Customers who happen to be conscious of climate change are becoming increasingly bothered about the emissions that are linked to the products they buy. Consumers are growing more concerned about the background of products in addition to the supply chain through which they get delivered. They are beginning to pay attention to the decarbonisation process in the shipping industry.
Simultaneously, policymakers across various levels, right from local to global, are carrying out new measures, while stakeholders throughout the maritime value chain are actively working to tackle the annual billion tonnes of greenhouse gas emissions produced by the maritime sector.
The decarbonisation of a sector that handles 90% of global trade happens to be an issue of immense complexity requiring multifaceted approach. There is no one approach that can solve this problem completely.
ZEMBA- a coalition that aims to establish a new market for zero-emission solutions
In order to effectively reduce and eventually eliminate emissions from the maritime sector, it is crucial to foster creative ways of working together. The role of first movers is essential in initiating the shift to a zero-emission maritime sector. In the early stages of the sector’s development, it is vital to have first-movers who can test ambitious remedies, push boundaries, and also contribute to determining an appropriate trajectory for zero.
Cargo owners play a crucial role in the transportation industry. In order to encourage investment and action throughout the value chain, it is crucial for customers in the maritime shipping sector to work together to demand zero-emission solutions. However, since ZE shipping solutions are not currently available, it is necessary to employ innovative purchasing techniques in order to match customers who are willing to pay for a new, high-quality ZE shipping solution with suppliers who are prepared to provide it.
Companies that lead in climate action go on to play a crucial role as pioneers in this field. They have shown their willingness to pay for zero-emission solutions, to test novel methods of procurement via investments, and also take part in collaborative group approaches.
Collaboration amongst cargo owners: effects and economies of scale
Given the worldwide reach of the maritime shipping industry and the significant number of companies that depend on ocean travel, cargo owners cannot single-handedly promote the demand for zero-emission solutions. In the field of maritime decarbonisation, there are many initiatives like the Zero Emission Maritime Buyers Alliance- ZEMBA as well as the First Movers Coalition. These initiatives allow cargo owners of different sizes and types to accelerate progress and benefit from economies of scale.
ZEMBA is a unique buyers’ alliance in the maritime sector that focuses on expediting the commercial implementation of zero-emission ZE shipping. By implementing advanced market promises for zero-emission solutions, ZEMBA members will have the ability to access ZE shipping services before they become accessible in the market. This will help instill trust among private sector actors and policymakers that there is a significant demand for ZE solutions. Consequently, it will encourage additional investment as well as regulatory action at the global, regional, and also domestic levels.
The co-founders of ZEMBA, including The Aspen Institute, Amazon, Patagonia, and Tchibo, have been joined by more than 20 other members in starting an inaugural Request for Proposals- RfP for zero-emission shipping. This initiative was launched earlier this month.
The ZEMBA RfP plays a crucial role in fostering confidence across the maritime value chain. By offering particular requirements for the delivery of zero-emission services in 2025, cargo owners contribute to building trust as well as assurance. The time gap between consumer demand and delivery of supply allows other participants in the maritime value chain to have enough time to put in the required investments so as to meet the goals of ZEMBA members.
Furthermore, ZEMBA has developed a multi-step process with the goal of securing the most beneficial deal for cargo owners when it comes to zero-emission shipping services. The price for ZE shipping services is unknown because there is currently no current marketplace for them.
By visiting the market and gathering price quotes for an initial volume, ZEMBA members can make educated choices about their contracts without committing to a particular amount of demand. This allows them to have all the necessary information before finalising their agreements.
ZEMBA aims to assist its member companies in reducing around 1 million tonnes of carbon emissions over a three-year period. This will be achieved by procuring 600,000 twenty-foot containers and utilising vessels that are powered by zero-emission fuels.
The First Movers Coalition aims to utilise the collective purchasing power of its members to address the challenge of reducing carbon emissions in 7 difficult-to-abate industries. These sectors, namely aluminium, aviation, chemicals, concrete, shipping, steel, as well as trucking, currently contribute to 30% of global emissions. Additionally, the group is additionally investigating innovative carbon removal technologies as part of its endeavours. The coalition’s goal is to increase the availability of clean energy technologies by driving off-take and scaling up by means of a variety of programmatic activities. Collaborating with ZEMBA is essential for expediting the development of zero-emission shipping solutions.
Promoting competition for green premium
In order to address the high cost of buying near-zero products and services that are not widely available, a strategy known as “forward” procurement has been developed. This approach involves bringing together multiple buyers to share their demand, allowing for economies of scale to be accomplished at an early stage in the transition. By committing to longer-than-usual offtake agreements, this method additionally contributes to fostering market confidence. Additionally, forward procurement enables the sharing of both the risks and rewards associated with taking bold collaborative action.
There is a growing recognition among actors in the maritime industry of the significance of partnership and cooperation in advancing decarbonisation efforts. The ZEMBA pilot RfP offers companies a practical and proactive approach to collaboration, enabling them to make progress in accomplishing their Scope 3 emissions decrease targets.
Additionally, this collaboration will have a significant impact on the development of a zero-emission shipping market. ZEMBA offers companies that are part of the First Movers Coalition Shipping commitment an opportunity to make strides towards their 2030 and 2040 targets. As a vessel owner, the success of this RfP confirms that there is demand for their zero-emission maritime service product.
For companies that are dedicated to achieving other sectoral goals within the First Movers Coalition, ZEMBA offers a chance to tackle their maritime shipping emissions on a smaller scale. This presents an opportunity for these companies to recognise the important role they can have in operating the decarbonisation of the global maritime sector.
Procurement’s Role in Addressing Climate Change
The joint procurement of zero-emission shipping services, conducted by ZEMBA, exemplifies the strategy needed to tackle the various challenges linked to the climate crisis. Given its robust relationships with suppliers and customers, extensive cross-functional reach, and access to comprehensive supply and demand market data, the procurement department is ideally positioned to lead the execution of decarbonisation goals. Yet it is uncommon for performance indicators for procurement teams to encompass the goal of reducing emissions. This needs to be changed.
Taking part in innovative procurement approaches and working together with value chain partners are measures that can speed up the process of supply chain decarbonisation while simultaneously decreasing the risks associated with being the first to implement such measures.
Taking first-mover action alone is insufficient to achieve complete decarbonisation of the maritime industry. Comprehensive policy support and regulatory action at all levels are crucial for initiating action and facilitating a rapid, seamless, as well as economically feasible transition.
The achievement of decarbonisation initiatives in the areas of focus for the First Movers Coalition relies on the execution of innovative procurement strategies. ZEMBA is a prime example of creativity and is playing an essential part in driving the maritime sector towards a zero-emission future.