Collaboration Is Critical To Achieve Decarbonization In Shipping

By Karrie Trauth

General Manager, Shipping and Maritime Americas,
Shell Trading (US) Company

It’s not an easy time to be in shipping. Amidst a backdrop of economic challenges, including currently depressed fuel prices, the industry is striving to move toward compliance with the International Maritime Organization’s significant emissions reduction ambition: to halve carbon emissions from 2008 levels by 2050.

Particularly challenged by this goal are U.S. and Canadian owners of smaller, inland vessels, who face a unique set of circumstances. However, decarbonization of these cabotage ships, too, is possible if ship owners are willing to rally to take advantage of the opportunities in this landscape and address the challenges through cross-sectoral collaboration.

Understanding the many perspectives of stakeholders across the industry is a critical first step in moving toward decarbonization. In July, DeLoitte and Shell released a joint collaboration, “Decarbonizing Shipping: All Hands on Deck.” This report, which gathered input from senior shipping executives around the world, provides a comprehensive view on shipping decarbonization from the voices of the market and seeks to clarify a practical way forward. Shell’s response to the report is here.

Industry leaders interviewed for the report were unwavering on a key point: there is an urgent need for the shipping sector to act in order to reach the IMO’s ambition to halve emissions. Without action, the sector will be responsible for approximately 17 percent of global CO2 emissions by 2050. Given the current economic challenges, achieving this can seem daunting.

In the U.S. and Canada, inland transport consists primarily of tugs and barges and coastal articulated tug and barges (ATBs). Physically smaller than their international, ocean-faring counterparts, these vessels have limited space for carrying fuel or engines. Besides that, retrofitting these vessels to use alternate fuels is almost prohibitive in cost. The vessels also have a typical operating life of 30 to 35 years, meaning each ship built today will likely last until at least 2050. This makes acting now in the U.S. and Canada even more pressing.

In addition to these characteristics, the political, social and regulatory environment in North America is different from elsewhere in the world. Consumers in the U.S. and Canada don’t always align climate ideals with spending criteria, and, in the U.S. in particular, federal funding for climate control efforts is scarcer than it may be in other countries. If legislation supporting the IMO’s decarbonization goal was passed in the U.S. it would at least follow a fairly straightforward regulatory approval channel. Even so, states and local port authorities have diverse requirements that do not always provide an even playing field or motivate broad industry effort toward decarbonization.

Organizations along the shipping value chain are currently investing in research and development to better understand efficiencies that can be unlocked from digitalization and machine learning or “artificial intelligence.” While these individual actions are all positive steps, they could be amplified through collaboration as an industry-wide examination of the overall efficiency of maritime movements. Instead, outside of a few isolated examples, the focus right now is on optimizing a single vessel, individual ports and terminals or individual owners and charterers.

Of course, the challenging nature of investment in shipping equipment and infrastructure plays a role in how the industry approaches decarbonization, too.  Significant funding is necessary for new or upgraded assets and equipment, and investments in lower-carbon or lower-sulfur fuels are sequential in nature. Collaboration can be a critical factor in overcoming this obstacle, and we have already seen some strong examples that can be built upon.

In 2009, faced with increasing emissions regulations in California, Foss Maritime worked with the California South Coast Air Quality Management District and the ports of Los Angeles and Long Beach to develop the hybrid assist tug Carolyn Dorothy. The hybrid tug reduces emissions and fuel consumption while delivering the same performance of Foss’ other assist tugs and can be recharged using shore power. In 2012, Foss converted a second tug—the Campbell Foss—with hybrid technology.  Foss partnered with the ports of Long Beach and Los Angeles to bring the Campbell Foss to San Pedro Bay with help from a $1 million grant from the California Air Resources Board (CARB) under the AB 118 Air Quality Improvement Program (AQIP).

In 2017, Crowley Maritime and Eagle LNG began construction on a shoreside LNG bunker fueling facility in Jacksonville, Fla. While Crowley selected LNG because it is sulfur-free, the fuel also has a lower carbon footprint than diesel. The bunkering station fuels Crowley’s LNG-fueled Commitment Class vessels, which travel between Florida and Puerto Rico. Similarly, Tote Maritime and Jax LNG have also partnered to provide fuel for Tote’s Marlin Class LNG-powered vessels.

Shell, too, believes in LNG as a cleaner and comparatively economical alternative marine fuel source that is well-positioned to move the industry toward a lower-carbon future. Shell Trading (U.S.) Company recently agreed to a 15-year time charter with Q-LNG of America’s first offshore LNG ATB. Q-LNG’s ATB construction project will rely heavily on collaboration between VT Halter and Wärtsilä, who is delivering a large scope of equipment to the project, including all of the cargo handling, cargo control and cargo containment system as well as the PMS and automation onboard. Upon delivery, the Q-LNG 4000 will deliver LNG to customers, including the cruise ship industry, primarily along the southeast U.S. coast.

We recognize, of course, that LNG alone won’t bring our industry to a 50 percent reduction in carbon emissions. It’s difficult to know if the IMO’s goal will stand as it was originally written in 30 years, and what U.S. and Canadian legislation may require. Regardless, decarbonization of the shipping sector is a reality, and LNG is one cost-effective way to reduce carbon emissions. With grant incentive programs, hybrid and other options also become viable.

We know, whether through “Decarbonizing Shipping: All Hands on Deck” or in interactions across the sector, that collaboration is necessary both in the short and long term for decarbonization of the shipping sector.  Recently, Shell Trading (US) Company and key industry participants came together to begin forming a North American shipping decarbonization coalition. The coalition is designed to bring the voices of the inland, short sea and U.S. and Canada cabotage shipping together with a focus on action. Attendees included ship owners and operators, charterers, shipbuilders, equipment manufacturers, service providers, the U.S. Coast Guard, Port Authorities, class societies, consumers, cargo owners, financiers, shipping service providers, NGOs and academia. Though this group has only just begun to meet, the expectation is that it will facilitate needed discussions and drive concrete action that will address specific U.S. and Canadian challenges that differ from the global shipping sector.

The headwinds we’re facing are challenging, and no single solution fits every company.  However, by identifying where we can come together and collaborate, we will realize efficiencies to help us achieve decarbonization of our coastal and inland fleets.

Karrie Trauth is the general manager of shipping and maritime for the Americas at Shell Trading (US) Company, where she leads a community of maritime and commercial professionals that provide operational and technical maritime solutions across Shell’s businesses in North and South America.  Karrie holds bachelor’s and master’s engineering degrees from MIT and an MBA from Georgetown University. She served in combat roles in the U.S. Navy as a Surface Warfare Officer.

(The companies in which Royal Dutch Shell PLC directly and indirectly owns investments are separate legal entities. In this article “Shell” is sometimes used for convenience where references are made to Royal Dutch Shell PLC and its subsidiaries in general. Likewise, the words “we,” “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.)