Container shipping moving towards green fuels

Major container shipping companies are busy buying new vessels which could run on clean or green fuels like green methanol, biodiesel, biomethane. Many of the big container shipping companies like China’s COSCO, Denmark’s Maersk have placed orders for dual-fuel ships, which will use green fuels where it is possible and fall back on fossil fuels where the price of green fuels becomes too high.

Container shipping is a small part of the maritime sector but it remains a major greenhouse gas emitter because container ships consume more fuel as they move faster. They deliver products for Walmart, Ikea, Amazon, Nike. The shipping sector greenhouse gas emissions amount to a mere three per cent of the global greenhouse gas emissions.

But the container shipping industry is moving faster towards green fuels. And many of the major container shipping companies complain that there are no clear policies to incentivise change towards green fuels because that would help stabilise investments in green fuel-run container ships.

It is curious that the industry – in this case container shipping companies --- are keen to change to green fuels and it is taking decisions to make the transition, while the governments remain quite indifferent to the issue. The United Nations’ International Maritime Organisation has set a 2050 deadline for zero carbon emissions for the shipping sector, but this does not seem to figure on the policy agendas of governments. It is a positive development that the container shipping industry is taking the initiative on its own. This could be an example for many other industries. It can be argued that the container shipping segment is a small one and it is easier for the few major players to take decisions. The fact that the decisions in the right directions are being taken in this sector is a heartening trend when the world is grappling with the ever rising threat of climate change, and the inability of governments and businesses to grapple with it effectively.

The interesting aspect of this green transition is that the operators are looking at various options of green fuels including ammonia and methane, apart from hydrogen. “We are headed in the right direction. It’s just going to be a portfolio of options,” said Heather Wood of the French container shipping company CMA CGM, which has invested $15 billion in new vessels that can run on a variety of fuels. The least attractive for the green activists is liquefied natural gas (LNG), which is relatively cleaner fuel compared to hard fuels like petrol, diesel.

Container shipping provides a good example that the right decisions – in this case, the green transition – can be made at smaller levels where the options can be worked out. If the right decisions are to be made at national and international levels to be effective, then it becomes so much more difficult to decide because of the number of players involved and their conflicting perspectives.

Climate change decisions are likely to be more effective if smaller groups take the initiatives, whether it be specific industries or businesses, or even local government authorities like municipalities. The deadlock at COP29 in Baku is understandable because 198 countries are involved. It would make much sense to devolve decision-making.

The macro-level decision-makers should confine themselves to set the broader goals, and leave it to the smaller organisations to find ways of meeting the targets. Goals can be set at global levels, and implementation should be at the local level. In the case of container shipping, the players – the container shipping companies – are making their own investments in appropriate technology and they are not looking for outside financial support. But the container giants would not be able to make the green transitions unless their main customers, that is Walmart, Amazon, Ikea and Nike, cooperated and shared the financial burden.