China's renewable energy and green hydrogen capacity shows potential to surpass South Korea and Japan in green shipping

August 28, 2024 (SEOUL) — Shipping accounts for more than 80% of the world's trade, making shipping decarbonization a critical part of the Paris-Agreement aligned response to combat the climate crisis and keep global warming levels down. Accordingly, major shipping and shipbuilding nations, China, Japan, and South Korea are responding to these global trends with shipping decarbonization roadmaps and investments in alternative fuels.  

While there is no fixed definition of eco-friendly or green fuels, the terms usually refer to fuels with less carbon emissions than conventional fuel options such as Heavy Fuel Oil (HFO). Within the alternative fuels' spectrum, research highlights that not all alternative fuels have equal environmental impact, and several alternative fuels could even have higher risks- especially when they are based on fossil fuels (like Liquified Natural Gas (LNG) or Gray/Blue Methanol). 

Geunha Kim, a Senior Shipping Program Officer at SFOC, said, “In bridge fuels such as LNG, Biofuel, and Methanol, the potential risk factors outweigh the perceived benefits. These risks include high carbon intensity, deforestation and other environmental impacts linked to production methods and feedstocks, making the bridge fuels unviable as alternative fuels.” 

The new report by Solutions for Our Climate (SFOC), “Environmental Risks of Bridge Shipping Fuels and Fuel Transition Plans of South Korea, China, and Japan”, compares green shipping competitiveness between China, Japan, and South Korea, finding that all three countries maintain a reliance on fossil fuels, especially LNG, in their decarbonization plans for shipping in the near future. However, as these three countries also compete to develop alternative fuel technologies for ships, the ability to secure and supply carbon-free fuel will be a key- not only for decarbonization but also for national competitiveness.  

While the three countries share certain commonalities in their persistent reliance on LNG as the primary bridge fuel in the medium term, differences emerge when considering the energy transition pace and decarbonization strategy amongst the three. 

China stands out due to its high potential for renewable energy and the ability to produce green hydrogen domestically, positioning it as the most likely to transition to zero-emission shipping fuel in the medium to long term.  

By contrast, South Korea and Japan have limited potential for self-supplying renewable energy, leading to a lower potential for self-sufficiency in green hydrogen. Both countries are actively working to import green hydrogen and build international partnerships. However, Japan holds a competitive edge due to its early research and investment in green hydrogen supply chain and technology, as well as its strong and diverse international cooperation network.  

Figure 1: Comparing China, Japan, and South Korea’s Green Shipping Fuels Competitiveness 

Source: SFOC, 2024 

Given these differences, China should focus on decoupling from fossil fuels while maintaining its advantage on renewable energy and green hydrogen. Facing additional challenges, Japan and South Korea must expand the invest in green infrastructure and green hydrogen procurement capabilities to secure competitiveness. 

Kim said, "The goal of shipping decarbonization lies in phasing out fossil fuels, which have both environmental and health impacts. Transitioning to LNG and gray methanol is simply moving from one fossil fuel to another. To maintain global competitiveness, South Korea and Japan must streamline their current fuel transition scheme to be more focused on renewables-based fuels.” 

ENDS.  

Solutions for Our Climate (SFOC) is an independent nonprofit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.   
 
Website: https://forourclimate.org/  

For media inquiries, please reach out to Kate Kalinova, Communications Officer, at kate.kalinova@forourclimate.org.