Decarbonising Global Shipping

Global shipping aims to decarbonise by 2040–50, transitioning from fossil fuels like Very Low Sulphur Fuel Oil (VLSFO) and LNG to green fuels such as ammonia, e-methanol, and biofuels.

What is Green Shipping?

• Green shipping, also known as sustainable shipping, refers to a comprehensive approach aimed at minimizing the environmental impact of freight transportation, particularly within the maritime industry.
• Core Goals of green shipping include:
• • Reducing Carbon Emissions: Shipping is a significant contributor to global CO2 emissions, and green shipping seeks to drastically reduce this footprint.
  • Minimizing Air and Water pollution: This involves cutting down on harmful emissions like SOx and NOx, as well as managing ballast water to prevent the spread of invasive species.
  • Promoting Ecological Balance: Protecting marine ecosystems and coastal communities from the negative impacts of shipping.

Status of Global Shipping Emission 

• Global shipping significantly contributes to greenhouse gas (GHG) emissions, accounting for roughly 3% of total global emissions.
• Paris agreement temperature goals has agreed to fix a target for reducing carbon intensity (CO2 emissions per transport work) by at least 40% by 2030 compared to 2008 levels, and by 70% by 2040, ultimately achieving net-zero by 2050. 
• The International Maritime Organization (IMO) is actively working to reduce these emissions, setting targets for the sector to achieve net-zero emissions by 2050.

About Green Fuels

• Refers: Carbon-neutral/synthetic fuels derived from renewable energy.
• Purpose: Reduce greenhouse gas (GHG) emissions and dependency on fossil fuels.
• Importance: Key to decarbonizing hard-to-abate sectors like shipping, aviation, and heavy industry.

Production of Green Fuels

• Green hydrogen is produced via electrolysis of water using renewable power.
  • It won’t be used directly in shipping due to storage and transportation challenges (high volatility).
• Green ammonia is made from green hydrogen and nitrogen, offering greater stability.
  • India encourages its production to substitute LNG imports in fertilizer manufacturing.
• Green methanol (e-methanol) is created from green hydrogen and carbon dioxide obtained from industrial sources.
• Power-to-X (P2X): Converts green hydrogen into other fuels.
• e-Methane / SNG: Synthetic alternative to natural gas.
• e-Kerosene: Synthetic aviation fuel.
• Biofuels:
  • 1st-generation: From food crops (e.g., corn, sugarcane).
  • 2nd-generation: From agri-waste, woody biomass, used oils.
  • 3rd-generation: From algae.
  • 4th-generation: Use engineered microorganisms for CO₂ capture.

Preferred Green Fuels in Shipping

• The shipping industry is generally conservative in adopting new technologies.
• Green methanol is the initial preference, emitting about 10% of carbon dioxide.
  • It’s a near drop-in replacement for VLSFO, stored as liquid at ambient temperature.
  • 360+ methanol-capable ships are in service or on order.
  • Major container shipping companies (Maersk, CMA, CGM, Evergreen) support methanol.
• Green ammonia is expected later, as it emits no greenhouse gas.
  • Requires extensive onboard processes, including a dedicated storage tank and engine/fuel handling system tweaks.
• Pricing discrepancy: Sustainable e-methanol costs $1,950 per tonne (VLSFO equivalent) compared to VLSFO’s $560 per tonne.
  • This is due to the high price of renewable electricity (10-11 MWh per tonne of e-methanol) and significant upfront capital costs for electrolyser facilities.
• Demand for green methanol is projected to surpass 14 million tonnes by 2028, while supply is estimated at only 11 million tonnes, creating price pressures.

India’s Decarbonization Plans for Shipping

• Commitment: India is committed to decarbonizing its domestic shipping.
• Infrastructure: Plans include supporting domestic container ships with green fuels and establishing green fuel bunkering points (e.g., Tuticorin V.O. Chidambaranar port and Kandla).
• Export Focus: India aims to produce and supply green fuels to Singapore, a major global ship fuelling station.
• Strategic Edge: Given India’s land and solar power expertise, it can become a significant supplier of green fuels to global shipping.

How Can India Achieve Decarbonization?

• More Production: Need to import solar panels and electrolysers for green hydrogen production.
• Leveraging India’s Solar Energy Revolution: Growth from 2.82 GW (2014) to 105 GW (2025) demonstrates success through sovereign guarantees, off-take assurance, and strengthened supply chain support.
  • Sovereign guarantees can significantly reduce prices by enabling access to international capital markets at lower interest rates.
• Innovative Financial Instruments:
  • Production-linked incentive (PLI) schemes for electrolysers can alleviate supply chain bottlenecks.
  • Carbon capture, utilisation, and storage (CCUS) incentives enhance the feasibility of green methanol from sequestered CO2.
  • India’s aggressive push for 1.5 GW of local electrolyser manufacturing capacity and growing industrial CO2 sources (steel, cement) strategically positions it for integrated green fuel hubs.
  • Multilateral development banks offer financing at lower rates (as low as 4%) compared to domestic lenders (11-12%).

Green Fuels and Indian Shipowning/Shipbuilding Revival

• Demand Support: Government’s demand-side support for shipbuilders and incentives for foreign cooperation will spur economies of scale and attract global shipbuilders.
• Global Partnerships: Partnerships with overseas shipbuilders (South Korea, Japan) are being pursued.
• Green Strategy: Strategy involves supporting new builds and retrofitting current ships for green fuel compatibility.
• Financial Commitment: India has pledged $10 billion to support the purchase of over 110 ships.
• Green Incentives: Incentives can ensure 10-20% of these are green fuel-capable, built in Indian shipyards, and Indian-flagged.