*

Container shipping firms are at the vanguard of the green

push

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Order books reflect uncertainty over supplies of cleaner

fuels

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Dual-fuel LNG ships make up the bulk of container ship

orders

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Shippers invest in other green fuels like methanol,

ammonia,

hydrogen

By Lisa Baertlein

LOS ANGELES, Nov 21 (Reuters) - Container shipping

companies like Maersk, CMA CGM and COSCO

have ordered hundreds of new vessels in recent years

meant to help their industry slash greenhouse gas (GHG)

emissions to meet rising demand from customers and regulators

around the globe.

Their order books, however, reflect uncertainty over which

of a wide array of so-called green fuels will become the

standard in the decades to come, and whether supplies will be

cheap and abundant enough to keep their fleets in motion.

Decarbonizing shipping is important to global efforts to

fight climate change because it accounts for about 3% of global

greenhouse gases, but accomplishing it will be difficult and

costly, requiring billions of dollars in investments in new

vessels and fuel production.

The U.N.'s International Maritime Organization has set a

goal to zero out shipping industry emissions by 2050, but

policymakers have so far provided little in the way of support

or guidance for how companies should get there, leaving the

future of the market a mystery.

"No single fuel or technology dominates," said Knut

Orbeck-Nilssen, CEO of Maritime at Norway-based ship certifier

DNV.

Faced with that reality, operators of the hulking vessels

that ferry thousands of shipping boxes stuffed with furniture,

televisions, shoes and toys destined for companies like Walmart ( WMT )

, Amazon ( AMZN ), IKEA and Nike ( NKE ) are hedging

their bets by ramping up orders for hybrid engines designed for

several different green fuel types, but which also allow them to

fall back on petroleum if those green fuels are unavailable or

too costly.

Container shipping companies had pending orders for 522

dual-fuel new vessels as of Oct. 31, according to data from DNV.

Of those, 303 are designed to run on liquefied natural gas

(LNG), 216 are meant to burn methanol, two would use hydrogen,

and one would be equipped to use ammonia, according to the data.

Rebecca Galanopoulos, senior content analyst at maritime

software and services provider Veson Nautical, said 65% of

container vessel orders in 2024 were for dual-fuel engines

versus just 4% in 2018.

"Major shipping players are future-proofing their fleets,"

she said.

GOAL: REPLACE 2.5 BILLION OIL BARRELS

The maritime sector each year burns roughly 2.5 billion

barrels of heavy fuel oil made from the cheap leftovers of

gasoline, diesel and jet fuel production.

Decarbonizing the entire shipping industry could cost over

$100 billion per year, and double the industry's fuel prices,

according to the U.N.'s Conference on Trade and Development.

While the container shipping industry's 6,643 vessels

account for a small fraction of the global fleet, they have an

outsized impact on the climate because they travel faster and

consume more fuel than other vessels, shipping experts said.

Container shipping companies are now at the vanguard of the

green push, having ordered more than twice the number of

alternative-fuel vessels than any other cargo sector, like

petroleum tankers or bulk carriers, according to DNV.

In the meantime, most ships that run on conventional fossil

fuel can also run on biodiesel made from used cooking oil and

other products. But supplies are forecast to fall far short of

what would be needed for the maritime industry.

CMA CGM, which counts Walmart ( WMT ) as a top customer, is among

those that have secured some supplies. The company has notched a

50% reduction in carbon dioxide emissions per container using

biodiesel, said Heather Wood, the French carrier's vice

president of sustainability.

At the same time, the company is adding biomethane, also

known as renewable natural gas, to its fuel mix.

"We're headed in the right direction. It's just going to be

a portfolio of options," said Wood, who added that CMA CGM is

investing $15 billion in new vessels that can run on a variety

of cleaner fuels.

MORE GAS

Dual-fuel LNG ships now make up the bulk of container ship

orders. Despite being a fossil fuel, LNG can reduce GHG

emissions up to 23% because it burns cleaner than traditional

ship fuels, according to DNV.

Environmentalists and climate scientists are far less

enthusiastic though, because producing, transporting and using

LNG can lead to leaks of methane, a potent planet-warming gas,

into the atmosphere. The same is true for renewable natural gas,

captured from decomposing animal and plant waste.

Switzerland's MSC, the industry leader with a fleet of more

than 800 owned and chartered ships, says LNG has a relatively

certain and reliable supply chain compared with other

lower-carbon shipping fuels. And, like most of its peers, it has

been ordering dual-fuel LNG vessels.

Germany's Hapag-Lloyd ( HLAGF ) earlier this year won a

two-year contract to provide waste-based biomethane-powered

shipping for the Zero Emission Maritime Buyers Alliance that

includes major shippers like Amazon ( AMZN ), IKEA, and Nike ( NKE ).

Jo Friedmann, a vice president of supply chain research at

Rystad Energy, said transition fuels like LNG could "play quite

a big role until 2035 or 2040."

CARRIERS 'LEAN IN'

Meanwhile, executives are clamoring for global regulations

that would create more certainty and promote investment in the

green fuel market for decades to come.

They want global deadlines for phasing out dirty fuels,

government incentives for lower-carbon fuel production and use,

and penalties for late adopters of cleaner fuels.

And, several companies are making investments in other

alternative fuels like green methanol and ammonia,

hydrogen-based fuels produced using power from renewable sources

like solar and wind.

CMA CGM, Denmark's Maersk, Taiwan's Evergreen and

China's COSCO are buying ships that can run on green methanol.

COSCO and CMA CGM, meanwhile, are working on a project to

procure, supply and deliver green methanol at major ports in

China. And MSC is equipping an undisclosed portion of its new

LNG vessels with ammonia-compatible tanks.

"We could sit back and see which comes first, or you can

lean in" to green fuel investments, Maersk CEO Vincent Clerc

said earlier this year at the Los Angeles naming event for one

of its green methanol ships, Alette Maersk.