Green shipping and the decarbonization of the industry have been coming for a long time. When Democrats took control of both houses of Congress and the White House earlier this year, it was no surprise that global warming and climate change concerns began sprouting up all around the beltway. Early executive actions, congressional hearings, and legislative proposals all took on a verdant hue, and the maritime industry has not escaped notice. With container shipping capacity extremely tight, supply chains stretched to the breaking point, and record industry profits, policymakers in Washington are looking at new rules and new ways to enforce old rules to decarbonize shipping.

House Lawmakers Look Toward A Carbon-Free Maritime Industry

Earlier this year, the House Committee on Transportation and Infrastructure, Coast Guard and Maritime Transportation Subcommittee held a hearing on a "Carbon-Free Maritime Industry".1 At the outset of the hearing, the Chairman of the full Committee on Transportation and Infrastructure Rep. Peter DeFazio (D-OR) reported that he has tasked every subcommittee to look at ways to reduce carbon emissions within its jurisdiction, and stated that ocean shipping accounts for 3% of global carbon emissions today, increasing to 10% without significant changes. Subcommittee Chairman Salud Carbajal (D-CA) noted the International Maritime Organization (IMO) goal of reducing carbon dioxide emissions 50% before 2050, and expressed hope that American industry would be able to innovate and lead the way into new energy technologies, creating green jobs at home and eliminating carbon emissions from vessels entirely.

Hearing witnesses presented contrasting views. A witness from the nonprofit research group International Council on Clean Transportation (ICCT) stated that meeting the IMO goal of a 50% reduction in greenhouse gas (GHG) emissions by 2050 relative to 2008 levels will require net zero emission deep sea ships on the water no later than 2030. The witness opined that the technologies to achieve this will include batteryelectric ships for near-port operations and short sea routes, hydrogen pressured or cryogenic fuel cells, and ammonia as a hydrogen carrier. He also suggested that wind propulsion and hull air lubrication may be deployed to aid in the competitiveness of zero-carbon fuels. However, the ICCT witness cautioned against reliance on liquefied natural gas (LNG) because of methane released during upstream LNG production and from the engine itself downstream, which may make LNG worse for the climate than conventional fuels when accounting for full life-cycle emissions. He also cautioned against reliance upon biofuels because of limited supply, the need to generate them from limited waste, and deforestation concerns.

The ICCT witness suggested that the U.S. Government take action to encourage the development and deployment of zero-emission vessels and fuels along with supporting port and electrification infrastructure, using the Jones Act fleet as a protected market launch platform for new technologies. He also suggested that the development of these technologies in the U.S. would position U.S. businesses to compete for the global deep sea vessel fueling market, contrasted with conventional bunkering hubs often located in overseas ports such as Singapore. Lastly, he advised the Committee that the U.S. should work with key trading partners, including China, Mexico, the European Union (EU), and Canada, to establish zero-emission vessel corridors and associated infrastructure, in addition to the zeroemission vessel cabotage trades proposal.

Striking a similar tone, a witness from the U.S.-based naval architecture firm Glosten called for significant new Federal investments led by the U.S. Department of Energy (DOE) and the U.S. Maritime Administration (MARAD). Also focusing on the domestic Jones Act fleet, the witness suggested that the DOE and MARAD together develop a strategic plan and timeline for achieving low GHG vessel technologies. First, he proposed significant new DOE funding of port infrastructure for electric vessel fueling and alternative fuel bunkering. Second, he proposed MARAD lead and fund collaborative technology development consortia among government, academia, vessel operators, and vessel developers such as Glosten, which was recently awarded a grant by the Federal Transit Administration to design an all-electric passenger ferry in cooperation with MARAD.

The World Shipping Council (WSC), which represents major container carriers in international liner service, also testified before the Subcommittee. WSC offered a marked channel forward to decarbonization through proposals pending before the IMO. Specifically, the industry has proposed to establish an International Maritime Research and Development Board (IMRB) and International Maritime Research Fund (IMRF) under IMO oversight to develop and fund the research work needed to create the technology needed for ships to use low and zero-carbon fuels. Industry advanced the IMRF/IMRB proposal in December 2019, further expanded and detailed in 2021, and it is slated for consideration by the IMO Marine Environment Protection Committee (MEPC) in Fall 2021.

Although meeting the IMO's 2030 GHG goal of increasing overall fleet efficiency by 40% is achievable by operational and design modifications to the current fleet based on fossil fuels, WSC asserted that achieving the 2050 IMO goal of a 50% absolute reduction in emissions will require new fuels and related propulsion, fuel storage, and fuel infrastructure systems not yet in existence. None of the current candidate fuels available today can power large ships in trans-oceanic routes, indicated WSC. Even the rosiest forecasts admit that battery solutions do not work at those ranges. Hydrogen, ammonia, and other fuels have been identified as potential replacements for fossil fuels, but present safety, storage, handling, and production challenges that must be overcome before they are practically available. Overcoming those challenges, or finding other alternatives technologies not yet conceived, will require a well funded, centralized research effort.

To meet the 2050 goal on time, the WSC stated that action must be taken immediately to set the standards for new builds today with a useful life extending 20- 25 years. Furthermore, the industry is keen on ensuring that there is a level playing field for all with shared lowcarbon fuel technology, shared international standards, and shared research and development costs allocated by a mandatory charge on each ton of vessel GHG emissions, expected to generate approximately $500 million per year over a 10-year period-or $5-$6 billion of industry funding. The WSC indicated that nationbased initiatives or regional initiatives are likely to lead to slower development, patch-work methods, and patch-work rules which may further delay development of the needed technologies and make compliance more challenging. For example, WSC noted that in the absence of prompt forward movement by IMO, the EU has begun unilaterally seeking to extend its own Emissions Trading System (ETS) to the global shipping sector by imposing extraterritorial GHG rules on the last voyage leg into the EU and last voyage legal out of the EU for all vessels calling EU ports. While some observers have suggested the EU's move is intended to spur IMO's progress, the threat is real and another reason to expeditiously move toward a global standard.

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Footnotes

1. Carbon-Free Maritime Industry: Hearing Before the Subcomm. on Coast Guard and Maritime Transp. of the House Committee on Transportation, 117th Cong. (2021).

Originally published by Fourth Quarter 2021 Benedict's Maritime Bulletin

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