Green Corridors Can Help Decarbonize the Shipping Industry
October 3, 2022
Green corridors are routes that are exclusively used by ships running on alternative fuels. Recently, their feasibility has been widely debated by industry players. Most agree that green corridors can help de-carbonize the shipping industry but there are still some uncertainties about implementing them. But first comes first – what are green corridors and what are the different types that industry players can use?
The Logic behind Green Corridors
Broadly speaking, green corridors are specific routes that make zero- and low-emission shipping more feasible. They correspond to economic zones where industry players can implement new business models and advanced technologies while cooperating with regulators and policymakers. Safety regulations, financial incentives, and regulatory measures will help businesses lead the way. International freight forwarders, on the other hand, can make arrangements about sharing benefits and costs and stimulating demand.
More specifically, green corridors are routes that connect various ports and support zero-emission shipping. These routes are specifically designed for ships that use low greenhouse emission fuels. The first such route will be connecting the ports of Shanghai and Los Angeles across the Pacific Ocean.
Types of Corridors
There are three types of green shipping corridors – network, point to point, and single point. Single point refers to a route that is tied to a specific port hub or location and enables round-trip bunkering. Point to point corridors connect two ports to facilitate commodity shipping. The third type, network will connect multiple ports where cargo ships can run on green fuels.
Feasibility of Establishing Green Corridors
A number of questions still remain when it comes to deploying this solution at scale. One is what type of bunkering, storage, and port infrastructure is available to enable the handling, storage, and shipping of fuel. Green fuels typically have specific handling and storage requirements. Bunkering and port operators should thus focus on the capacity needed to meet the fuel requirements of green corridors.
Another question is whether end customers and carriers will be willing to support green logistics solutions that facilitate zero-carbon shipping. A third question is about the size of the investment that carriers and shipowners would need to make toward retrofits and purchasing new ships. A final question for stakeholders to consider is whether there are sufficient green sources to power commercial vessels.
The three main focus areas here are regulatory, economic, and technical. The regulatory aspect refers to the extent to which carbon subsidies would impact green corridors. Economic feasibility mainly pertains to the funding sources available and the sharing of financial risk among all stakeholders. Technical feasibility is about the preparedness of carriers to deploy the technology needed to create green shipping corridors. Whether green fuels are viable depends on the total cost of ownership of cargo ships. TCO includes components like voyage and daily running costs, cost of capital, depreciation of the vessel, fuel cost, and whether larger tanks will be required to store green fuels.
