Green revolution for the world’s shipping fleet comes not a moment too soon

New regulations restricting the use of high-sulphur fuel have oil markets in a panic. But shippers are coming up with innovative solutions to power their vessels – essential for the future given that ships account for 90 per cent of world trade

David Dodwell

Published: 2:00pm, 29 Mar 2019

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Out of sight, out of mind, out on the open oceans, the world’s shipping fleet is bracing for an environmental revolution. It all comes down to “IMO 2020”.

While most of the global warming militancy has quite reasonably been vented on cars, planes, coal and power plants, the tawdry truth about pollution in the shipping industry has attracted increasing attention, not least in Hong Kong, which has one of the world’s busiest ports and owns about 3 per cent of the world’s ships.

The response of the International Maritime Organisation was, in 2016, to decide that the world’s shipping fleet would begin a massive clean-up from January 1, 2020 – hence “IMO 2020”. The deadline is now just nine months away.

Global warming and carbon dioxide emissions are just one of the shipping industry’s problems – and not the most immediate one at that. Since the 1960s, shippers have been doing the world’s oil refiners a favour by taking off their hands the viscous black sludge – literally the dregs of the barrel – that remains after diesel, petrol and other lighter fuels have been refined away. Dense in sulphur, particulates and other nasty residues, this unpleasant gloop is heated up by shippers and burnt out on the open oceans. No one has cared very much until the ships come close to port. No one recognised back in the 1960s that carbon dioxide emissions were a problem even when they were coming from a ship 1,000km from land.

The IMO rule, taking effect on January 1 next year, limits the sulphur content in bunker fuel to 0.5 per cent – from a current average of 3.5 per cent. Panic has spread through the world’s oil markets. What to do with the residual gloop that for so many decades the shipping industry has taken off their hands? The price of this stuff is expected to fall by perhaps 60 per cent or more. If ships switch to diesel or other lighter fuels used by cars, trucks and planes, what is the likely impact on these global fuel markets, and on the fuel bills of airlines and truckers? As one oil industry analyst noted last week, “the oil market still feels strangely paralysed by indecision”.

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And what will the impact be on the world’s shippers, already bleeding from low freight rates? The IMO 2020 rule will mean new costs. Shippers will not be allowed to use high-sulphur fuel, or sell it, so the challenge will be immediate.

Some of the initial responses have been simple and practical: by cutting their speed at sea, they can cut fuel consumption by about 10 per cent. Others say costs – and pollution – can be cut by up to 20 per cent by reducing the waiting time outside ports that can sometimes stretch to weeks, in particular for bulk carriers. A simple step here – but still not common practice – would be to allow shippers to book berths ahead of arrival.

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Other efficiencies can come from more energy-efficient ship design. But since the working life of a ship can stretch to 30 years, it is design decisions being made in shipyards today that will determine the technology in use when the 2050 deadline – for the industry to cut emissions by 50 per cent – looms.

Others have installed scrubbers to capture sulphur as the fuel is burned. The cost is high, and disposal of sulphur remains a problem, but for many shippers, it is a stopgap they have to use if they are to comply with IMO 2020.

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Global leader Maersk, which operates a fleet of 639 ships, has inevitably been in the vanguard of environmental solutions. Along with other Dutch multinationals including Shell, Maersk has committed itself to reducing all harmful emissions related to shipping. The container shipping company has also pledged to cut net carbon dioxide emissions to zero by 2050. As I write, one of Maersk’s 18,000 teu container vessels is taking the 40,000km round trip between Rotterdam and Shanghai on a biofuel blend (used cooking oil supplied by Shell). The aim is to reduce carbon dioxide emissions by 1.5 million kg and sulphur emissions by 20,000kg.

Further down the track, the industry is exploring a dizzying array of new technologies to power their ships, and to meet the 2050 target. Some are exploring battery power. Others, hydrogen or ammonia fuel cells. Still others are designing sails.

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In China, what has been called the first electric cargo ship is now at work nearby, on the Pearl River. The ship is small, and can travel just 80km on one charge, which means there is a long way to go before a Maersk Triple-E container ship can cross the Pacific on battery power. In an uncomfortable paradox, the Chinese vessel is currently being used to transport coal. As so often in China, one step forward, one step back.

Nuclear-powered ships have so far attracted little interest, despite the fact that navies around the world have been using nuclear power for many years. This comes down to a small matter of cost: an average 8,000 teu container ship today costs around US$60 million to build, one analyst has said – but a nuclear-powered ship would cost at least US$500 million using today’s technologies.

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Whatever the ripples across the world’s shipping industry, the IMO 2020 initiative provides a stimulus, and not a moment too soon. The global economic recovery pushed up energy demand by 2.3 per cent in 2018, according to the International Energy Agency. Although renewables grew at double-digit pace, 70 per cent of the uptick in demand was met by fossil fuels, adding 560 million tonnes of carbon dioxide emissions, and lifting the global total to a record 33 billion tonnes.

Shipping may account for just 3 per cent of the world’s greenhouse gas emissions at present, but without urgent action, the figure is set to increase dramatically if sea transport – which currently accounts for 90 per cent of global trade – continues to grow at its present rate. The world’s ships may be out of sight, but they certainly cannot be out of mind.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view

This article appeared in the South China Morning Post print edition as: Sea change in shipping

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