Written by Mikael Lind, Sandra Haraldson, Wolfgang Lehmacher, Zeeshan Raza, Ellinor Forsström, Linda Astner, Jeremy Bentham, Xiuju Fu, Jimmy Suroto, Dr. Phanthian Zuesongdham, Article No. 103 [UNCTAD Transport and Trade Facilitation Newsletter N°97 - First Quarter 2023]
© Shutterstock FOTOGRIN | Port terminal for unloading liquefied gas
The reduction of greenhouse gas (GHG) emissions has become a greater societal responsibility. According to the estimates of the International Energy Agency (IEA) the transport sector is responsible for about 21% of global CO2 emissions. Ports face customers requiring cleaner energy and a plethora of existing/forthcoming global and regional regulations. Ports are mini energy systems similar to other industrial hubs.
A port is not only a transport and digital node but also an energy hub in the global energy ecosystem. On average 40% of goods going through ports are energy related. Ports are generally connected to economic activity, as industrial clusters are often located in and near ports which points to potential synergies and co-creation opportunities. Ports are central nodes for sector coupling and energy system integration as they host and serve multiple industries including oil and gas, shipping, trucking, railways, cruise-tourism, and manufacturing.
Decarbonization of transport requires all stakeholders to collaborate including shippers, transport operators, freight forwarders, ports, vehicle makers, engine manufacturers, energy producers, policy makers etc. Ports could play an important model role at the intersection of marine fuel, shipbuilding (including ship supplies), and operational value chains through providing energy to seaborne visitors, i.e. wet and dry bulk, container, car carriers etc. and land borne trucks and trains. Ports help synchronization along the value chain through data sharing and end-to-end digitalization. As critical energy hubs ports should adopt any available enabler of transport decarbonization.
In this article, based on a larger Swedish study, we provide a framework for guiding ports on how to develop their energy node capabilities and play a role as energy model nodes accelerating the pace of decarbonization globally. This framework builds upon the port’s energy strategy (Level 1) pointing at the need for proactive actions taking into account its own operations (Level 2), the provision of sustainable energy to port visitors (Level 3), and its role as part of the transport ecosystem - which includes also the global energy system (Level 4). Figure 1 depicts this four-level maturity framework discussed in more detail in this article.
Figure 1: Maturity framework for the port as energy node (Illustration: Sandra Haraldson)
The role of ports in decarbonization
Recently, we have seen efforts of some ports to establish themselves as key energy hubs. The ports of Antwerp-Bruges, Hamburg, Rotterdam, and Singapore are examples of ports that aim to position themselves as multi-fuel bunkering hubs to support transport carriers by acquiring, storing, and supplying low and zero-carbon fuels including biofuels, methanol, ammonia, potentially hydrogen and electricity. The signing of the Memorandum of Understanding (MOU) for the Singapore – Rotterdam Green Corridor in Singapore on 2 August 2022, is a manifestation of such intention and ambition which has intensified in the recent years.
Ports can facilitate decarbonization, energy efficiency and energy transition in multiple ways. As landlord and investor, ports can optimize the spatial planning ensuring that land and infrastructure is available to facilitate energy projects (as e.g. in Hamburg and Antwerp-Bruges), while (co-)investing in sustainable alternative energy solutions to meet their own energy requirements and to support energy needs of customers, nearby industrial clusters, and the wider society. As “regulators”, port authorities can develop and leverage tariffs and incentives to support low carbon measures, and upgrade environmental and safety standards to facilitate production, storage, bunkering and transportation of alternative fuels. Ports can create (digitally supported) processes that help other stakeholders to become more (energy) efficient, not necessarily changing to low/zero carbon energy sources. Ports as “enablers/collaboration partners” can initiate collaboration, partnerships, and business consortia with a broad range of players involved in transport and energy ecosystem to align climate goals, predict energy demand, develop energy related projects along the low/zero carbon fuels value chain. Energy-empowered ports can expand the port community by inviting “energy” actors and tracking/tracing energy supply/demand flows through big data intelligence and blockchain technologies etc. They can measure and quantify energy efficiency for energy strategy decision-support. Such ports can drive new revenue streams through climbing up the four step maturity framework.
Level 1: The need for an energy strategy
Ports need to be proactive to contribute to a sustainable transport ecosystem and capitalize on the opportunities presented by the energy transition. Ports can generate new lease earnings or incomes through the sale of energy. Port authorities are advised to start by devising an energy strategy for their own energy needs and for their energy supply capacity in their role as a transport provider (first level of the maturity framework depicted in figure 1). Such an energy strategy should encompass all port operations and service as a guide for the entire port community including customers who use ports as transport, digital, and energy nodes. This implies that the port authority’s energy strategy is not only the compass for port authorities but also influences, to varying degrees the multi-modal actors that operate within ports and those that visit ports e.g. terminal operators, shipping companies, inland operators of trucks/trains, as well as Beneficial Cargo Owners (BCOs). All energy-related investment and collaboration decisions should be aligned with the port authority’s overall strategy. In the process, ports need to animate levels 2-4 of the framework, by holding stakeholder dialogues, initiating collaborations etc. The framework should not be seen as a one-direction/step-by-step framework but be understood as a self-improving circular system, where ports move back and forth between the levels.
Level 2: Sustainable operations within the port
At the next level (figure 1), and after defining the port authority’s energy strategy ports should evaluate their current energy needs and emissions from their own assets and operations within the port area and develop measures to reduce the port area’s carbon footprint. One of the promising measures for ports is to improve energy efficiency and make sure that their own needs within the port area are met sustainably through a shift from fossil-fuels to sustainable energy solutions. Electrification can help through powering e.g., cranes, reach-stackers, prime-movers, tugboats, forklifts, and the port’s vehicle fleet, while being mindful of the source of the electricity itself i.e., the Scope 2 emissions. Many ports pay already attention towards the use of LED and smart lighting at port premises. They acquire green electricity, and some produce their own renewable energy through investments e.g., in solar and wind power. Evidence from Swedish ports suggests that adoption of such measures can result in substantial OPEX savings, alongside other benefits for ports including reduced emissions, and less noise pollution helping ports to contribute to the United Nations sustainable development goals (SDGs). Most ports are landlords with multiple independent operators, leases and terminals within the port areas. Port authorities need to create collaborative platforms, regulative incentives, and partnerships to achieve effective emissions reductions. They can, for example, initiate joint roadmaps with terminals, logistics services providers etc., secure infrastructure by planning for and investing in grid capacity for terminals, and develop shared port processes for efficient traffic management between terminals.
Level 3: Provision of sustainable energy to port visitors
Recently, a growing number of operators of vessels, railways, and heavy vehicles have set ambitious CO2 reduction targets to comply with various regional and global environmental regulations. Carriers will need to further optimize their operations while reducing their reliance on fossil fuels by switching to low/no carbon energy, like electricity generated from renewable sources. Increasingly, ports are expected to supply and facilitate sustainable energy consumption by carriers (level 3 of the maturity framework in figure 1). Port authorities can for instance facilitate the bunkering of low carbon fuels (e.g., ammonia, hydrogen, and methanol) and offer shore-side electricity to vessels while berthed, charging stations and alternative fuel stations e.g., LBG for heavy vehicles transporting goods to and from ports and electrification of rail in the port area. Beyond provision of clean energy, ports can support just-in-time arrivals and slot management practices which have significant impact on the level of emissions of the port area, including terminals, and which provide prerequisites for significant emissions reductions in the entire end-to-end cargo flow. Live pilot programs of such initiatives by Rotterdam and Singapore have shown bunker and emissions saving in the range of 4% to 7%.
Level 4: Broader industry role in the energy transition
Countries and industries have ambitions to reduce GHG emissions by the middle of this century propelled by legislations such as EU Green Deal, EU energy efficiency target of at least 32.5% for 2030 and REPowerEU plan which aims to replace Russian natural gas with imported (10 million tons) and locally produced (5 million tons) renewable hydrogen. Industries will increasingly rely on low/zero carbon fuels. Ports can, for example, provide land to energy companies for new production sites. Ports can support the development of productions facilities by directly (co-)investing in energy production facilities; aspects depicted at level 4 in the maturity framework captured in Figure 1. Large-scale electrification of different industries, including transportation, triggers the need for capacity upgrades for the production and distribution of low/zero carbon fuels. Like other industries, ports will need to estimate the demand for such energy sources for own operations, visitors, and in relation to the needs of nearby industries and societies. This can be supported digitally by solutions such as digital twins which can utilize complex modelling to provide insights into energy demand and enable testing of future scenarios, optimal siting of energy infrastructure to reduce transmission losses, and applicability of power transfer within the port estate during periods of peak demand. Finally, ports can reconsider the types of cargo handled by entering partnerships and strategically planning for terminals that handle goods which enable regional transitions to net zero; ports can also be testbeds or enablers for new technologies such as Carbon Capture and Storage (CCS).
The clean energy landscape consists of a plethora of alternatives. There are several complementary enablers that can be put in place to decarbonize operations pursued by the sector. Many of these enablers are also relevant for other sectors, which consequently affect ports in their investments, but also highlights the need for prioritizing of the use of the scarce sources of sustainable energy.
This article brings forward four key messages:
- In the industry’s efforts to decarbonize the transport ecosystem, ports play an essential role as an intermediary and model node for the transport chain for people and goods bringing opportunities for the production, storage, and provision of sustainable alternative fuels to visitors.
- Ports will benefit from responding proactively to stakeholders (e.g., ship owners, operators, visitors, local communities, and the society at large) that demand that ports operate with the lowest level of GHG emissions and provide sustainable alternative fuels and energy to other stakeholders. Ports would benefit from moving to the forefront of decarbonization.
- Ports’ investments in becoming an energy model node requires a re-definition of the group of actors that are engaged in port operations which needs to include also the energy sector.
- Cross-value chain collaboration is critical, requiring the port to collaborate with parties decarbonizing other value chains, e.g., to ensure that the right fuel is available, for its right use, at the right quantity, the right time, and the right price
The alignment required to decarbonize the maritime industry alone is already enormous. The port can play a model role in aligning supply and demand of sustainable alternative energy sources by deeper engagement with the energy value chain across multiple industries. This requires that the port enhances its scope of activity by including the energy value chain in its business portfolio. With this comes the need for broader collaboration but also a broader knowledge and skill-base of the people working in the port and elsewhere along the different value chains.
Contact the authors:
Mikael Lind | Research Institutes of Sweden (RISE) & Chalmers University of Technology | Mikael.Lind@ri.se
Sandra Haraldson | Research Institutes of Sweden (RISE)| Sandra.Haraldson@ri.se
Wolfgang Lehmacher | Anchor Group & Topan AG | email@example.com
Zeeshan Raza | Research Institutes of Sweden (RISE)| firstname.lastname@example.org
Ellinor Forsström | Research Institutes of Sweden (RISE)| email@example.com
Linda Astner | Port of Gävle | firstname.lastname@example.org
Jeremy Bentham | World Energy Council | email@example.com
Xiuju Fu | Agency for Science Technology and Research (A*STAR) | firstname.lastname@example.org
Jimmy Suroto | PSA International Pte Ltd | email@example.com
Dr. Phanthian Zuesongdham | Hamburg Port Authority (HPA) | Phanthian.Zuesongdham@hpa.hamburg.de