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      Highlights:

      • The EU sees a need for regulation in the shipping industry in order to achieve the climate targets set as part of the Green Deal.
      • One of the biggest challenges on the road to sustainability is the global availability of CO2-neutral fuels and the creation of the corresponding infrastructure. The shipping industry and ports should work closely together to make the transition a success.
      • In the future, more electricity will be sourced from offshore wind farms. This offers potential for greener shipping and a reduction in CO2 during lay times.
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      ESG is also becoming increasingly important in the shipping industry, especially due to the growing demand for more transparency, climate protection and responsible leadership. Financing from banks and investors is essential for the shipping industry and investors attach great importance to ESG criteria and transparent processes for their customers.

      How can the shipping industry permanently reduce its CO2 emissions and rely more heavily on alternative fuels? A CO2 tax offers a possible solution here, and hydrogen is also being discussed as an alternative fuel. We will now turn our attention to the question of what else is needed in the context of ESG in order to achieve the targets set by the European Green Deal and the International Maritime Organisation. Let's take a look at technologies that offer the potential to change the industry in the long term.

      The European Green Deal

      The European Green Deal (EGD) was presented by the European Commission in December 2019. The aim is to reduce Europe's net emissions of greenhouse gases to zero by 2050 by setting climate and energy targets and becoming climate neutral. This means that emissions are to be reduced by at least 55 per cent by 2030 compared to 1990. Maritime transport is also part of this, accounting for around 11 per cent of global CO2 emissions from the transport sector in 2018. According to estimates by various experts, emissions from shipping could continue to rise significantly if the framework conditions remain unchanged.

      Europe-wide availability of shore power connections required

      One of the biggest challenges at the moment is the availability of CO2-neutral fuels and energy sources. A key factor here is the development of an infrastructure for alternative fuels. Shipping and harbours are interlinked and interdependent.

      In European harbours, technologies such as Onshore Power Supply (OPS) are being used with steady expansion. This allows ships to be supplied with electricity from shore so that the current power generators of the on-board network, such as diesel generators, can be switched off. This is more environmentally friendly for both short and longer lay times.

      There are two types of OPS systems: A distinction is made between public grid connection and independent power generation. In the Port of Hamburg, an independent "LNG hybrid barge" is operated, which is able to generate energy in combined heat and power engines and generators using liquefied natural gas. By 2022, around 76 million euros are to be invested in ten additional shore power connections in the Port of Hamburg.

      Shore power supply will increase

      There is already a high availability of shore power connections in China. There, shore power is mandatory for cruise ships during lay times and from 2022 also for container ships. According to EU regulations, such an obligation will probably also apply in Germany from 2025. By 2023, the German government will provide 176 million euros in funding for shore-side power supply in German ports, which is another important step towards reducing emissions.

      The challenge in Germany so far is still access to shore power and the prices for ships, as onshore power supply is more environmentally friendly but more expensive than production with diesel generators. In order to promote the use of shore power, government regulatory measures are being taken and special offers (e.g. discounts) are being created in the harbours. However, to ensure that shore-side power is actually used, the offer must be made even more attractive - by lowering prices and making shore-side power connections available throughout Europe in the foreseeable future.

      Intelligent harbours

      Last but not least, the use of new technologies to improve mobility in ports plays an important role in making the maritime sector significantly more sustainable. To this end, the EU Commission has defined a series of measures for more sustainable and intelligent mobility in "green ports". Artificial intelligence (AI), which is useful for efficiently coordinating lorries or ship calls, for example, is helping to transform ports towards sustainability. Algorithms learn from historical data which arrival rate and handling time can be expected in which situation. In addition, AI forecasting methods can be used to make containers available more efficiently and damaged containers can be identified more quickly using image recognition. Due to high data volumes in the maritime sector and the increasing possibility of generating data through the Internet of Things (IoT), AI will help to optimise and sustainably advance port processes in the future.

      Outlook - offshore power supply

      Offshore wind power is seen by the International Energy Agency as one of the most important sources of electricity in the future. The size and technology of wind turbines are developing exponentially, while costs have fallen by more than 60 per cent in the last ten years. The new mega turbines have a rotor diameter of up to 220 metres with an output of 15 megawatts (MW). A good dozen of these turbines would be enough to supply a large city like Mainz. Rapid market growth is forecast. The reason for this is the increasing global demand for green electricity, which is also needed to produce green hydrogen, among other things. The advantage over onshore wind turbines: more wind and free space on the seas. The EU Commission has therefore set itself the goal of installing wind turbines with a total capacity of 300 gigawatts (GW) in the North Sea, Baltic Sea, Atlantic and Mediterranean by 2050.

      It is conceivable that offshore wind turbines will act as charging stations for compatible ships in the future. Work is already underway on the first prototypes, such as a charging buoy that is capable of supplying battery-powered or hybrid-electric ships with green electricity. The ship docks at the buoy, switches off the engines and is charged via a cable. The buoy draws its electricity from the surrounding wind turbines. No emissions are produced during the entire process, which means that the technology offers considerable potential to make a positive contribution to reducing CO2 emissions.

      The industry in transition

      Increasing political regulation is presenting the shipping industry with new challenges. In order to cope with this, strategies need to be developed to mitigate the effects of a CO2 tax, the use of alternative fuels needs to be addressed and infrastructures need to be expanded by utilising green technologies. For this to succeed, the shipping industry and ports should work together and develop solutions in order to achieve a holistic approach.


      How the maritime sector is shaping the future with sustainable solutions.

      Your contact

      Monique Giese

      Partner, Corporate Tax Services

      KPMG AG Wirtschaftsprüfungsgesellschaft