The Environment

Corporate Buying Power Can Be Harnessed to Decarbonize Shipping

August 12, 2020  • Ingrid Irigoyen, Jonathan Lewis, Ned Molloy, Dr. Nishatabbas Rehmatulla & Natacha Stamatiou

The shipping industry is the lifeblood of global trade—around 80 percent of global trade travels by ship. Yet because ship traffic is, by its very nature, international, it is exceedingly difficult to regulate. Consumers rarely interact directly with shipping entities, and so this vital component of the transportation network and supply chain is effectively ‘out of sight out of mind’, unless you live next to a busy port breathing in the harmful air pollution from ships. Thus, we must consider the environmental impact of more than fifty thousand ocean-going vessels perpetually flowing from point to point all over the planet carrying everything from toys to Toyotas and coal to Coca-Cola.

Today, every one of those vessels and voyages is powered by burning fossil fuels, making the oft-forgotten industry a massive emitter of greenhouse gases and other harmful pollutants responsible for causing health problems and 200,000 premature deaths globally each year. Annual emissions from shipping are equivalent to the entire national output of Germany, the world’s sixth-largest national emitter, and on the current trajectory, vessel emissions are projected to increase up to 130% by 2050. It is critical that the shipping industry quickly lower its emissions to align with science-based targets that limit global warming to 1.5 degrees Celsius.

Source: UMAS (2019)

The International Maritime Organization has committed to reducing greenhouse gas emissions from international shipping by at least 50% by 2050 (compared to 2008 emissions), with a strong emphasis on ultimately reaching zero emissions.​ Neither this target nor the stronger 1.5 degree Celsius pathway, can be achieved with efficiency tweaks alone. The only way to achieve the level of reduction needed in the next decade is to accelerate a full transition away from fossil fuel-powered ships to those powered by zero-carbon fuels. Like many other parts of the economy for which direct electrification of battery use is not economically viable, shipping can use renewable energy stored as hydrogen or a variant of hydrogen. Current technology puts hydrogen-based fuels at the forefront of likely technologies on the basis of cost-effectiveness, scalability, and sustainability.

Hydrogen-based fuel production from electrolysis via renewable energy is creating a pathway for zero-carbon shipping fuels that, in many cases, can be deployed in existing ship engines. Building toward large-scale production and distribution of these fuels is essential to rapidly decrease the industry’s annual greenhouse gas emissions. This transition will be expensive and require a significant investment of time and money to build, outfit, and place the first truly zero-emission cargo vessels into service, and under a business as usual scenario, the shipping industry has little motivation to make the change. Since shipping companies are not public-facing brands—consumers don’t ever interface directly with a vessel owner—they don’t encounter the same public pressure to account for their pollution as corporations with household names.

Annual emissions from shipping are equivalent to the entire national output of Germany.

However, there is a clear path that can lead ship owners to initiate this transition, and it starts with those same public-facing brands—the cargo owners that are the shipping industry’s biggest customers. Many major cargo owners have made commitments to reduce emissions across their operations and supply chains over the coming years, some ambitiously aiming for net-zero emissions and alignment with a 1.5-degree trajectory. For these brands, becoming a first mover in stimulating the transition to zero-carbon transoceanic shipping can be a key component of those strategies.

As public-facing global brands strive to reduce their environmental footprints generally, and their supply chain (scope 3) emissions in particular, they have an important opportunity and responsibility to address pollution from maritime shipping. A precompetitive initiative, supported by a coalition of cargo owners that have already issued public declarations of their commitments to reduce greenhouse gas emissions throughout their supply chains, would maximize the impact of their corporate buying power, eliminate first-mover disadvantages that would otherwise impose higher costs on the most progressive companies, and inspire accelerated adoption of ambitious targets for transitioning to zero-emission shipping. Cargo owners coming together to commit enough cargo to fill the first zero-emission shipping route for a set duration of years would give investors confidence in a business case to build the first zero-emission vessel for transoceanic shipping.

Corporate participation in such an agreement also acknowledges that the decarbonization of shipping is inevitable as societal and regulatory pressures about climate change grow. The question is no longer if a transition away from fossil fuels will happen, but how to facilitate this transition in the smartest, cheapest way that minimizes disruptions to the container freight business. The companies that choose to be inside the circle of zero-carbon supply chain pioneers will gain brand benefits as consumers will respond favorably to responsible corporate policies, as well as the opportunity to help shape resulting initiatives in ways that support their overall sustainability objectives.

A New Initiative

For these reasons, and building on several years of research and advocacy by our organizations and other partners, the Aspen Institute, in collaboration with University College London’s Energy Institute, Clean Air Task Force, ClimateWorks Foundation, Environmental Defense Fund, Ocean Conservancy, and others, is launching the Cargo Owners Zero Emission Vessel Initiative (coZEV), a highly ambitious coalition designed to fill this need. Specifically, we are creating a precompetitive platform for cargo owners to develop and make joint commitments to:

  • Provide specific volumes of freight over time to the first zero-ready ocean-going vessel(s)
  • Set a target for exclusively buying zero emission maritime freight service by a future year
  • Urge carriers to meet specific GHG reduction benchmarks with existing technologies and operational methods now

The coZEV Coalition is eager to partner with corporate leaders to help accelerate implementation of technology and innovation and play a significant role in reducing global greenhouse gas emissions and fighting the existential planetary threat of climate change. We encourage all interested individuals and organizations to reach out to learn more about our initiative and to join the coZEV Coalition in support of an environmentally and economically sustainable global shipping industry.

For more information, please contact Ingrid Irigoyen at [email protected]

Ingrid Irigoyen is the deputy director of the Aspen High Seas Initiative; Jonathan Lewis is senior counsel at Clean Air Task Force; Ned Molloy is a consultant on shipping, energy markets, and environmental regulation; Dr. Nishatabbas Rehmatulla is a senior researcher at the University College London Energy Institute UMAS; and Natacha Stamatiou is a research analyst at the Environmental Defense Fund. Michael Conathan, executive director of the Aspen High Seas Initiative and Kitty Pollack, program coordinator at the Institute’s Energy & Environment Program also contributed to this piece.