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Distribution giants sign coZEV agreement to decarbonize deep maritime voyages


On the electrification of deep maritime shipping, the cost and implications of the green transition. An interview with Ingrid Irigoyen of The Aspen Institute coZEV (Cargo owners for zero emissions vessels) initiative

About maritime shipping

Maritime shipping is a sector that is characterized by many uncertainties if we consider it at a global level. It is hard to abate and behind many others in its decarbonization. Since we’ve entered a new critical geopolitical phase, there’s also uncertainty revolving around the many regulatory changes. 

The International Maritime Organization (IMO) regulates maritime shipping. They are currently discussing what kind of policy measures it could put into place. They look at both the the short and longer term. The aim is to accelerate the adoption of new fuels and technology. The uncertainties makes it difficult for the shipping industry to make investments with confidence.  

coZEV (Cargo owners for zero emissions vessels) initiative

We spoke to Ingrid Irigoyen, Associate Director for The Aspen Institute, to get the details of the coZEV (Cargo owners for zero emissions vessels) initiative. This is a network-oriented project led by customers of the container shipping industry. They are working together to decarbonize maritime shipping. «Our project consists in bringing companies together to share ambition and working with them to advance adoption of zero emissions fuels and technologies in shipping. We are also organizing them to engage in supportive policy approaches to accelerate the transition, coming together, aggregating demand, influencing the policy decision makers».

«We’re getting more clarity about what the appropriate fuels and technologies that can get us to zero lifecycle emissions for greenhouse gases are. What really matters is that we look at these new fuels through their entire lifecycle. So ideally we will be looking primarily at fuels that are generated with renewable energy».

The goal of the coZEV coalition is to ultimately bring clarity to the customers of the shipping industry. In particular, about the characteristics of the fuels and the new technologies to adopt. This is so that they know what they should be making investments in. As a consequence, those same customers will start to engage in related policies, accelerating the process and reducing uncertainty.  

«It’s all about what we invest in what would be the return of that investment. We have run out of time. The customers need to help the shipping industry to see that there’s a business case, that this is the future of shipping».

Principles and signatories of the coZEV agreement 

The nine companies that originally signed the coZEV agreement are a mix of very large corporates, such as Amazon, Unilever and IKEA. There are also some medium sized, and small ones. This initial group of signatories represent a variety in the product and retail segments, as they have very different shipping patterns. 

In the principles of the coZEV statement, cargo owners  must clarify some aspects. For example, those that apply will make it clear to the marketplace, to their service providers and policy makers that they want to be using only zero emissions shipping by 2040. «This is a trajectory aligned with the Paris Agreement on climate change. The climate leaders can come together and help facilitate the adoption of those fuels and technology, commercially for the first time. We want to do it by the middle of this decade. Therefore, the companies will then be able to get emissions reduction as a return.

«We try to be as flexible as possible: it’s a very low barrier to entry and very much open arms. Any company that wants to make a contribution in space will be able to find a way to engage that suits their corporate culture and where they find themselves at this time on their sustainability journey. We feel like it will probably take to 2050 for the entire shipping industry to decarbonize. However, want this solution to be at sufficient scale by 2040 and sufficiently affordable by 2040 that the companies we work with, the climate leaders, can with confidence decarbonize their maritime shipping completely by 2040».

One of the main challenges: electrifying deep sea shipping

In shipping, there are some fundamental challenges and one is about fuels and technologies. «We can’t just electrify deep sea shipping,» clarified Irigoyen. Regarding smaller vessels doing smaller businesses, a lot of people focus on how to speed up the electrification process.

This is both for port operations and then for smaller vessels. The big challenge is about deep sea voyages, very large ships going very large distances. Sometimes, they are on the water for several weeks. «The model that is currently in use for shipping makes it hard for it to change. Particularly in container shipping, where the owner of the vessel may not be the operator of the vessel. For example, when the capital investment in new ships or retrofitting ships is done, the benefit doesn’t necessarily come to the ship owner. This is the distributed nature of this sector: some companies are both owners and operators. So, that’s a little bit easier from that perspective. Differently, in container shipping there are so many different cargo owner companies distributed all over the world, working with a lot of different carriers. So because of technology and the lack of good policy support in the past, the sector hasn’t made as much progress as some other sectors up until this point». 

This is why it’s very hard for customers to come together and have a united voice. Or, being clear on the first actions of their transition. The coZEV agreement meets those needs for customers to come together and create a place to organize. 

The costs of the green transition

The transition promises to construct a network which will help to develop a collaboration. It will act as a starting point for the industry to adopt zero emissions technologies and fuels. Therefore, finding a quick way to overcome the challenges of this system described above is key. 

«We want this energy transition in shipping to happen quickly. We want to ensure that we are catalyzing solutions that are long term. And, that the transition will happen while we continue to offer a reliable service. We want to make sure that the transition is steady and doesn’t cause further disruption of the supply chain. A fast transition but a gradual one. If we wait for too long the cost of delay will be much higher».

Zero emissions fuels are predicted to cost more than fossil fuels

The prices of the future are unknown. It’s all about the relative price between fossil fuels and the new fuels. The International Maritime Organization is expected to create a market based mechanism to close that price gap. This will make sure that the whole value chain is sharing the burden. Therefore, cargo owners won’t be the only ones paying for the entire transition. 

The record high freight rates are the results of a lot of factors out of our control, explained Irigoyen. «What we hope is to see freight rates settle back down to a rate that accounts for the cost of decarbonization. They need to be able to ship their goods across the ocean, to be reliable, to have enough capacity in this industry to keep those prices reasonable. Fuel cost will be a key factor in those future prices. Our hope is that shipping can be seen as a dependable taker of input such as green hydrogen in the future».

Green shipping corridors

coZEV are working with initiatives such as green shipping corridors. This is starting to give an opportunity to test some ways of collaboration and risk sharing. One of the world’s busiest container shipping routes connect Los Angeles and Shanghai. They announced a partnership of stakeholders from across the shipping value chain to create a transpacific decarbonized shipping corridor between the U.S. and China. 

This effort will engage project partners to work together. In particular, to reduce greenhouse gas emissions from the movement of cargo between the cities of Shanghai and Los Angeles. This will be considered throughout the decade, with the introduction of zero-emission vessels.

Panama Canal,  The Mediterranean Sea, Singapore 

What’s the current technological readiness and ambition to decarbonize maritime shipping in the most active areas of the world? The International Renewable Energy Agency (IREA), published ‘A pathway to decarbonize the shipping sector by 2050.’

According to this report, the medium term goal is to focus on advanced biofuels that will increasingly be substituted by renewable fuels. The current sustainable alternatives are FAME – fatty acid methyl ester, a biodiesel produced from food waste – and hydrotreated vegetable oil (HVO) that do not impact food security and land availability. To date, only trials have been completed using FAME blends in the Mediterranean Sea Company. A maximum of thirty percent are being used by vessels. 

The hydrotreated vegetable oil demand is very high in multiple sectors, mainly the transport industry. Therefore, the supply infrastructure requires development to sustain advanced fuel supply to the shipping sector. The Mediterranean Shipping Company is aligned with the European Union’s goals to reach complete decarbonization of the sector before 2050.  

Renewable e-fuels, such as methanol and ammonia are the most promising fuels. Of the two options, ammonia is more attractive due to its null carbon content. This characteristic excludes it from the cost of capturing CO2, which significantly adds to the final cost of e-methanol. The falling costs of green H2 coupled with the cost reduction of CO2 capture technologies should enable 2050 production costs to reach around USD  107-145/MWh for renewable e-methanol.

CO2 Emissions Dashboard launching

In March 2021, the Panama Canal introduced several initiatives to better align with the global response to climate change. They launched the CO2 Emissions Dashboard, which began tracking monthly data on carbon emissions per segment.

Next is a roadmap to outline the specific steps to achieve its goal of carbon neutrality by 2030. This includes generating electricity from renewable sources. It also includes consolidating facilities to minimize the impact of its operation’s footprint, and the establishment of a pricing strategy. In particular, this promotes the efficiency and low-carbon emissions of the ships.

Europe and North America have the majority of CI infrastructure globally. However, Asia reaches the annual highest  shipping traffic but has limited investment in infrastructure. To reduce the negative impact of maritime shipping in Asia, the Maritime and Port Authority of Singapore unveiled ‘The Maritime Singapore Decarbonization Blueprint: Working Towards 2050.’

It is a plan setting out ambitious and concrete long-term strategies supported by investments of $220.81 million. The Blueprint will contribute to Singapore’s commitments under the UN’s 2030 Sustainable Development Agenda, the Paris Agreement and the Initial International Maritime Organization Strategy on reduction of GHG emissions from ships.

This also includes the transit of port terminals from carbon negative to the adoption of clear energy, automation and digitalization, a more efficient registry of ships, domestic harbor craft, carbon accounting and green financing.

coZEV

Cargo Owners for Zero Emission Vessels or coZEV, is a cargo owner-led platform for collaboration that enables maritime freight customers to come together and use their brand power and economies of scale to accelerate maritime decarbonization. coZEV’s mission is aligned with Paris Agreement climate goals, and offers services powered by zero-emission shipping fuels and technologies to allow cargo owners to decarbonize their maritime freight by 2040

The writer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article.

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check and buy on Prototipo Store
item collections in limited edition
crafted according to our editorial search

Hemp / made in Italy
Lampoon is working to restore
Hemp production in Italy
as hemp is the one and only
natural vegetal fiber sourceable in the country
for more info, please email us at [email protected]

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