July 2 ------ While many in the shipping industry have long argued that converting to green fuels and next-generation green technologies represents a significant cost to the shipping lines, a new study from the NGO Transport & Environment contends that there will be almost no impact on the price of consumer goods by running ships on renewable hydrogen. Based on a real-world example of a voyage on an average large containership sailing between China and Belgium, the analysis concludes that the likely impact on seaborne transport costs would be negligible for the fuel but does not consider the cost of building the ships to operate on these new fuels.
Long a critic of the shipping industry’s efforts and slow progress at decarbonization, T&E used the EU’s current proposal to charge carbon pollution from ships, combined with the proposal to mandate small amounts of green e-fuel use by 2030 in their report. They sought to analyze the effect that the proposals would have on container shipping prices and the resulting impact on consumer goods manufactured in China and transported to Europe. “Green shipping would add less than 10 cents to a pair of Nikes. This is a tiny price to pay for cleaning up one of the dirtiest industries on earth,” said Faig Abbasov, shipping director at T&E. “In a year where shipping companies are making bigger profits than Facebook, Google, Amazon, and Netflix combined, it is right to question whether shipping companies are doing enough.”
A central argument against ambitious green measures is that they would push up prices for consumers. T&E, however, contends that there are economies of scale in global supply chains that are not hypersensitive to shipping fuel costs. They tested their hypothesis by analyzing what they called a typical containership, the 153,000 dwt Taurus. Built in 2016 in South Korea, the vessel is owned by Costamare of Greece and managed by Evergreen sailing between Asia and Northern Europe. It has a capacity of 14,000 TEU. They analyzed data from the vessel’s AIS records. “The analysis of shipments from Shenzhen in China to Europe debunks claims by the shipping industry that ambitious measures to green the industry will be prohibitively expensive and cause exorbitant price hikes for consumers,” concludes T&E. They argue that running ships entirely on green hydrogen-based fuels would add less than 10 cents to the price of a pair of Nike sneakers and approximately $8.50 for a refrigerator.
In the worst-case scenario, T&E’s analysis concludes cargo carriers would face increased transport costs of 1 to 1.7 percent, or actual costs of approximately $9 to $14 per TEU. The study uses what they call the most extreme case of a ship running on 100 percent green fuels and makes assumptions that the carriers would pass on all the costs which would ultimately reach consumers. Despite this, they argue that on an itemized basis, the price of consumer products would barely budge. “European policymakers, who are currently voting on two key proposals to clean up shipping, should be emboldened by this,” says T&E arguing for the adoption of the measures under consideration by governments across the EU and the laws that will be voted on in July.
The full report available online looks at a variety of fuel options concluding that both fossil LNG or blended e-LNG/fossil LNG pathways would be the least economical way to comply with the coming regulations. The analysis also concludes that the relative cost-effectiveness of different fuel pathways for shipping can change as the uptake of sustainable and scalable fuels increases, but of course, there is also the substantial investment required to develop the technology and infrastructure to support the adoption of e-fuels. T&E says that the technologies are emerging and now what is required is the green e-fuel mandate that guarantees hydrogen fuel suppliers a market and drives adoption.
Source: maritime-executive.com