Challenges of sustainability, energy transition of shipping industry

Conversation and pressure on sustainability and energy transition consistently takes centerstage in the transformation of the maritime industry. However, the intricate and complex requirements to start, sustain and succeed in meeting these demands are tossing stakeholders up and down in choppy waters. 

In an interview with Maritime Fairtrade, Susana Germino, chief sustainability & energy transition officer for Swire Shipping and its sister company, Swire Bulk, talked about the challenges to meet sustainability goals.

Susana Germino, chief sustainability & energy transition officer, Swire Shipping and Swire Bulk. Photo credit: Swire Shipping

Are the net zero carbon emission targets of the International Maritime Organization (IMO) feasible and practical? 

Achieving net zero carbon emissions in the maritime industry is a monumental task, and the IMO has set ambitious targets to reach this goal. However, the feasibility and practicality of these targets remain subjects of intense debate and scrutiny.

The targets set by the IMO are ambitious, aiming to align with the Paris Agreement’s goals of limiting global temperature rise and reducing greenhouse gas emissions. These targets are crucial for the global effort to combat climate change, but they also present significant challenges. Achieving net zero emissions will require substantial innovation and transformation within the industry.

The IMO’s midterm measures, which will outline the specific regulations to achieve these targets, are not expected to be finalized until next April. Without these detailed regulations, it is premature to definitively comment on their feasibility and practicality. The maritime industry is in a state of expectation and confirmation, waiting to see how these regulations will shape the path forward.

To ensure a successful transition to net zero emissions, additional measures will be necessary. Strategies such as pooling resources and implementing mass balance approaches could play a critical role. 

Pooling, for instance, can help manage costs and improve efficiency by optimizing fuel use across different segments of the industry. A financial measure is also necessary to bridge the gap between the cost of conventional fuels and green fuels. If the support is significant enough, it will encourage the adoption of these. 

One of the most pressing concerns is the availability and cost of green fuels. Currently, the production of green fuels and biofuels is limited, posing a significant challenge for the shipping industry. Transitioning to these new fuels will also be more expensive, adding another layer of complexity to the equation. Ensuring a steady supply of affordable green fuels is essential for the feasibility of IMO’s targets.

The shipping industry is not monolithic; different segments have varying business models and face unique challenges. For example, global tramping, which involves unpredictable routes and bunkering locations, presents significant difficulties in terms of fuel availability and cost management. This is where pooling becomes particularly important, as it can help mitigate some of these challenges by ensuring more predictable and efficient fuel use.

Swire Shipping participates actively in a number of forums which provide feedback to IMO to assess and review documentation, as well as advocating for clear pragmatic regulations that allow different paths for compliance. This is not only through the use of green fuels but also through the adoption of energy efficiency technology and measures. 

The World Shipping Council’s Green Balance Mechanism (GBM), which we support, is a promising approach to promoting green fuel adoption. By levying a fee on fossil fuels and allocating the funds to green fuels, the GBM can level the playing field and drive further investments in sustainable energy.

What do you consider when making decisions regarding sustainability of energy transition amid changing fleet profiles?

First of all, it is regarding the fuel. The feedstock availability, i.e., the capacity to maintain a steady product in the years to come. If a feedstock from a fuel has constraints, it is a challenge to ensure its scalability in the future. 

For example, the production of fuel – is it mature and happening? The truth is, currently there is very little green molecules production, and to ensure a long-term supply, fuel manufacturers expect long term offtake agreements that are contrary to the shipping industry’s business model. 

The geographical location of these fuels is also important to ensure that extra emissions associated with transport of the fuels are avoided.  Storage, logistics, and bunkering infrastructure for these fuels must be ready. Onboard storage, safety, and operations – in some fuels this is mature but in others it is in its infancy. Therefore, all safety aspects have to be considered, including crew training and upskilling for these new fuels as two examples. 

The business model (liner/tramping) really is a key place to start. The options available to both are different, and liner, due to its regular bunkering ports, is seen as a less complex segment to start. 

How has environmental, social, and governance (ESG) complicated business and operations?

Environmental compliance is a regulatory expectation and ultimately the responsibility of the Documents of Compliance (DOC) holders of the vessel. In Swire Shipping, we are fortunate to have a sustainability team in place since 2010, meaning the practice of sustainability is mature and well-integrated into our business. 

The monitoring and compliance of current environmental targets like Carbon Intensity Indicator (CII), EU Emissions Trading System (EU ETS (from 2025), and FuelEU Maritime Regulation are done by a fleet efficiency team which is part of the sustainability and decarbonization division. 

Voluntary targets in carbon intensity and adoption of energy efficiency technology are the combined responsibility of a number of departments including technical and operations.  This is probably the biggest shift – recognizing that having efficient vessels is no longer enough. It is necessary to ensure the operations of these vessels are conducive for the optimal efficiency that will have an impact on the outcome of each voyage.  

Top photo credit: iStock/ WANAN YOSSINGKUM

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