Ports and GHG emissions

Shipping and ports worldwide are significant sources of Greenhouse gas (GHG) emissions and air pollution, emitting as much CO2 as Germany. Its impacts are global, with air pollution from ships contributing to an estimated 250,000 premature deaths and 6.4 million cases of childhood asthma worldwide each year according to the Ocean Conservancy. While the industry has committed to reducing its environmental impact, progress towards a 1.5°C scenario by 2050 has been slow due to various barriers, including:

Large upfront costs
Unclear financial benefits
Lack of supporting infrastructure
Limited expertise and/or capacity
Lack of or limited long-term capital

Catalytic port decarbonization fund

To address these barriers, Catalytic is leading the design and structuring of a Port Decarbonization funding solution. A blended-finance solution can help overcome some of the barriers to port decarbonization, especially in developing nations, provided it is structured to address key stakeholders' interests and concerns. The Fund includes both Debt with a first loss tranche (concessional capital) to lower the interest rate offered to port-authorities, terminal or port operators, or other beneficiaries; as well as funding for Technical Assistance

Technical Assistance funding for port authorities and other stakeholders covers:

Project preparation
Capacity building
Monitoring and evaluation

Investments in port decarbonization usually come as a “package”, including more than one technology (i.e. fleet electrification, shore power and solar panels etc.), as one depends on the implementation of another. This highlights the importance of having a strategy that covers a variety of solutions. For example, following are four interdependent solutions that could be in scope of the blended finance solution:

1. Renewable Energy and Decentralized Generation

Investments in renewable energy generation and distribution at port will play a pivotal role in the deployment of other technologies for port decarbonization.

Given the large land area of ports, the vast warehouse roof space, and large open areas for parking and storage, renewable energy generation on-site could be used to power operations.
With numerous ports encountering constraints in electrifying their operations due to local grid capacity and reliability, microgrids can aid ports in achieving self-sufficiency by guaranteeing the continuous independent supply of electricity.
A coordinated approach incentivizing ports to install renewable energy production on-site protects electricity access for the most vulnerable, especially in low-income and developing countries.

2. Shore Power and Alternative Fuel Infrastructure

The deployment of multiple energy sources will ensure power reliability in different contexts.

Cold ironing’, also known as shore power, provides electrical power to ships while at port, allowing them to shut down their engines and reduce emissions.
Shore Power infrastructure is typically installed at port, for ships to connect while berthed. Alternative mechanisms could be considered, such as providing electricity to ships directly from tugboats.
Infrastructure for Alternative Fuels such as green ammonia or green hydrogen.

3. Cargo Handling Equipment Decarbonization

Substituting diesel-powered machinery will reduce ports’ carbon footprint and enhance local air quality.

While the mix of cargo handling equipment will vary by port, they are typically powered by diesel fuel and could be switched to lower-emission propane, zero emission battery or hydrogen electric.

4. Operational Efficiencies

Operational efficiencies at port are relatively accessible in terms of technology and costs.

Enhancing operational efficiency (such as through LED retrofitting, Heat, Ventilation, Air Conditioning (HVAC) upgrades, and smart technologies) can help ports to reduce their carbon footprint, while simultaneously yielding gains in energy efficiency that can offset implementation costs in the short term
LED retrofits are particularly attractive in ports with high electricity costs, such as small island nations.
Operational efficiency measures are easily replicable across other ports.

This solution is expected to deliver measurable impacts in climate action (SDG 13), health (SDG 3) and gender equality (SDG5).

A Gender Action Plan with specific outputs would tackle issues regarding women’s workforce participation (particularly in leadership positions), safety, and infrastructure. This can include quotas for women’s participation, targeted training, and the improvement of port infrastructure (e.g. CCTV, separate toilets, night lighting)

Reduce death & illness associated with air pollution in cities through reduced diesel use and improved air quality (PM, NOx). A study on the Ports of Seattle and New York/New Jersey finds that PM2.5 emissions could be reduced by 69-75% under a full electrification scenario.

Reduce GHG emissions from port operations, with estimated potential of 1.5 million tonnes CO2 per year per port on average. Increase resilience & adaptive capacity to climate-related risks.

Some ports have already executed successful decarbonization projects. Below are a few examples: