Clean shipping is so close, yet so far away. Around mid-July, the world’s first-ever methanol-fueled container ship is due to leave Maersk’s shipyard in Korea and head over to Europe, proving that heavy-duty transport too, can be low-carbon. But for green shipping, trucking, and aviation to go mainstream, customers and governments will have to make a hard U-turn, and that isn’t happening yet, insiders say.
Though we all depend on it, most of us know little about shipping (or trucking or aviation, for that matter), including its dirty little secret: The fuels that propel ships across the oceans are among the most polluting ones around, responsible for about 3% of global greenhouse gas emissions. To achieve our emissions objectives, achieving a greener way of transporting bulk goods is essential. So how do we get there?
This summer, one answer will come from that Maersk ship's maiden voyage, powered by green methanol produced by OCI, a Dutch fuel producer, at a site in Beaumont, Texas.
The pioneering project matters, OCI CEO Ahmed El-Hoshy told me, because the green methanol the ship runs on emits about two-thirds less in greenhouse gases than the fuels typically used in shipping. The bio-methanol OCI provides, made with bio-gas from waste, is also cleaner than traditional methanol, whose production from natural gas emits significant amounts of CO2.
Maersk’s methanol-powered ship is a big step forward. But it’s just one ship among millions. “It’s us and Maersk dipping our toes,” El-Hoshy said.
If the shipping and transport industries ever want to get to “net zero” or even “absolute zero” carbon emissions, many more ships will have to roll off the world’s shipyards and green methanol will need to be replaced by an even cleaner fuel. But those objectives so far remain elusive, El-Hoshy admitted. And in a way, all market participants and overseers are to blame. Shipping customers are tepid to demand clean transport, and governments are slow to provide carrots and sticks for the industry.
Demand has changed little: 80% of global orders for new ships today are for fossil-fueled ships, El-Hoshy said. With an average lifespan of several decades, ships for the most part will continue to be heavily polluting long into the future. And as long as demand doesn’t change, supply won’t either, he said.
The same is true for clean fuels like green methanol and even more so ammonia, which El-Hoshy calls the “holy grail” for heavy-duty transport. Unlike methanol, ammonia can be made fully carbon-free, in a production process that involves hydrogen. But if green methanol is already pricey, ammonia is even more so, and the first engines that run on it aren’t expected until 2026. Widespread adoption is even further off.
I heard similar remarks from executives from the hydrogen industry, who joined me in a Vivatech panel on hydrogen in Paris earlier this week. European companies like EDF (Electricité de France), Hydrogenious, and Air Liquide are all bullish on what hydrogen-enabled methanol and ammonia can do for shipping and other heavy-duty transport like trucks, planes, and buses. For the nascent green transport industry to take off at scale, buyers and governments will need to give the industry a bigger push, they said.
The decarbonization of shipping and trucking need not be viewed as a chicken-and-egg problem, though. Ignacio Galan, executive chairman of Iberdrola, the world’s largest producer of renewable energy, is a proponent of the “build it and they will come” approach. Iberdrola already operates Europe’s largest hydrogen plant. For it and other types of clean fuels to be more successful going forward, he says, “It’s not only about price. It’s also about reliability and availability.” It's not just about dipping your toe, he says, but going all-in.
More news below.
Peter Vanham
Executive Editor, Fortune
peter.vanham@fortune.com
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This edition of Impact Report was edited by Holly Ojalvo.
