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Enterprise Explains: Arctic Shipping Part 2– ECAs may push the shift to alternative fuels:The International Maritime Organization (IMO) recently approved two new emission control areas (ECAs) in the Canadian Arctic waters and Norwegian Sea during the Marine Environment Protection Committee (MEPC) meeting and ships traveling through the ECAs will have to limit their emissions of sulfur oxides and nitrogen oxides, according to a Clean Arctic Alliance (CAA) press release. Vessels are obliged to switch to low-sulfur distillate fuels or other cleaner non-fossil fuels, such as green methanol and green ammonia derived from green hydrogen.
In part two of this two-part explainer, we look at how the push to establish new emission control areas (ECAs) will have a knock-down effect on the shift to alternative shipping fuels and the impact it will have on our region.
Missed Part 1 of our explainer?Check out our breakdown of how the shift in shipping routes to the Arctic is accelerating the release of CO2 and black carbon from oil-based fuels used in ships using heavy fuel oils.
The proposed ECA for the Canadian Arctic would cut particulate like black carbon matter emissions by 58% by 2030, according to a CAA press release. The Mediterranean Sulfur ECA (SECA), which has already been adopted, will cut down on sulfur dioxide emissions by up to 80% by 2030, the statement says. Existing ECAs include the North American area, Baltic Sea, North Sea, and US Caribbean Sea area, according to CAA data.
Sustainable shipping fuels could cost the same as fossil fuels by 2035 if we integrate decisive emissions policy, according to a report by Finnish maritime manufacturing company Wärtsilä. The cost of using fossil fuels could more than double by 2030 due to emission limitation policies, including the EU Emissions Trading System (ETS) adopted in January.
Enter clean fuel: A switch to distillates or cleaner fuels globally could result in the reduction of black carbon “by around 50% to 80%,”CAA lead advisor Sian Prior told us. In the short term, the “switch to distillate or switch to cleaner fuels now would be a simple, but broader approach.” Ultimately, it is important that the upcoming regulations are “ambitious enough to put shipping on an unambiguously 1.5 centigrade compliant pathway,” he added.
A case of green methanol? Green methanol can be produced from biomass, captured carbon, or green hydrogen and stands to slash emissions from shipping vessels by 60% to 95% compared with conventional fossil fuels.
Our region is no stranger to green fuel: Egypt’s Suez Canal Economic Zone (SCZone) inked a framework agreement in October with C2X — owned by AP Moller Holding and AP Moller-Maersk — worth some USD 3 bn for the production of green methanol. The SCZone also inked a land use contract back in 2021 with a company jointly owned by Abu Qir Fertilizers, Helwan Fertilizers, and Al Ahly Capital Holding to establish a USD 2.6 bn methanol plant at Egypt’s Ain Sokhna port and industrial complex.
The region is shaping itself to be a green hydrogen hub: Regional players have been scurrying to develop green hydrogen development facilities to ease their reliance on fossil fuels. The UAE’s AD Ports Group and Abu Dhabi energy company Masdar inked an MoU in December to explore the development of a green hydrogen production hub — along with export terminals for green hydrogen — in Khalifa Economic Zone Abu Dhabi (Kezad). In the same month, UAE-based energy company Masdar inked an MoU with the Port of Amsterdam and Dutch companies SkyNRG, Evos Amsterdam, and Zenith Energy Terminals to explore the development of a green hydrogen supply chain between Abu Dhabi and Amsterdam. The moves complement the UAE’s National Hydrogen Strategy, which targets scaling up local hydrogen production to 1.4 mn tons per annum by 2031.
We are getting more production sites: The SCZone inked a framework agreement in October with the China Energy Company to set up a USD 6.75 bn green hydrogen plant spanning 500k square meters in Sokhna Industrial Zone for the production of 1.2 mn tons of green ammonia and 210k tons of green hydron annually. Saudi Arabia also inked an MoU in green hydrogen with India the same month, which aims to set up a framework for the co-production of green hydrogen and renewable energy in both nations.
