Major ocean container lines have aggressive targets for reduction in CO2 emissions from their ships, more ambitious (for now) than goals from their regulators at the International Maritime Organization (IMO), and they are backing it up with their order books for new Green vessels.
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Drewry believes decarbonization targets will only get more ambitious over time as lines battle it out “in a game of eco marketing one-upmanship.” |
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According to the maritime analysts at Drewry in a research note this week, “Sustainability/ESG filings certainly provide more clues on the long-term direction that carriers are heading, filled as they are with pledges on how each will help the industry go beyond the current decarbonization target of the International Maritime Organization (IMO).”
The current IMO goal is to reduce shipping’s greenhouse gas emissions by at least 50% by 2050 compared to 2008 levels.
Among the 10 largest container lines, which together operate approximately 85% of the active containership fleet, eight have confirmed net zero targets by 2050 at the latest. Cosco, is aiming for new zero by 2060, in line with all Chinese state-owned entities, while Taiwanese carrier Yang Minhas not explicitly said that it will aim for net zero by a specific date, though saying it is committed to the IMO’s targets.
Drewry adds that “while the net zero target dates, interim goals and methods do vary between carriers, the common thread is a commitment to buying more fuel efficient and less polluting ships to replace the dirtier units that have been the workhorses of global trade for decades.”
In support of that statement, Drewry’s research note includes the chart below, which shows the growth overall of alternative fuel ships and as a percent of the total order book for a year. Which has been very strong in 2021-22 and so far in 2023.
So how long it will take the so-called “eco” container ships to take the lead within the active fleet?
Drewry says that timetable will depend on three factors; their density in the orderbook, the retrofitting of existing ships to adopt alternative fuels and/or other energy-saving technologies, and the speed at which older ships are demolished.
“Good progress is being made on the first part, more slowly on the second, and even slower on the third,” Drewry says.
But the changeover will take some time. Right now, 97% of the active container fleet as measured by teu capacity has their main engines powered by bunker fuel derived from crude oil, though that has been somewhat ameliorated by the recent mandated use of cleaner bunker fuels or use of onboard scrubbers.
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Drewry also smartly notes that making lofty decarbonization targets is the easy part, while delivering on those pledges is a lot more challenging.
“Shipping executives might have been tempted to chase the “green sheen” today by promising something undeliverable for 25+ years, safe in the knowledge that they will likely be enjoying retirement by then, but the commitment does seem genuine,” Drewry notes.
There is currently a 20-year high-low spread (Maersk to Cosco) for net zero targets among the leading carriers. Drewry believes decarbonization targets will only get more ambitious over time as lines battle it out “in a game of eco marketing one-upmanship.”
What’s more, a committee of the IMO is meeting this week, with many expecting a new target of net zero by 2050, matching many of the carriers. Some shipowners want the IMO to go even further and outlaw the newbuild purchases of bunker-fueled ships and mandate the scrapping of said vessels over 20 years old, with implementation sometime in the next decade or so.
Drewry, however, says any plan reliant solely on replacing existing ships with new builds will likely take too long. It notes that giant Maersk Line says that mid-next year it will retrofit one unspecified existing ship in its fleet to become a dual-fuel methanol powered vessel, repeating the process for sister vessels in 2027.
Drewry concludes by stating that “It is easy to lose sight of the bigger picture when wrapped up with short-term concerns such as the direction of freight rates or port throughput. But such matters only carry transitory importance and are quickly forgotten. What will be remembered in future years is what the shipping industry did to reduce its environmental impact on the world."
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