Oceans North Conservation Society
Canadian Green Shipping Corridors
Preliminary Assessment
Final Report
02 | 19 June 2023
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Contents
Acronyms 1
1. Introduction 2
2. Green shipping corridors in Canada 4
2.1 Green shipping corridors are intended to accelerate maritime
decarbonisation 4
2.2 Government and industry have already shown support for
green shipping corridors in Canada 6
3. Fuels for green shipping corridors 8
3.1 Production of low and zero emission shipping fuels 8
3.2 Mobilising the fuel supply value chain 12
4. The Total Value Case 15
4.1 A Total Value approach could illuminate the potential co-
benefits of green shipping corridors 15
4.2 Benefits that green corridors and broader maritime
decarbonisation could bring to Canada 16
4.3 Delivering the value 20
5. Case study: British Columbia, the Port of Vancouver, and the Port
of Prince Rupert 21
5.1 Regional energy and resources 21
5.2 Estimated demand for low and zero emission fuels 23
5.3 Port of Vancouver 26
5.4 Port of Prince Rupert 33
6. Case study: Nova Scotia and the Port of Halifax 40
6.1 Regional energy and resources 40
6.2 Estimated demand for low and zero emission fuels 42
6.3 Port of Halifax 44
7. Summary 50
8. References 52
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Acronyms
AIS Automatic Identification System
BC British Columbia
CAD Canadian Dollars
CCS Carbon Capture and Storage
CMC Chamber of Maritime Commerce
CO
2
Carbon Dioxide
CO
2
e Carbon Dioxide Equivalent
COP Conference of the Parties
DAC Direct Air Capture
ESG Environmental, Social and Governance
GDP Gross Domestic Product
GW Giga-Watt
H
2
Hydrogen
HFO Heavy Fuel Oil
HFOe Heavy Fuel Oil (Energy) Equivalent
IMO International Maritime Organisation
ktpa Kilo-tonnes per annum
LNG Liquefied Natural Gas
MOU Memorandum of Understanding
MW Mega-Watt
NS Nova Scotia
PPA Power Purchase Agreement
R&D Research & Development
RVA Real Value Added
Ro-Ro Roll-on / Roll-off
TEU Tonne Equivalent Unit
USA United States of America
USD United States Dollars
VLSFO Very Low Sulphur Fuel Oil
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1. Introduction
Accelerated action is needed to tackle greenhouse gas emissions from
shipping
Commercial shipping activity in Canada has been estimated to contribute
approximately $30 billion to the Canadian economy annually [1].
Meanwhile, vessels operating in Canadian waters produced more than more
than 13 million tonnes of CO
2
emissions in 2019 [2], or around 1.7% of
Canada’s total greenhouse gas emissions, directly contributing to global
climate change. These vessels also produce thousands of tonnes of air
pollutants that impact the health of port and coastal communities, pollute
oceans, and can themselves have a significant climate impact.
An urgent transition away from fossil fuels is required
Much of the activity to address shipping emissions has been at the
International Maritime Organisation (IMO) level. The IMO has introduced
regulations to address air pollutant emissions and has progressed with
measures to improve the energy efficiency of ships and therefore reduce
greenhouse gas emissions. At a national level, Canada has a legislated
commitment to achieve net-zero emissions by 2050 and, through the 2030
Emissions Reduction Plan, is developing a national action plan to enable the
marine sector to reduce its emissions, including engagement with
stakeholders on energy efficiency and carbon intensity requirements for
domestic vessels in-line with requirements for international vessels.
Energy efficiency measures and exhaust treatment technologies represent
some progress; however they will only contribute to marginal reductions in
emissions. A global transition is required away from fossil fuels to zero
emission alternatives if deep greenhouse gas emissions cuts are to be
achieved. Widespread uptake of these fuels will be required from the end of
this decade to follow a decarbonisation trajectory in line with Paris
Agreement goals. However, although progress is being made, availability of
these fuels is still extremely low while high costs make their use
uneconomical where they are available. Coordinated action in the short term
can help to develop and demonstrate the technical, regulatory, and
commercial viability of these fuels, laying the groundwork for subsequent
proliferation of their use across the industry.
The transition represents a significant infrastructure opportunity and Canada
is well placed to maximise the benefits
The capital investment required to decarbonise international shipping by
2050 has been estimated to be up to USD$1.6 trillion, around 87% of which
will be needed to develop the fuel production facilities and other landside
infrastructure [3]. In many cases, this infrastructure will be entirely new and
include renewable electricity generation, hydrogen electrolysers, and fuel
synthesis plants. This represents a significant opportunity for countries
around the world to achieve their environmental objectives while fuelling
economic prosperity, realising social co-benefits, and protecting themselves
from the impact of divestment from fossil fuel industries. As an existing
energy producer with a skilled workforce and substantial land and natural
resource availability, Canada is well placed to seize the opportunity to
become a producer, or even exporter, of zero emission fuels.
This report uses the term ‘zero emission fuels’ to refer to those with zero
lifecycle greenhouse gas emissions. In the context of this report, ‘low
emission fuels’ refers to fuels with lifecycle greenhouse gas intensity of
20gCO
2
e/MJ, which is approximately 80% lower than conventional
shipping fuel oils. These terms are discussed in more detail at Section 3.
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Green shipping corridors can accelerate maritime decarbonisation in
Canada
A variety of technical, regulatory, and commercial barriers have slowed
uptake of low and zero emission fuels in the shipping sector to date. Green
shipping corridors are a means of bringing together actors from across the
shipping and fuel value chain to work together to address these barriers. In
doing so, corridors aim to demonstrate the feasibility of using these fuels on
specific routes in the short to mid-term and therefore catalyse their uptake
more broadly. Several corridor partnerships involving Canadian Ports have
already been announced and Transport Canada has released a national green
shipping corridors framework to guide their implementation.
This report is intended to demonstrate the opportunity for Canada
Oceans North has commissioned Arup to undertake this preliminary
assessment into the potential impact that green shipping corridors - and
maritime decarbonisation more broadly - could have in Canada. Arup’s study
is supported by analysis by Lloyd’s Register Maritime Decarbonisation Hub
estimating the potential development of low and zero emission fuel uptake
from shipping using three Canadian ports under a variety of different
scenarios.
In this report, we introduce the background to green shipping corridors, the
characteristics of the emerging initiatives, and how these might be applicable
in the Canadian context. We explore the main low and zero emission marine
fuel production pathways and their feedstocks that have the potential to
support long term decarbonisation of shipping. We describe key
considerations that influence their suitability to different regions. We have
also explored how green corridor partnerships can be used to mobilise key
stakeholder groups in the fuel production value chain to drive the uptake of
these fuels.
Lloyd’s Register have estimated the potential demand evolution for low and
zero emission fuels under different scenarios at three different Canadian ports
based on vessel traffic data and forward-looking assumptions around demand
development. We have approximated the size, type, and capital cost of
energy and fuel production infrastructure required to meet demand. We have
described illustrative fuel supply typologies at the three ports, as a means of
exploring the challenges and opportunities they face in meeting this demand.
Finally, we have applied a ‘Total Value’ framing approach to explore some
of the key financial, social, and economic co-benefits that could be realised
through effective delivery of this new infrastructure.
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2. Green shipping corridors in Canada
2.1 Green shipping corridors are intended to
accelerate maritime decarbonisation
Despite growing decarbonisation ambition in the shipping industry, there are
numerous barriers hampering the development and deployment of zero
emission marine fuels. Green shipping corridors are one way of helping to
address these and accelerate decarbonisation of the industry.
Approaches vary but the deployment of zero emission shipping is the common
aim among green shipping corridors
The concept of green shipping corridors first emerged in 2021 and was
brought into the spotlight by the Clydebank Declaration made at COP26 and
now signed by 24 nations, including Canada. The declaration set out a
collective aim by the signatories to establish at least six green shipping
corridors by the middle of the decade, including international and domestic
routes. The concept of green corridors was developed by research from the
Global Maritime Forum (GMF) and their partners in the ‘The Next Wave’
report [4]. This sets out the core definition of a green shipping corridor as:
“Specific shipping routes where the technological, economic and regulatory
feasibility of the operation of zero-emission ships is catalysed by a
combination of public and private actions.”
This has created a wave of green shipping corridor commitments across the
globe, with different interpretations of the definition. Additional definitions
include:
“Maritime routes that showcase low- and zero-emission lifecycle fuels and
technologies with the ambition to achieve zero greenhouse gas emissions
across all aspects of the corridor in support of sector-wide decarbonization
no later than 2050.” US State Department Green Shipping Corridors
Framework [5]
“A green shipping corridor is a maritime route between two or more ports on
which vessels running on scalable zero-emission energy sources are
demonstrated and supported.” UK Shipping Office for Reducing Emissions
(UK SHORE) [6]
“Focused action/intention by a group of companies/countries/institutes,
related to the entire Zero Emission Shipping Value Chain with the aim to
deliver a commercial product/offer throughout the value chain.” Maersk
McKinney Møller Centre [7]
It is important to view green shipping corridors as emergence-phase initiatives
to catalyse feasibility of zero-emission shipping, working in tandem with
development of policy at a national and international level. As illustrated in
Figure 1, this dual approach can lead to rapid uptake during the subsequent
diffusion phase.
Figure 1 - Green Corridors in a transition context
(Adapted from Global Maritime Forum [8])
First mover corridors can help the shipping industry reach a ‘tipping point’ in
the uptake of zero emission fuels
At their core, green shipping corridors aim to mobilise stakeholders across the
value chain to address the barriers to zero emission fuel uptake. The focus of
these initiatives is on the initial stages of the fuel transition taking place over
the short to mid-term, while the technical and commercial readiness of the
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required solutions are still developing. By fostering this development and
facilitating the first uptake of zero emission shipping fuels, these initiatives
can contribute to the industry as a whole reaching a ‘tipping point’ where
they start to rapidly scale without such focussed support and coordination. It
has been estimated [9] that this point could be crossed if 5% of the fuel used
by international shipping industry and 15% of the fuel used by domestic
shipping has zero lifecycle greenhouse gas emissions by 2030; helping to
align shipping’s decarbonisation trajectory with Paris Agreement Goals.
Governance structures, shipping routes and goals vary widely between
corridor initiatives
Dozens of green shipping corridor initiatives have been announced and are
being developed globally; several of which involve Canadian ports. This
number is expected to increase rapidly over the coming months and years as
countries move to fulfil their obligations under the Clydebank Declaration.
These initiatives all differ in how they are led, the type of routes being
examined, the overall aims and objectives, and the methodologies being
applied to their development. All the initiatives are still at an early stage, and
it is too early to measure their relative success. However, there is an
opportunity for lessons to be shared between corridor partnerships and wider
stakeholder groups as they develop.
By understanding the benefits and challenges of the different approaches,
Canadian stakeholders can ensure that green shipping corridors involving
Canadian ports contribute most effectively to realising the long-term uptake of
zero emission fuels at scale and position Canada to benefit from this
transition.
Partners &
leadership
Routes
Goals &
aims
The leadership and key partners involved in a green
shipping corridor initiative can have a major bearing on its
focus and activities. For example, government and public-
private led initiatives may focus on unlocking opportunities
for economic and social development while industry led
initiatives may seek to position their partner organisations
to develop new commercial models. The makeup of the
partnership is also important as it will affect where efforts
are focussed in the value chain, either focussing on the
supply of fuels or mobilising their demand.
A corridor may focus on vessels operating between two
ports (end-to-end), in the area around or between one or
more ports (clusters) or across an entire geographic region
(regional). The scope of the route will have an impact on
the complexity of the corridor’s implementation. In some
cases, initiatives may start by assessing routes in a whole
region, before focussing on the most promising end-to-end
routes or clusters.
Corridors focusing on incremental emissions reductions
risk deployment of efficiency measures or transition fuels
that may not support the uptake of zero carbon fuel
solutions in the longer term. Corridors may take a hybrid
approach to their aims, targeting emissions reductions over
time while focusing efforts of the multi-stakeholder
partnerships on the more challenging topic of zero carbon
fuels uptake.
Figure 2 – Review of existing green shipping corridor initiatives
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2.2 Government and industry have already shown
support for green shipping corridors in Canada
The Government has indicated strong support for the decarbonisation of
shipping
In 2021, Canada passed the Net-Zero Emissions Accountability Act which
enshrines a commitment to achieving net-zero greenhouse gas emissions by
2050 across all sectors. The legislation puts in place a legally binding process
to set 5-yearly emissions reduction targets with credible plans to reach them.
The ‘2030 Emissions Reduction Plan’ [10], the first plan under the net zero
legislation that was released in March 2022, outlines Canada’s aim to cut
emissions by 40-45% below 2005 levels by 2030 and go on to achieve net-
zero emissions by 2050. The plan includes measures applied across all
economic sectors, including support for clean energy projects like wind and
solar power, the development of zero-emission fuels, a plan to decarbonise
transportation as well as a commitment to reduce methane emissions from oil
and gas production by 75%. For the maritime sector, the plan includes the
commitment to develop a ‘national action plan’ for emissions reductions in
the marine sector as well as to take direct action to reduce emissions from
government operated vessels.
At an international level, Canada has been collaborating at the International
Maritime Organisation (IMO) on lifecycle assessment guidelines for marine
fuels and regulatory measures for emission reductions. Canada, the United
States, and the United Kingdom have cosponsored a submission that
proposes increased levels of ambition in the IMO’s revised greenhouse gas
strategy. This includes proposals for shipping emission reduction targets that
align with the Paris Agreement's goal of pursuing efforts to limit global
temperature rise to 1.5°C, including to reduce total annual greenhouse gas
emissions from international shipping, on a life cycle basis, by at least 37%
by 2030 and 96% by 2040, compared to a 2008 baseline, and to zero
emissions by no later than 2050 [11]. The submission also proposes that the
revised strategy enshrine the goal that least 5% of the global fleet operating
on fuels and technologies with zero or near-zero emissions on a lifecycle
assessment basis by 2030.
Canada has joined the ‘Declaration on Zero Emissions Shipping’ [12] in
which partners agree to strengthen global efforts to achieve zero emissions
from international shipping by 2050. Canada has also confirmed support for
the Green Shipping Challenge [13], which encourages announcements that
support alignment of shipping’s decarbonisation with a trajectory to limit
global temperature rise to 1.5°C.
Delivering the required emissions reductions from domestic and international
shipping, in line with a 1.5°C decarbonisation trajectory, requires a rapid
transition to zero emission fuels over the coming years. Green shipping
corridors are an opportunity for the government to work with voluntary
industry participants to accelerate this transition through the development,
testing and use of scalable zero emission fuels and supporting technologies.
Canada has set out a framework for development of green shipping corridors
Canada is a signatory to the Clydebank Declaration [14], supporting the
establishment of at least six green shipping corridors ‘by the middle of this
decade’; including both domestic and international routes. Transport Canada
has published a ‘Canadian Green Shipping Corridors Framework’ [15] to
help guide the development of green shipping corridors and ensure consistent
implementation.
The framework recognises the challenges to Canadian shipping achieving
net-zero emissions by not later than 2050 and sets out the government’s
support for scalable solutions that can be implemented in the short term while
facilitating a path to net-zero. This could include efficiency measures,
provision of shorepower, as well as alternative zero emission fuels.
Regardless of the measure, the importance of considering the whole lifecycle
environmental impacts is reiterated.
The framework also identifies the importance of aligning local and national
actions with international efforts to ease their implementation, particularly in
the case of international corridor partnerships. Finally, it underscores the
importance of mobilising a broad range of industry stakeholders in the
implementation of green shipping corridors while ensuring the involvement
of all implicated parties such as local communities and indigenous groups.
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Several green shipping corridor initiatives involving Canadian ports have
already been announced
There have been at least four green shipping corridor announcements
involving Canadian ports made to date, as shown in Figure 3, demonstrating
the strength of industry support for maritime decarbonisation in Canada.
Canada has an opportunity to build on this early progress and establish itself
as a leader in maritime decarbonisation.
Figure 3 - Green shipping corridor initiatives announced in Canada to date
Canada’s abundant energy resources make it well-placed to be a supplier of
low and zero lifecycle emission marine fuels
Canada has one of the cleanest electrical systems in the world with more than
83% of output coming from non-emitting sources [16] and the government
has committed supporting clean energy projects to further reduce emissions
from power generation. The country is also a producer of oil and gas;
meaning that the sector has the financial resources, infrastructure, energy
expertise, and skilled workforce that can be leveraged to develop zero
emission fuel pathways.
The Hydrogen Strategy for Canada [17] was released in December 2020 by
the Government of Canada. It outlines opportunities for Canada to leverage
its natural resources to drive the domestic production and use of clean
hydrogen including the potential for Canada to become global producer of
low-carbon hydrogen. In 2022 the Government of Canada signed a joint
declaration of intent with the Government of the Federal Republic of
Germany on establishing a Canada-Germany Hydrogen Alliance which aims
to create a transatlantic supply chain for hydrogen before 2030.
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3. Fuels for green shipping corridors
3.1 Production of low and zero emission shipping
fuels
As identified above, scaling the production of low and zero emission fuels to
meet growing demand and deliver on global climate goals is a key challenge.
There are numerous possible alternative fuels, but focus is on a few core
options
There are numerous fuel options that could be considered, with no ‘silver
bullet’ applicable across all shipping segments, however the industry is
coalescing around a few core fuels that are expected to make up the majority
of the future fuel mix for deep sea shipping; methane, methanol, and
ammonia as well as drop-in fuel oils from renewable sources [18, 19, 20].
The use of molecular hydrogen and electrical energy stored in batteries are
also likely to play a key role in the decarbonisation of in-port or short sea
vessels, however their low energy density make them unsuitable for deep sea
vessels and are therefore expected to meet only a small portion of shipping’s
total energy demand.
It is critical to consider the full lifecycle greenhouse gas emissions from
marine fuels
The greenhouse gas emissions produced at the point of use of each fuel
option can be readily compared, regardless of how the fuel was produced and
distributed to the vessel. However, to reflect true climate impact, the full
lifecycle greenhouse gas emissions generated during the feedstock
generation, fuel production, distribution, and eventual use onboard must also
be considered.
This report refers to fuels with low or zero lifecycle greenhouse gas
emissions as ‘low and zero emission fuels’. However, it should be noted that,
depending on how the fuels are converted to energy on board, they may still
produce air pollutant emissions, some of which could themselves contribute
to climate change. Further discussion around the potential air quality impacts
of the new fuels is discussed in more detail in Section 4.
Each fuel has a range of production pathways which influence its lifecycle
greenhouse gas emissions
A fuel’s lifecycle emissions are heavily influenced by the feedstocks and
production pathway used to produce it. Each fuel option discussed in this
report has numerous production pathways – including fossil-, bio-, e- and
ccs-enabled routes – each with different feedstocks and production
technologies that will influence these lifecycle emissions. This report has
focussed on production pathways that can produce fuels with low or zero
lifecycle emissions.
The sector needs to minimise lifecycle emissions and avoid carbon lock-in
The lifespan of energy, fuel production, and port infrastructure, as well as of
ships themselves, typically spans several decades. Much of the infrastructure
being planned now and developed over the coming years will therefore still
be operating in 2050, the year in which Canada and the majority of major
economies have committed to achieving net-zero emissions. It is therefore
critical that infrastructure for the supply alternative shipping fuels is designed
to deliver, or have the ability to deliver, low or zero lifecycle emission fuels
in order to avoid ‘carbon lock-in’.
There are a number of ways of defining what constitutes a low emission fuel
There are various government and industry standards that can be applied to
define thresholds for the lifecycle emissions of hydrogen-derived fuels. These
thresholds are a key measure to ensure that government support and
investment is directed towards projects that can contribute to greenhouse gas
emissions reduction.
The Hydrogen Strategy for Canada recommended that a carbon intensity
threshold is set in Canada at which hydrogen may be termed ‘clean’ and that
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it should “coordinate with efforts underway internationally” [17]. The
strategy made specific reference to the European voluntary ‘CertifHy’
scheme and its recommended threshold of 36.4gCO2e/MJ. The same
threshold is recommended in British Columbia’s provincial hydrogen
strategy [21]. The threshold is set at 60% below the carbon intensity of
hydrogen produced from natural gas without CCS.
Other standards either published or in development include:
• More recent rules published by the European Commission which set a
lower lifecycle emissions threshold of 3.38kg-CO
2
e/kg-H
2
(~28gCO
2
e/MJ) [22].
• The ‘UK Low Carbon Hydrogen Standard’ which sets an emissions
intensity threshold of 20gCO
2
e/MJ [23] below which the hydrogen can be
considered ‘low carbon’.
• The ‘U.S. Department of Energy Clean Hydrogen Production Standard
(CHPS) Draft Guidance’ [24] proposes a less stringent target of 4
kgCO
2
e/kgH
2
.
The threshold in the UK standard (20gCO
2
e/MJ) is the most stringent of
those listed above and has been selected as the preferred approach in the
absence of a standard specifically agreed for Canada. Therefore, this report
uses the term ‘low emission fuel’ to refer to fuels with lifecycle greenhouse
gas intensity below 20gCO
2
e/MJ, which is approximately 80% lower than for
conventional shipping fuel oils. Since this threshold is for hydrogen
production only, it is assumed that further processing to produce ammonia or
methanol is powered by renewable electricity only and that the source of CO
2
for methanol is net carbon zero over its lifecycle.
Green shipping corridors should focus on building supply chains for low and
zero emission fuels
Green shipping corridors are an opportunity for high-ambition partners to
drive the uptake of low and zero emission fuels in the short term. This report
has therefore considered fuel production pathways that could offer significant
reductions in lifecycle greenhouse emissions compared to conventional fuels
and are therefore able to support the decarbonisation of shipping in line with
a trajectory aligned with a 1.5°C Paris Agreement goal. A high-level
overview of the production pathways considered in this report is shown in
Figure 4.
The fuels can be grouped and defined as follows:
• CCS-enabled fuels, referring to those derived from hydrogen produced
by reforming natural gas feedstocks and capturing the resulting carbon
using a Carbon Capture and Storage (CCS) process. These fuels may also
be referred to as ‘blue’ fuels. For these fuels to meet the emissions
intensity threshold, the CCS process must have a high capture rate, the
resulting carbon permanently and securely sequestered, fugitive methane
emissions must be tightly controlled, and hydrogen used to fuel the
reformer.
• Bio-fuels, referring to those produced with carbon from biomass
feedstocks. For these fuels to be meet the emissions intensity threshold,
the biomass feedstocks must be from sustainable sources without
detrimental climate, environmental, or social impacts and with robust
certification and traceability.
• E-fuels, referring to those derived from hydrogen produced by
electrolysis. To meet the emissions intensity threshold, the electricity
used in the fuel’s production must be from low or zero carbon generation
sources. These fuels are sometimes also referred to as ‘green’ fuels. For
carbon containing e-fuels, such as methane or methanol, the carbon must
be removed from the atmosphere via biogenic processes or Direct Air
Capture (DAC).
Geographical and technological characteristics will influence the uptake of
each fuel and production pathway in the short, medium, and longer term
Each fuel and production pathway presents its own challenges and
opportunities that may affect its short- and mid-term development as well as
long-term technical, economic, and environmental viability as a full-scale
shipping fuel. As well as the fuel’s production, there are also challenges
associated with the bunkering, storage and use onboard of the fuels that will
need to be overcome.
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Location of production infrastructure is key to delivering cost competitive
fuels
In the absence of market influencing policy or regulations, the cost of
production of low and zero emission fuels will be higher than that of their
fossil fuel equivalents. Aside from technology costs, which are broadly
comparable regardless of location, the cost of production is highly dependent
on:
• Availability of low-cost renewable energy - The production of e-fuels
requires significant input of electrical energy for hydrogen electrolysis
and subsequent synthesis of the fuels. Electrical energy may also be
required to power desalination plants to provide water for electrolysis or,
in the case of methanol and methane, for energy intensive carbon capture
processes. To minimise lifecycle emissions of the fuels, the electricity
must be generated from low or zero emission sources such as renewables
or nuclear power. Furthermore, the electrical generation capacity used in
the production of fuels should be introduced in addition to those required
to decarbonise the electrical grid in any country or region. Since long
distance electrical transmission presents a range of challenges, including
Figure 4 - The key energy sources, feedstocks, and production processes involved in the main carbon fuels under consideration
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high costs and power losses, location of the production plants in regions
with ample renewable power available at low cost is preferable.
• Proximity to the point of use - There are existing global supply chains
for methane, methanol, and ammonia, with the products transported by
pipeline, road, rail, or ship. However, transporting the fuels over greater
distances will add cost and logistical challenges; hence impacting the
commercial competitiveness of the delivered fuel. Producing fuels in
proximity to the point of delivery to the end user could be preferable
where this is balanced with the relative production cost at that location.
• Sustainable supply of carbon - The lifecycle emissions associated with
carbon containing fuels, such as methane or methanol, will heavily
depend on the source of the carbon used as a feedstock during production.
Although this could be captured from the exhaust streams of existing
fossil fuel plants, the preference should be for this carbon to be
sequestered permanently rather than released to the atmosphere when the
fuel is used. For the fuel to be considered low or zero emission on a
lifecycle basis it needs to be from sustainable biogenic sources or
extracted from the atmosphere by a DAC process. In the case of biomass,
the energy required to transport the feedstock, often by road, can have a
significant impact on the lifecycle emissions as well as the cost of the
end-product. Similarly, transporting carbon dioxide over significant
distances, by road, rail, ship, or pipeline, is equally costly and presents
infrastructure development challenges.
• Availability of carbon sequestration facilities - In the case of CCS-
enabled fuels, where hydrogen is separated from fossil fuel feedstocks,
there is an additional requirement for long term sequestration of the
carbon; a process that relies on suitable geological conditions, often in
depleted natural gas or oil fields. Situating CCS-enabled fuel production
facilities in proximity to the source of natural gas as well as sequestration
locations will remove the need to transport these products and hence
reduce production costs.
The location of the fuel production plant in relation to the energy source,
feedstock, point of use and carbon sequestration location is therefore key to
minimising production costs and making these fuels commercially viable.
The availability of these key resources in a region will influence which fuel
and production pathways would make the most economic sense – a topic
which is explored in more detail later in this report.
Liquefied Natural Gas
Liquefied Natural Gas (LNG) – a gaseous mixture of hydrocarbons
predominantly made up of methane – has seen uptake as a marine fuel in
recent years as a means of complying with new regulations on air
pollutant emissions as well as to reduce the carbon intensity of vessels.
More than 10% of the global fleet, either operating or on order, are now
capable of operating on LNG fuel [60] and bunkering availability is
increasing around the world. However, LNG has not been considered in
this report for the following reasons:
• LNG is a fossil fuel that is only able to offer limited greenhouse gas
emissions reductions of up to just 23% [61] on a lifecycle basis in
comparison to fossil fuels. Widespread uptake of LNG as a shipping
fuel does not enable a decarbonisation trajectory for the shipping
sector that is aligned with the Paris Agreement goals and achieving
net zero greenhouse gas emissions by 2050.
• Since methane is itself a highly potent greenhouse gas - 86 times more
potent that carbon over a 20 year time frame - tight controls of
fugitive emissions are required through the supply chain from
production to use in ship engines. Unless fugitive emissions are
tightly controlled, the use of LNG fuel could have a detrimental effect
on the overall climate impact of shipping.
• The purpose of green shipping corridor initiatives is to accelerate
development of supply chains for zero emission fuels that are
currently immature.
The potential role of LNG in meeting existing emission reduction targets
has been covered in more detail in a number of industry papers [61, 62,
63]. For the purpose of this report, natural gas has been considered as
possible feedstock in the production of CCS-enabled fuels.
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3.2 Mobilising the fuel supply value chain
There are a number of commercial, regulatory, and technical barriers to the
production, supply, and use of low and zero emission fuels at scale. A green
shipping corridor initiative is an opportunity for an engaged group of
stakeholders, from across the supply and demand side of the marine fuel
value chain, to collaborate on means of addressing these. This could include
development of new commercial approaches, agreeing safety standards for
bunkering of new fuels or collaborating on technology demonstration
projects.
Figure 5 outlines the key groups of value chain actors involved in the supply
of low carbon marine fuel value. Each of these groups can play a key role in
the supply of fuels to green shipping corridors and, in the longer term, to
shipping as a whole. This section explores these roles and the ways in which
the stakeholders can work together to accelerate low and zero emission fuel
uptake.
Close collaboration between energy, feedstock and fuel producers can
minimise fuel production costs
As discussed above, the cost of energy and material feedstocks is one of the
key price drivers for many low and zero emission fuels. Close collaboration
or integration between feedstock and fuel producers is important to support
commercial viability by minimising and stabilising costs. For CCS-enabled
fuels, natural gas could be procured from the open market however more
niche renewable feedstocks may require dedicated production or collection
facilities local to the fuel production facility.
For electricity supply, agreements between energy companies and fuel
producers should therefore prioritise minimising and stabilising costs to
support viability of the fuels. Stabilisation can be achieved through specific
power purchase agreements (PPAs) which might be delivered virtually from
a remote renewable electricity production facility, or physically using a direct
wire connection.
Figure 5 – Key stakeholder groups involved in production, supply and use of low and zero carbon marine fuels
Demand
Supply
Energy Providers
Feedstock Producers
Fuel Producers
Vessel Operators
Ports
Cargo Owners
Bunker Suppliers
Investors
Government & Regulators
Production
Distribution & Supply
End Use
Local Communities, Indigenous Groups & Wider Society
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Fuel offtake agreements will help to stabilise prices and de-risk
infrastructure investments
Producers of low carbon fuels will include start-ups developing new
production infrastructure as well as established organisations adapting
existing facilities. In either case, making significant investment in new
infrastructure can represent a significant risk. Establishing offtake
agreements with bunkering services or vessel operators can offer longer-term
stability of pricing for both the producer and the user, increasing the certainty
required to invest in costly new infrastructure. For this reason, first mover
fuel producers are likely to seek partnerships with upstream suppliers (which
may be exposed to a similar risk from economy-wide decarbonisation), ports
and bunkering services and vessel operators.
Bunker suppliers are involved in the distribution of marine fuels from
production facilities or import/export hubs to in-port storage facilities or
directly to the vessel via truck, bunker vessel, or fixed infrastructure.
Alternative marine fuels such as hydrogen, ammonia, and methanol each
present distinct challenges to their safe and efficient storage, distribution and
transfer that will require new infrastructure and equipment to safely deliver
the fuels to vessels; this may include storage facilities, pipelines, landside
vehicles, and bunker vessels. It is likely that the fuel producers may
undertake some or all of the bunker supply activities.
Ports sit at the intersection of the supply and demand of marine fuels
Ports will play a vital facilitating role in the transition of shipping to zero
emission fuels. As a minimum, ports can be expected to facilitate port visits
from vessels using alternative fuels. However, there is an opportunity to
support movement of fuels into their site and facilitate bunkering activities,
requiring the appropriate knowledge and procedures to manage this safely.
Development of fuel storage facilities within the port boundary will require
significant investment. It should be noted that bunkering of several different
fuels in a single port, each with distinct handling requirements, is likely to be
commonplace in the future.
Sharing the cost of the fuels across the supply chain
Increased operational costs associated with the high cost of low carbon
marine fuels will be faced by vessel owners and operators. They will
additionally require significant capital investment for new or upgraded ships
and supporting technologies. Collaborating with other value chain actors on
offtake agreements, port fee incentives, or premium cargo rates can help to
mitigate this. Significant technical and regulatory challenges remain to the
uptake of some fuel's onboard vessels and collaboration with regulators,
shipbuilders, and equipment suppliers will be required to overcome them.
Cargo owners bridge the gap between the shipping industry and consumer
ambition
Cargo owners will play a key role in the development of green shipping
corridors. Ambitious decarbonisation targets have been set by cargo owners
in response to government and consumer pressures and this is driving these
businesses to seek low carbon shipping options. For example, the Cargo
Owners for Zero Emission Vessels (coZEV) network, which includes major
retailers like Amazon and Ikea, is working to accelerate maritime
decarbonisation by sending demand signals for zero emission shipping
services and supporting green shipping corridor development [25].
Governments will play a central role in the decarbonisation of shipping at
local, regional, national, and international levels
The nature of the marine fuel production value chain will require
involvement from a range of government departments. By setting top-level,
Paris-aligned decarbonisation policies for the energy and transport sectors,
governments can ensure the shipping industry is clear on the targets that need
to be achieved. Governments may also seek to regulate the greenhouse gas
intensity of fuels used by domestic shipping, in a similar approach to the
existing Clean Fuel Regulations [26] put in place in Canada to help drive
development and uptake of low emission fuels in transportation sector.
Government also has a central role in the development of enabling
regulations and provision of any direct grant funding to support bridging the
cost gap in the short to medium term. Creating decarbonisation policies with
clear targets and embedding them across taxation, development planning and
regulations sends opportunities signals to the market. This will need to take
place at a local, regional, national, and international level and work across the
value chain.
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The substantial investment opportunity needs to be unlocked
Decarbonisation of the global shipping industry by 2050 has been estimated
to require investment of up to USD$1.6 trillion [3]. This presents new
opportunities for the investor community around ship building and retrofits,
energy and fuel production infrastructure as well as associated supply chains.
Internalising the wider value opportunities means investors moving outside
the traditional, narrow lending criteria which views uncertainty as risk, rather
than a steppingstone to a bigger opportunity.
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4. The Total Value Case
4.1 A Total Value approach could illuminate the
potential co-benefits of green shipping
corridors
Substantial capital and operational investment is required in new
infrastructure to supply low and zero emission fuels to first mover green
shipping corridors. These projects could have significant positive impacts
on Canada’s economy, at both national and local levels, as well as on the
natural environment and communities living nearby. Considering the
‘Total Value’ case for green shipping corridors and supporting fuel supply
projects can help to shape, capture, and leverage their wider value and
therefore improve their investment case.
The Total Value of infrastructure is the “perception of worth, or benefit,
that accrues to stakeholders, communities and other beneficiaries over
time” [27]. It is the sum of the financial, economic, social, and natural
value delivered by the project. A Total Value assessment should identify
the positive value outcomes that could be realised, helping to embed these
as objectives from an early stage of the project. However, it should also
identify and explore the risk of negative value outcomes, such that they
can be mitigated and minimised wherever possible.
This section explores how a Total Value framing approach can be applied
to green shipping corridor projects in Canada, the areas that value could be
delivered in, as well as some of the potential risks and negative outcomes
that should be mitigated. A ‘Total Value story from 2040’ has been
developed for each of the case studies in sections 6 and 7 to illustrate the
value outcomes that could be delivered and the approaches to realising
them.
Figure 6 – Total value for green shipping corridors
(Adapted from Arup [27])
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4.2 Benefits that green corridors and broader maritime
decarbonisation could bring to Canada
Figure 6 shows a range of areas where green shipping corridors and their
associated fuel production infrastructure could – if shaped and implemented in
the right way – deliver broad value to diverse stakeholders. Although
presented separately, many of the value areas are inter-linked or overlapping,
underlining the importance of considering the full value profile together. Each
individual project will have a greater or lesser impact on each value category
and there may be additional categories to be considered that are not shown
here. Each of these value categories is described in more detail below.
Economic value
Economic value is the value delivered to the public purse, for example by
supporting jobs, facilitating trade, or increasing tax revenue.
Shipping has been estimated to directly contribute CAD$3 billion to Canada’s
GDP [1] while the energy sector makes up a further 9% of the economy, or
CAD$175billion [28]. However, both of these sectors will undergo significant
change in the coming decades as the world transitions to a net-zero economy
meaning that continuing in business-as-usual will not be an option. Green
shipping corridors present opportunities to address risks associated with this
transition, realise first mover advantages, create green jobs, and support
sustained economic growth in these sectors while delivering on policy
ambitions.
These economic value considerations could be grouped under the following
four categories:
Delivery of new zero emission fuel production infrastructure
can help to minimise climate transition risk in Canada’s
energy and transport sectors; future proofing jobs in these
sectors and enabling sustained economic activity and as the
world transitions to net zero emissions. More broadly,
shipping decarbonisation will help to secure a long-term
future for competitive international trade.
There are already numerous low and zero emission fuel
infrastructure projects underway globally, but production
still needs to scale significantly in the coming decades to
meet global climate targets. Entering the market at an early
stage can help to realise first mover advantages and lock-in
economic benefits over the long term. Uncertainties in the
rate that demand will scale presents risks which can be
mitigated through the green shipping corridor model.
Participation in green shipping corridors and other first
mover projects can support development and demonstration
of innovative technologies across the fuel production chain.
Fostering this innovation in Canada can help to maximise
the economic potential of the maritime fuel transition while
supporting a broader technology and innovation sector.
Projects should align with stakeholders’ strategies and
broader policy while delivering value for money. In Canada,
supporting green shipping corridors will help the
government deliver on its international commitments and
national emissions reductions targets. There are also
opportunities to consider how energy policy aligns with the
decarbonisation of road transport, rail, shipping, aviation,
and other fuel consuming sectors can help identify demand
aggregation opportunities, unlocking economies of scale and
maximising economic benefit.
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Social value
Social value is the value delivered to individuals, local communities and wider
society that ultimately improves quality of life.
While maritime industries can bring significant benefits to port and coastal
communities, in terms of employment and economic growth, these same
communities also often experience the worst of the negative impacts of
shipping such as air, water, and noise pollution. Maritime activity can have a
particularly acute impact on low-income communities, who may live in the
most polluted areas, as well as Indigenous people who have a strong ancestral
connection to the sea and coastal lands.
Green shipping corridors, and the longer-term decarbonisation of shipping,
presents an opportunity to reduce pollution and pursue broader social benefits.
These may include the generation of new employment opportunities, skills
development for existing workers, improved health and wellbeing, enhanced
community cohesion, and increasing inclusion of Indigenous groups.
These social value considerations could be grouped under the following four
categories:
The creation of well paid, inclusive, and meaningful jobs in
innovative industries - such as zero emission fuel production -
can provide more and better employment opportunities for
local communities with the net effect of an improved quality of
life. Providing training and improving skills will provide
broader opportunities over the long term and contribute to
realising economic benefits.
Port communities often have a strong connection to the port’s
activities with the port forming part of local identity. Ensuring
the future success of the port and positioning it as a front
runner can enhance this connection and provide positive
community uplift benefits.
Developing new energy and fuel infrastructure is an
opportunity to ensure Indigenous communities are included and
the full benefits are shared equally. Early and comprehensive
engagement and involvement with community groups,
particularly indigenous communities, is key to project success
and to advancing reconciliation and self-determination.
Reducing air pollution from shipping will avoid negative health
impacts on port and coastal communities but can also have
indirect positive effects such as encouraging increased outdoor
recreational and community activities. However, there are also
health and safety challenges that must be addressed in the
transition to these new fuels.
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Natural value
Natural value is the value delivered for the environment.
Vessels operating in Canadian waters produced more than more than
13 million tonnes of CO
2
emissions in 2019 [2] as well as hundreds of
thousands of tonnes of air pollutants that impact the health of port and coastal
communities, pollute oceans and can themselves have a significant climate
impact. There are also risks associated with accidental fuel oil spills as well as
ongoing loss habitats and natural resource depletion.
Green shipping corridors are an opportunity to collaborate across the energy,
fuel, and shipping value chains to address these environmental impacts while
exploring opportunities to deliver net benefits to biodiversity and support the
development of circular economy principles in any new projects.
These natural value considerations could be grouped under the following
categories:
Combustion of fossil fuels contributes to ongoing
environmental damage through processes such as ocean
acidification and eutrophication. The transition to alternative
fuels can help to slow these processes. However, care must still
be taken when handling these new fuels to avoid accidental
leaks or spills, particularly in areas with vulnerable ecologies.
Poor air quality in ports and coastal areas caused by shipping
contributes to negative health impacts and causes millions of
premature deaths globally every year. Reducing combustion of
carbon-based fuels will reduce emissions of particulate matter
and associated health impacts. However, adverse impacts of
combustion of alternative fuels must be understood and
managed.
The importance and urgency of reducing greenhouse gas
emissions in order to protect people and the planet has never
been clearer. Climate impacts will be felt at a local level,
impacting coastal communities as well as stakeholders across
the port and shipping sectors. Transitioning to low and zero
emission shipping fuels will address greenhouse gas emissions
and hence help to prevent the worst climate outcomes.
The need to produce develop new energy and fuel production
infrastructure at scale, which can occupy large areas of land or
seabed, must be balanced with the need to protect sensitive
environmental areas and enhance biodiversity. Maximising the
use of brownfield sites and repurposing existing infrastructure
wherever possible can help to achieve this aim and deliver the
fuel transition with as little environmental impact as possible.
Many of the fuel production pathways explored in this report
require significant quantities of feedstocks, from biomass to
fresh water, and also produce waste streams, such as oxygen or
carbon dioxide. Effective use of these resources should be
prioritised to avoid adverse environmental impacts. Meanwhile,
any opportunities to use waste products from other industries or
provide by-products for secondary use should be explored.
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Financial value
Financial value is the direct financial benefit delivered to stakeholders through
the delivery and operation of new infrastructure.
Decarbonisation of the global shipping industry will require significant
investment in land side energy and fuel production infrastructure [3]. Green
shipping corridors can help to attract this investment to Canada where
available natural resources, a skilled workforce and available land can be
leveraged to produce cost competitive zero emission shipping fuels. The
development of this infrastructure raises opportunities to explore how its
financial benefit can be distributed among a broader range of stakeholders
such as local communities and indigenous groups.
These financial value considerations could be grouped under the following
categories:
The shipping industry consumes billions of dollars’ worth of
fuel every year; there is a significant opportunity for
stakeholders across the shipping and fuel supply value chain to
realise new revenue streams and profit from the transition away
from fossil fuels. This could include energy companies, fuel
producers, bunker suppliers, ports and first mover shipping
companies. Exploring different ownership structures may raise
the potential for greater public or community wealth building.
Although there is inherent risk in first mover projects involving
innovative and emerging technologies, by mobilising supply
and demand simultaneously, green shipping corridor initiatives
are an opportunity for stakeholders de-risk investments in new
fuel infrastructure. This infrastructure is also an opportunity for
investors to de-risk existing portfolios by reducing exposure to
legacy fossil fuel infrastructure and potential of stranded assets.
Considering how to structure the ownership of new
infrastructure alongside the broader value aims of a project can
help to ensure the intended outcomes are achieved and benefits
maximised. These projects provide an opportunity to increase
ownership stakes in projects for public bodies, local groups,
and indigenous communities.
Good governance in new infrastructure projects is crucial to
ensuring value is delivered across all areas and to all
stakeholders. Work should be done to ensure stakeholders,
including investors, have strong Environmental, Social and
Governance (ESG) performance and values that align with the
broader aims of the project.
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4.3 Delivering the value
As explored in the preceding section, there are a broad range of positive value
outcomes that could be delivered for Canada through green shipping corridors
and longer-term maritime decarbonisation. However, the type of value that
can be delivered - and the benefactors of it - depends as much on the approach
taken to implementing the infrastructure projects as it does to the type of
infrastructure delivered.
Considering the impact at a local, national, and global scale
As identified in the Canadian Green Shipping Corridor Framework, actions to
tackle emissions at a local level can support positive outcomes at a national or
global scale. This is applicable across the Total Value framework, where
supplying zero emission shipping fuels in Canada could also realise economic,
social, and financial benefits at a global scale. Figure 7 sets out example
benefits that could be delivered by at a local, national, and global scale.
Applying a place-based approach
A place-based approach recognises that a one-size-fits-all attitude to project
delivery will not capture the importance of local context and how this shapes
the uniqueness of place. The impact of creating green shipping corridors on
the local communities will be unique to Halifax, Vancouver, Prince Rupert,
and indeed any port in Canada. Ensuring that evidence-based knowledge of
local need and context feeds into decision-making processes within the project
allows for sustainable and relevant long-term value creation.
Identifying the target value outcomes from a project and embedding them in
its delivery
Undertaking a value assessment at the start of any project can enable
stakeholders to identify the potential value that could be delivered and embed
this as specific objectives in the project’s delivery. The objectives should be
revisited at all key stages of the project to ensure they are delivered. This
approach can help to make sure all stakeholders are aligned on the outcomes
and working together towards them.
Figure 7 – Example benefits that could be realised at a local, national and global
scale
Local
National
Global
A new fuel production
facility creates new, well-
paying jobs; positively
contributing to the local
economy.
Canada positions itself as
a global leader in low
carbon marine fuels and
associated technologies,
generating new export
opportunities.
The shipping industry’s
operations on with zero
carbon fuels enable it to
continue facilitating
global trade in a net-zero
economy.
A new port fuel project
creates a vacant terminal
that is redeveloped into a
waterfront public park,
increasing the wellbeing
of local communities.
A renewable energy
project undertakes
comprehensive and early
engagement with
indigenous groups,
supports reconciliation
and promotes increased
economic inclusion.
Social value
considerations are
embedded in the project’s
procurement strategy,
delivering value
throughout the supply
chain with a potential
global impact.
Use of zero emission fuels
improves air quality
around the port, reducing
negative health outcomes
for local communities.
Reduced combustion of
fossil fuels reduces
impacts of ocean
acidification and
eutrophication.
Supply of zero emission
fuels reduces greenhouse
gas emissions from
shipping and helps to
avoid the worst impacts of
climate change globally.
Facilitating the supply and
export of a range of new
fuels creates new revenue
streams for the port.
The development of zero
emission fuel supply
chains drives innovation
across the country,
attracting investment
across a number of sectors
and regions.
Shipping lines are able to
demonstrate enhanced
sustainability to access
preferential capital and
insurance rates.
Economic
Social
Natural
Financial
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5. Case study: British Columbia, the Port of Vancouver, and the Port of Prince Rupert
This report uses two Canadian case studies to illustrate the potential impact
that green shipping corridors and the longer term decarbonisation of shipping
could have in Canada. These case studies examines the Port of Vancouver
and Port of Prince Rupert in British Columbia. These explores the region’s
energy and resource setting, the local context of each port, and how these
factors can influence the feasibility of different fuel production pathways.
Using an estimate of the potential future low and zero emission fuel,
produced by the Lloyd’s Register Maritime Decarbonisation Hub, an
example fuel production and supply typology is developed for each port to
illustrate the type, scale and cost of the infrastructure required to meet
potential future demand for low and zero emission shipping fuels. The cost
estimates provide an order of magnitude indication of the investment required
to deliver the infrastructure for each typology and are based on assumptions
and benchmarks taken from publicly available sources and similar projects.
A Total Value story has been developed for each of the illustrative fuel
supply typologies to demonstrate possible value outcomes that could be
delivered for each location, including some of the approaches taken to doing
so. Considering the ‘Total Value’ case can help to shape, capture, and
leverage the wider value of the corridor and therefore improve their
investment case.
5.1 Regional energy and resources
British Columbia has a high renewable energy mix with excess generation
capacity
In British Columbia, hydroelectric power generates about 87% of the
region’s electricity followed by Biomass (5%) which primarily uses waste
from the province's large forestry sector [29]. A further 4% of electricity is
generated from wind power and the remaining 4% is generated from
combustion of natural gas generation. This high renewable energy mix means
that the province has one of the lowest carbon intensity grids in the world, as
shown in Figure 8.
Figure 8 – Carbon intensity of electricity in British Columbia compared to a selection
of global economies in 2020
Data source: British Columbia [29], all other countries [30]
Most of the hydroelectric generation plants are situated on the Peace River in
the northeast and the Columbia River in the southeast of British Columbia. A
major, 1,100 MW hydroelectric project called Site C is currently being built
on the Peace River and is anticipated to be finished in 2025 aiming to provide
additional low-cost renewable energy.
There is a currently an energy and capacity surplus in British Columbia
which is forecast to persist until around 2030 [31]. Given the large quantities
of renewable energy in the grid, the province has the opportunity to produce
low carbon fuels such as hydrogen and its derivatives.
0
100
200
300
400
500
600
Carbon intensity of electricity
(gCO2/kWh)
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The province has significant natural gas resources
British Columbia is a major producer and supplier of natural gas; accounting
for 35% of total Canada’s total natural gas production in 2020 [29]. An
established pipeline network supports the distribution of natural gas within
the province as well as its export elsewhere in Canada and to the US. The
Province has recently released a New Energy Framework that sets
requirements for new LNG facilities to set out plans to reduce production
emissions to net zero by 2030. The framework commits to putting in place a
regulatory cap on production emissions from the oil and gas industry to
ensure British Columbia meets its 2030 emissions-reduction target for the
sector. The utilization of renewable energy to lower the greenhouse gas
emissions from the production and liquefaction of natural gas, would help to
minimise the lifecycle emissions where the gas is used as a feedstock in
production of CCS-enabled hydrogen and its derivatives.
Some parts of the electricity grid are constrained
There is a push to electrify buildings and vehicles to curb climate-warming
emissions. However, in the northwest of British Columbia there is limited
grid capacity and lower security of supply which has impacted the rate of
decarbonisation in the area. These constraints could impact the viability of
any e-fuel production facility in the area, including Prince Rupert. However,
the commitment in the New Energy Framework to accelerate the industrial
electrification with renewable electricity could help to alleviate this concern.
There is government support for transport electrification and hydrogen
production
Despite British Columbia having a low carbon electricity grid and surplus
generation capacity, around 70% of the region’s total energy demand is met
through fossil fuels such as gasoline and domestic natural gas. In 2021, BC
Hydro, the electric utility that generates most of the region’s electricity,
launched a 5-year ‘Electrification Plan’ [32], which includes plans to invest
CAD$260 million to promote energy studies, energy incentives and other
programs to encourage customers to switch to electricity. This plan covers
customers across industry, transportation, and homes and buildings. For the
Transportation sector, BC Hydro are providing incentive support around
customer specific electrification roadmaps, studies, fleet conversations and
demo projects. There is potentially an opportunity to further extend this
programme to support e-fuel production for vessels that cannot be directly
electrified.
The province’s government has published Hydrogen Strategy [21] to support
its aim to reach net zero emission by 2050 and ambition to become a world
leading hydrogen economy. The strategy outlines government’s actions to
accelerate the development of British Columbia’s hydrogen sector,
identifying potential for green and CCS-Enabled hydrogen production given
the clean grid, natural gas reserves, and significant CCS potentials with
favourable geology. This hydrogen can be used directly in fuel cells or
combustion engines of some marine vessels or used in the production of e-
fuels such as methane, methanol, or ammonia to fuel larger ocean going
vessels.
Favourable geology creates a potential market for carbon sequestration
The geological formations that provide the province’s abundant natural gas
reserves also present a significant opportunity for the geological storage of
carbon dioxide. Neighbouring Alberta has already committed $1.24 billion of
funding for two commercial-scale carbon capture, utilisation and storage
projects in the region where carbon will be collected from industrial activities
and injected into secure geological formations. The potential for significant
long-term sequestration of captured carbon, as well as the availability of
natural gas with low production emissions, could lend itself to production of
CCS-enabled hydrogen and derivatives such as ammonia at commercially
competitive cost.
There is also the potential to develop further economic activity around the
capture, handling, and storage of carbon, potentially importing captured
carbon from other regions or countries, or becoming a leading region in the
technology development required to develop this industry. For example, local
company Carbon Engineering is already operating a pilot Direct Air Capture
(DAC) plant in Squamish which has the potential to produce feedstock to
produce low emission e-fuels.
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5.2 Estimated demand for low and zero emission fuels
The Lloyd’s Register Maritime Decarbonisation Hub conducted an analysis
of vessel traffic operating on the West Coast of Canada during a baseline
year of 2021 to estimate zero emission demand under different scenarios. The
applied methodology for this analysis is described in full at Appendix B.
Port of Vancouver
The analysis identified 3,300 vessels that entered the region covering the
western coastline of Canada and the US, extending to the southern point of
Oregon. Of these, 830 vessels entered the Strait of Georgia and Vancouver
area. However, as shown in Figure 9, many of these vessels spend a
significant proportion of the year operating internationally and therefore have
greater options to bunker elsewhere. To account for this, the analysis assumes
that vessels would be unlikely to bunker in the port if less than 20% of their
total port calls are in Vancouver or they spend more than 50% of the year
outside the region; these vessels are therefore considered out of scope and
excluded from the estimate of fuel demand. Applying these thresholds to the
first mover segments - bulk carriers, container ships and Ro-Ro vessels -
Lloyd’s Register identified 144 vessels as being in-scope. The estimated total
annual fuel demand of the in-scope fleet is in the region of 820 thousand
tonnes per annum (ktpa) of HFO equivalent fuel (HFO
e
), of which around
Figure 9 - Heatmap of global activity of vessels that ever called in Vancouver during 2021
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
449bulk carriers
130 containerships
119 open hatch cargo ships
78 vehicle carriers
54 other
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230ktpa is estimated to be attributable to Vancouver based on the time the
vessels spend in the region.
The analysis applies a number of assumptions to project the uptake of zero
emission fuels to 2030 including estimates for transport demand growth,
alternative fuel uptake versus other options, level of decarbonisation
ambition, and refuelling frequency/feasibility which are described in more
detail at Appendix B. The analysis predicted a zero emission fuel demand at
the Port of Vancouver of approximately 11ktpa HFO
e
in 2030, which is
equivalent in energy terms to 24ktpa of ammonia or 22ktpa of methanol.
Figure 10 shows how this demand could develop if uptake were to follow a
decarbonization trajectory aligned to 1.5°C Paris Agreement goal. If uptake
follows this projection, the demand for zero emission marine fuels in
Vancouver could warrant dedicated production facilities.
Port of Prince Rupert
In the case of the Port of Prince Rupert, the analysis identified 72 vessels that
made a collective 239 port calls in the baseline year. As shown in Figure 12,
these vessels operate globally throughout the year and as such the annual fuel
demand that is likely to be attributable to the Port of Prince Rupert is low.
Projecting this to 2030 results in a low fuel demand that is unlikely to make
dedicated production infrastructure economically viable in the short to mid-
term, as shown in Figure 11.
As identified above, using vessel traffic data analysis to estimate fuel demand
at a port level is a first step to explore opportunities for green shipping
corridor and other initiatives. However, another important activity is
engagement with stakeholders; examining port calls of vessels to establish
routes, and therefore potential partner ports, is one way of doing this.
Table 1 shows the most common port calls for the container vessels identified
in the analysis immediately before they arrive in Prince Rupert and
immediately afterwards. For example, Lloyd’s Register identified that of the
239 port calls identified in 2021, 48 were container arrivals from Okpo,
South Korea and Zhoushan, China. This indicates potential links to two
international locations that could be leveraged in the establishment of
international green shipping corridors.
0
100
200
300
400
500
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
ktpa HFOe
High Med Low
0
10
20
30
40
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
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High Med Low
Figure 10 – Projected zero carbon fuel demand in thousands of tonnes per
year of HFO equivalent in Port of Vancouver
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
Figure 11 – Projected zero carbon fuel demand in thousands of tonnes per
year of HFO equivalent in Port of Prince Rupert
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
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Table 1 - Top port calls by container vessels before and after Prince Rupert
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
Previous port call
• Okpo, South Korea
• Zhoushan, China
• Masset, Canada
• Port Edward, Canada
• Yokohama, Japan
Next port call
• Vancouver, Canada
• Masset, Canada
• Wilmington, USA
• Port Orchard, USA
• El Segundo, USA
• Yantian, China
West Coast Demand
Lloyd’s Register also identified several ports along the west coast of Canada
and the USA, including Vancouver, which create a network of ports servicing
containerships that have designated service lines. By aggregating zero
emission fuel demand across multiple ports, greater economies of scale can
be achieved in the production plants serving first mover initiatives. It will
also allow the burden of investing in new refuelling infrastructure to be
shared across the ports.
For these reasons, a combined demand for these two port locations has been
considered for the purposes of estimating the size of the infrastructure
required in the example fuel supply typologies explored later in this section.
Figure 12 - Heatmap of global activity of vessels that called in Prince Rupert during 2021
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
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5.3 Port of Vancouver
The Port of Vancouver is Canada’s largest and most diversified port, situated
in the south west of British Columbia. Managed by Vancouver Fraser Port
Authority, the port is a major gateway for trade between Canada and Asia
and handles a wide variety of cargo. By value, Vancouver handles CAD$1 of
every CAD$3 of Canada’s trade outside of North America, with over 75% of
cargo handled at Vancouver exported to or imported from China, Japan, and
South Korea. The Port has 29 multimodal terminals and borders 16
municipalities, intersecting several Coast Salish First Nation lands. In 2021
the terminals handled a total combined throughput of 146m tonnes worth
~CAD$275bn [33]. As the largest Port in Canada Vancouver has the
opportunity to drive the shift in decarbonising ships operating in the region.
Port activities directly interface with the city of Vancouver
The Port of Vancouver covers a large area with numerous direct interfaces
with the city of Vancouver. The majority of operations take place in
Vancouver Harbour, in close proximity to densely populated areas such as
Downtown and North Vancouver, potentially resulting in barriers or
challenges to future development, especially for the storage, production, and
transfer of alternative fuels which in many cases present new risks due to
their flammability or toxicity. However, the city location also raises the
importance of improving air quality from the vessels in port, through
electrification or the use of alternative fuels, to reduce the negative impacts
shipping emissions can have on local communities.
There is a wide variety of cargo handled in Vancouver
The Port of Vancouver handles a wide variety of cargo, in 2021 the terminals
handled a total combined throughput of 146m tonnes worth ~CAD$275bn.
The chart across shows the volume of cargo shipped through Port of
Vancouver, over the past three years the tonnage through the port has
increased at a rate of 1m per year. In 2021 Bulk accounted for the majority
(69%) of the annual tonnage throughput followed by Container (17%) and
Breakbulk (14%) [34].
Table 2 - Port of Vancouver cargo type overview
Cargo Type
Overview
Bulk (Dry
and Liquid)
There are 21 Bulk Terminals in Vancouver, this cargo type makes up the
majority of Vancouver’s annual tonnage, handling 102m tonnes in 2021.
A number of these service the petroleum industry, providing potential
opportunities for re-development in future fuel transitions.
Container
There are four large container terminals located across the Port of
Vancouver, in 2021 these had a combined throughput of 25m tonnes or
around 3.6 million TEU.
Breakbulk
In 2021 around 20m tonnes of Breakbulk Cargo was handled over two
terminals, each having road and rail connections.
Automobiles
There are two Automobile terminals, both located in the Fraser River.
They provide import services from Asian markets, handling 350,000 cars
in 2021.
Cruise
Due to Covid-19 the Port of Vancouver’s Cruise berth was not open to the
public over recent years. Previously in 2019, around 1m passengers
arrived at Vancouver.
Figure 13 – Vancouver Cargo Throughput (2019-2021)
Source: Port of Vancouver [34]
17
17
20
100
102
102
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The port is working to deliver its vision to become the world’s most
sustainable port
The Port of Vancouver has a vision to become the world’s most sustainable
port which is demonstrated through a number of ongoing initiatives:
• The port has developed a framework, summarised in Figure 14, that
describes their interlinking sustainable objectives. They have developed
performance indicators which they report against. The framework
includes 10 areas of focus and 22 statements of success.
• It was the first port authority to join the Sustainable Shipping Initiative
(SSI), an initiative connecting stakeholders committed to improving
sustainability within the shipping industry.
• In 2017 the Port formed the Northwest Ports Clean Air Strategy, which in
2020 was updated committing to eliminate all port-related emissions by
the year 2050, through shifting port operations toward technologies and
fuels with lower emissions.
• Currently the Port offers shorepower at the cruise and container
terminals, allowing ships to shut off their diesel-powered auxiliary
engines when docked and take power from British Columbia’s low-
carbon grid.
• Through the Low-Emission Technology Initiative, the port authority and
the province of British Columbia have each committed US$1.1 million in
funding to support the port community's transition to low-emission
energy. This includes the testing of battery-electric terminal tractors,
100% biodiesel on commercial ferries, a hydrogen-powered crane, and
100% renewable diesel on port vehicles [35]
• Finally, the Port of Vancouver is a partner in the Pacific Northwest to
Alaska Green Corridor Project which aims to accelerate decarbonisation
of cruise ships operating in the region.
Economic prosperity
through trade
Healthy environment
Thriving communities
Competitive business
Effective workforce
Strategic investment and
asset management
Healthy ecosystems
Climate action
Responsible practices
Good neighbour
Community connections
Indigenous relationships
Safety and security
Figure 14 - Port of Vancouver sustainability framework: ten areas of focus to be the
world's most sustainable port
Source: Vancouver Fraser Port Authority
[36]
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Example Fuel Typology: production of e-methanol at the Port of Vancouver
To illustrate the scale of infrastructure potentially required, and to feed into
the consideration of the broad value that this could deliver, we have shaped
an illustrative fuel supply typology for the Port of Vancouver, based on the
production of e-methanol.
The production of e-methanol could be well suited to the province of British
Columbia and Vancouver area specifically for the following reasons:
• The surplus low carbon renewable energy generation capacity,
predominantly from hydro-dams, in the region.
• The relative ease with which it can be handled safely in bulk, particularly
in proximity to populated areas such as in Vancouver.
• The opportunity it represents to develop and demonstrate emergent Direct
Air Capture (DAC) technologies as a source of the carbon feedstock
required in methanol synthesis.
As discussed elsewhere in this report, there are multiple possible fuel
pathways that could be used to decarbonise shipping. The mix of fuels
available at a port will be dependent on local conditions as well as policies
and regulations. The typology presented here is provided as an illustration of
a possible pathway for Vancouver based on its context and resources but is
not intended to be prescriptive to select this fuel rather than others. It is
therefore not intended as a recommendation on the most economical or
technically viable fuel production pathway.
Demand evolution
Based on the demand scenarios explored by Lloyd’s Register Maritime
Decarbonisation Hub (see Appendix B) for Vancouver and Prince Rupert,
demand in a methanol fuel transition scenario would range between 14 and
24 ktpa by 2030. If the fuel uptake in these segments tracks a Paris
Agreement aligned trajectory, this could scale to between 560 to 980 ktpa by
2050 as shown in Figure 15.
For the purposes of estimating the size and cost of the infrastructure
requirements, it is assumed that a commercial production facility completed
towards the end of this decade would be designed with the ability to produce
200ktpa of methanol. This plant would be adequate to meet the projected the
zero-emission shipping fuel demand projected in 2040, in a ‘low’ bunkering
occurrence scenario as indicated in Figure 15. Using the lower projected
demand recognises that the demand is unlikely to be exclusively for
methanol. Further study to explore the size and evolution of the demand
would be required to develop the strategy and design of fuel production
infrastructure. This scale of production would compare with relatively large
commercial e-methanol plants being developed around the world [37].
Figure 15 – Projected zero carbon fuel demand in thousands of tonnes per year of
methanol for vessels calling at Vancouver and Prince Rupert
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
Scale of investment
Delivering the fuel production facility described on the following page is
estimated to potentially attract in the region of CAD$3-4 billion of capital
investment. This estimate assumes that there is sufficient surplus renewable
energy capacity in the grid. Where additional hydro-electric generating
capacity required then this could double the amount of investment required to
deliver the project. As covered in more detail below, there is uncertainty
around the cost of some key technologies in this typology that could impact
this cost estimate in both either a positive or negative direction.
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0BSize and type of infrastructure required
Energy source
An e-methanol plant with production capacity of 200ktpa would require approximately 370MW of renewable power to
operate at full capacity. An estimated 25% of this power would be consumed by the Direct Air Capture (DAC) process, a
described below.
This typology assumes that the renewable energy is generated from the hydro-dams located around British Columbia which
are anticipated to provide a surplus capacity of more than 1GW in 2026.
Carbon feedstock
An estimated 320,000 tonnes of CO
2
feedstock would be required per year to synthesise 200,000 tonnes of methanol. This
typology assumes that a Direct Air Capture (DAC) plant would produce this CO
2
and be co-located with the fuel
production infrastructure to minimise CO
2
transport and storge costs.
A DAC plant of this size is estimated to occupy around 30 acres; however this could vary depending on the technology
development. Sourcing this CO
2
from biogenic feedstocks such as municipal or agricultural waste would likely reduce
costs if an appropriate supply can be established in the required quantities.
Fuel production & storage
The methanol production facility is assumed to be located in the Vancouver area, potentially on the Fraser River. The
facility would include PEM electrolysers rated to 400MW with supporting desalination plant, hydrogen storage,
compression, and supporting auxiliary infrastructure and a methanol synthesis plant to combine the H
2
and CO
2
. Sufficient
product storage would be required onsite to manage variations in demand and offtake frequency. Such a plant, including
the DAC plant, would occupy an estimated footprint in the region of 70 acres.
In-port handling & delivery
It is assumed that the production facility would have waterfront access allowing delivery directly to vessels via a jetty.
However, in practice a methanol bunker barge would be expected to deliver most of the fuel to vessels around the Port of
Vancouver or further afield. The fuel facility could also provide truck loading facilities or pipeline connections for supply
of methanol or hydrogen to secondary users.
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Key feasibility challenges & opportunities
This typology presents several key feasibility challenges and opportunities
that should be considered in its development. For the production and
distribution of the fuel, these include:
• Exploring circular economy opportunities – The methanol production
plant will require significant amounts of fresh water for the electrolysers
and produce oxygen and waste heat as a by-product. Seeking out
opportunities to integrate the electrolysers with the local water system
without negatively impacting the environment, rather than employ
desalination units, or use waste heat or oxygen in other industrial
processes locally would support reduced costs.
• Addressing renewable generation capacity and transmission constraints
– Surplus renewable energy generation capacity in the province of British
Columbia could support low carbon e-fuel production without the need to
develop new, dedicated renewable energy infrastructure. BC Hydro’s
Integrated Resource Plan [31] forecasts a surplus generating capacity of
at least 500MW until the middle of the next decade, with as much as
1.5GW surplus available when the new generating station on the Peace
River is completed. This is sufficient to power the e-fuel plant as
described by this example typology in the until around 2035, as shown in
Figure 16. In the longer term, if the region is to become a significant e-
fuel producer, additional renewable generating capacity is likely to be
required, particularly in the context of increased electrification across
other sectors. Furthermore, the power demand of the described e-
methanol plant is unlikely to be met by the existing electrical
transmission infrastructure in the area and, as such, significant investment
could be required for new substations and transmission lines.
• Technology risk and cost – Two key technologies in this typology are
electrolysers to produce hydrogen and Direct Air Capture (DAC) units to
extract carbon from the air for use in the fuel synthesis process. Although
widely demonstrated, electrolysers are still a high-cost technology albeit
with significant cost reductions forecast in the coming years. Availability
Figure 16 - BC Hydro forecasted electricity grid surplus/deficit generating capacity with no new generation sources compared to estimated power demand of 200kpta e-
methanol production facility
Data source: BC Hydro Integrated Resource Plan [31]
-1000
-500
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2000
F2022 F2023 F2024 F2025 F2026 F2027 F2028 F2029 F2030 F2031 F2032 F2033 F2034 F2035 F2036 F2037 F2038 F2039 F2040 F2041
Generation Surplus / Deficit (no new resources)
200ktpa E-Methanol Plant Power Demand
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of electrolysers can also be a challenge. Meanwhile, DAC is still
relatively a relatively nascent technology that has not been demonstrated
at the scale required to support full-scale fuel production, presenting a
risk to any first mover fuel producers looking to implement it.
For the port itself, key challenges and opportunities include:
• Aggregating demand across different sectors – The demand estimate is
based on assumed uptake of methanol among first mover shipping
segments. Aggregating this demand with other users of low carbon fuel
can help to support economies of scale as well as de-risk the investment.
As Vancouver is home to the largest port in Canada, as well as 50% of
the province’s population, there are numerous potential users of hydrogen
or its derivatives. Working with a range of stakeholders can help to build
certainty around the fuel’s demand, this could include different shipping
segments, other transport modes, industrial processes, domestic energy
supply or even export markets.
• Managing fuel demand evolution – The demand of low and zero emission
shipping fuels will need to scale rapidly in order to align the sector with
Paris Agreement goals. For this typology, the modular nature of the
electrolysers and DAC technologies could allow for a progressive scaling
of the plant to meet growing demand, thereby de-risking the investment.
However, developing technology and limited available industrial land in
the port may warrant developing a separate facility to meet full-scale
demand in the future.
• Available development land – As per the Port of Vancouver’s Land Use
Plan [38] and the Metro Vancouver Industrial Land Inventory [39], there
are some potential opportunities for developments to support port
activities, with key sites for new developments being located in Planning
Area 5 in the Fraser River. There are also 5 existing petroleum terminals,
located in the Burrard Inlet, that present an opportunity to expand or re-
purpose in the longer term as the energy and shipping fuel transition
progresses. With a total footprint in the region of 70 acres, it is potentially
feasible to locate the example fuel production plant in close proximity to
the port, reducing transport costs for the produced fuel, however, further
scaling of the production facility beyond this level may be challenging
and warrant a more remote location with the fuel transported to the port
via pipeline, rail, or ship.
• Leveraging existing experience in methanol handling - Methanol presents
a different risk profile to conventional fuel oils due to it toxicity and
flammability, requiring new safety procedures to be put in place for
bunkering. This is particularly applicable in Vancouver harbour, a
congested waterway with a direct interface between the city and the port
operations, where potential barriers could arise from regulators or local
opposition. Experience gained through handling methanol as a cargo
within the port of Vancouver could be leveraged to support the
development of safe methanol bunkering. Methanex, is a Vancouver
based producer and supplier of methanol, and owns Waterfront Shipping,
the world's largest methanol tanker fleet and has ordered a number
methanol fuelled ships as well as taking part in bunkering studies
elsewhere in the world [40].
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‘Total Value’ story from 2040
Vancouver’s clean energy advantage and dynamic maritime sector has
allowed the region to be a first mover on shipping decarbonisation, initially
establishing green shipping corridors with several international partners and
developing a burgeoning domestic zero emission fuel production sector.
One green corridor partnership undertook a Local Needs
Analysis early on. The Local Needs Analysis allowed the
partnership, through data analysis and stakeholder
engagement, to understand the needs, challenges, and
opportunities within the community surrounding the port. The
Local Needs Analysis identified improved air quality and improvements to
human health as a key strategic aim for their partnerships in Vancouver. This
shaped decisions around fuel choices, on-board technologies, and fuel supply
logistics.
Due to the high density population that surrounds the Port of Vancouver, the
green corridor partnerships collaborated with other transport operators in the
region, working together to monitor and report their collective impact on air
quality improvements and the knock-on benefits to human health and
wellbeing. Through this work, the green shipping corridor partnerships
formed a strong connection with local healthcare stakeholders and
community groups, easing the development process for future infrastructure
projects.
The rapid uptake of zero emission fuels in the 2030s led to
significant reductions in carbon emissions linked to the port
traffic. The shipping sector globally is demonstrating
significant action on decarbonisation - protecting and
enhancing its position as an energy efficient and sustainable
form of goods movement.
The growing role of the port as a bunkering hub has increased the frequency
and volume of ship-to-ship fuel transfers. There were initially concerns that
spills could lead to adverse impacts on the sensitive local ecosystems, but
innovations in technology and operational processes developed through the
green corridor partnerships meant that these risks were managed. The
partnerships shared lessons with the global maritime community on the
approaches developed, enhancing their reputation as environmental leaders.
Development and construction of the new e-methanol plant in
Vancouver attracted several billion dollars of investment,
directly supporting over a thousand jobs in the region and
delivering more than CAD$600 million in RVA (refer to
Appendix A for methodology) for the Canadian economy.
Furthermore, focus on the e-methanol supply chain positioned British
Colombia as a leading innovator on Direct Air Capture (DAC) technology
and the hydrogen economy. Additionally, the strategic emphasis on air
quality catalysed local research and development into large-scale fuel cell
technology, with successful demonstration projects influencing global
thinking about the next generation of ocean-going vessels.
This bolstered the R&D investment in the region and its reputation as a hub
for innovation. In turn, this induced value-added gains to the regional
economy beyond the ports and shipping sector, creating a clean technology
ecosystem and green maritime sector that reinforce each other’s competitive
positions.
The demands from the local shipping market resulted in
significant investment in fuel production facilities, port
infrastructure and connecting transport systems. This
investment had a catalytic effect on the local energy system,
helping to realise additional investment in energy and
transport infrastructure and action on decarbonisation.
The additional cost of zero emission fuels warranted concerns about higher
transport costs and knock-on effects for cargo-owners and consumers. A core
focus of the green shipping corridor partnerships was to develop new
commercial models that shared costs across supply chain actors and between
the public and private sector. Additionally, the partnerships focussed on
adapting existing infrastructure which helped reduce the cost gap with
traditional marine fuels.
Financial
Economic
Natural
Social
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5.4 Port of Prince Rupert
The Port of Prince Rupert is located on Kaien Island in the north west of
British Columbia. Managed by the Prince Rupert Port Authority, the Port
handles coal, wood, propane, agribulk and containerised cargo; it also has a
cruise ship facility. While the port is in a rural setting, especially when
compared with Port of Halifax and Port of Vancouver, a majority of the
operations are within the city of Prince Rupert, with a population of
approximately 12,000.
Prince Rupert’s location make it a key gateway to East Asian ports
The Port of Prince Rupert is one of the fastest growing ports in North America,
which can be in-part attributed to it having the shortest sailing time to key East
Asian ports such as Shanghai, Busan and Tokyo (circa 8 days) [41] when
compared to any other major North American ports. The six terminals at Prince
Rupert Port therefore provide a gateway for the North American market to
international trade, particularly with the Asian Pacific markets. Limited
navigational restrictions allow the port to accommodate the largest vessels
within the trans-Pacific trade lines. Furthermore, the Port has strong rail
connections: all freight terminals at the port have direct, on-dock rail-
connecting into the CN mainline. The network connects Prince Rupert to
locations across North America.
Ongoing growth of the port is facilitated by available development land
Prince Rupert Port Authority has a range of tenants and activities operating on
its property, it has a long-term vision to make Prince Rupert a sustainable and
economically resilient port centred around growth and diversification. This
ongoing growth is evidenced in a number of major ongoing projects, including
the expansion of the Fairview container terminal that will increase capacity
from 1.6 to 1.8 million TEUs per year and a feasibility study exploring the
potential of a second container terminal at the port.
The Port has identified an opportunity to develop operations on Ridley Island
that could support the production, storage or bunkering of low and zero
emission fuels. Currently there is an operational propane export facility on the
island as well as an ongoing project to potentially develop a new bulk liquids
storage facility by Vopak Pacific Canada. There have also been several
potential LNG export facilities explored in the area, although none of these
have reached a final investment decision to date.
The port has committed to carbon neutrality and environmental protection
The PRPA is committed to becoming carbon neutral by 2050, with an initial
goal of reduction of 30% carbon emissions by 2030. As part of its strategy to
achieve these aims, the port:
• Has built shore power infrastructure at Fairview Container Terminal,
allowing cargo ships to use hydroelectric power while docked,
considerably reducing local air pollution alongside greenhouse gas
emissions.
• Is incentivising its customers, through reduced port fee discounts, to
invest in sustainable practices, such as emissions reduction technology or
the use of clean fuels, through its ‘Green Wave Program’.
• Undertakes continues air quality monitoring to track performance on a
continuous basis.
Alongside carbon and air pollution reductions, the port also supports broader
environmental protection initiatives such as marine mammal monitoring
programs, progressive land use planning, and habitat enhancement programs
New bunkering infrastructure is under construction
Bunkering is not currently provided at the Prince Rupert Port. However, there
is a project underway to provide conventional marine fuels at the port, led by
Wolverine Terminals [42]. Trains from the CN Mainline will board a ‘rail
barge’ at the existing Aquatrain terminal. The barge will be moved to the
Wolverine Marine Fuels mooring site where the fuel will be discharged onto
a distribution barge. The distribution barge, once loaded, will move between
marine berth and fuelling locations within port, delivering up to 1,000 tonnes
per day. Wolverine Terminals have signed a transportation agreement with
CN Rail and they expect this service will be operational in the near future.
The port handles a wide variety of cargo
The Port of Price Rupert handles a wide variety of cargo, summarised in
Table 3. In 2021 Container cargo accounted for the majority of annual
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tonnage (42%), followed by Coal (22%) and Grain (14%). Figure 17 shows
the volume of cargo shipped through Port of Prince Rupert over the past four
years. The volume of Cargo at the Port fell in 2021 compared to 2020 by
c.23% due to the pandemic and supply chain constraints resulting in a drop of
major cargo (container and bulk) lines [43].
Table 3 - Port of Prince Rupert cargo type overview
Cargo
Overview
Coal
(bulk)
In 2021 coal accounted for 5.6m tonnes of cargo throughput. The Trigon
Pacific Terminal handles bulk exports, it has a deep berth and has the
capacity to handle 18m tonnes.
Wood
Pellets
Wood pellets are exported for use as a biofuel overseas. In 2021 wood pellets
accounted for 1.4m of cargo.
Propane
The Ridley Island Propane terminal primarily exports to the Asian market. In
2021 the terminal handled a 1.9m tonne of LPG, the most it has handled at
the island.
Grain
In 2021, 3.6m tonnes of grain were handled at Prince Rupert Grain terminal,
Canada's largest West Coast grain terminal. The facility has an annual export
capacity of approximately 7 million tonnes.
Cargo
Overview
Container
In 2021 container cargo accounted for the majority of throughout through the
Fairview Container Terminal, accounting for 10.6m tonnes of cargo in over
1m TEUs. The terminal is the first North American port of call for weekly
services from Shanghai, Yokohama, and Busan.
Cruise
Prince Rupert has a 330m berth for cruise vessels. The number of passengers
passing through the terminal increased from 49.1k in 2021 to c.76.6k in 2022.
26.7
29.9
32.4
25.1
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35
2018 2019 2020 2021
Metric tonnes (millions)
Figure 17- Prince Rupert Port cargo throughput (2018-2021)
Source: Prince Rupert Port Authority [41]
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Other
Container
Grain
Coal
Coke
LP Gas
Wood Pellets
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Example Typology: CCS-enabled ammonia supply to the Port of Prince
Rupert
To illustrate the scale of infrastructure potentially required, and to feed into
the consideration of the broad value that this could deliver, we have shaped
an illustrative fuel supply typology for the Port of Prince Rupert, based on
CCS-enabled ammonia.
This typology leverages the natural gas reserves of northern British Columbia
and the associated industry for its production and supply around the province.
It also makes use of the carbon sequestration presented by the Western
Sedimentary Basin. Since the electrical power demand in CCS-enabled fuel
production relatively is relatively low, the challenges around transmission
capacity and resilience to more remote areas of the province will be less of a
limiting factor on the typology. This typology is for a remote production
facility where the produced fuel is transported to the port for use as a
shipping fuel.
As discussed elsewhere in this report, there are multiple possible fuel
pathways that could be used to decarbonise shipping. The mix of fuels
available at a port will be dependent on local conditions as well as policies
and regulations. The typology presented here is provided as an illustration of
a possible pathway for Prince Rupert based on its context and resources but is
not intended to be prescriptive to select this fuel rather than others. It is
therefore not intended as a recommendation on the most economical or
technically viable fuel production pathway.
Demand evolution
Based on the demand scenarios explored by Lloyd’s Register Maritime
Decarbonisation Hub (see Appendix B) for Vancouver and Prince Rupert, if
all first mover segments currently using these ports transitioned to ammonia
fuel by 2030, the combined estimated demand in 2030 would be between 15
and 25 ktpa. If the fuel uptake in these segments tracks a Paris Agreement
aligned trajectory, this could scale to between 600 and 1050 ktpa by 2050.
Considering that a multi-fuel future is the most likely outcome, for the
purposes of estimating the size and cost of the infrastructure requirements, it
is assumed that a commercial production facility completed towards the end
of this decade would be designed with the ability to produce 225 ktpa of
ammonia.
This plant would be adequate to meet the projected the zero-emission
shipping fuel demand projected in 2040, in a ‘low’ bunkering occurrence
scenario as indicated in Figure 18. Using the lower projected demand
recognises that the demand is unlikely to be exclusively for ammonia. Further
study to explore the size and evolution of the demand would be required
before proceeding with design and construction of any fuel production
infrastructure. This scale of production would compare is relatively small
compared with commercial CCS-enabled ammonia projects announced
globally, however there is scope to serve other sectors, to achieve greater
economies of scale.
Figure 18 – Projected zero emission fuel demand in thousands of tonnes per year of
ammonia for vessels calling at Vancouver and Prince Rupert
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
Scale of investment
Delivering the fuel production and supply infrastructure described on the
following page could attract capital investment in the region of CAD$750-
1,000m, assuming there is little new investment required in the natural gas
production infrastructure, rail connections, or for transporting the captured
carbon over long distances.
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1BSize and type of infrastructure required
Natural Gas Feedstock
Natural gas produced from existing fossil fuel production infrastructure in northern British Columbia is the main
feedstock for use in the fuel production Almost 6 tonnes of natural gas is required for each tonne of CCS-enabled
ammonia produced, so a plant producing 225ktpa of CCS-enabled ammonia would consume more than a million
tonnes of natural gas per year, which is equivalent to approximately one day of British Columbia’s natural gas
production.
Fuel Production
The CCS-enabled ammonia production plant in this typology is assumed to be located in proximity to natural gas
production and carbon sequestration opportunities in northern British Columbia, several hundred miles from the
port. The fuel production plant will include a Steam Methane Reformer (SMR), air separation unit for nitrogen
generation, and ammonia synthesis via a Haber Bosch plant. An integrated carbon capture process would capture
the resulting carbon for compression and injection into a geological sequestration site.
Carbon Sequestration
A typical SMR process produces around 10 tonnes of CO
2
for every tonne of hydrogen resulting in up to
approximately 400,000 tonnes per year that would need to be sequestered. This typology assumes that the fuel
production plant is situated close to the carbon sequestration site to limit the costs associated with transporting the
carbon dioxide.
Transport
Based on the estimated demand, transport of the produced fuel to the port via the existing rail connections is
expected to represent an attractive option with little capital investment. If demand scales significantly beyond the
estimated quantities, or an export market for the fuel is developed, then distribution by pipeline may become a
preferred solution.
In-port handling & delivery
Delivery to vessels around the port and more widely in the region would be via a bunker barge. If possible,
making use of existing infrastructure, such as the proposed new bunkering terminal, to transfer the fuel from rail
cars to the bunkering barge.
CO
2
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Key feasibility challenges & opportunities for this typology
This typology presents several key feasibility challenges and opportunities
that should be considered in its development. For the production and
distribution of the fuel, these include:
• Making use of existing infrastructure – This typology maximises the use
of existing infrastructure to deliver low carbon shipping fuel to shipping
in Prince Rupert and potentially more widely. This includes the existing
natural gas production, rail links and potentially the port’s new bunkering
infrastructure. In doing so, the capital investment required is significantly
lower than other fuel production pathway options and the environmental
and social impacts of constructing major new infrastructure can be
minimised.
• Natural gas feedstocks exposing the fuel to price fluctuations – As a
globally traded commodity, natural gas can be subject to significant and
unpredictable price fluctuations. Given the large quantities of natural gas
required to produce CCS-enabled ammonia, any price fluctuations could
have a significant impact on the cost of the produced fuel and therefore
the price paid by the end-user.
• Challenges to achieving truly low lifecycle greenhouse gas emissions –
Steam Methane Reforming (SMR) is already a mature technology
however, in order to qualify as a low carbon process and achieve an
emissions intensity below 20gCO
2
e/MJ, as described at Section 3.1, it
requires the addition of Carbon Capture and Storage (CCS) technologies
with high capture rates as well as secure, permanent sequestering of the
captured carbon, which are both processes that will need to scale up and
mature further to become cost effective. Furthermore, fugitive methane
emissions throughout the process must be tightly controlled. Robustly
demonstrating that CCS-enabled ammonia from a particular production
facility has a low associated emissions will be key to its acceptance as a
fuel with low lifecycle greenhouse gas emissions.
• Transmissions constraints – Although the primary feedstock required for
CCS-enabled ammonia production is natural gas, several processes
require electrical energy. In order to minimise lifecycle emissions of the
produced fuel, this electricity should come from low or zero carbon
sources. A constrained and unreliable grid in northern British Columbia
may necessitate the use of electricity generated locally using fossil fuels,
negatively impacting the carbon intensity of the produced fuel, or the
construction of new, high-cost renewable generation sources or
transmission infrastructure.
• Managing demand evolution – Reformers are non-modular in nature,
increasing the challenge of scaling the plant to future demand. This
challenge may be compounded by variations in the demand for ammonia
fuel throughout the year. Aggregating the shipping fuel demand with
other ammonia consumers, such as agriculture, or seeking export
opportunities would help to address this challenge as well as increase
revenues. In the longer term, the appropriateness of CCS-enabled fuel
production in a net-zero economy may warrant replacement of the
reformers with electrolysers to produce green ammonia.
For the port itself, key challenges and opportunities include:
• Delivering the fuel to the port – This typology assumes the CCS-enabled
ammonia fuel production facility will be located inland, closer to natural
gas fields and carbon sequestration sites, to avoid transport of the
feedstock and resulting CO
2
to and from the port. While this reduces the
amount of new infrastructure required, transporting the fuel product,
potentially over several hundred miles, could be costly and may introduce
resilience challenges. Existing rail links could be leveraged to deliver the
fuel to the port; a 100-car freight train could be capable of delivering
around 6000 tonnes of ammonia. However, loading and unloading several
hundred rail cars of ammonia will introduce additional operational costs
when compared to a pipeline.
• New bunkering infrastructure – Ammonia presents a significantly
different risk profile to conventional fuels so there are safety and logistics
challenges to be addressed for its bunkering and use onboard vessels. The
new bunkering terminal in development at the port is designed for use
with conventional marine fuels and, although some aspects may be re-
purposed for ammonia bunkering, it is likely that significant
modifications or completely new infrastructure would be required.
• Export potential – Ammonia has a wide range of uses, including as a
fertiliser, industrial processes, or as a fuel for power generation. If CCS-
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enabled ammonia can be produced at a commercially competitive cost in
the region, then there is an opportunity for exporting the product by sea to
other countries that lack the same level of resources. Given the available
land around Prince Rupert, the port could capitalise on the opportunity
with a new export terminal.
• Carbon import opportunities – The production of CCS-enabled ammonia
at these scales will require significant carbon sequestration facilities
which are not universally available elsewhere. There is potential to
import CO
2
, captured in industrial processes elsewhere, through the Port
of Prince Rupert for sequestration at the same site. This would help to
achieve economies of scale for the fuel production facility as well as
represent a new revenue stream for the port and other stakeholders along
the supply chain.
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Total Value Story from 2040
Prince Rupert’s location, as a shipping gateway to east Asia, allowed the port
to position itself as a key bunkering hub in a first mover green shipping
corridor partnership involving a network major North American and Asian
container ports. Leveraging northern British Columbia’s rich natural gas
reserves and carbon sequestration potential, the region became a key global
producer of CCS-enabled ammonia which is delivered to the port for use as a
shipping fuel by container ships operating on the green corridor network.
Capital investment in new CCS-enabled ammonia production
and supply infrastructure directly supported over three
hundred jobs in the region while delivering more than
CAD$100 million of RVA to the Canadian economy. The
ongoing operation of a zero-carbon marine fuelling service in
Prince Rupert continued to support dozens of future proofed jobs in the city.
The availability of cost competitive zero emission fuel at the Port of Prince
Rupert helped the port to maximise the number of vessel calls from the
growing Asia to North America container trade. An increase in the number of
container vessel calls and the continued growth of the port supported further
terminal expansions and associated ongoing economic growth of the city.
Delivery of the fuel to the port by existing rail connections
helped to maximise the use of existing infrastructure and
minimise habitat loss in the port area Embedding
environmental values within the project’s development
realised funding for ongoing habitat restoration work in the
Prince Rupert area to deliver an overall biodiversity net gain.
An emissions monitoring programme was co-funded by the port and its green
shipping corridor partners to track the impact of any increase in NOx
emissions from combustion of ammonia fuel onboard vessels. Results of the
monitoring were made publicly available, supporting acceptance of the new
fuels among local communities and environmental groups.
Participation in the green corridor partnership with other
major port cities around the pacific helped to position Prince
Rupert on the world stage as a leader on climate and
sustainability. The development of the port presented
opportunities to involve the local community in plans to
enhance the public realm, providing access to the waterfront
and supporting enhanced wellbeing and community cohesion. This
community uplift as a result of the zero-carbon fuel project strengthened the
connection between the city, local indigenous communities, and the port,
which is a key part of Prince Rupert’s cultural identity.
The Prince Rupert Port Authority and City of Prince Rupert
secured federal development funding to support the
establishment of the new fuelling infrastructure in the port,
allowing the new service to remain in public ownership. The
ownership structure supported ongoing reinvestment of
revenues in new infrastructure as well as social and environmental
programmes, helping to keep the generated wealth within the community.
Economic
Natural
Social
Financial
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6. Case study: Nova Scotia and the Port of Halifax
This case study uses the Port of Halifax in Nova Scotia as an example to
illustrate the potential impact that green shipping corridors and the longer-
term decarbonisation of shipping could have in Canada. It explores the
region’s energy and resource setting, the local context of the port, and how
these factors can influence the feasibility of different fuel production
pathways.
Using an estimate of the potential future low and zero emission fuel,
produced by the Lloyd’s Register Maritime Decarbonisation Hub, an
example fuel production and supply typology is developed for the Port of
Halifax to illustrate the type, scale and cost of the infrastructure required to
meet potential future demand for low and zero emission shipping fuels. The
cost estimates provide an order of magnitude indication of the investment
required to deliver the infrastructure for the typology and are based on
assumptions and benchmarks taken from publicly available sources and
similar projects.
A Total Value story has been developed for the illustrative fuel supply
typology to demonstrate possible value outcomes that could be delivered,
including some of the approaches taken to doing so. Considering the ‘Total
Value’ case can help to shape, capture and leverage the wider value of the
corridor and therefore improve their investment case.
6.1 Regional energy and resources
Existing electricity generation is carbon intensive but there are plans to
address this
In Nova Scotia the electricity grid has a high emissions intensity; over 76%
of NS’s energy mix comes from non-renewable fossil fuel sources including
coal and coke (52%) and natural gas (22%) – contributing to the second
highest grid emissions intensity in Canada, at 670 g CO2e/kWh [44].
However, the province has some of the most ambitious greenhouse gas
reductions targets in the country – targeting 53 per cent below 2005 levels by
2030 and is committed to net-zero by 2050 [45]. A significant proportion of
the reduction up to 2030 is expected to come from a planned phase out of
coal-fired electricity generation and a planned increase in the share of
renewable energy generation sources from around 25% today to 80% by
2030.
Figure 19 – Carbon intensity of electricity in Nova Scotia compared to a selection of
global economies in 2020
Data source: Nova Scotia [29], all other countries [30]
The Maritime Link connects the province to neighbouring Newfoundland and
Labrador, helping to stabilise the grid and provide access to clean
hydroelectricity, the province imported 7% of all electricity in 2019. The
Maritime Link is expected to play a key role in reducing Nova Scotia’s grid
electricity emissions by 2030.
0
100
200
300
400
500
600
Carbon intensity of electricity
(gCO2/kWh)
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Production of natural gas ceased in 2018 and the energy focus is now on
developing offshore renewable generating capacity
Historically Nova Scotia has been a producer and exporter of fossil fuels
from the Sable Offshore Energy Project but production stopped in 2018 and
the Imperial Oil’s Dartmouth refinery closed in 2013. Now natural gas is
imported for consumption through the Maritimes & Northeast Pipeline
(M&NP).
Recent years has seen the development of onshore renewables, in particular
hydro-electric power and onshore wind farms. The provincial government
has committed to the delivery of at least 500MW of new, local renewable
energy by 2026 with an additional 50MW of community solar projects,
which aim to increase participation of community groups in the energy
transition.
The province has identified significant potential for development of
renewable energy generation sources including solar, wave, tidal and
offshore wind. There have been a number of pilot scale tidal and wave energy
projects in the province, but the most significant contribution is expected to
come from offshore wind. The province has committed to leasing 5GW of
offshore wind development sites by 2030, which will help support the green
hydrogen industry.
Significant hydrogen and ammonia projects are planned with large export
potential
EverWind a private developer of green hydrogen and ammonia production in
Nova Scotia announced in 2022 the signing of a Memorandum of
Understanding ("MOU") under which Uniper will purchase green ammonia
from EverWind's initial production facility in Point Tupper, Nova Scotia.
They intend to extend and develop the NuStar storage terminal into a regional
green hydrogen hub for Eastern Canada, complete with new green hydrogen
and ammonia production facilities. The production of green ammonia is
forecast to begin in 2025. The plant has plans to produce up to 10mtpa of
green ammonia with 1mtpa of offtake agreements for export to Germany.
Another ongoing project at Point Tupper Industrial Park area is being driven
by Bear Head Energy. They are planning to develop, construct and operate a
large-scale green hydrogen and ammonia production, storage and loading
facility at the site of the previously approved for an LNG export facility.
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6.2 Estimated demand for low and zero emission fuels
The Lloyd’s Register Maritime Decarbonisation Hub conducted an analysis
of vessel traffic operating on the East Coast of Canada during a baseline year
of 2021 to estimate zero emission fuel demand under different scenarios. The
applied methodology for this analysis is described in full at Appendix B.
The analysis identified 239 vessels that called at the Port of Halifax during
the baseline year. These vessels had a high concentration of activity along the
east coast of North America and on trans-Atlantic routes to the
Mediterranean and Northwest Europe as shown in Figure 21, increasing the
number of bunkering options for the vessels at ports along these longer
voyages. To account for this, the analysis applies assumptions that vessels
would be unlikely to bunker in the port if less than 20% of their total port
calls are in Halifax or they spend more than 50% of the year outside the
region; these vessels are therefore considered out of scope and excluded from
the estimate of fuel demand. Applying these thresholds, only 43 vessels of
this fleet fall “in-scope”, the activity of which is shown in Figure 22. The
analysis predicted a zero-emission fuel demand at the Port of Vancouver of
approximately 1ktpa HFO
e
in 2030, which is projected to scale to between 13
and 19ktpa by 2040 and 30 to 50ktpa by 2050.
Similarly to the Port of Prince Rupert, established and operational service
lines connecting the port to other locations across the globe could be one way
of initiating collaboration discussions with ports along the route and
associated shipowners where there are limitations to identifying a purely
regional fleet that is likely to bunker in a specific location. These service
lines include connections with ports in North West Europe, the
Mediterranean, the Middle East and Asia [46].
A fuel supply typology for the Port of Halifax is explored later in this report
where vessels operating on these service lines are secondary offtakers from a
large-scale hydrogen export facility in Nova Scotia.
Figure 20 – Projected zero emission fuel demand in thousands of tonnes per year of
HFO equivalent in Port of Halifax
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
0
10
20
30
40
50
60
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
High Med Low
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Figure 21 - Heatmap of global activity of the 239 vessels that called in Halifax during 2021
Source: Lloyd’s Register Maritime Decarbonisation Hub
Figure 22 - Heatmap of global activity of the 43 ‘in-scope’ vessels that called in Halifax during 2021
Source: Lloyd’s Register Maritime Decarbonisation Hub
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6.3 Port of Halifax
Port of Halifax is located in the province of Nova Scotia and the city of
Halifax. Managed by the Halifax Port Authority (HPA), the port is one of the
deepest and largest natural ice-free harbours in the world covering 15,000ha
of water and 1,000ha of land.
As a Gateway, Port Halifax offers alternative fuel bunkering opportunity
Historically Halifax has benefited from its strategic geographic location as
the closest main-land North American Port to Europe (its principal trading
partner) and serving as a significant gateway for trade to and from Southeast
Asia, a route made easier by the Suez Canal's ongoing renovation and
enlargement. Acting as a gateway raises a potential opportunity to bunker
alternative fuelled vessels before vessel onwards legs to other ports.
There is a direct interface between the port and the city
Most of Halifax’s Port operations are in Halifax Harbour, therefore there is a
direct interface between the city and the port operations. Due to the proximity
of the port operations to the city, there may be barriers to storing and
bunkering alternative fuels which could be more volatile within the port
boundary. This could result in barriers to future development, especially for
the handling and storage of alternative fuels such as hydrogen and ammonia
which present additional risks that must be considered.
Identified availability of development land
The Port of Halifax has a varied range of tenants and activities operating on
its property. As described above, the majority of the these are based in the
city of Halifax where it is unlikely that there will be sufficient land available
to develop new fuel infrastructure, nor would such a development represent
the most appropriate land use.
However, a large 475-acre plot of land with waterside access recently became
available [47]. This land was previously used for industrial purposes and is
could therefore be as a potential viable location for an alternative fuel
production and storage site to support ship-to-ship bunkering.
The port has set its targets for reduction of its own emissions
The Halifax Port Authority has set targets for reduction of its Scope 1 and 2
emissions, covering its own operations, of 40% by 2030 and 100% by 2050
[48]. It has also committed to measuring and reducing scope 3 greenhouse
gas emissions. It is setting out to achieve these in a number of ways,
including the provision of shore power to visiting vessels, with the first
system developed as part of a partnership with the Government of Canada
and the province of Nova Scotia.
The port is supporting the export of hydrogen from Nova Scotia
The Port of Halifax is a member of the Atlantic Hydrogen Alliance, that is
looking into the development of a viable clean hydrogen value chain. The
alliance aims to build on the East Coast’s opportunity to leverage their wind
resources, and other renewable energy sources, to create new jobs in
renewable energy and to attract new investments in innovation and clean
technology.
In 2022, the Halifax Port Authority and Hamburg Port Authority signed a
memorandum of understanding committing to work together to decarbonise
the shipping corridor between the two ports [49]. The focus of the
collaboration is on the development of port infrastructure for the bunkering
and trading of green hydrogen and its derivatives as well as the fostering of
collaboration between key value chain partners to advance the use of green
energy on the corridor. Exploring the energy and fuel production
infrastructure needed to supply the shipping traffic is critical for successful
wider implementation.
Port of Halifax specialises in handling containerised cargo
The Port of Halifax primarily handles Containerised Cargo, in 2021 the total
cargo handled by the port was 4.9m tonnes. Containerised Cargo accounted
for 89% of the cargo, with the remaining 11% non-containerised. The cargo
types handled in the Port of Halifax are summarised in Table 4 and Figure
23.
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Table 4 - Port of Halifax cargo type overview
Cargo Type
Overview
Container
In 2021, 89% of cargo moving through HPA facilities was
containerised with a total throughput of 434 thousand TEU.
Non-
containerised
In 2021 5.5m of non-containerised material was handled by HPA. The
majority of which was grain, steel rail, steel coils, nickel sulphide,
wood pellets, and Ro-Ro. [50]
Cruise
The Halifax Seaport can receive the world's largest cruise ships. In
2020 and 2021 there were no cruise passengers due to Covid-19,
however, previously in 2019 there were 323k passengers.
Figure 23- Port of Halifax Cargo Throughput (2018-2021)
Source: Port of Halifax [51]
40.9
38.3
43.5
3.7
3.9
5.5
44.6
42.2
49.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2019 2020 2021
Metric tonnes (millions)
Containerised Cargo Non- Containerised Cargo
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Example Typology: Port of Halifax as a secondary offtaker of e-ammonia
To illustrate the scale of infrastructure potentially required, and to feed into
the consideration of the broad value that this could deliver, we have shaped
an illustrative fuel supply typology for the Port of Halifax, based on the
supply of e-ammonia.
Nova Scotia as a net energy exporter
As detailed in Section 7.3, the estimated demand for low carbon fuel in 2030
from shipping currently using the Port of Halifax is relatively low and is
unlikely to trigger development of significant renewable energy or a large-
scale production facility.
More broadly, there are a number of factors that make the province of Nova
Scotia well positioned to become a significant producer and exporter of green
hydrogen and ammonia. This includes the province’s significant potential for
low carbon renewable energy generation, in particular the provinces target to
offer leases for 5GW of offshore wind development by 2030. A number of
projects are already in the pipeline to fulfil this potential.
Shipping as a secondary demand
This typology considers a scenario in which the Port of Halifax, through
close collaboration with its customers and broader stakeholders, establishes
itself as a bunkering hub in a number of first mover green shipping corridor
partnerships. It considers the feasibility challenges and opportunities for the
Port of Halifax to deliver a portion of the e-ammonia produced in Nova
Scotia to shipping traffic using the port as well as the potential of developing
a zero emission fuels hub to supply port equipment and other users in and
around the Halifax area, such as the transport and industrial sectors.
Scale of investment for fuel supply typology
The estimated capital cost for an ammonia bunkering vessel, fuel storage
facility and loading jetty is between CAD$250-500 million. However, this
does not include any marine works such as breakwaters or dredging which
could add a significant cost but is highly dependent on the specifics of the
site selected.
World-scale hydrogen & ammonia production facility
This typology assumes a separate hydrogen and ammonia production
plant is constructed to supply domestic and international demand and
that shipping using the Port of Halifax would be a minor offtaker from
this plant.
If this plant were to produce 1 million tonnes of green ammonia per
year, it would require around 3GW of offshore wind power capacity
to be available. This scale of offshore wind generation would likely be
made up of several separate wind farms and cover several hundred
square miles of sea area.
The ammonia production plant itself would require electrolysers with
rated capacity of around 2GW, an air separation unit producing 175
tonnes of nitrogen per hour, and a significant Haber Bosch plant. The
electrolysis process will consume more than 2 million tonnes of water
per year which could be met by a desalination plant to avoid negative
impacts on nearby natural water systems.
Given the scale of the facility, which could occupy an area of
hundreds of acres, this typology assumes that it is be located some
distance from the port and would have its own dedicated loading jetty
for the export of the ammonia by gas carrier.
Delivering an 1Mtpa e-ammonia production facility with 3GW of
offshore wind power generation would attract capital investment in
the region of CAD$20 billion. Approximately 50% of this investment
would be made in the build out of the offshore wind farms with most
of the remaining cost for the fuel production facility.
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2BSize and type of infrastructure
Fuel Source
As described above, ammonia is produced at a world-scale production plant located elsewhere in Nova Scotia,
being supplied by the developing offshore wind generation capacity. Given the relatively limited shipping demand
in comparison to the scale of the plant, shipping is not considered as a primary trigger for the development of this
infrastructure.
Distribution
Delivery of ammonia fuel from the production plant to the port is via a gas carrier loaded at the production
facility’s marine loading jetty. Due the relatively limited rail network in Nova Scotia this isn’t considered a
suitable solution. Furthermore, the relatively low anticipated fuel demand in the short- to mid-term is unlikely to
warrant the high capital cost of a pipeline.
In the short term, while the uptake of ammonia fuel scales up, the relatively infrequent bunkering activities could
be met by a bunker vessel that acts as in-port storage as well as delivering the fuel directly to the receiving ships.
Assuming a days’ transit time from fuel production plant to the port, a 20,000m
3
ammonia bunkering vessel could
potentially be capable of delivering up to a million tonnes of fuel to vessels each year. However, as demand scales
and bunkering become more frequent, it may be necessary to develop in-port storage facilities to ensure more
consistent fuel availability. In this case a dedicated in-port bunker vessel would serve ships in the port and a
separate shuttle tanker would resupply the facility.
In-Port Handling & Delivery
In-port storage and handling facility, delivering to vessels via bunker barge and to secondary users via truck or
pipeline. This facility would consist of storage tanks, a liquid transfer jetty and associated plant. The size of the
storage tanks would depend on the demand evolution, however, is likely to be matched to the size of typical
shuttle tanker capacities in the region of 40,000 to 60,000m
3
.
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Key feasibility challenges & opportunities for this typology
This typology presents several key feasibility challenges and opportunities
that should be considered in its development. For the production and
distribution of the fuel, these include:
• Competition for a scaling renewable energy capacity - As renewable
generation capacity is expanded in Nova Scotia; any fuel production
facility will be competing for the produced energy with existing
consumers. Since Nova Scotia’s electrical grid is currently highly carbon
intensive, it would be preferable from a climate impact perspective to
divert the energy to more efficient electrified onshore consumers such as
industry, domestic and transport uses. This challenge may be mitigated
by increasing the import excess hydro-electric power from neighbouring
provinces in the shorter term. In the longer term, the province’s offshore
wind generation capacity could out-grow its forecast peak power demand
of 2-3GW [52]; low carbon fuel production will be an effective means of
utilising this excess generation capacity.
• Circular economy opportunities – Production of hydrogen and ammonia
at the anticipated scale will require large quantities of fresh water as a
feedstock and produce significant amounts of oxygen and heat. Careful
consideration must be given to where fresh water is sourced from to
avoid negative impacts on natural water systems and associated
ecosystems. For large scale plants, a desalination plant is typically
required to provide the necessary quantities of water, however this also
increases energy consumption. Significant value can be unlocked by
investigating the potential integration of the plant with other industries
that might provide a water supply or make use of the by-products.
For the port itself, these include:
• Available development land – There is available development land along
the shoreline of Halifax Harbour that was previously utilised in fossil fuel
refining and distribution. This presents an opportunity for the
development of dedicated, in-port fuel infrastructure that would enable
the efficient delivery of fuels to vessels in the harbour. This infrastructure
may include ammonia storage, for supply as a shipping fuel, as well as
small scale production of green hydrogen or other fuels for supply to
harbour vessels, port equipment, trucks and other shoreside consumers.
• Potential to drive shipping fuel demand evolution – The proximity of
commercial scale fuel low and zero emission fuel production facilities
and the location of the Port of Halifax as the closest major North
American port to Europe to has an opportunity to location makes it well
placed to drive demand for bunkering in the port. Engaging with
stakeholders across the fuel value chain to establish demand and supply
will help to unlock the opportunities this presents.
• Scaling infrastructure to match demand evolution - Demand for low and
zero emission shipping fuel is expected to scale rapidly over the coming
decades as the shipping industry decarbonises. It may be challenging to
scale the in-port infrastructure to meet growing demand. In the short
term, while demand is low, a bunker vessel delivering fuel directly from
the remote production plants is likely the most cost-effective solution
however it will impact overall efficiency of the fuel supply chain. In the
longer term, increased bunkering frequency is likely to make in-port
storage preferable.
• Handling of ammonia in a city environment – All industrial zones in
Halifax Harbour are in close proximity to residential properties and no
more than a few miles from the city centre. This raises potential
challenges with the storage and transfer of ammonia in the port from a
safety perspective as well as potentially presenting a nuisance to local
communities. Similar considerations will also apply during bunkering
operations at terminals and anchorages elsewhere in the area.
Demonstrating the safety of these operations and engaging effectively
with local stakeholders will be critical to successful implementation.
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Total Value story from 2040
Offshore renewable energy generating capacity was rapidly scaled up in
Nova Scotia, decarbonising its grid electricity and supplying world-scale
hydrogen production plants, making the province a significant energy
exporter. The Port of Halifax developed an in-port marine fuel storage and
bunkering facility to supply ammonia to container shipping using the port as
well as other secondary users in and around the city.
Through the development of bunkering infrastructure, the Port
of Halifax has capitalised on the local availability of zero
emission fuels and supported the decarbonisation of shipping
using the port securing the long term future of the port as a
key gateway to European and Asian markets.
The region has maximised the economic benefits by setting requirements for
local content in the procurement strategies of these projects, fostering a
thriving regional supply chain, and by investing in education and training
programmes to ensure local workers have the required skills to operate and
maintain the new infrastructure.
Involvement of local First Nations as partners in the fuel production projects’
development has ensured their inclusion in the opportunities that these
projects present and advanced the cause of economic reconciliation in the
region.
The Nova Scotian electrical grid now has one of the lowest
carbon intensities in the world. In Halifax the fossil fuel
generating stations are closed, all ships use shore power, and
truck, port handling equipment, ferries and harbour craft are
powered by hydrogen fuel cells, slashing air pollutant
emissions in the city with benefits realised for the local population and
environment.
The new energy, fuel and port infrastructure has maximised the use of
existing industrial land wherever possible to minimise the impact on Nova
Scotia’s natural habitats and biodiversity.
The energy and fuel production infrastructure projects
undertook comprehensive engagement with all relevant First
Nation communities from the outset. By gathering traditional
knowledge on the sea and land uses, the project not only
avoided any major negative impacts, but also actively
enhanced biodiverse and culturally important sites highlighted during
engagement. This early engagement process allowed potential positive
outcomes for these groups to be identified and embedded into the project’s
objectives from the outset.
The port worked with the fuel producers, bunker suppliers, and partner
shipping lines to undertake safety assessments to demonstrate the safe
handling of ammonia. Transparency and public engagement around these
activities helped to allay concerns from local communities around the safety
of handling of ammonia in the Port of Halifax during engagement. This
presented an additional opportunity to communicate the benefits of the
marine energy transition to local schools and community groups to increase
the community’s sense of stewardship around local environmental issues in
Halifax.
The port engaged with a number of first mover container lines
and the fuel producers to demonstrate the scale of demand that
could be generated from shipping using the Port of Halifax.
This higher level of certainty supported the completion of
agreements between the container lines and fuel producers to
purchase ammonia fuel. The port partnered with the fuel producer to co-
invest in new in-port fuel storage and bunkering infrastructure which now
leased to a third party operator, generating a key new revenue stream for the
port.
Economic
Natural
Social
Financial
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7. Summary
This report provides an overview of the potential benefits that green shipping
corridors – and maritime decarbonisation in general – could deliver for
Canada. It sets out an illustrative fuel supply typology for three different
ports to explore the size, type and capital cost of the infrastructure needed to
meet the potential zero emission fuel demand, as estimated by Lloyd’s
Register, and describes the ‘Total Value’ that these could deliver.
Canada has already identified green shipping corridors as an effective means
of accelerating maritime decarbonisation
Green shipping corridors have emerged over the past two years as a means of
mobilising cross-value chain stakeholders to address the technical,
regulatory, and commercial barriers that have hampered the uptake of zero
emission shipping fuels. Stakeholders in the Canadian maritime industry have
recognised the potential of these initiatives as evidenced by several green
shipping corridors involving Canadian ports. The Canadian government has
also backed the initiatives, as well as indicating its ambition to see net zero
emissions in the shipping industry by 2050, through a number of
declarations.
There is a significant opportunity presented by maritime decarbonisation and
Canada could be well positioned to realise it
The development of new energy and fuel production infrastructure to meet
the projected demand for zero emission shipping fuels represents a significant
opportunity for Canada to achieve its environmental objectives while fuelling
economic prosperity, realising social co-benefits, and protecting themselves
from the impact of divestment from fossil fuel industries.
As an existing energy producer with a skilled workforce and significant land
and natural resource availability, Canada is well placed to seize the
opportunity to become a producer, and potentially exporter, of low carbon
fuels. This report has described three example fuel supply typologies to
illustrate how these advantages can be leveraged:
• E-methanol production in Vancouver, making use of the existing
surplus hydro-power generating capacity and local expertise in Direct
Air Capture (DAC) technologies.
• CCS-enabled ammonia production complying with stringent lifecycle
emissions standards to supply shipping from the Port of Prince
Rupert, making use of British Columbia’s significant natural gas
reserves and geology suitable for long term carbon sequestration.
• Supply of ammonia to shipping in the Port of Halifax as a secondary
consumer of fuels from the world-scale hydrogen production
facilities planned in the region.
To support the decarbonisation of shipping on a trajectory aligned with a
1.5°C Paris Agreement goal the fuel production pathways in each of these
typologies must be demonstrated to comply with stringent standards for
lifecycle emissions of low carbon fuels.
Green shipping corridors could help to drive demand for zero emission fuels
produced in Canada
Analysis of historical shipping traffic data conducted by Lloyd’s Register
Maritime Decarbonisation Hub has demonstrated the potential evolution of
fuel demand in the Port of Vancouver, Port of Prince Rupert, and Port of
Halifax. In Vancouver, first-mover shipping could generate significant zero
emission fuel demand in the port, potentially warranting dedicated fuel
production infrastructure. Whereas, in Prince Rupert and Halifax, the
relatively lower shipping traffic volumes result in lower projected bunkering
demand. Developing multi-stakeholder green shipping corridor initiatives
using these ports could help to drive demand for fuels in these two ports and
support investment in the land side infrastructure to produce them.
Canadian Green Shipping Corridors Preliminary Assessment
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The total value of opportunity from green shipping corridors includes a
broad range of potential co-benefits
Considering the ‘total value’ case for green shipping corridors and supporting
fuel supply projects can help to shape, capture and leverage their wider value
and therefore improve their investment case. the total value opportunity from
green shipping corridors and maritime decarbonisation is broad and diverse,
covering financial, economic, environmental, and social benefits at a local,
national, and global scale.
A Total Value assessment should identify the positive value outcomes that
could be realised, helping to embed these as objectives from an early stage of
the project. However, it should also identify and explore the risk of negative
value outcomes, such that they can be mitigated and minimised wherever
possible.
The type of value that can be delivered - and the benefactors of it - depends
upon the type and scale of infrastructure realised but also the approach taken
to strategizing, implementing the infrastructure projects that should ensure
value objectives are delivered on.
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Appendix A
Quantifying the economic value of the fuel supply
typologies
A high-level analysis has been made, based on the estimated capital cost of
each typology, to assess the impacts in terms of temporary jobs during the
development and construction phase and the Real Value Added (RVA) from
the employment that is generated. RVA reflects the value generated by
producing goods and services and is measured as the value of output minus
the value of intermediate consumption. RVA includes:
• Direct employment directly generated through the construction and day-
to-day operation of the new plant.
• Indirect employment created and/or sustained in suppliers to the plant.
These jobs represent the cumulative effect through the supply chain as
initial suppliers make purchases from their suppliers and so on.
• Induced employment supported by the wages and salaries of workers
employed both directly by the plant, and indirectly by suppliers to the
plant.
The analysis also takes into consideration other additionality factors, with
assumptions made for:
• Leakage – the number or proportion of outputs that benefit those outside
of the intervention’s target area or group.
• Displacement/substitution – the number or proportion of outputs
accounted for by reduced outputs elsewhere in the target area.
• Deadweight – output that would have occurred without the intervention.
• Multipliers - Further economic activity (jobs, expenditure, or income)
associated with additional local income, local supplier purchases and
longer term effects. For this assessment employment multipliers
published by the Canadian Government have been used.
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Appendix B
Lloyd’s Register Maritime Decarbonisation Hub fuel
demand estimation methodology
To assess the scale of energy and fuel production infrastructure required to
supply green shipping corridors in Canada, the refuelling quantities and
frequencies must first be estimated. The Lloyd’s Register Maritime
Decarbonisation Hub have conducted a separate analysis to estimate the
potential future demand for low and zero emission shipping fuels at the three
ports considered by this study.
The Lloyd’s Register analysis applies a methodology first developed as part
of a joint study by The Resilience Shift, Lloyd’s Register and Arup entitled
“Port energy supply for Green Shipping Corridors” [53] and further
developed for the specific case studies of the Port of Prince Rupert, Port of
Vancouver, and Port of Halifax. The methodology allows Lloyd’s Register to
consider alternative fuel demand evolution, at the port level, and can also be
applied to uncovering green shipping corridor opportunities. The approach is
based on three steps:
1. Identification – involves identifying shipping routes or ports as a starting
point for the assessment.
2. Calibration and categorisation – involves examining Automatic
Identification System (AIS) data to study ships calling at the key ports
along the shipping traffic route; understanding ship fuel demand patterns
for a base year; and then breaking down this estimated fuel demand into
categories for more granularity.
3. Projection – involves applying a number of assumptions to project the
potential demand for alternative fuels in the future, based on activity in
the baseline year. This includes estimates for transport demand growth,
alternative fuel uptake versus other options, level of decarbonisation
ambition, and refuelling frequency/feasibility.
Identification
Ports are integral to the entire shipping system, at the node of intermodal
networks while also facilitating and housing connections between various
shipping functions and resilient energy systems. With ports at the heart of
shipping activity, it is important to understand how the role of ports, port
users and its engagements will evolve to facilitate and advance the wider
industry’s energy transition.
In the case of this report, three individual ports were pre-identified as case
studies, however the demand estimation methodology can be deployed to
various applications, including multi-port shipping corridors and across
domestic and international trading zones.
Calibration and Categorisation
2021 was taken as the baseline year for each of the case studies in which to
study the activity and profile of vessels calling at the ports. To account for
the uncertainty around future bunkering activities, the identified fleet is split
into three categories based on the vessel’s likelihood to refuel in the location
of interest: primary, secondary, and tertiary. The likelihood of refuelling is a
function of the number of port calls made in the port and nearby ports as well
as the time spent by the fleet in the region, as defined in Figure 24. For
instance, in the cases of the Port of Vancouver and Port of Prince Rupert, the
region was defined as the western coastline of Canada and the US, extending
to the southern point of Oregon.
The Lloyd’s Register Maritime Decarbonisation Hub analysis assumes that
vessels would be unlikely to bunker in the port if they rarely call at the port
and spend most of the year outside the region; these vessels are therefore
considered out of scope and excluded from the estimate of fuel demand. This
concept of regionality is also employed by the Silk Alliance green shipping
corridor cluster, which focuses on a regional fleet that predominantly bunkers
in Singapore [54], extending beyond a point-to-point corridor concept to
drive scale and stronger region-specific partnerships.
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Figure 24 - Thresholds for identifying vessels within scope of the analysis
(Source: Lloyd’s Register Maritime Decarbonisation Hub)
Projection
The Lloyd’s Register Maritime Decarbonisation Hub analysis considers the
outlook for the fleet which can vary between the vessel types and is based on
trade flow dynamics both domestically and internationally. For this analysis,
low and zero emission fuel demand uptake in 2030 is projected for the in-
scope vessels based on the following:
• Percentage of time spent in the region.
• Market growth projections for each vessel type, taken from the 4
th
IMO
greenhouse gas study [55].
• Identification of likely “first mover”, or high ambition, fleet segments,
for example containerships, bulk carriers, and Ro-Ro vehicle carriers in
the context of a green corridor initiative. These are ship types where end-
consumer pressure is increasingly pushing for action to decarbonise and
those that usually operate regular routes, allowing fuel strategies to be
planned with more certainty. This analysis has only considered these first
mover segments.
• Alternative fuel uptake pace based on ambition of fleet segment, for
example an assumption is made that first mover segments will track the
5% fuel uptake target by 2030 [56] and subsequently follow a
decarbonization trajectory aligned to 1.5°C Paris Agreement goal.
The fuel demand estimates also take into consideration potential changes in
refuelling occurrence of vessels operating on low and zero emission fuels,
considering their lower energy densities, resulting in low, medium, and high
estimates for different scenarios.
Further considerations
The Lloyd’s Register analysis conducted follows the above methodology to
provide an estimate of the potential demand for low and zero carbon fuels in
the identified ports. This estimate should be considered in the context of the
following points:
• The analysis uses historical data, taking 2021 as the baseline year, but
cargo trade patterns may change in future, which need to be accounted
for. Estimates of fuel demand to identify potential first mover initiatives
and green corridors is a first step to explore opportunities. Engagement
with the fuel consumers is crucial to validate and supplement the analysis
carried out to estimation future fuel demand. Studying port calls is also a
way of uncovering natural port collaborations by seeing where vessels
regularly call before or afterwards.
• Feasibility of a bunker hub also extends to safety. The local
characteristics of the port, which is not studied in this report need to be
factored. For example, the proximity to local communities and populated
areas become meaningful constraints as handling alternative fuels poses
greater risks than conventional fossil fuels. These considerations are
explored in more detail elsewhere in this report, but dedicated safety
studies and hazard risk assessments are necessary steps to evaluating
bunkering feasibility and preparing for a port's decarbonisation transition.
• Pre-selected port case studies are used as examples by this study to
estimate potential fuel demand and the infrastructure required to meet it.
Applying a similar methodology in a more holistic Canada-wide
approach could help to pinpoint to narrow down green corridor
opportunities and potential collaborator ports.