BusinessDay

Stronger policies to drive investment in green shipping – Report

Governments of maritime nations have been urged to put stronger policies in place to give low-carbon hydrogen producers, shippers, and consumers the confidence needed to invest in green fuel ships, according to a new report published by the Tyndall Centre at the University of Manchester.

The report was commissioned and welcomed by the International Chamber of Shipping which called on governments attending COP27 to send ‘stronger market signals’ to the shipping industry to reduce fears that new ships built to transport low-carbon fuels would never be used.

The new report, which highlighted the major role the shipping sector, will play in transporting the green fuels necessary to meet global climate goals, found a gap between announced government-led projects and what is required. It called for the creation of far stronger national policies on low-carbon fuels.

It identified growth in low-carbon hydrogen and sustainable bioenergy as essential to meeting the Paris Climate Agreement’s goals but said that lack of enabling policies from governments, such as guaranteed markets and prices for producers and consumers, was holding back investment in the shipping infrastructure needed to support the global energy transition.

“The world needs 50-150 million tons of low-carbon hydrogen by 2030, but there is a major gap between this and what is planned, already-announced projects will only produce 24 million tons by 2030, according to the International Energy Authority. Worryingly, only 4 percent of these projects have a final investment decision.

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Commenting, Alice Larkin, the report co-author said: “New green fuels are essential to meeting the Paris climate goals, and there is a pivotal role for the shipping sector in transporting them. But production of green fuels must be scaled up to meet the Paris goals.”

The report said that the sea transport of ammonia and bioenergy in the coming decades could match shipments of gas and coal today, but it requires around 20 large new ammonia carriers a year, to link green hydrogen producers with consumers.

“Given the two-three years timelines for constructing new vessels, shipping industry representatives said they needed certainty on hydrogen production as soon as possible to be able to justify the necessary investments in new infrastructure.

The report further identified several potential considerations for government policy to increase its effectiveness at enabling investment.

“These include introducing mandates for increasing percentages of green hydrogen, creating ‘production credits for the production of hydrogen, or providing guaranteed markets and prices for producers and consumers. Such measures are already being trailed in the USA, Germany, and India.

Guy Platten, secretary general of the International Chamber of Shipping said: “The shipping industry knows it has a huge part to play in global decarbonisation in the coming decades, transporting the new green fuels the world’s economy needs. But for us to invest, governments need stronger policies to de-risk green hydrogen production.

“National Hydrogen strategies must include an explicit focus on supporting the transport infrastructure needed for both imports and exports. The industry is ready to respond but we urgently need stronger market signals and infrastructure investment to make this a reality,” Platten added.

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