Green ocean corridors need policy backing to remain viable : report

Longer voyages around Africa have caused emissions from shipping to return to 2008 peaks . Shutterstock . com

By Greg Knowler

Green ocean corridors crucial to decarbonizing container shipping have grown rapidly over the past year , but the continued development of these trade routes is facing a “ feasibility wall ” in the absence of national policy incentives to narrow the cost gap between fossil fuels and cleaner alternatives , according to a new report .

The “ Annual Progress Report on Green Shipping Corridors 2024 ,” published Nov . 18 by the Getting to Zero Coalition and the Global Maritime Forum , said this lack of action at the government level is now the largest bottleneck facing green corridor projects .

“ Green shipping corridors have an essential role to play in accelerating zero-emission shipping ,” said Jesse Fahnestock , director of decarbonization at the Global Maritime Forum . “ This year saw a handful of advanced corridors setting the pace , but continued progress is not inevitable .”

The warning comes as shipping ’ s greenhouse gas emissions return to the peak levels seen in 2008 . Longer voyages around southern Africa to avoid ongoing hostilities in the Red Sea , spiraling freight rates and congestion across ocean container supply chains led to record-high carbon emissions in the third quarter , according to rate benchmarking platform Xeneta .

The Marine Benchmark Carbon Emissions Index ( CEI ), which measures carbon emissions across Xeneta ’ s top 13 ocean container shipping trades , hit 107.9 points in the third quarter — the highest on record and up 12.2 % compared with a year ago before the Red Sea crisis .

The Global Maritime Forum report said 18 new green shipping corridor initiatives emerged in 2024 , a 40 % increase over 2023 , with a third of the existing initiatives making “ significant , measurable progress ” in the past year .

Canal complications

One of the largest of those green corridor projects connects the hubs of Rotterdam and Singapore , and even though the forced diversions around Africa are frustrating the drive to reduce shipping emissions , work continues on cleaning up the Asia-Europe trade route .

The Rotterdam-Singapore Green and Digital Shipping Corridor aims to reduce emissions from large container vessels on the 15,000-km route by at least 20 % by 2030 by enabling the use of low- and zero-carbon shipping fuels . It is a project with 25 partners operating more than 90 large container vessels on the route with a combined transport capacity of 1.5 million TEUs per year .

However , a recent Port of Rotterdam report said without urgent government initiatives to address the wide price gap between fossil fuels and low- or zero-emission fuels , there would not be the level of commitment needed from carriers and fuel producers , slowing the development of the green corridors .

“ Sustainable fuels are estimated to be two to three times more expensive than fossil fuels and could account for a significant portion of the total cost of ownership for container vessels ,” the report noted .

“ This makes it difficult for shipping companies to commit to long-term offtake agreements , thereby hampering investments from suppliers in new production facilities ,” it added .

Maersk recently estimated that even with current regulatory tools in place such as the European Union ’ s Emissions Trading System ( ETS ) and FuelEU Maritime fuel intensity rules that will be applied from Jan . 1 , only by the mid-2030s would it be more expensive to use fossil fuels on ships rather than green fuels .

Member states of the International Maritime Organization ( IMO ) are working on reaching an agreement on the proposed midterm measures involving a carbon pricing mechanism and the establishment of a fuel standard that must be approved at the MEPC 83 meeting in April 2025 if they are to be adopted in October next year .

‘ Significant ’ Scope 3 impact

The concept of green corridors was established in November 2021 as a critical way to scale new sustainable fuels and technologies . They are regarded as being central to delivering the goal of having zero-emission fuels account for 5 % of all fuels by 2030 , a target considered to be the threshold at which the infrastructure , supply chains , and technologies that support zero-emission fuels are mature enough to enable exponential growth .

The report also recommended more focused support on existing green corridor initiatives , a flexible governance approach to allow for risk sharing and scaling , as well as policy and finance to promote green corridors in the southern hemisphere ’ s weaker economies .

email : greg . knowler @ spglobal . com

32 Journal of Commerce | December 2 , 2024 www . joc . com