Work to transition the maritime sector away from fossil fuels has been delayed due to the hard-to-decarbonize nature of activities such as long-range shipping, but there are reasons to focus and fast-track maritime decarbonization. For example, ports play a critical role in connecting multiple industrial sectors, energy subsectors, and multiple modes of transport—including road, rail, and shipping—and action at ports can unlock decarbonization opportunities landside and seaside.
On November 3, Oceans North, the Vancouver Maritime Centre for Climate, C40 Cities Climate Leadership Group, and Arup convened a multi-stakeholder workshop on New Energy Markets in West Coast Shipping today to link clean energy projects with the marine value chain and figure out how energy export projects can be leveraged to decarbonize ports, shipping and marine transportation.
As hosts, we were pleased to have the participation of 34 senior representatives from across the shipping sector supply chain on the Pacific Northwest Coast join us for this conversation. Our table welcomed candid participation from new and incumbent energy producers, port operators, port authorities, shipping companies, cargo shippers, clean tech and innovation companies, a coastal Nation, and key provincial and federal government officials.
This report summarizes the discussion and outcomes identified by workshop participants during the event.
While the dialogue in the room took place under Chatham House Rules, individual presenters have agreed to have their introductory presentations appended to this report and to have their formal remarks attributed here. The formal agenda is also appended.
Objectives and Key Takeaways
Objectives
The starting point of this conversation was the Canadian Green Shipping Corridors Preliminary Assessment completed by Oceans North, Arup, and Lloyd’s Register Maritime Decarbonisation Hub. For the first time in our experience, energy producers were brought into the room with other supply-chain actors to discuss solutions to zero-emission energy supply and offtake.
Our goals included putting the shipping sector on the radar of zero-emission energy producers and suppliers as they assess and plan to meet demand and to look for new offtakers and local-use cases; communicating the needs of the sector in advance of the next federal budget; supporting the Green Shipping Corridor Fund releases after our meeting took place; and building an ambitious catch-up agenda focused on both increasing demand and clean fuel and technology supply across this sector.
We also wanted to leave the conversation having formed some stronger relationships and new connections between participants, as well as having gained insights to bring back to our respective organizations.
The agenda was ambitious for a 2.5-hour discussion, but it was very successful. We look forward to hearing from you and staying in touch on what comes next.
Key Takeaways from What We Heard
The major takeaways from the discussion were that:
1.The existing marine fuel supply chain is fragmented. Despite a universal understanding the transition away from fossil fuels will require unparalleled cross-value collaboration, there is a disconnect between energy producers, maritime sector offtakers, cargo-owners, and mid-stream players like ports and technology providers. As the maritime sector accelerates its ambition to address climate change, it is important that there are fora where information can be shared freely and where new relationships can be forged up and down the marine fuel supply chain.
2.The cost of zero-emission fuels is too high for widespread adoption. . Upstream costs associated with the build-out of new infrastructure and renewable electricity are high and will require financing. Unlike a gas plant where inputs costs fluctuate with the market, the project costs for hydrogen production, for example, are fixed for the lifetime of the project. Industry, government, and the financial sector will need to work together to ensure first- generation zero-emission fuel projects are competitive and profitable.
3.The adoption of zero-emission marine fuels will require a systemic change in the way the fuel is procured. Instead of purchasing fuel on the spot market, as is done today with traditional marine fuels, multi-year fuel offtake agreements are needed to provide certainty for fuel producers to invest in new energy projects, and for vessel owners and port-side fleet operators to invest in new technologies and equipment that will use the fuel.
4.Aggregating demand for fuels—and for electricity—is required to support secure supply at scale and to support the multi-year offtake agreements.
5.Maritime offtake benefits fuel production projects. There is an opportunity to leverage our energy production for export to expand Canada’s role in new zero-emission fuel markets, including fuel bunkering at ports. The adoption of zero-emission fuel at ports and for international and domestic vessels supports Canada’s parallel pursuits of energy export and the domestic energy transition.
6.The adoption of zero-emission fuels and technologies in the maritime sector will not happen without government support. In the early stages of the adoption of zero-emission fuels and new technologies in the maritime sector, cost-for-difference contracts, tax incentives, and direct subsidies are needed to de-risk investments for fuel producers and vessel/fleet operators. Without this initial upfront support by government, Canada will be exposed to prices and policies determined elsewhere. Without leadership, we become a cost-taker and less competitive compared to other jurisdictions that moved quickly to develop new fuel supply chains.
Shipping Sector Energy Outlooks and Assessing Demand
Laurence Cret, Transportation Analyst with the International Energy Agency (IEA), and Ahila Karan, Senior Decarbonisation Analyst in the Lloyd’s Register (LR) Maritime Decarbonisation Hub, presented their current work on getting to net-zero in the shipping sector. The focus was energy and fuel types, estimating fuel demand, and fuel competition with other sectors.
What’s Needed to Reach Net-Zero Shipping by 2050
In September 2023, the IEA released their Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach – 2023 Update. The report showed that current policies across economic sectors (such as the European Union’s FuelEU regulations on fossil fuel pricing and shore power) will not achieve net-zero emissions globally by 2050. As illustrated in Figure 1, this is particularly true for the shipping sector, with existing policies leading to a significant rise in emissions. The IEA results are consistent with other forecasts and underline why we must focus on enacting policies to decarbonize the shipping sector.
The IEA report includes a modelled net-zero by 2050 scenario that would require additional measures, including maximal operational efficiency and design as well as zero-emission fuels. Although the report does not prescribe policies to achieve net- zero by 2050, the analysis includes key details, including:
•Net-zero by 2050 requires an 85 percent reduction in fossil fuel use relative to 2022.
•Ammonia (almost 50 percent), biofuels (almost 20 percent), and hydrogen (almost 20 percent) are forecasted to supply the shipping sector’s energy needs by 2050, with methanol supplying a marginal quantity. This outlook may be contested, for example by fuel producers and shipping companies building, ordering, and investing in e-methanol technology and vessels.
•Hydrogen-based fuels are key to sector decarbonisation.
•According to the IEA’s cross- sector analysis, biofuel supply is significantly constrained by the availability of sustainable biomass.
•Finally, the deployment of clean technology is fundamental to decarbonization—mainly to support new zero-emission fuel
engines and bunkering facilities.
Green Shipping Corridor Opportunities on the Pacific Coast
In 2023, Oceans North, Arup, VMCC, and Lloyd’s Register Maritime Decarbonisation Hub (LR MDH) released the Canadian Green Shipping Corridors Preliminary Assessment. The assessment included case studies for future shipping energy demand at the Ports of Vancouver and Prince Rupert:
•Using AIS data, LR MDH estimated future ship traffic and fuel bunkering demand for zero-emission fuels at each port, with example fuel typologies provided based on regional characteristics. Using LR MDH demand estimates, Arup then developed scenarios to supply the estimated demand based on regional characteristics such as the availability of land.
•The Port of Vancouver is projected to support stand-alone e-methanol fuel production and bunkering in the future. The analysis predicted a demand of approximately 1 kilotonne per annum of heavy fuel oil equivalent (ktpa HFOe) in 2030, equivalent in energy terms to 22ktpa of methanol.
•The Port of Prince Rupert is well positioned for multi-port coordination as an energy and fuel export location given the surrounding land availability. For example, there is potential for green shipping corridor connections based on regular routes from Okpo, South Korea, and Zhoushan, China.
•The potential to create a regional demand hub was discussed as a possible strategy to aggregate demand further across multiple ports that could scale further and send a strong and stable demand signal to investors of the necessary fuel supply infrastructure.
•As a next step, it would be possible to identify different sector / energy and fuel production / bunkering / shipping clusters and create a more accurate and broader demand case, including a fuel infrastructure case across marine and landside sectors.
Conclusion
To summarize, the Green Shipping Corridors Preliminary Assessment demonstrates clear opportunities for green shipping infrastructure development on the Pacific Coast of North America.
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Source: LR