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Accelerating the Energy Transition

Although there are several important initiatives attempting to decarbonize the industry, these need to be articulated across the sector: Port authorities, terminal operators, shipping lines, cargo owners, energy and technology providers, regulators, and every other industry stakeholder need to integrate their efforts into a unified decarbonisation roadmap. 

By Mateo Wiegold, Content Producer, TOC Worldwide

According to the Asia-Pacific session of the Global Energy Summit (September 2021), the pace of Asia’s energy transition remains too slow even despite its efforts to accelerate it.

This has been mainly due to a lack of public policy on it, which leaves many details unaddressed and discourages companies from investing in energy transition.

The recent revision of the marine environmental regulatory framework by the IMO aims to make this transition more inclusive for state members and industry that may struggle to navigate through the energy transition.

This revision is expected to work in tandem with ongoing green initiatives such as  the Getting to Zero Coalition, promoted by the Global Maritime Forum, which aims at bringing together key industry players to tackle the decarbonisation problem, and among its main directives is the development of ‘Green Corridors’.

These would be trade routes where all parties involved would be carbon neutral. For these to succeed, however, it will be necessary: (1) corridor-level consensus on fuel pathways, (2) policy support to help close the cost-gap for higher-cost zero-emission fuels, and (3) value-chain initiatives to pool demand – the change towards clean fuels must take place across the entire supply chain.

Amongst the most significant challenges to this, and all other energy transition programmes, is choosing what type of energy to transition to Ammonia and hydrogen seem to be the long-term solution for the industry as they are both carbon neutral; by 2050 they are predicted to supply 60% of the market’s energy needs. While hydrogen and ammonia are deemed as the fuels of the future, methanol and LNG are the alternative in the short-term: Maersk will launch the world’s first carbon neutral fleet in 2023, running on methane.

According to Simon Neo, Executive Director at S&P Global Platts, methanol is "an alternative fuel that is in use today but will be a short to mid-term solution.”

Despite all present barriers, recent events like the COP26 and the IPCC’s latest report on climate change have accentuated the importance of reducing GHG. We are now seeing a growing push towards investors prioritizing sustainable assets, which is translated to investment flows in energy transition remaining stable over the next 15 years. Infrastructure investment in hydrogen has in fact started to grow significantly in the region, from 0% (2019) to 16% (2021). Can we assume that such investment will incentivize the deployment of hydrogen-powered machinery and vessels across the sector, and across different markets and regions? One can only hope. 

While there are many commendable decarbonisation efforts, we must be observant and differentiate significant actions from ‘green washing’. Only through a significant integration of sustainable environmental practices into the business will our industry truly be able to accelerate the energy transition.

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