Nordic lead on shipping’s decarbonisation

Have Nordic countries laid down a roadmap for the rest of the world to follow when it comes to decarbonising shipping? New research from the International Transport Forum (ITF) believes so. Its recently published Lessons from the Nordic Region report concludes that Nordic countries are among those with the highest ambition and greatest number of maritime technology demonstrations in the world. Consequently, the Forum has showcased the pioneering efforts being made by Nordic countries to reduce the environmental impact of maritime shipping, aiming to encourage more cohesive global decarbonisation efforts.

The report, initiated by the Nordic Council of Ministers and funded by Nordic Energy Research, found that accelerated innovation is important in a sector dependent on long-lasting assets like ships and that policy is a “critical tool” to stimulate the deployment of maritime low-carbon technologies.

Pierpaolo Cazzola, project lead for the report at the ITF, said: “In the Nordic countries, both government and the private sector provide strong leadership in environmental questions. Nordic governments have understood that support for environmentally friendly technology can stimulate employment in the maritime sector and in ensuring its competitiveness.

“Government-sponsored research is thus often accompanied by industry partnerships and cluster initiatives that provide a fertile environment for innovation. Many of these schemes bring together multiple actors and ensure a full project cycle from research via the demonstration phase to market introduction and investment finance for customers willing to apply the new solution. This last step has been important to ensure that prototypes find their way into real-life application. It is an approach that holds many lessons for shipping nations seeking to decarbonise their fleet as quickly as possible.”

The report also found that liquefied natural gas (LNG) and methanol (when produced using fossil fuels) do not deliver significantly lower greenhouse gas (GHG) emissions than conventional marine fuels. Further, it claims that current policies that focus on direct CO2 emissions are failing as they do not account for other GHG emissions such as methane or emissions from upstream fuel production, creating “inappropriate advantages” for fuels such as fossil LNG.

Global recommendations

The ITF has proposed six recommendations from the Nordic research. First, the global shipping industry needs to increase the energy efficiency of new and existing ships. The research established that Norway, Denmark and other Nordic countries have proposed mandatory technical or design efficiency improvements for the existing fleet (labelled EEXI) and a mandatory operational goal-based measure with carbon intensity targets at the ship level. “Adoption of both proposals – or a proposal combining both measures – by the International Maritime Organisation (IMO) seems possible,” states the report. “It would help to achieve the IMO’s 2030 carbon intensity target to reduce shipping CO2 emissions by at least 40% from 2008 levels.

However, in an acknowledgement of the challenges, the ITF recognises that this would require both stringent engine power limitations in the EEXI-proposal, ambitious carbon intensity targets and sanctions if carbon intensity targets at ship level are not met.

The second recommendation calls for leveraging of public sector procurement to stimulate the electrification of short-distance shipping. Here, the ITF praises Nordic countries as a “world leader” in the electrification of short sea shipping and provision of onshore power supply. Specifically, the ITF proposes that electrification be expanded to harbour ships, tugboats and icebreakers by using the public sector’s buying power regarding maritime services.

A third recommendation stresses the need for regulations on lifecycle emissions of maritime fuels, calling on shipping stakeholders to support the adoption of a lifecycle (known as a well-to-wake) framework for assessing energy use and GHG emissions of shipping fuels. “Promoting an IMO standard or approval procedure for lifecycle-based carbon emission factors, including in the framework of the IMO Energy Efficiency Design Index (EEDI) regulation, is a near-term priority,” said the ITF. “This is particularly important for LNG, which reduces tailpipe GHG emissions but can have significant upstream GHG emissions.”

Carbon pricing proposal

Recommendation four suggests putting in place carbon pricing for shipping and policies that can reduce the carbon content of shipping fuels. The ITF proposes that inspiration be drawn from the initiatives in place in Nordic countries for carbon taxes, environmentally differentiated port pricing and electricity tax exemptions for shore power connections.

The fifth recommendation advises advancing the discussion on market-based mechanisms at the IMO, urging that Nordic countries support a review to map state-of-the-art carbon pricing (market-based mechanisms). “It could focus on policy practices developed over the last decade and also include findings of the IMO expert group on market-based mechanisms of 2010. From this review, a concrete proposal could be developed, that could assess the effectiveness and feasibility of measures such as, for example, a carbon levy, an emissions trading scheme, a low-carbon fuel standard or a hybrid approach,” said the ITF.

The final recommendation encourages the launch of pilot projects to gain experience with new fuels and accelerate the adoption of safety guidelines. Here, the Nordic countries’ many pilot projects for new fuels make it a “proving ground for the low-carbon shipping fuels of tomorrow”, said the ITF. “Norway in particular has played an important role in the development of international codes on the use, transport and storage of low-flashpoint fuels.

Research and additional pilot projects on promising fuels such as ammonia, liquid hydrogen and advanced biofuels, in a range of shipping segments, are important to address technical challenges associated with the use of new marine fuels.” The ITF added that in this context the capacity, experience and leadership of Nordic stakeholders are a “precious resource”.

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Source: Baltic Exchange