The Week in Alt Fuels: Shipping’s proxy fuel fix
A book-and-claim mechanism could offer a temporary bridge between ambition and action in shipping’s green fuel transition.
IMAGE: Illustration of book-and-claim scheme in shipping. ENGINE via ChatGPT
A number of shipowners hesitate to commit to low- and zero-emission fuels without guaranteed availability, while many fuel producers hold back due to a lack of assured demand. This well-known “chicken-and-egg” problem continues to undermine progress.
After all, how can fuel uptake be accelerated when demand and supply remain out of sync.
A book-and-claim mechanism could potentially help break this deadlock.
The supply chain model allows shipowners to buy emission reductions from other shipowners who have already invested in low- and zero-emission fuels. These reductions will be bought at price premiums, even if the actual cargo is transported on fossil-fuelled vessels.
The missing link
This mechanism “can help solve the mismatch between supply and demand for low-emission alternative fuels by allowing alternative fuels to be consumed where there is a supply, and allocating the benefits and costs to where there is a demand,” Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping explains in a report.
A separate Global Maritime Forum (GMF) report highlighted how the model helps “unblock geographical bottlenecks” and allows the sector to focus on developing market demand and fuel technologies, instead of being limited by fuel availability in specific ports.
By decoupling physical bunkering and consumption from its sustainability attributes, book-and-claim can enable emission reductions to be accounted for regardless of where the fuel is actually bunkered, GMF noted.
The model is gaining traction as a practical tool to address an impending renewable fuel supply-demand imbalance. It can also act as a bridge between cargo owners willing to pay a premium to reduce their Scope 3 supply chain emissions, and shipowners who want to invest in cleaner fuels but lack sufficient commercial incentives.
Several shipowners now offer book-and-claim freight directly to cargo owners.
IKEA, Amazon, Nike and other members of the Zero Emission Maritime Buyers Alliance (ZEMBA) have joined Hapag-Lloyd’s book-and-claim scheme. Hapag-Lloyd uses biofuels and biomethane to reduce greenhouse gas (GHG) emissions on some of its ships against a baseline. These GHG emission reductions can then be sold on as green freight to cargo owners.
Meta and Microsoft have also joined separate book-and-claim programmes with Norden. And logistics companies are joining in too.
For instance, Swiss retailer Avolta will buy green freight from Germany's DB Schenker, which has GHG reduction contracts with Hapag-Lloyd, Mediterranean Shipping Company (MSC) and CMA CGM.
Some of their container ships run on biofuels and DB Schenker uses a book-and-claim system to claim GHG reductions, which it can pass on to Avolta and other customers.
Need for caution
Still, the success of book-and-claim will depend on more than just technical feasibility.
Without strict oversight, the model risks being seen as greenwashing where companies report emission reductions without making operational changes. In a worst-case scenario, it could stall meaningful progress and delay deployment of physical alternative fuels.
Transparency, third-party verification and registry integrity will be critical.
Companies participating in a book-and-claim system can provide “reputable evidence of their efforts to reduce their emissions,” the GMF noted, but only if the model is transparent, credible and consistently enforced.
In other news this week, the Estonian government has launched a €25 million ($28.5 million) grant scheme to subsidise retrofits of existing vessels to operate on alternative bunker fuels. Shipowners and operators will be able to claim between 15-30% of eligible retrofit costs as subsidies. Grants will be capped at €5 million ($5.7 million) per project, with zero-emission potential technologies qualifying for the highest rates.
ESL Shipping has secured a €70 million ($79.2 million) loan from Sweden’s state-owned bank Svenska Skeppshypotek to build four methanol dual-fuel vessels. The four 17,000-dwt vessels will feature dual-fuel methanol engines and dedicated methanol tanks, enabling them to run on both methanol and conventional marine fuels.
LNG and low-emission ammonia will initially be the most cost-effective pathways for shipping companies to comply with the IMO's Net Zero Framework, GMF forecasts in a new report. But it expects ammonia consumption costs to drop below LNG's by the mid-2030s and for ammonia to become the preferred low-emission fuel.
By Konica Bhatt
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