Maritime Shipping Emissions
Innovating new fuels is only part of the solution to mitigating 3% of global emissions.
Global trade can be seen as the lifeblood of modern economies, and if we are running with the analogy, maritime shipping is the cardiovascular system that keeps the blood pumping. According to the UN Center for Trade and Development, maritime shipping accounted for 80% of this global trade. In 2023, maritime shipping also grew by 2.4%, recovering from the contraction it experienced during COVID. Whether it is raw materials, finished goods or commodities, shipping offers an efficient mode of transportation for businesses to engage in cross-border trade, enabling them to access diverse markets and create economic opportunities.
Basics
Shipping is seen as a cost-effective tool for transporting goods versus other solutions like air freight, with the main drawback being the longer shipping time. Shipping offers a few core benefits:
Capacity and Value – One container can hold 10,000 beer bottles and ocean freight is cheaper. For example, any shipment weighing more than 500 kg is likely too expensive for air freight.
Fewer restrictions – International law, national law, carrier organization regulations, and individual carrier regulations all play their part in defining and restricting what goods are considered dangerous for transport. Generally, more products are restricted as air cargo than as ocean freight, including gases (e.g. lamp bulbs), all things flammable (e.g. perfume, Samsung Galaxy Note 7), toxic or corrosive items (e.g. batteries), magnetic substances (e.g. speakers), oxidizers and biochemical products (e.g. chemical medicines), and public health risks (e.g. untanned hides).
Emissions – CO2 freight emissions from ocean freight are minuscule compared with air freight. For example, according to this research, 2 tonnes shipped for 5,000 kilometers by ocean freight will lead to 150 kg of CO2 emissions, compared to 6,605 kg of CO2 emissions by air freight shipping.
That being said, this vital sector does contribute to global emissions, despite its relatively low footprint compared to other long-distance shipping alternatives.
Emissions Directly From Maritime Transport
A report from the International Council of Clean Transportation covers the change in maritime emissions from 2016 to 2023. “From 2016 to 2023, total tank-to-wake (TTW) greenhouse gas emissions increased by 12%, with a compound annual growth rate of 1.4%. Shipping’s share of global anthropogenic CO2 emissions remained stable at approximately 1.7% (or 2.3% of global anthropogenic CO2)”.
Although carbon intensity of shipping has decreased from 2016 to 2023, the absolute emissions have increased, demonstrating just how much the maritime shipping industry has grown over this period of time, calculated to be a growth of 21%. The industry is also likely to continue to grow.
Source
Currently, ships mostly rely on marine gas oil and heavy fuel oil as primary energy sources. The combustion of Heavy Fuel Oil (HFO) results in the release of harmful gases, including carbon dioxide (CO2), methane (CH₄), and nitrous oxide (N₂O), all of which contribute to the problem of climate change. In addition, ships produce sulphur oxide (SOx) emissions, which, although not directly affecting the climate, pose significant environmental and health risks.
As seen in a report from the International Maritime Organization, maritime fuel consumption has also stayed relatively constant since 2019.
When segmenting by fuel type, it is easy to see that the majority of maritime vessels use fossil fuel-based fuels, consisting of our heavy fuel oil (HFO), light fuel oil (LFO), diesel/gas oil, and, more recently LNG. HFOs and LFOs are known as residual fuel oils, which are formed from crude oil, like diesel fuels. Gas oils and LNG are other fossil fuels that maritime ships use, which are derived from natural gas. It may be hard to see, but there are also other types of fuels being used, albeit in very small amounts.
A report from the Argonne National Laboratory dives into the exact climate impacts of these fuels.
Now that we know the main segments of fuel available, let’s dive into their environmental impact. I made a table consolidating information from the U.S Department of Transportation and the Argonne National Laboratory. I organized to show the % differences for each fuel from HFO (2.7% sulphur), which is a standard marine fuel. The table has four columns:
Fuel Type
Name of the fuel
% GWP
Global warming potential is a measure of how much a greenhouse gas contributes to warming the Earth compared to carbon dioxide (CO2). It quantifies the heat-trapping ability of a gas relative to CO2 over a specific time period, in this case 100 years.
HFO (2.7% sulphur) has a GWP of ________. Each % you see is the GWP relative to HFO (2.7% sulphur)’s GWP.
% CO2e
HFO (2.7% sulphur) has CO2 emissions of ________. Each % you see is the CO2e relative to HFO (2.7% sulphur)’s CO2e.
From this table, we can clearly see the intensity of emissions of current fuels compared to our incumbents (HFOs, MDOs, MGOs), which currently dominate the fuel market. Through the decreased GWP, we can see other fuels leave waste products that have milder effects of global warming, but through CO2 emissions, we also see they leave less of an environmental impact through the volume of emissions.
Let’s look a bit closer at some of these cleaner fuels and their progress towards commercialization.
How Shipping is Decarbonizing
These technologies are all at different stages of development, but I want to try and shed some more light on how they can be segmented. Low-carbon fuels can include methanol, methane, hydrogen, ammonia, and even diesel, all depending on the feedstocks used to produce them. The process of creating these fuels can often be segmented into bio-fuels or e-fuels. At a high level, these two families of fuels can be segmented as below:
Biofuels, produced from plant matter like sugar-rich plants, vegetable oils, forestry and agricultural waste or even some animal fats.
E-fuels, produced from CO2, captured at industrial sites or in the atmosphere, and use low-carbon electricity.
Now I have used the word feedstock many times today, but what does that mean? Feedstocks refer to “raw material to supply or fuel a machine or industrial process”. In the case of these low-carbon fuels, the raw materials needed depend on the fuel being produced. I’ve demonstrated how this differs between fuels in the table below:
Depending on how accessible and cheap these feedstocks are greatly impacts the ability to produce these low-carbon fuels. For example, carbon capture is just emerging as an industrial trend, so CO2 feedstocks are quite limited and likely concentrated in geographies with industrial sector focuses. There are many companies pursuing each of these fuels as potential shipping fuel substitutes, and time will tell which ones emerge as market winners. Nonetheless, there are many options for substitutes, although many are still a long way from commercialization.
That being said, the shipping industry is growing. In 2023, global maritime trade grew by 2.4% to 12.3 billion tons and is projected to grow by 2% in 2024 and an average of 2.4% annually through 2029. Additionally, shipping distances have increased due to geopolitical trends and increased shipping volumes, causing disruptions in the Panama and Suez canals. Lower carbon fuels can reliably mitigate emissions in a growing industry. However, it is reasonable to believe the majority of decarbonization of the shipping industry will come from substituting for clear fuels.
Wait…Kaden you Never Mentioned What is Actually Getting Shipped!
I came across an old Forbes article from 2023, and the analysis of what is actually being shipped was shocking. Approximately 40% of all container cargo is for fossil fuels, including oil, gas, and coal. So I did what anyone shocked by a statistic would do and took to the internet.
In the UN Trade and Development Organization’s 2024 Maritime Transport Report, it was reported that 28% of ALL shipping was for oil transport. The report did not get into specifics for coal and gas as well, which, to be honest, could still be matching that 40% figure from 2023. Let’s zoom out on this: as explained earlier, 3% of all emissions in the world come from shipping. If today we stopped shipping oil based on the UN’s research, the world's emissions would be cut by around 1%. That is a significant figure.
The True Impact of Electrification on Shipping Decarbonization
Taking this statistic forward, it has many implications for other sectors within the energy transition, mainly electrification. If countries were to maximize the amount of renewable, non-fossil fuel generating resources, it would reduce the need for importing gas, oil, coal, and other fossil fuels. This would not only clean their grid but also decarbonize the maritime industry as a whole. There are some geographies that can play a bigger role in decreasing fossil fuel shipping consumption than others. Let's look at natural gas imports in 2023 across the world.
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It is very easy to focus on where we can begin to decarbonize in our home countries, but we have to remember, a ton of carbon emitted somewhere means another ton of carbon in the air everywhere: after all, we all share the same atmosphere. Europe and Asia are clear leaders in natural gas imports.
Zooming in on China, most of their gas imports (65% in 2021) are in the form of LNG, transported by ships.
Source
If suddenly China were to electrify all the end-uses of this imported gas, not only would the emissions from using these fuels disappear, but the emissions from transporting this fuel would also be erased. Knowing this, in countries that are large gas importers, the true impact of electrification can be much greater than expected.
The heart of global trade does not have to be pumping this much blood, and this volume of trade is evidently harming our earth due to emissions. Almost a third of shipping emissions are due to the transportation of fuels that are direct substitutes for renewable or non-fossil fuel-based generation. Electrification and the energy transition can slash a significant portion of global emissions.
However, it is not feasible to assume that everything can suddenly be electrified, whether it's due to the lack of generation capacity, the lack of grid robustness, or even the lack of developed technology to use electricity in all end-uses. Realistically, the shipping of fossil fuels will likely continue and grow for years to come as these fuels are cheap, abundant sources of energy that can support countries experiencing high growth in need of energy affordability. In the meantime, innovations in clean shipping fuels will have to be made to cut down on maritime emissions.
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