Business

ZeroLab: Develop business strategies that reward collaboration in decarbonisation

Carbon credits from insetting can help spread cost of emission reductions in supply chain, overcome current funding gap and speed up transition to low- and zero-emission tech.

Published

3 years ago

August 18, 2022

Admin

ZeroLab by Klaveness, dedicated to the development of new products and business models for decarbonisation, in an article on Wednesday (17 August) suggested high quality carbon credits and a remake of the bunker adjustment clause in contracts for those who want to get started on commercially driven decarbonisation:

Decarbonisation is posing a real prisoner’s dilemma for shipping: how can we overcome individual company incentives in favour of the common good? Economic theory teaches us that regulation is one way out of the prison: by altering present-day incentives, behaviour can shift rapidly. Unfortunately, this is not happening fast enough.

The Paris Agreement was signed in 2015, but six years on the IMO has yet to formalise a target that would align the shipping industry with carbon-neutrality by 2050.

When institutionalised regulation is lacking, another way out of the prison is to develop strategies that reward collaboration. In Klaveness, we are dedicating ourselves to creating products and business models allowing stakeholders in the shipping value chain to collaborate on emission reductions. Business models that incentivise collaboration should allow the participants to move ahead with decarbonisation even as the regulatory framework is lacking, and they must efficiently reduce the risks of being a frontrunner. Two approaches are emerging for those that want to get started on commercially driven decarbonisation today: high-quality carbon credits and a remake of the well-established bunker adjustment clause.

The voluntary carbon market can be a powerful tool for shipping decarbonisation if it supports the right projects. Carbon credits from insetting can do exactly that: insetting refers to projects within the relevant value chain as opposed to offsetting, which refers to carbon reduction or removal projects anywhere and most often outside of the sector where the emissions originated. Today, in the absence of an industry-wide carbon levy, many decarbonisation projects are prohibitively expensive. Carbon credits from insetting can help overcome the current funding gap and speed up the transition to low- and zero-emission technology.

A high-quality carbon credit made available through a robust book and claim-mechanism decouples the emission reduction benefit from the actual project implementing the solution and makes it possible to match ambitious organisations that want to support the realisation of low-emission technology.

Carbon credits from insetting spread the cost of emission reductions throughout the supply chain and allows the purchasing entity, for example a cargo owner, to legitimately claim supply chain emissions reductions in their Scope 3 emission inventory even if their cargo was not carried on the ship that realised the emission benefits. The concept is of particular significance for environmental upgrades of the existing fleet and for fuel-switching. To ensure the environmental integrity of such projects, it is essential to apply stringent additionality criteria. Credits should only be generated from savings that fulfil the additionality criteria, i.e., go beyond mandatory requirements.

Another possibility is to include a carbon-emission adjustment factor (CEAF) in contracts. Very often, the decarbonisation discussion in shipping focuses on the endgame: how will we design zero-emission vessels? When will alternative fuels become available? It ignores the significant emissions reductions that can be obtained through greater focus on operational improvements today. The CEAF-clause should incentivise the operator to meet a pre-agreed emission target (measured for example in kg CO2 emitted per tonne cargo transported), and equally result in reduced freight if the emissions are higher. The CEAF is an option immediately available to impatient operators and cargo owners that would like to make collaboration on decarbonisation commercially tangible.

To accelerate the decarbonisation of shipping, formal regulation is key. In the meantime, collaborative business models are a place to start.

Photo credit: Chris Pagan on Unsplash
Published: 18 August, 2022

Biofuel

Ulsan Port aims to become leading bio bunker fuel supply hub in Northeast Asia

UPA’s Director Byeong-gu Kim unveiled comprehensive plans to promote marine biofuel adoption centered on Ulsan Port at 2nd Forum on the Commercialization of Biofuels for Maritime Vessels in Seoul.

Published

11 hours ago

April 25, 2025

Admin

Ulsan Port aims to become leading bio bunker fuel supply hub in Northeast Asia

Ulsan Port Authority (UPA) on Thursday (24 April) said it is looking to position the port as a leading biofuel supply hub in Northeast Asia.

UPA, Korea’s port operator for energy and petrochemical logistics, emphasised its strategic role in building a stable marine biofuel supply chain aligned with tightening global regulations.

UPA's Director Byeong-gu Kim unveiled comprehensive plans to promote marine biofuel adoption centered on Ulsan Port at a recent biofuel forum in Seoul, highlighting the port's strategic advantages including its world-class petrochemical infrastructure, extensive storage facilities, and specialised handling expertise.

The presentation showcased UPA's commitment to developing the necessary facilities and operational frameworks to become Northeast Asia's “premier biofuel bunkering destination”.

“As IMO environmental regulations intensify, Ulsan Port Authority is strategically positioned to lead the transition to alternative fuels,” stated UPA President Jae-young Byeon.

“Marine biofuels represent a practical alternative that can be implemented immediately without requiring new vessel construction or retrofitting. UPA will continue to strengthen port-centered biofuel supply networks and create a competitive eco-friendly marine fuel market through our advanced infrastructure and technical expertise.”

Chief Executive of the Korea Maritime Cooperation Center (KMC), Hong Sun-bae, emphasised that “the strategic partnership between the shipping industry and the logistics sector has become more important than ever in this era of climate-friendly economic transition.”

The 2nd Forum on the Commercialisation of Biofuels for Maritime Vessels, hosted by the Ministry of Oceans and Fisheries and co-organized by UPA and KMC, drew around 300 key stakeholders from across the shipping, energy, terminal, shipbuilding, and finance sectors.

The event underscored the increasing urgency of eco-friendly fuel adoption, following the International Maritime Organization (IMO)'s approval of mid-term greenhouse gas reduction measures.

Expert sessions featured actionable insights and market intelligence from key players in the maritime and energy sectors:

Key outcomes from the 83rd Marine Environment Protection Committee (MEPC83) by Team Leader Dae-jung Hwang of KMC
Biofuel utilisation and demonstration cases by Manager Dae-sik Seo of HMM
Current usage status and challenges of B100 biofuel by Manager Min-guk Jang of G-Marine Service
Market outlook for marine biofuels by Chief Surveyor Jae-hoon Lim of DNV
Case studies of biofuel applications for marine engines by Team Leader Jae-yup Seo of HD Korea Shipbuilding & Offshore Engineering
Global marine biofuel market trends and bunkering developments by Senior Manager Yul-kyung Hong of Hyundai Fuels

Photo credit: Ulsan Port Authority
Published: 25 April, 2025

Shipping Corridor

SFOC report proposes green methanol-fuelled Korea-Europe shipping corridor

Corridor will run between Pyeongtaek Port—the largest hub for automobile imports and exports in South Korea—and major European ports of Bremerhaven, Antwerp, Zeebrugge, and Southampton.

Published

11 hours ago

April 25, 2025

Admin

SFOC report proposes green methanol-fuelled Korea-Europe green shipping corridor

Korean non-government organisation Solutions for Our Climate (SFOC) on Wednesday (23 April) released a report proposing the establishment of a green methanol-fuelled South Korea-Europe shipping corridor.

The proposed corridor will run between Pyeongtaek Port—the largest hub for automobile imports and exports in South Korea—and major European ports of Bremerhaven, Antwerp, Zeebrugge, and Southampton, presenting strategic pathways for the decarbonization of the maritime sector.

South Korea has announced its “Greenship-K Program” to accelerate the adoption of eco-friendly vessels and set a national goal to achieve a 100% reduction in greenhouse gas (GHG) emissions from shipping by 2050.

Focusing on a green methanol-fuelled Pure Car and Truck Carrier (PCTC) operation model, the report quantitatively assessed the potential for greenhouse gas reduction along key routes. Notably, the Bremerhaven–Pyeongtaek route alone is estimated to reduce more than 1.4 million tonnes of CO₂ emissions annually, given its high cargo volume.

The report proposed the adoption of green methanol as the primary fuel for the corridor, with a long-term goal to transition toward e-methanol. This shift is expected to reduce CO₂ emissions by more than 70% compared to conventional fossil fuel use.

Beyond fuel switching, the report emphasised the importance of securing a stable green fuel supply chain, establishing supportive legal and institutional frameworks, and fostering close public-private cooperation among shipping companies, cargo owners, port operators, and fuel suppliers to make the corridor a viable reality.

“With these foundational elements in place, Pyeongtaek Port is well positioned to become the starting point of Korea’s transition toward a decarbonised maritime sector,” SFOC said.

Note: The full report by SFOC can be viewed here and it is also available in Korean here.

Photo credit: Solutions for Our Climate
Published: 25 April, 2025

Biofuel

MASH Makes powers first vessel trial with bio bunker fuel from carbon-negative process

NORDEN and MASH Make completed the world’s first commercial vessel trial using B20 blend produced from a carbon-negative process; vessel operated on a roundtrip voyage from Singapore to Brazil.

Published

11 hours ago

April 25, 2025

Admin

MASH Makes powers first vessel trial with bio bunker fuel from carbon-negative process

Global shipping company DS NORDEN and renewable energy company MASH Makes on Thursday (21 April) successfully completed the world’s first commercial vessel trial using biofuel produced from a carbon-negative process.

The vessel operated on a roundtrip voyage from Singapore to Brazil, successfully using 65 tonnes of fuel blend with 20% MASH Makes biofuel in its auxiliary engine.

“This trial proves that MASH Makes’ biofuel is suitable for marine engines, and it marks an important milestone towards bringing the fuel into our operation,” said Henrik Røjel, Head of Decarbonisation and Climate Solutions, NORDEN.

The trial demonstrated that MASH Makes’ biofuel is technically a drop-in fuel, compatible with existing systems and capable of reducing reliance on fossil fuels in specific marine applications.

The results point to a practical path for shipowners to cut emissions without waiting for new infrastructure.

If the new agreement by the International Maritime Organization (IMO) to cap and price excess emissions globally is ratified in October 2025, MASH Makes offers a solution that enables shipowners to start significantly reducing their emissions well before the agreement takes effect in 2028.

“Our biofuel meets the technical requirements of the shipping industry and can be used in unmodified engines. It’s a seamless, scalable alternative ready to cut emissions today,” said MASH Makes CEO Jakob Bejbro Andersen.

Unlike emerging fuels like green hydrogen or ammonia, which require new infrastructure, MASH Makes biofuel integrates directly with existing systems.

NORDEN acquired a minority stake in MASH Makes in 2023 to strengthen its future supply of renewable fuels. Since the acquisition, the two companies have worked closely together to validate the biofuel for marine usage.

Photo credit: DS NORDEN
Published: 25 April, 2025