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31 May 2019

Nordic grouping plan to stop talking, start doing on shipping fuels

A handful of Nordic established shipping concerns, have formed an initiative to cut emissions from cargo ships, which lie outside the Paris climate change accord. These use some of the dirtiest fuels in the world, and if they were a country, would rank about 6th in the global emissions stakes, giving off around 1 billion tonnes of CO2 a year. The company which solves that puzzle might control all global shipping.

We have heard this refrain before, but the difference is that this time, the new grouping called Zeeds (Zero Emission Energy Distribution at Sea), wants to attack this by totally replacing the fuel. Or at least that’s the impression we get.

In the past alliances like the Smart Green Shipping Alliance, have invested tiny amounts of money paying lip-service to the idea and have come up with suggestions like putting sails on massive ships to shave a few percentage points off the pollution. The last press release from that organization was in 2018 and talked about Drax, one of the biggest polluters in the UK, wanting to cut emissions using sails, on transporters in its biomass supply chain

Now six Nordic firms led by Wärtsilä, a specialist in smart technologies for the marine and energy markets and including engineering firm Aker Solutions, Equinor, a Norwegian energy multinational, DFDS, an international shipping and logistics firm, and Grieg Star, ship operating company and Kvaerner in engineering and construction.

This goes deeper than perhaps most people realize. More or less everything manufactured these days is transported from Taiwan or China, and that journey can be halfway around the world and back. Go back 100 years, and manufacturing was largely local, go back 50 years and it was within national boundaries. It is only the advent of the World Trade Organization with its aims to take friction out of global trade, that made such journeys possible, allowing China with its cheap educated labor market, to take a significant amount of manufacturing business.

But for every 20% that Chinese companies may take out of the cost of manufacturing a solar panel, the transportation of the same panel, which is after all mostly glass (in weight terms), has in the meantime gone up by 20%.

If Chinese companies were to add the glass in the US, in a factory staffed by Americans, it may currently be less attractive, but once there is a significant middle class in China, so the pay scales are not so different, then that disadvantage may evaporate.

So in a way solving this puzzle of lowering the pollution of shipping is in order to preserve access to cheap global labor markets.

The collaboration will be spearheaded by Wärtsilä, which will push towards a transition to clean fuels. They plan to do this by addressing the supply, storage and distribution chain of fuels. It is likely that if one company will make green hydrogen or whatever fuel that want to move to, then another will retrofit ships with it, and others will promise to use those ships, creating an exemplar set of trading routes for others to copy. Some other individual companies have attacked this from the point of view of “scrubbing” the fumes from the engines, but we have no data on how effective that is.

The partners say they have already explored potential solutions together, and the most promising ideas will be presented in Oslo at Future Innovation Day – Horizons on June 3rd and during Nor-Shipping on June 4th. We shall have to wait until then.