northern European nations, are expected to join the U.S. call for more stringent emissions cuts. But others, such as Brazil, Argentina and many African countries, are expected to push for compensation as a condition of backing a more ambitious emissions-reduction goal.

South American nations fear that the cost of exporting meat products, fresh produce and commodities would at least double if ships have to run on nonfossil fuels, which currently cost roughly 10 times more than conventional bunker oil.

“The IMO target for a 50% cut is already a tall order,” said Lars Robert Pedersen, deputy secretary general of shipping trade body Bimco.

The U.S. isn’t one of the countries that dominate the shipping business, ranking below Greece, China, Japan and South Korea. But the switch to noncarbon-based fuels would cost an estimated $3 trillion globally, and shipowners looking to raise funds to renew their fleets—some of which are listed in New York—must pay heed to U.S. regulations.

China likely would join developing countries in seeking exceptions to any new requirements or pushing for financial support and technology transfers to ease the transition to new ship fuels, according to people familiar with the IMO’s deliberations.

“While it’s encouraging to see more countries push for increasing the level of ambition to close to zero, there is a need to ensure no one is left behind, meaning more support will be required to other countries to achieve that more ambitious target,” said Roel Hoenders, head of air pollution and energy efficiency at the IMO. “Defining and agreeing on that support will be a complex issue.”

Many in the industry are skeptical about whether net zero by 2050 is achievable, including some people who approve of the aim.

“The U.S. involvement will trigger a lively debate and it will push the IMO to adopt more ambitious goals. Mr. Biden’s vision may be overambitious, but it’s on the right track,” said a senior executive at a Connecticut-based shipowner.

Thirty years might seem like a long time, but the target is already a priority for the owners of the approximately 60,000 ocean vessels that move the majority of the world’s manufactured products and commodities. Ships typically take two years or so to be delivered and remain in operation for around 25 years, so buying decisions made by shipping companies today could have major financial implications as emissions regulations get tighter.

Some operators are turning to ships that run on natural gas, seeing them as an interim solution that is cleaner than conventional bunker fuel, while others are holding out for zero-emissions technology to become cost-effective.

But the search for an alternative that will work for the entire industry is still at an early stage.

Ship engines that run on ammonia, hydrogen and biofuels are being tested, but the fuels aren’t yet available in the volumes needed, and all come with potential drawbacks. Hydrogen tanks occupy a lot of cargo space, ammonia is highly toxic if spilled in the water, and some biofuels require large areas of farmland to be devoted to plants such as sugar cane, which brings its own potential for environmental damage.

Achieving widespread availability of renewable fuels by 2030 would make it easier to move closer to zero by 2050, Mr. Hoenders said. “It’s about reaching that threshold where the fuels are available, the prices are reasonable and then you will see a massive uptake.” He said the availability of biofuels will be a key topic of debate at the 2023 meeting.

Mr. Pedersen of Bimco, the trade body, agreed that carbon-neutral shipping is technically feasible—despite his skepticism about the ambitious time frame recently laid out by the Biden administration.

“We don’t know how to do it yet, but it’s not impossible. If you can make one ship net zero you can make all of them, provided the economics make sense,” he said.

Source: wsj.com/articles


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