The International Maritime Organisation’s (IMO) ambitious target of achieving net-zero emissions by or around 2050 has spurred significant interest in zero-emission fuels like green ammonia and methanol. While there has been progress in ordering vessels capable of running on these fuels, a key barrier remains: the substantial cost premium associated with them, according to Baltic Exchange
Aggregate Fuel Demand
The Global Maritime Forum encourages stakeholders to begin exploring opportunities to aggregate demand in their specific contexts. Governments are urged to include demand aggregation as a component in their policies to support the commercial implementation of zero-emission shipping.
This involves creating a supportive regulatory environment, providing subsidies, and investing in research, development, and demonstration programs. Governments should also consider differences between shipping segments, how demand aggregation may interact with regulations and subsidies, and opportunities to combine shipping and land-side demand when designing policy interventions.
Ports are encouraged to explore the potential to support pre-commercial action through engagement with customers and reflection on their likely position in the hydrogen economy. This can help clarify ports’ role in any commercial action. Additionally, ports can consider investing in infrastructure and facilities necessary to handle zero-emission fuels, such as bunkering stations and storage tanks.
Strategy Planning
Shipping companies are advised to assess the need for participating in fuel demand aggregation efforts against their commercial strategy and transition plans. They should also consider the legal and commercial feasibility of demand-led measures and seek opportunities to engage in testing real-world feasibility, such as through green corridors. By participating in demand aggregation initiatives, shipping companies can help create a more robust market for zero-emission fuels and secure long-term supply at competitive prices.
Finance institutions, including commercial banks, investment and development banks, and philanthropic investors, can also play a vital role. Commercial banks and investors can support supply-led action by providing financing for the development of zero-emission fuel production facilities and infrastructure.
Investment and development banks can explore opportunities to broaden access to zero-emission fuel through credit enhancement and/or market-making for shipping. Philanthropic investors can consider supporting convening organizations and financially contributing to zero-emission buyers’ alliances and market-making efforts.
By implementing demand aggregation measures, the shipping industry can accelerate the availability and use of zero-emission fuels, bringing us closer to a more sustainable and decarbonized future. This will require a collaborative effort from governments, ports, NGOs, shipping companies, and financial institutions. “Fuel demand aggregation can play an important role in accelerating the availability and use of Zero-emission fuels in shipping,” said the GMF. “Multiple approaches to implementing demand aggregation are available across different actors and the pre-commercial and commercial stages…”
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Source: Baltic Exchange
