Ocean carriers have expressed strong interest in competing for an e-fuel-focused tender launched Tuesday by the Zero Emission Maritime Buyers Alliance (ZEMBA), according to the group’s president and CEO.
The second tender from ZEMBA calls for a carrier or group of liners to move the equivalent of 1.5 million TEUs across the Pacific on ships powered by renewable synthetic fuels, with the aim of fast-tracking the commercial deployment of e-fuels at scale to create a competitive market.
E-fuels are synthetic fuels produced using renewable electricity and include e-methanol and biomethane, a cleaner version of liquefied natural gas (LNG).
ZEMBA head Ingrid Irigoyen described the response to the tender as “remarkable,” adding that carriers numbering “in the double digits” have stepped forward.
“We have a strong group of carriers who registered their interest with us so we’re feeling quite bullish about being able to get some good e-fuel bids,” she told the Journal of Commerce.
“Several bids are from top carriers and some are from smaller ones, which is going to see a mix of different fuels, different technologies, different sizes of carriers operating in different geographies,” she added. “It is a diverse group of market participants.”
ZEMBA is a non-profit alliance of more than 40 freight buyers that includes global brands such as IKEA, Electrolux, Nike, Philips and Levi Strauss.
Hapag-Lloyd last April was awarded ZEMBA’s inaugural tender for the zero-emission shipment of containers from Singapore to Rotterdam that will cover 1.2 billion TEU-miles over a two-year period beginning in 2025.
While the first tender focused on biomethane, a qualifying bid for ZEMBA’s second tender that will be awarded later this year will be a proposal from a carrier or consortium for e-fuel-powered shipping over a three- to five-year period starting in 2027. All bids will need to demonstrate at least a 90% lifecycle emission reduction for primary propulsion of the vessels “compared to a high-emission fuel baseline,” the tender noted.
The tender intends to aggregate approximately 86 billion metric ton-nautical miles of demand for the emissions abatement associated with e-fuel-powered shipping. It will cover a negotiated “green premium” paid by shippers and will not involve the base freight rate.
“Getting e-fuel-powered shipping on the water for the first time through this collaborative forward procurement will be a huge technical and commercial innovation milestone for the sector,” Irigoyen said.
Seeking ‘supportive and sophisticated’ policy
Irigoyen said the timing of the second tender was important as the International Maritime Organization (IMO) debates the composition of its mid-term measures, namely a global carbon pricing mechanism and a fuel standard. The IMO’s Maritime and Environment Protection Committee (MEPC) meeting will decide on the measures and finalize the legal framework in April with implementation planned for October.
“We hope to be a source of inspiration and confidence-building for policy makers,” Irigoyen said. “We want to see policy that is supportive and sophisticated enough to capture the long-term strategic needs of this sector and get the scalable fuels supported in the market despite a high price point today so those costs can come down precipitously.”
ZEMBA’s decision to focus on e-fuels in the second tender was because they are “vastly scalable,” Irigoyen said, and the cost reductions would be significant compared with biofuels that faced sustainability questions, limited availability and competition from other sectors.
“The beauty of just going to market is that we don’t have to speculate,” she said. “We don’t have to speculate on pricing, we don’t have to speculate on availability and [we] will have concrete commercial offerings that meet our requirements.
“It’s not our suggestion that the entire sector must switch immediately, but by having leader buyers, leader freight forwarders, leader carriers and leader fuel producers coming together through the execution of this project, I think we can enable that future to set sail,” Irigoyen added.
