Assessing Biomethanol Green Corridors for International Shipping: A Case Study on the Brazil-China Iron Ore Route

Abstract

In mid-2023, the International Maritime Organization has strengthened its greenhouse gas ambition, aiming at reaching net-zero international shipping emissions by 2050. The achievement of this goal depends on the substitution of oil-derived fuels. Yet, the high diversity of candidate alternative fuels poses challenges to the shipping industry, since investments in specific fuels and motorizations bring the risk of technological lock-in, while can also affect the global trade costs. One way to mitigate such risk is the establishment of green corridors associated with predetermined products and geographical routes, thereby reducing the challenge to coordinate stakeholders and promote first movers. This study assesses an original and emblematic implementation of a green corridor based on biomethanol between Brazil and China, focusing on the trade of iron ore, a major dry bulk cargo. Findings show that the use of biomethanol can reduce by 37% the lifecycle GHG emissions of the route. They also indicate an increase of 8-25% on operational costs. This corresponds to an emission price between 330 and 450 USD/tCO2e. The study also indicates that stakeholders (especially mining companies) are engaged in implementing measures to reduce emissions through their supply chain, providing a favourable environment for the corridor.

Keywords: international shipping, green corridors, climate mitigation, biomethanol