Running ships entirely on green hydrogen-based fuel (e-fuel) will add less than € 0.10 to the price of some coaches and up to € 8 for a fridge¹, a new study shows on the cost of degassing European shipping. The analysis of shipments from Shenzhen in China to Europe denies claims by the shipping industry that ambitious measures to make the industry greener will be excessively expensive and cause excessive price increases for consumers.
Faig Abbasov, shipping director at T&E: “Green shipping will add less than 10 cents to a pair of Nikes. It’s a small price to pay for cleaning one of the dirtiest industries on earth. 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. ”
The shipping industry is the backbone of world trade. But to date, the industry has been slow to decarbonize and it remains one of the heaviest polluting industries in the world. A key argument against ambitious green measures is that it will push up prices for consumers.
The study shows that even in the most extreme case of a ship running on 100% green fuel, prices will not rise significantly. This is if rich freight carriers were to pass on the cost to consumers. This reflects the economies of scale in global supply chains that are not hypersensitive to fuel costing.
European policymakers, who are currently voting on two key proposals to clean up shipping, should be encouraged by this, says T&E. The first is a historic expansion of the carbon market to shipping that was supported in the European Parliament last week and is now in the hands of national governments. The second is a ship fuel law that will be voted on in July.
Use the EU’s existing proposal to eliminate carbon pollution from ships, combined with the proposal to mandate small amounts of green e-fuel consumption by 2030²T&E analyzed what effect this would have on container shipping prices and consumer goods coming from China.
In the worst case scenario, freight companies will face increased transportation costs from 1% to 1.7%. On a detailed basis, however, the price of consumer products would hardly move. A few coaches will only cost € 0.003 more, a television € 0.03 and a fridge up to € 0.27 more.
Faig Abbasov, concluded: “A decade ago, the only hope was to decapitate shipping to stop world trade itself. Now we have the technology, but what is missing is a market signal for green hydrogen producers. As a world leader in shipping, the EU must set an ambitious green e-fuel mandate that guarantees hydrogen fuel suppliers a market. Green shipping is possible. It is a matter of political will. “
Courtesy of Transport & Environment.
¹ The cost increase calculations are based on different hypothetical fuel mixtures for an actual container vessel (TAURUS) sailing between China and Europe. Data are obtained from the satellite-based automatic identification system (AIS) and crossed with the EU MRV database. For example, the range costs for trainers are € 0.05 to € 0.08, depending on the H2-based fuel chosen: ie e-ammonia, e-LNG (e-methane) or e-methanol. All the calculations can be found in the report and publicly available calculation model.
² The most ambitious proposals on the table for EU shipping include: 1) a carbon market that covers all intra-EU voyages and 50% of extra-EU voyages using a life cycle approach; 2) mandate a green e-fuel subquota of 6% by 2030 and 3) require ships to achieve an overall reduction of 14% fuel greenhouse gas intensity by 2030.
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