As the IMO’s 2050 deadline to cut GHG emissions by 50% gets ever closer, identifying ways to coordinate and scale up decarbonisation efforts is vital if the maritime industry is to make meaningful progress. Green corridors – specific routes linking major port hubs that support zero-emission solutions – show great promise as a way to speed up the pace of the voyage towards net zero.
Last year’s COP26 climate change conference in Glasgow saw a coalition of governments issue the Clydebank Declaration, which seeks to establish green corridors – routes where the economic, logistical and political conditions are favourable to zero-emission shipping and where rapid deployment of solutions can be supported by combined policy and industry action. The 22 signatories committed to establish six such corridors by 2025, with the goal to accelerate the development of fuels, infrastructure, legislation and regulation.
“The declaration gave a political voice to those countries that were willing to be the first movers in the maritime energy transition,” says Jesse Fahnestock, Project Director at the Global Maritime Forum. “The connection it created between industry efforts and political drive has generated a great deal of momentum, which is fantastic.”
“There are some key components that need to be in place to make these corridors as impactful as possible,” Fahnestock says. “Firstly, we need to have a coordinated, programmatic approach rather than silos of individual pilot or demonstration projects. This has been a strong message from industry stakeholders because they are aware that this is the only way to scale up efforts effectively and avoid the chicken-and-egg problem we’ve seen so far,” he says.
“Secondly, these corridors have to be public-private endeavours by design. Governments at both ends of the corridor need to work bilaterally to put in place regulations and incentives that will enable these corridors to generate zero-emission shipping activity; in essence, green corridors should be viewed as special economic zones at sea that create favourable conditions for stakeholders to take risks and work together in new ways,” Fahnestock highlights.
“Thirdly, it is important that these corridors focus on the future fuels that will create the most impact – like green ammonia, hydrogen and methanol. Rather than focussing on low-hanging fruit like efficiency improvements and transition fuels, green corridors should be used to support the most impactful – zero-emission – future fuels.”
Rather than focussing on low-hanging fruit like efficiency improvements and transition fuels, green corridors should be used to support the most impactful – zero-emission – future fuels.
Fahnestock points out that cross value-chain cooperation is a basic prerequisite for establishing a corridor. This is where the programmatic approach comes into play, enabling the context to be built for the various members of the value chain to cooperate instead of relying on industry players to create partnerships themselves. Collaboration between government and industry reduces risk and establishes the right conditions to encourage first movers.
Jane Jünger, Communication & Marketing Manager, Wärtsilä Norway, agrees: “Above all else ship owners need to be confident that the clean fuel they require will be available on the routes they operate. Green corridors allow us to build up an ecosystem of producers and consumers, and when owners know they have a secure fuel supply they can invest with confidence in vessel upgrades and newbuilds. The green economy requires a new way of thinking, new business models and close collaboration. The focus is on de-risking across the board for all parties and maintaining an open and transparent dialogue.”
The second fundamental element is a viable fuel pathway. “What makes green corridors a particularly effective way to tackle decarbonisation is that you can focus on the routes rather than the fuels themselves,” Fahnestock explains. “Certain fuels make more sense on certain routes while others will be more attractive elsewhere. This makes it easier to gain consensus early on the right fuel to use and also simplifies the discussion because everyone is on the same page, focused on one fuel pathway.”
There is no escaping the fact that future fuels are going to be more expensive than current fossil-based options, and part of that premium needs to be borne by the market. “You need to create demand from first movers who have strategic reasons to drive green shipping forward, for example gaining market share or reducing their emissions footprint,” says Fahnestock. “This helps to consolidate fragmented early demand around a given corridor and means collaboration between the value-chain players can be established to accelerate progress.”
The final piece of the puzzle is policy and regulation. Bridging the fuel cost gap in the early stages might mean subsidising fuel for example, which as Fahnestock notes is a novel idea: “International shipping operators don’t traditionally contribute a great deal to national tax revenues, so by directing funding at a specific set of corridors governments can focus on where they can get the most bang for the public buck,” he highlights “I see real potential for the EU, for example, to build on the proposed inclusion of shipping in emissions trading systems by recycling tax revenues into green corridors to achieve a lot more, faster and at a larger scale. The industry already has the appetite but generating policy support from national governments is an area where there’s still progress to be made.”
I see real potential for the EU, for example, to build on the proposed inclusion of shipping in emissions trading systems by recycling tax revenues into green corridors to achieve a lot more, faster and at a larger scale.
A special report for the Getting to Zero Coalition entitled “The Next Wave – Green Corridors”, discusses two corridors that have the potential to enable a feasible, accelerated decarbonisation roadmap for shipping: the Asia–Europe container route and the Australia–Japan iron ore route. The report also presents a third route as a case study, the northeast Asia–US car carrier route, which offers significant opportunities for collaboration between industry stakeholders to cut emissions even before zero-emission fuels are widely available.
“While these routes show great promise it’s important to remember that the proposal to prioritise them is just that, a proposal,” Fahnestock points out. “The Asia–Europe route was proposed because it is the single biggest source of maritime greenhouse gas emissions and also because it is a good fit in terms of potential policy support. Decarbonising shipping is a growing priority for policymakers along the route and there is a corresponding demand to decarbonise from players across the whole value chain,” he explains. “Furthermore, the high-value characteristics of the freight on this route also mean that the extra costs could be covered with a green premium.”
“The Asia–US car carrier route is one where the shipping companies and the cargo owners are really demonstrating leadership and a willingness to be leaders in this transition,” says Fahnestock. “However, the picture here is more complex than we initially thought in terms of the design and operational needs of the vessels. Vessels on this route are often diverted to other markets, which makes planning a corridor more challenging.”
To take another case, Wärtsilä has partnered with five other companies to lead the way towards a cleaner and more sustainable future for the shipping industry with the Zero Emission Energy Distribution at Sea initiative, or ZEEDS for short. “From ZEEDS has emerged the concept of regional chains of clean energy hubs, a so-called ‘string of pearls’ to supply vessels with fuel. We see these strings as the building blocks for green corridors,” Jünger explains.
A concrete example of this concept being put into practice is a project to develop the world’s first commercially viable green ammonia ecosystem in Norway. Wind power is used to produce hydrogen through electrolysis, and this hydrogen is then turned into green ammonia. The ammonia will be produced in the municipality of Berlevåg in the far north of the country and used by vessels traveling around the Norwegian coast, and in the Arctic, and for off grid power production in the Svalbard archipelago.
Putting all the elements in place for a green corridor is a complex task that demands watertight coordination, and the timescales will vary depending on the fuel pathway in question. “We’ll likely see the first ammonia-capable engines hitting the market in 2025, so that could be a realistic timeframe for the Australia–Japan iron ore route,” Fahnestock says. “But of course we need to coordinate the development of the bunkering infrastructure, establish safety regulations, train crews and draw up fuel offtake agreements. The best way forward is to bring together government agencies and industry players to develop a joint roadmap that sets out a realistic timeline.”
Fahnestock points out that the much-discussed corridor between LA and Shanghai has already entered this phase and hopes to see vessels hitting the water in 2025 or 2026. “We’re confident that we’ll see several more similar initiatives get under way this year. Once the first ships are in the water it will be a snowball effect.”
Green corridors serve to broadcast demand signals to shipyards and technology providers, demonstrating the kinds of vessels and technologies that are needed for specific corridors and helping them to develop and fine-tune their offerings for the zero-carbon shipping market in general.
“Of course, fuel providers are integral to green corridors because the choice of corridors is inexorably linked to the ability to choose a specific fuel and ensure a secure supply. The hope is that the potential corridors being proposed will drive fuel providers to produce volumes that are earmarked for those corridors,” Fahnestock says. “We think that the scale up will be on track to hit the target of 5% of global shipping fuel being zero emission by 2030. The Asia–Europe container route alone accounts for 3–4% of global fuel use so these corridors really do have huge potential.”