Shipping is the backbone of the global economy, carrying more than 80% of traded goods. But it also accounts for almost 3% of man-made carbon dioxide emissions. If the world’s ships are going to decarbonize at the speed required by the Paris Agreement on climate change, the shift to clean fuels needs to be well underway by 2030. 

1. Which fuels could replace oil? 

Today’s merchant fleet is largely powered by marine fuels made from crude oil. Shipping fuels of the future must produce lower or zero emissions, but they also need to be storable, transportable and affordable and have enough power to propel gigantic vessels around the globe. Here are the main candidates:

• Ammonia

• Pros: Doesn’t emit CO2 and can be made cleanly by combining so-called green hydrogen with nitrogen from the air. It’s the World Bank’s favored fuel

• Cons: Less energy dense than traditional fuel oils, so needs about three times as much containment space, a challenge for ship designers; it’s also toxic for humans and aquatic life

• Methanol

• Pros: Methanol derived from the likes of plants or CO2 from renewable sources dramatically reduces carbon emissions vs traditional oil-derived fuels; liquid at ambient temperature so easy to store

• Cons: Also less energy dense than oil-based fuel

• Biofuels

• Pros: Can be made from substances such as vegetable oil and is compatible with several existing commercial marine engines and fuel infrastructure; some ships are already using them in small amounts

• Cons: Generally more expensive than fossil fuels, and a major increase in production would be needed to meet maritime demand

• Hydrogen

• Pros: Can be made without emitting CO2 for use in a ship’s engine or in a fuel cell

• Cons: Needs to be stored at either -253 degrees Celsius (-423 Fahrenheit) or under high pressure, so another headache for shipbuilders; it’s also explosive

• Liquefied Natural Gas

• Pros: A well-known, generally available, lower CO2-emitting alternative to oil-based fuels that some ships already use

• Cons: Still a fossil fuel and only cuts CO2 pollution by 25% vs oil; needs infrastructure and causes methane emissions. LNG’s supporters tout cleaner biological and synthetic versions for the future

• Nuclear

• Pros: Zero emissions, already used by some ships and highly energy-dense

• Cons: While fail-safe mechanisms are built into reactor designs, safety and security concerns likely make it unappealing to governments

2. What about renewable power and other options?

Today’s batteries lack the energy density to power globe-trotting ships on their own. A large container ship would need the power of 10,000 Tesla S85 batteries every day, according to the International Chamber of Shipping. But electricity is still an option for some vessels. The world’s largest electric ferry has entered service in Norway, while Asahi Tanker has ordered two vessels powered only by lithium-ion batteries. Wind can also help. Maersk Tankers has fitted rotor sails -- giant pillars on deck -- to an oil tanker, saving about 8% of fuel. Cargill has said it plans to add so-called wing sails to some of its cargo fleet. Carbon capture and storage on vessels is also under development. 

3. Why the urgency?

The shipping industry’s mid-century emissions target is miles away from what’s needed to align with the Paris Agreement’s goal of limiting global warming to 1.5 degrees celsius above pre-industrial levels. That would require shippers to achieve zero carbon emissions by about 2050, with steep CO2 reductions starting around the middle of this decade. However, the International Maritime Organization is currently targeting only a 50% cut in greenhouse gas emissions by 2050. Hitting net zero by then would require about 5% of international marine fuel to be zero CO2 by 2030, according to Jesse Fahnestock, head of research and analysis at the Global Maritime Forum.  

4. What are the latest developments?

Some governments are demanding faster action from the IMO. Putting a price on the CO2 emitted by ships is one way to close the price gap between today’s oil-based fuels and cleaner alternatives. The European Union has proposed including shipping in its Emissions Trading System. Financial incentives aren’t the only regulatory option on the table, however. Nations have also agreed to establish clean shipping routes called green corridors by mid-decade, while a group of big companies including Apple Inc., Trafigura Group and Airbus SE has committed to minimum levels of zero-emission fuels by 2030 in shipments. Shipping giant A.P. Moller-Maersk A/S has invested $1.4 billion in eight new ships that will be able to run on clean methanol, and the number of LNG-fueled ships on the water continues to grow. 

5. How much will all this cost and who’s paying?

About $1 trillion to $1.4 trillion of investment will be needed from 2030 just to halve emissions by mid-century, according to the Global Maritime Forum. The industry wants to create a $5 billion fund for clean shipping research and development, financed by a small charge on marine fuel, but it’s yet to be approved by the IMO. Proposals for a carbon levy vary widely, with countries including the Marshall Islands pitching $100 a ton of CO2 and Trafigura calling for as much as $300. A charge of $100 could result in an annual carbon bill for the industry of as much as $94 billion, according to Berenberg. 

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