COP28: 30 industry stakeholders pledge to boost hydrogen-based fuel supply and demand by 2040

30 maritime companies signed a joint pledge at COP28 to scale the demand and supply of green hydrogen and hydrogen-derived marine fuels over this decade to help the industry meet its decarbonisation targets.

PHOTO: MOL's dual-fuel methanol carrier Cajun Sun which can run on methanol along with conventional marine fuels. Mitsui O.S.K. Lines

Signatories included ship owners, operators, ports, maritime financiers, equipment manufacturers and green fuel producers.

Bunker fuel offtakers including shipping majors A.P. Moller-Maersk, Mitsui O.S.K. Lines (MOL) and X-Press Feeders, committed to “full decarbonization of the maritime sector, beginning with a shift to use of at least 5% - striving for 10% - scalable zero-emission fuels in 2030, providing a dependable and ambitious demand signal that will help catalyze investments in at-scale green hydrogen production.”

On the other hand, green fuel producers like Orsted, ET Fuels, First Ammonia and OCI Global and bunker suppliers like Bunker Holding pledged to “provide at-scale green hydrogen/hydrogen-derived fuels to ensure an affordable and minimally disruptive transition for the global shipping sector.”

“Shipping is positioned to be a key offtaker of zero-emission fuels because, unlike in any other sector except aviation, its global regulator (the IMO) has committed to implement legally binding regulations that will mandate demand and use of fuels with near-zero and zero GHG emissions,” the Joint Commitment noted.

Dealing with the chicken-and-egg dilemma

In July, the IMO’s Marine Environment Protection Committee (MEPC) adopted a revised GHG strategy with the ambition of achieving net zero emissions “by or around” 2050. The revised strategy also includes a 20% reduction in GHG emissions by 2030 (striving for 30%) and a 70% reduction by 2040 (striving for 80%).

According to the joint pledge, achieving these targets would require reducing vessel GHG intensity by 86% by 2040. To achieve this ambition, the letter estimated that 5 million mt/year of green hydrogen feedstock will be required by 2030. This will need to be scaled up dramatically to 90 million mt/year by 2040.

However, it is often argued that shipping is caught in the “chicken-and-egg” conundrum, as an increase in green fuel supply depends on an increase in demand, and a demand for green fuel determines its availability.

As a solution, the offtakers pledged to invest in zero-emission vessels to drive clear demand signals. They also agreed to "develop strategies" to align with IMO's 2050 target.

Signatory ports of Fujairah and Seattle committed to strengthen green fuel infrastructure and “become part of green corridor projects which help further incentivize the production of green hydrogen and hydrogen-derived fuels for use in shipping.”

Green fuel producers pledged to “supply sizable shares of the 5.5 [million mt/year of green hydrogen], striving for an 11 million-ton 2030 production target [of green hydrogen] for use by the shipping sector.”

Some of the other signatories included engine manufacturer MAN Energy Solutions and shipping industry coalitions Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping and Getting to Zero among others.

“Regardless of what other future-fuels eventually come into play, green hydrogen and green fuels derived from it will undoubtedly play a major role in all scenarios [for shipping],” said Uwe Lauber, chief executive of MAN Energy Solutions.

The joint pledge was initiated by the UN High-Level Champions and Rocky Mountain Institute.

Policy support crucial

The pledge urged the IMO and member states to adopt ambitious mid-term measures in 2025 for implementation in 2027. It should include GHG fuel standards on a well-to-wake basis as well as a GHG pricing mechanism such as a carbon levy.

Additionally, it suggested that national governments align supply-side policies with their demand-side policies. This will provide long-term price certainty for producers and reduce offtakers' risks, the letter argued. It also called for incentives to advance and scale green shipping corridors.

By Konica Bhatt

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