Shanghai Goes Green

While the Chinese conventional bunker market remains as competitive as ever, Shanghai has been aiming to carve out a firm niche for itself as a leader in decarbonisation efforts.

In March, Shanghai International Port Group held the inaugural meeting of the “Green Shipping Industry Alliance” in Lingang New Area, the newest part of the city’s free trade zone. The group consists of the Lingang New Area’s management committee, Cosco, SIPG, State Power Investment Corporation, China Classification Society and the Methanol Institute. The alliance is to serve as an open platform and cooperation mechanism to promote the application of green energy and well-to-wake sustainable low-carbon development in the shipping industry with a particular eye to green methanol and ammonia adoption, something the port is particularly keen to promote. Shanghai is the site for the country’s pilot project in ship to ship green methanol bunkering and in April, completed China’s (and Asia’s, SIPG said) first ship-to-ship refuelling, of the 16,000 TEU Astrid Maersk at Guandong Wharf in Yangshan Port Area.

According to Chen Jinshan, the Lingang New Area’s management committee director, basing the group in the free trade zone will help draw international cooperation and allow for a more “innovative development environment”.

Not long after, SIPG signed a cooperation agreement with Hanxin Shipping to improve green methanol supply both for Hanxin’s ships and for Shanghai in general. Hanxin has nine 9,000 TEU methanol-powered container ships currently under construction, scheduled to be delivered from 2025 to 2026. The two sides will jointly discuss the possibility of providing long-term ship clean fuel procurement, supply and refuelling services for the future LNG or green methanol dual-fuel fleet of Hanxin, to jointly promote the realisation of carbon reduction goals and promote global shipping cooperation in renewable fuels. SIPG said it would also accelerate the construction of Shanghai Port Green Energy Centre, and further build a low-carbon energy hub in the Asia-Pacific region, to provide efficient and reliable energy supply for international shipping companies.

In July, SIPG also announced it was launching a green energy trading platform for hydrogen-based fuels with Shanghai Environmental Energy Exchange, Shanghai Lingang Green Innovation and Guohua Investment Hydrogen Energy Company. The aim, group chairman Gu Jinshan said, was to accelerate uptake of and availability of green hydrogen-based fuels. The trading platform will be based in Lingang New Area, and will cover green hydrogen, green methanol and green ammonia, as well as green hydrogen certificate trading and data services, to ease distribution and availability of hydrogen-based green energy.

June saw bunker supplier Chimbusco sign a distribution deal with producer Bairin Zuoqi and Cosco’s energy and logistics arms to sell up to 200,000 tonnes of green methanol to be produced at a new wind-powered plant in Chifeng, Inner Mongolia. The 500MW plant will produce methanol for Cosco to transport and store, and Chimbusco to offer to ships. In a statement, Chimbusco said: “The signing of this strategic cooperation agreement further promotes the production, transportation, warehousing, fuelling and use of green methanol across the whole industrial chain. The three parties will give full play to their respective advantages and take the green methanol supply chain as the entry point to further expand the field of cooperation.”

Shanghai has also seen in late May its first offloading of shipboard-captured carbon from Evergreen’s 14,000 TEU Ever Top, the first ship to be fitted with a CCS system. According to SIPG, two months of sea trials, the capture rate of carbon dioxide by the system was over 80%, and the purity of carbon dioxide captured was over 99%, both meeting the design and classification requirements the amine-based system had been under. Shoreside reception for captured CO2 is one of the main practical limitations for CCS use at present, and SIPG described the unloading process as “complex” and “cumbersome”, needing careful control, eventually taking four hours to complete.

There are valid questions over the use of CCS versus reducing emissions by changing fuels and operational practices, but as a transitional step it’s certainly encouraging that the practical hurdles to handling CO2 output in port are being cleared.

For all the good work Shanghai and other ports and industry bodies have done to promote renewable fuels, conventional HFO will remain dominant for a long time to come.

Zhoushan is chasing hard on the heels of Fujairah for third spot in the list of major bunkering ports. Last year bunker sales topped 7m tonnes for the first time, up nearly 17% on 2022, which the Zhoushan Marine Fuel Association said was in part down to greater efficiency but also competition. Last year there were 19 licensed bunker suppliers active in the port, with private operators contributing almost half the total volumes supplied, up almost 25% year-on-year.

Overall, the association attributed its performance to “Zhoushan’s steadfast commitment to developing the bunkering industry, implementing reforms, fostering innovation in response to market demands, and proactive efforts to enhance infrastructure”.

That said, the association has been keen to point to its addition of China’s first offshore LNG bunkering and anchorage biofuel bunkering, which it says makes Zhoushan the first port in China to provide multiple fuel types at once across its 20-plus anchorages.

LNG bunkering was launched fully at the end of February, with the dual-fuel bulk carrier Gaoershan taking on 1,222 tonnes of LNG, after trial LNG bunkering in August last year at Qushan anchorage. Following the bunkering trial, the port went through a lengthy review and optimisation process to ensure smoother service once commercial bunkering began.

The port was shortlisted for trial supply of biodiesel in April, one of 22 sites across China picked to do so, and the only one in a free trade zone, having carried out its first bunkering operation with B24 biofuel in October last year.

The Chinese government announced in November 2023 a new programme to boost domestic biofuel use and direct sale to customers, including bunkers. The timing was impeccable because an anti-dumping probe was launched by the EU in December 2023 – not expected to be completed until well into 2025, though tariffs of up to 36% could be imposed by the time World Bunkering goes to press. With much of China’s biofuel production and UCO feedstock previously going to export, and the EU a key market in all fuel grades (the Netherlands alone accounts for over three quarters of Chinese biodiesel exports), providing local demand for hundreds of thousands of tonnes of fuel potentially not going to export any more is obviously a boost to Chinese biofuel producers.

The administrative committee of Zhejiang Pilot Free Trade Zone welcomed the port’s shortlisting, saying: “This will create new prospects in Zhoushan for advancing green and clean energy from biomass and establishing a significant bunkering centre for international vessels utilising renewable energy. The demand potential for biodiesel in Zhoushan Port is substantial. The current market demand for biodiesel fuel ranges between 300,000 to 500,000 tonnes annually. In the future, the biofuel bunkering sector is anticipated to generate numerous opportunities for resource alignment and trade.”