Key considerations for establishing a green shipping corridor
What is a green shipping corridor?
A green shipping corridor is a route from one port to another where carbon-neutral ships start using carbon-neutral fuels (well-to-wake) earlier than required by existing rules and incentives. This makes green shipping corridors key enablers in accelerating the early adoption of these fuels by addressing and resolving key barriers on a manageable scale. Key identified barriers for the uptake of carbon-neutral fuels are low demand for green transport, high fuel cost, lack of fuel availability and bunkering infrastructure, technical immaturity, and lack of specific safety regulations. As the first initiators to declare green shipping corridors, the Clydebank Declaration from COP26 (2021) states: “Signatories agree that fully decarbonized fuels and technologies should not increase global greenhouse gases (GHGs) at any stage of their life cycle” and recognizes that not all vessels transiting a corridor would need to be zero-emission vessels or to participate in the corridor partnerships.
More than 50 announced green shipping corridor initiatives
DNV’s database recorded 57 green shipping corridor initiatives as of February 2024. Announcements doubled from 22 in 2022 to 44 in 2023, the year the IMO also adopted its revised greenhouse gas strategy. The strategy is now aiming for a 20% reduction in GHG emissions by 2030, 70% by 2040 and net-zero by 2050, making the uptake of carbon-neutral fuels even more urgent. Various initiators have announced green corridors involving diverse ships, fuels and technologies. Most initiatives are in the early planning phase. In November 2023, the Global Maritime Forum published a comprehensive progress report on green shipping corridors, presenting a status overview of 44 corridor initiatives.
Possible initiators and goals
The initiators and goals of a specific green shipping corridor will vary from project to project. Every green shipping corridor aims to contribute to developing steps along several different axes. Examples include increased fuel production and infrastructure development, technology maturity and cost reductions, accelerated development of rules and regulations for safety, development of new supporting policies, growing market demand for green shipping services and green contracts. Green shipping corridors can be an important playground for testing, proving and scaling new fuel solutions and technologies, targeting decarbonization and digitalization.
Digitalization - an enabler for efficient green shipping corridors
Digitalization will be a key enabler for efficient and smart future corridors that could use digital-enabled optimization to unlock energy saving potentials. In a digital green shipping corridor or network, enhanced integration and communication among ships, shore offices and ports facilitate several critical benefits. These include standardization, improved planning, streamlined scheduling, efficient logistics, and enhanced information integrity and transparency. Leveraging digital tools also boosts fleet utilization and performance, leading to energy and cost savings. Digital technology also plays a pivotal role in preparing for the rise of autonomous operations, even within the logistics system.
Moving from idea to realization
Moving from idea to realization of corridors will take time and involves several phases and milestones. The start of the process and involvement of key stakeholders is crucial. The stakeholders should strive to reduce the risk of unnecessary delays, establish momentum and, most importantly, identify cost gaps and cost-sharing mechanisms such as procurement policies, green financing, government incentives and regional supporting instruments to bridge the cost gap. To accelerate the development of green shipping corridors DNV introduced a three-step approach. This builds on our experience of more than a decade with existing green shipping corridors in Norway, pilots in the Green Shipping Programme, pre-piloting work in the Nordic roadmap project and other large-scale joint industry projects.
DNV’s stepwise approach assists stakeholders starting out on green shipping corridors
The purpose of DNV’s three-step approach is to accelerate the process by guiding stakeholders from the initial idea, focusing on early identification of key barriers and actions for overcoming potential showstoppers. While our approach covers only the initial feasibility phase, we also have experience guiding projects through all phases of the process.
Taking informed decisions to build your business case
In step 1 of DNV's three-step approach, data is gathered and evaluated on five main elements to establish a green shipping corridor: the type, volume and frequency of cargo; the transport system design; the on-board energy source; the energy supply; and the financial tools and support mechanisms. For the specific corridor, the step maps out details on the transport system, fleet composition, operational profiles, relevant energy carriers, potential stakeholders and possible financial support schemes. Additionally, an initial high-level techno-economic evaluation of potential on-board energy carriers and technologies is provided. These insights aid in constructing the business case as detailed in step 3 and offer talking points for all stakeholders to collaboratively develop it.
Overcoming economic and organizational barriers
From experience, typical bottlenecks for realization are economic, financial and organizational barriers rather than technical issues. As a second step, our approach aims to identify critical stakeholders and what they need to establish a sound business case in the green shipping corridor. When key stakeholders and bottlenecks are identified, the partnership can call attention to where action is needed to move a green shipping corridor from idea to realization.
Closing the fuel cost gap
Finding ways to share risk and close the significant fuel cost gap is critical for realizing green shipping corridors. The EU’s adoption of shipping into the EU ETS, FuelEU Maritime and the IMO’s work on market-based instruments are policies that are putting a cost on GHG emissions. However, they are not expected to be sufficient to create price parity with conventional fuels within this decade. To further narrow the cost gap, it is critical to establish mechanisms such as Contracts for Difference or other schemes that allow costs and risks to be spread across the value chain or passed onto the end-consumer.
Taking informed and data-driven decisions to build your business case – DNV’s Green Shipping Corridor services
Through various projects and feasibility studies, DNV has developed a range of different Green Shipping Corridor services, consisting of several models, databases and dashboards. The services can be applied to green shipping corridor projects in different ways providing tailormade and corridor-specific advisory services (e.g. identification of potential corridors and energy hubs, techno-economic feasibility studies). DNV’s Alternative Fuels Insights platform provides insights into where alternative fuel infrastructure for bunkering and fuel production is already available and under development.
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Alternative Fuels Insights (AFI)
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Green Shipping Programme
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