International shipping could save 776 million tonnes of cumulative CO2 emissions between 2024 and 2050 by progressively adopting hot rolled steel with lower embodied carbon, according to analysis from Lloyd’s Register Maritime Decarbonisation Hub and UMAS.
Shipping has a dual role to play in the steel sector’s low-emissions transition – as a buyer of green steel for shipbuilding, containers and infrastructure, and as a supplier of steel scrap from ship recycling, says UMAS. Additionally, the shipping sector transports a big proportion of steel produced globally, impacting the steel industry’s scope 3 emissions. “This further highlights the interconnectedness of the two sectors and the need for collaboration in strengthening their decarbonisation efforts,” the UK-based advisory service says in a note seen by Kallanish.
Currently, “green steel” is used as a catch-all term for steel with lower embodied emissions with various definitions suggested by different institutions. Going forward, it is preferred that the steel sector agrees on a definition based on clear GHG emissions reduction thresholds that also considers environmental, social, and socio-economic sustainability aspects, UMAS points out.
The analysis uses a forecast of the number and steel mass of newbuild ships likely to be built between 2024-2050, in line with expectations of growing demand, as well as achieving IMO GHG reduction ambitions. This is then used to estimate the potential CO2 emissions savings that could be achieved if the majority of the hot rolled steel used had lower embodied emissions, in line with the trajectory set by the Science Based Targets initiative (SBTi) steel sector guidance.
“Continuing with business as usual, where the aforementioned volume of hot rolled steel is produced based on current production methods, will result in the shipping sector indirectly contributing to the creation of 1.3GtCO2 in the period to 2050. In order to align with the SBTi steel sector guidance, the international shipping sector could demand that its newbuild ships are built using green steel based on clear GHG emissions reduction thresholds that also considers environmental, social, and socio-economic sustainability aspects,” UMAS observes.
“Increasing green steel production requires action from both the steel sector and from its demand sectors, including shipping. Incentivising the use of green steel in shipping is critical to driving up demand, which in turn will incentivise increased production of green steel from steel producers. Furthermore, there is an expectation that interest in green steel will increase in the sector as shipowners begin to understand and explore ways to reduce their Scope 3 GHG emissions,” it concludes.
Adam Smith Poland