Paving the Way for Low-Carbon Shipping Fuels in Long-Haul Trade Routes

Abstract

In 2023, the International Maritime Organization strengthened its ambition, aiming at net-zero greenhouse gas (GHG) emissions by 2050. This goal depends on the replacement of oil-derived fuels by alternative fuels and motorizations that bring the risk of technological lock-in and increasing global trade costs. The establishment of low-carbon (LC) trade routes (LCRs) is a way to mitigate such risks for the first movers. However, while a dozen LCRs are being considered, few scientific studies have focused on designing and evaluating them, particularly for the trade from emerging economies. We propose a methodology for assessing the economic feasibility, GHG emissions, and policy design of candidate LCRs. We employ it on a shipping route dedicated to the transportation of iron ore, a major dry bulk cargo. Findings show that the use of biomethanol can reduce by 37% the lifecycle GHG emissions of the route. They indicate an increase of 8%–25% in operational costs. This corresponds to 330 and 450 USD/tCO₂e. The success of this strategy depends on the engagement of private and public actors promoted by policies and international agreements, which can be fostered by the existing involvement of the Brazilian and Chinese governments in the companies and harbors of the assessed route.