More than 80% of the world’s traded goods travel by ship, with maritime transport accounting for 2–3% of global greenhouse gas (GHG) emissions, according to the World Economic Forum. As part of the International Maritime Organization’s (IMO) commitment to support the UN Sustainable Development Goal 7, it is strengthening targets within its 2023 GHG strategy, with the aim of accelerating the adoption of zero or near-zero GHG emission fuels of at least 5% (striving for 10%) of the energy used by 2030.

As the home of major global shipping lanes and transshipment and bunkering hubs, the Asia-Pacific region has a key role to play in the sector’s delivery of these GHG reduction targets. As such, the Port of Singapore – the largest in the world – has already shown active engagement in developing its own green corridors, to address the urgent need for new technologies and alternative fuels adoption.

How do we decarbonise international shipping, and why is regional collaboration important?
While bunkering – supplying fuel – drives demand, it is important to remember that decarbonisation is about more than just refuelling. It’s about producing, sourcing and transporting new fuel alternatives – something that cannot happen in isolation, or in Singapore alone.

Singapore sits in the heart of the Indian and Pacific oceans, where countries across the region are developing national hydrogen strategies for domestic industries and export markets (and more energy-producing countries may emerge in the future). Here, there is an opportunity to tap into these newly-created energy markets through regional cooperation. For this, dialogue and collaboration between all stakeholders is required at national and regional levels to create synergies that deliver wider benefits.

While Singapore and countries in the region have often been active in decarbonisation discussions, a joined-up effort bringing demand and supply hubs together is required to build a more compelling case for alternative fuels investment, which could see success within a regional context.

This is where initiatives like the Silk Alliance come in. It was established in May 2022 by the Lloyd’s Register Maritime Decarbonisation Hub (a joint initiative between Lloyd’s Register and Lloyd’s Register Foundation, which aims to accelerate the safe and sustainable decarbonisation of the maritime industry).

What is the Silk Alliance and how does it support maritime decarbonisation?
The Silk Alliance is a green corridor cluster focused on a fleet that predominantly bunkers in Singapore and operates across the Indian and Pacific oceans. It comprises stakeholders from across the full value chain, including international shipping, shipbuilding, financing and marine fuel supply chains, while also bringing together representatives from both the public and private sector.

Upon its creation, the Alliance brought together its members – ship managers, financiers, fuel suppliers, governments and shipyards – and quickly adopted the First Mover Framework, which aims to highlight key transition strategies across the entire supply chain.

After dedicating the last two years to building trust and relationships between key stakeholders and establishing its main priorities through pre-feasibility studies, the Alliance shared its implementation plan last year, setting out key milestones until 2030. These include deploying pilot vessels with low-carbon methanol in 2026 and having a scaled ammonia supply in place for Silk Alliance demand, delivered to Singapore before 2030.

Beyond key milestones, this approach can teach us a lot about one of the main challenges faced by countries around the world when it comes to decarbonisation – the need for cross-sector conversations. To help better inform investment decisions, the Alliance initiated three key workstreams:

• Fleet and fuel demand: Focused on aggregating demand and understanding of the evolution of the fleet replacements and retrofits.
• Fuel supply: Examining fuel production pathways, carbon intensities and cost drivers to inform potential investment decision and transition approach.
• Finance: Identifying the scale of the cost gap for the Alliance, and ways it could be bridged, taking key financing levers and policy support into account.

These workstreams embody a holistic approach, designed to promote integrated business cases across the supply and demand side to increase the chances of success.

While the Silk Alliance focuses on regional vessels that cluster in Singapore, the recent Maritime Fuels Supply Dialogues (MFSD) launched on 16 April 2024 targets the multiple regional demand centres and potential to aggregate demand further.

The first MFSD meeting brought together energy and transport ministries across the Asia-Pacific and Africa, including Singapore’s Ministry of Transport, making the case for dialogues focused on policy levers and financing mechanisms that can support fuel supply development and opportunities for regional collaboration.

What is the biggest barrier to decarbonising shipping?
One of the main challenges that comes with maritime decarbonisation, as identified by the MFSD, is the lack of mechanisms to bridge the cost gap of hydrogen-derived fuels (such as e-ammonia, e-methane and e-methanol). Hydrogen production projects remain largely at ‘concept’ stage, with limited projects reaching the final investment decision (FID) stage. According to International Energy Agency (IEA) data, this equates to 447,000 tonnes of heavy fuel oil e-fuel (HFOe) availability by 2027 from projects that have reached FID, which is only 4.3% of total project announcements.

Yet, hydrogen is a versatile energy source that can be utilised in various sectors including maritime, making it a key fuel source to promote and attract investors by showcasing its broader applications. Produced from renewable energy sources, binding green hydrogen offtake agreements remain sparing, particularly for uses in maritime operations. However, ministries participating in MFSD remain motivated, as highlighted in a recent joint statement: ‘Significant hydrogen production opportunities and growing demand for clean fuels in the region will deliver opportunities to develop mutually beneficial supply chains and unlock economies of scale, also across borders and sectors.’

Where does the fuel come from? 
This is one of the key questions that initiatives like the Silk Alliance and the MFSD must examine, both from an operational and investment perspective.

Singapore launched a national hydrogen strategy in 2022. In addition, many Asia-Pacific and African countries are well-positioned to supply these regional demand hubs and have already developed, or are preparing, national hydrogen strategies, including Japan, India and South Korea. An AGHA and McKinsey report estimates that Namibia and South Africa could tap into a 10–22mn tonnes of hydrogen equivalent export market, mostly to Japan, South Korea and the south-east Asian market, with landed e-ammonia prices to Asia found to be competitive with other locations, such as Saudi Arabia and Western Australia.

Countries may arguably reap developmental benefits as part of building a robust regional fuel supply chain too. With these economic measures, policy makers need to factor in risks and the wider human, social and biodiversity impacts such that these unchartered market opportunities are not at the expense of a just and equitable transition.

Working with key maritime, transport and energy stakeholders in these nations could prove mutually beneficial to understand the wider risks and opportunities. Large scale infrastructure required for fuel production and distribution may also be repurposed to unlock and accelerate the roll-out of other energy sources across the territory, such as electricity.

There is another challenge – finance. Building infrastructure from the ground up is a costly venture that few are willing to undertake, mainly due to the current limited demand and cost gap of e-fuels relative to conventional fossil fuels.

How can we pay for decarbonising shipping? 
Green hydrogen holds immense promise as a game-changing solution for both energy security and climate targets. But each stakeholder at every level must be clear on what this new future holds for them, in order to unlock the required investment at a global, national and regional level.

It is also vital to remember that key operational and financing challenges can only be solved if decarbonisation efforts are backed by policy, both at a national and global level. While green initiatives that shape the decarbonisation picture around Singapore, such as the Silk Alliance and MFSD, can provide a framework and help advise stakeholders, both private and public, international and effective policies remain a key lever to enabling the implementation and regulation of alternative fuel sources, such as hydrogen.

Demand for green energy, especially hydrogen, is like a ‘dripping tap’ for now. Once policy support starts, the rest will follow, most likely at a rapid pace, bringing on the next big operational challenge – scaling. This is why we must continue to promote regional dialogue between large, established ports – such as Singapore – and their regional partners, while bringing in experts from sectors beyond maritime: namely, energy and transport. Together, we can build a greener future for our oceans and seas.

• Further reading: ‘Maritime decarbonisation: ports and green shipping corridors’. The Port of Huelva is assisting in the development of both alternative maritime fuels and green shipping corridors, thanks to its geographical position in the southern part of Spain. Director of the Port Authority of Huelva, Ignacio Álvarez-Ossorio Ramos, explains.
• As shipping strives to cut greenhouse gas (GHG) emissions, a raft of regulatory changes are on the horizon. But do they fudge the complex issue of maritime emissions reduction? Eirik Nyhus, Vice President, Director Environment, DNV, outlines what lies ahead.