The UN agency responsible for regulating global shipping is holding back the industry’s decarbonisation, according to one of the world’s leading experts on reducing maritime emissions.

Tristan Smith, the naval architect and engineer who has arguably researched shipping’s decarbonisation science most deeply, tells Recharge’s sister publication TradeWinds, that the International Maritime Organization (IMO) “still feels like it is in denial about the scale of the [climate] challenge”.

The IMO has pledged to reduce carbon emissions from shipping by 40% by 2030 and by 50% by 2050 (compared to 2008 levels) — despite the world needing to reach net-zero emissions by mid-century in order to meet the goals of the Paris Agreement.

“We can see that the IMO has not got anywhere close to what is needed both in its short-term policy measure debates and in its general expression of where it is heading on the greenhouse gas [GHG] agenda,” Smith tells TradeWinds.

This, he says, is creating a headache for shipping’s financiers, shareholders, charterers and stakeholders who are attempting to set their own commercial decarbonisation strategies.

The private sector is moving much faster than the regulators, but “it’s hard for them to adopt [any] decarbonisation strategy moving rapidly toward zero carbon fuels because the business case remains elusive in the absence of any clear policy driver,” says Smith.

Tristan Smith. Photo: Marine Money

“The awareness is there, but the material to act on it isn’t, so it is a risky time to make decisions. I have a lot of sympathy for those trying to run shipping businesses right now.”

Smith — who is a reader in energy and shipping at University College London and worked on the Fourth IMO GHG Study in 2020 — says that even if shipping managed to reduce its carbon intensity by 40% by 2030, overall emissions would be higher than in 2008 due to industry growth.

According to Smith, this amounts to shipping saying: “ ‘Give us a break, we need to have rising emissions for another decade’, just when much of the rest of the world is saying this is serious and we need to get on with drastic reductions.”

He adds: “There are governments at the IMO that do want to decarbonise at a speed consistent with the 1.5°C climate science, but most do not at this point, and that prevents the IMO taking the action we know is necessary.

“That is a level of political dissonance that is not going to work for very long,” he says, because IMO member governments’ environment ministries will be in conflict with the transport ministries’ position at the IMO. Governments will have moved on and will demand: “What’s so special about shipping?”

Adding to this disconnect are the efforts of some within the industry to act as though the 40% target is a maximum, whereas the IMO set it as a minimum.

This uncertainty makes it even harder to take investment decisions on ships that perhaps have a 25-year lifespan, when it is likely that within a decade the rules will have failed and will as a result need to be made far stricter than could have been the case now.

“If the industry believes the IMO will change its policy but does not know how it will do so, it either has to invest in one pathway, hoping it will be okay, or it doesn’t invest at all because it is not sure it will get the returns it needs,” Smith says.

Revising the rules down the road would require an even bigger and more painful effort than going for it now.

“It would be a pyrrhic victory for those that want the low ambition. It ultimately damages the industry because those who want to move faster don’t have the business case, and then maybe intelligent capital starts leaving the sector.”

The options for clean shipping

Green fuel choices come down to bio- or hydrogen-derived options, but the scalability and sustainability of biofuels are a challenge.

“We have real concerns about any hydrogen-derived fuel that has carbon in it, and methanol is that fuel. It has got a lot of hype recently, but it is a real challenge in the long run to see how it would be made other than as a biofuel, given that it is a compound with hydrogen, carbon and oxygen,” says Smith.

“There are lots of other alternatives which we think are likely to be much cheaper in the long run, of which ammonia is the most obvious at this point.”

Smith points out that green fuels are not just about shipping.

“What we are building globally is a hydrogen economy and an electric economy, and the two are very tightly coupled.

“The broad mantra for governments is: electrify everything that you can, and use hydrogen for anything that’s left over or if you can’t do anything else. Bioenergy is only there at the edge for assistance and is more critically needed for a number of other uses, including plastic substitutes and food.”

Ammonia’s advantages include that it is a known commodity that is easier to store than hydrogen. About 150 million tonnes of ammonia are currently produced a year — a level that Smith says can be tripled reasonably easily using renewable energy in developing countries. As with the cost of oil, the price of transport would not be a problem.

However, there are still safety issues with ammonia, and there might be problems with emissions, such as nitrous oxide, that arise from the combustion of ammonia. Fuel cells that chemically extract the energy from hydrogen or ammonia could solve this problem.

The cost of renewable energies has been falling fast and should continue to do so, cutting the price of alternative fuels over time.

“By end of this decade, we think we will need a few hundred billions [of dollars] dedicated to the fuel supply for shipping committed to be spent over the 2030s,” Smith says.

That may sound high, but $20bn has already been committed in just a few years.