13 September 2023 – London International Shipping Week saw the public launch of SSI’s Green Steel and Shipping report, kickstarting a discussion around the need to broaden how we define “zero emission shipping”

The event, held in collaboration with The Climate Group’s SteelZero initiative, was hosted at the London office of Watson, Farley & Williams.

Simon Petch, partner at Watson Farley & Williams, opened the full-house event by highlighting the development bringing the lifecycle and materials of a vessel to people’s minds: the recent ratification of the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships. Ship recycling plays a crucial role for a circular material flow within the ship lifecycle. Furthermore, circularity provides an opportunity to design more resource-efficient ships, discuss extending their lifecycle, ensure better and safer recycling, and optimise the use of materials, such as steel recovered from ships.

SSI Executive Director Andrew Stephens then spoke about SSI’s history with the topic, beginning in 2013 with the Closed Loop Materials Management work which looked at material traceability as a step towards circularity. In 2021, SSI re-started the discussion around what circularity means for shipping by focusing on steel.

The industry is evolving. Decarbonising shipping requires change in the current fleet and this presents opportunities to explore how ships are designed and built, the building materials, and what happens at a vessel’s end of life. As the sector decarbonises, non-fuel-related GHG emissions will become more relevant. Given the 20-30 year lifespan of a vessel, exploration must begin now, as vessels built today may still be at sea in 2050.

Green steel

Steel makes up 75-85% of a ship by weight and it is a key source of shipping’s Scope 3 GHG emissions, as the steel sector is responsible for 7-9% of global GHG emissions. The Green Steel and Shipping report illuminates the synergies between shipping and steel’s decarbonisation efforts. Andreea Miu, SSI’s Head of Decarbonisation, shared the report’s key findings: from what ‘green steel’ is and its potential in shipping to the exploration of the material flow of steel and how steel circularity can be integrated by addressing key barriers and drivers.

An expert panel was then convened to discuss the topic, moderated by Sameen Khan (Steel Zero). The panel consisted of Nicolò Aurisano (A.P. Moller-Maersk), Amelia Hipwell (Lloyd’s Register Maritime Decarbonisation Hub), Gudrun Janssens (BIMCO), and Kate Kalinova (Solutions for Our Climate).

Andreea Miu, Head of Decarbonisation of the Sustainable Shipping Initiative, presents the Green shipping report.

Traceability and transparency are crucial to the uptake of green steel and circularity within shipping

The classification approval process for green steel for marine applications requires two steps: the steel should be approved as green, looking at GHG emissions across the production process, and it should be approved as marine grade.

This complexity means that clear guidelines on GHG emissions from steel production and the traceability of both GHG emissions and green steel products are key for green steel classification. However, a system for tracking in this way is not currently in place across the ship lifecycle.

This needs to improve, more data on green steel products for shipping is needed, and this needs to capture the emissions savings gained from scrapped vessels and the resource-efficient use of shipping’s scrap steel. More data is also needed to bolster demand for green steel from shipping and to understand whether this demand can be met by the steel industry.

Ultimately, transparency and traceability are necessary to build a resilient shipping industry that operates within planetary boundaries.

“The measures we have in place today for transparency will become even more relevant when the Hong Kong Convention enters into force”

The entry into force of the Hong Kong Convention in 2025 also means Inventories of Hazardous Materials will become the norm, making lifecycle traceability a requirement for several substances.

However, current regulations and guidelines on ship recycling and hazardous waste, from the Hong Kong Convention to the Basel Convention, fall short of encouraging a circular economy. In addition to this, incentives for green steel tend to fall under national and regional regulation, where other legal instruments may be more relevant. Amendments are needed to align regulations and policies to encourage a circular economy and drive production and uptake of green steel.

Case study: South Korea

South Korea has a unique placement within this conversation as a concentrated hub for steel, shipping, and shipbuilding. It is a leading nation when it comes to the construction of ships and steel production – with shipbuilding making up around 20% of domestic steel consumption.

The shipping and shipbuilding sectors additionally receive support from the South Korean government, which provides companies with loans and arranges for the sale and leaseback of ships to support the industry. As the industry decarbonises, this government support has continued with policies like the Eco-friendly Ships Act, and there is potential for the government to support and expand policies like this one to include embodied carbon emissions, while narrowing the classification of eco-friendly fuels to exclude fossil fuels.

What can be done to progress?

Panellists shared their insights into what is needed to encourage green steel production, requiring action throughout the entire value chain:

  • Pool demand and make commitments on green steel that will be required. This can be done by shipbuilders, or by shipowners ordering new vessels. The greater the demand for green steel, the more action will come from steel producers and classification societies.
  • Dialogue throughout the entire value chain is needed – from suppliers of ship parts and policymakers to shipowners and investors, ensuring a shared understanding of the challenge and the role shipping can play as a steel consumer.
  • Improving existing ship recycling processes to ensure optimal use and segregation of scrap steel (as well as improving the sector’s existing environmental and social issues).

Until green steel becomes a reality and is available at scale, there are incremental changes that can be made to reduce lifecycle emissions.

Vessels can be designed to increase operational and material efficiency, increase the repairability of components, and make it easier to replace parts and extend the lifetime of a vessel.In addition to this,operational and energy efficiency measures can also be implemented to start producing steel in less emission-intensive ways. These improvements are possibletoday and could be already implemented whilst the steel sector explores large-scale decarbonisation.

Amelia Hipwell, Nicolò Aurisano, Gudrun Janssens, and Kate Kalinova.

In her closing remarks, Pia Melling from Grieg Green emphasised how demands for transparency and traceability will increase – from buyers of scrap steel wanting to know more about that steel production and use, to capital providers and cargo owners asking for information on lifecycle emissions of ships, as well as increase corporate due diligence corporate, such as from the EU Corporate Due Diligence Directive coming into place.

The updated IMO GHG strategy calls for decarbonisation by 2050. Ships built today are the pioneers of a zero emission, sustainable future for the sector. Therefore, in 2023, it is our responsibility to take action, create demand for green steel in shipping, and shape a future for shipping that is transparent and well-informed about all the social and environmental impacts of its activities.