The urgency of global decarbonization has officially reached the Australian ports industry, with ports in Australia now serious about incorporating decarbonization into their master planning. This would involve accounting port contributions to the scope 3 emissions of their customers, the sustainability requirements of debt and equity partners, and potentially also alignment with key industry initiatives, like Ports Australia’s Sustainable Strategy Development Guidelines.
Today, clear first-movers in the maritime logistics industry, some far-sighted ship and tug operators for instance, are pushing hard to implement their pathways for decarbonizing their operations and maritime supply chains. While their governance imperative is to comply with international (IMO) and national emissions targets, the overarching motive is profit – it has dawned on some market players that a green business model beyond the current norm could attract high-paying, loyal customers with sustainability and decarbonization aspirations of their own, like global shippers and well-informed passengers.
Supply-chain implications of green shipping corridors
Following trial concepts spawned at the recent Glasgow COP26, green shipping corridor and supply chain initiatives are taking hold. In theory, a carbon-neutral maritime supply chain means that deployed ships operate zero emissions, as well as the vessel visits to the ports of loading and discharge, the cargo-handling operations, storage and associated landside transportation from initial origin to final destination are all at green zero emissions.
Take this a step further, and it might mean that a carbon-neutral Australian containerized exporter competing with a similar producer across the Tasman is effectively excluded from a lucrative overseas market if the Australian port in the supply chain is insufficiently decarbonized, while the comparable New Zealand port is operating with zero emissions.
Worst still, what if the Brazilian iron ore port is decarbonized, the Pilbara port isn’t (or is lagging behind), and Japanese-owned transport vessels are all green newbuilds – do we miss out on exporting our current major bulk commodity to Japan? How would this apply to sustainable energy production and export like hydrogen and ammonia, which also need sustainable port and supply-chain credentials to secure overseas buyers.
A recent joint announcement by the Australian and Singaporean governments has seen the signing of a world-first Green Economy Agreement which includes the key element of a future green shipping corridor between Australia and Singapore.
Decarbonizing the fleet itself
Read any maritime or transport industry journal and you will see a plethora of new technical solutions to deliver sustainable energy throughout the supply chain. In shipping, this includes green-hydrogen vessel design, green-ammonia and methanol-ready newbuilds, as well as the use of biofuels based on waste materials, smart fuel-saving retrofits, and optimized operations and wind-assisted propulsion.
The important takeaway from all of this is that no one decarbonization solution has been adopted by a leading marine engine manufacturer. Some industry leaders may forge ahead with sustainably fueled vessels. Many others will find that they cannot overcome the cost premium, nor can they practically manage real or perceived safety risks of new fuels. Geographical differences will also impart their own flavor on the decarbonization of ports with electricity and fuel access likely to vary considerably with the availability of biofuel and hydrogen supply chains, or a lack of remote power transmission infrastructure.
Governing decarbonization under a landlord model
Another challenge for Australian ports is how far can they really go it alone on the decarbonization pathway. Australian ports are typically landlord models, where with limited exceptions they do not get involved in port operations such as stevedoring, towage, pilotage, warehousing, and associated transportation. Governing transformational change in decarbonization will be a challenge.
Most capital-city ports have been leased-out by state and territory governments with different sets and types of shareholders. So, we have a real challenge in terms of how Australian ports can most effectively meet the need for rapid and full decarbonization. Or do they just sit back and let industry do it all – a recipe for entrenching competing demands and potential system-wide inefficiencies.
Bunkering of vessels with alternative fuels
An opportunity for the ports industry could be the forming of collective port thinking across port ranges about which alternative fuels infrastructure should be provided where, for vessel bunkering of containerships, tankers, bulk carriers, and cruise-ships as well as port services vessels such as tugs and pilot boats.
It is becoming apparent that vessels with low-energy alternative fuels such as methanol and ammonia will have to bunker more often on their voyages to avoid lost cargo-carrying capacity compared with conventional fossil fuels. Particularly at the early stages of decarbonization (the next five to ten years), a vessel operator will have to think about serving a port not just for the cargo it offers, but also whether it offers the net-zero emissions fuel needed to power the vessels in their fleets. Ports will need to do some serious planning themselves, in this area, to ensure the continued capture and facilitation of efficient, decarbonized supply-chains.
Vessel onshore powering (cold ironing) and electrified vessels
For some ports with nearby residential areas and a well-suited type of vessel operations, vessel onshore powering (cold ironing) can make an immediate impact on fossil fuel emissions, albeit with significant investment.
However, there is a risk that as the pace of newbuild vessels are delivered with alternative fuels, onshore powering can become redundant. Likewise, with the increasing penetration and relatively low cost of renewable energy generation infrastructure, ports need to consider how far they could or should go towards being their own local green energy producer.
Ultimately, the provision of sustainable electricity and common-user marine recharging stations in remote and regional areas may be the only way to kick-start and facilitate the replacement of local (short-range) fossil-fueled vessels with electric vessels – just like EV chargers on the road.
Keeping operational and community safety front of mind
Of course, there is one bottom-line item that all can agree on – the need for continuing to prioritize and uphold safety. But a vacuum of ownership of emerging safety concerns is holding back the maritime industry in implementing the most economic or efficient sustainable energy solutions – think of the mix of hydrogen and passengers, or hydrogen stored in bulk in precincts close to heavily populated areas.
There are some in the domestic shipping industry who find it all too difficult to manage potentially hazardous fuels. Uncertainty in replacing old vessels has led to some opting for more expensive, electric options where their operations permit.
What can the ports industry do now to decarbonize?
Together with following Ports Sustainable Strategy Development Guidelines*, the ports industry can do six things to begin the journey to full decarbonization:
- The mapping of all emissions in the port-controlled areas (marine and landside) and understanding who is doing what to decarbonize, and what are the opportunities, challenges, and safety/health risks
- Initiate collective port industry forums on how best to collaborate on decarbonization solutions and facilitate the needs of port users with their own decarbonization journeys
- Develop a strategy, as part of a port master planning refresh, on what is the optimal role of the port in tackling decarbonization in the land and marine areas or assets under its control
- Develop a port-user and community-supported roadmap for the preferred decarbonization pathway (with continuing safety as a foundation)
- Undertake preliminary business cases to ensure the identified port decarbonization roadmap actions are fully understood and budgeted/funded by stakeholders
- Undertake an assessment of the port organization’s current progress with respect to reporting and establishing a plan to increase transparency and/or compliance with developing sustainability and decarbonization standards.
(*) Ports Sustainable Strategy Development Guidelines plot a path for what ports need to do with respect to accurate reporting/disclosures, and consequently directing decarbonization actions.
This article was written by Guy Reynolds, Executive Advisor – Transactions & Infrastructure Strategies, and Simon Ward, Executive Advisor – Transactions & Infrastructure Strategies, at GHD Advisory.
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