Ports are hubs of sustainable innovation and business opportunities. Over the past few years, cargo traffic has been increasing steadily at Indian ports. Moreover, digital technologies are efficiently transforming the maritime space. India plans to become energy independent by 2047, and achieve net zero emissions by 2070. To achieve this target, increasing the use of renewable energy across the port ecosystem is essential.
Traffic trends at Indian ports
Both major and non-major ports in India have registered impressive growth in traffic movement. During 2022-23, India’s major ports handled 795 million tonnes (mt) of traffic compared to 720.29 mt in 2021-22, registering a growth of 10.4 per cent. Meanwhile, non-major ports witnessed a traffic growth of 8.5 per cent from 599.12 mt handled in 2021-22 to 649.89 mt in 2022-23. This was a result of increased shipments across categories such as coal, petroleum and other crude products.
The ports and shipping sector has been given so much focus as it can catalyse change across the entire economy. Thus, the ports and shipping industry is naturally becoming a nodal point of this green transition.
India currently imports over 40 per cent of its primary energy requirements, and its per capita energy emission is very low. As of April 30, 2023, renewable energy comprises about 41 per cent of the country’s total installed power capacity, with solar accounting for 38.9 per cent of this, followed by hydro (27.15 per cent) and wind (24.8 per cent). Biopower and small hydro account for the remainder.
The Ministry of Ports, Shipping and Waterways (MoPSW) recently launched the green port guidelines, titled Harit Sagar. The guidelines encompass ecosystem dynamics in port development, operations and maintenance, while aligning with the “working with nature” concept and aiming to minimise the impact on the biotic components of harbour ecosystems. The ministry has set a target of covering all 12 major parts with green hydrogen bunkering facilities by 2035. The initial focus will be on the ports of Paradip in the east, Kandla in the west and Tuticorin in the south. The new policy guidelines require ports to meet at least 60 per cent of their electricity needs through renewables by 2030, and 90 per cent by 2047.
Under International Maritime Organization (IMO) regulations, the upper limit of sulphur content in fuel oil for ships has been reduced to 0.5 per cent from the previous 3.5 per cent, which has had huge implications. Sustainable Development Goal 14 seeks to introduce sustainability, manage marine and coastal pollution, and address its impact on oceans. The initial IMO strategy aims to reduce carbon produced from international shipping by at least 40 per cent by 2030 and 70 per cent by 2050, compared to 2008 levels. If the IMO strategy is revised in 2023, pushing for complete decarbonisation by 2050, then building the infrastructure to provide over 270 mt of alternative fuels will become a huge challenge.
To aid the government in meeting its climate targets and making India a green hydrogen hub, the National Hydrogen Mission was launched on August 15, 2021. Its goal is to produce 5 mt of green hydrogen by 2030 and develop the necessary renewable energy capacity. Depending on the method of its extraction, hydrogen is categorised into the grey, blue and green subtypes. Initially, hydrogen will be produced in the form of ammonia carriers, gradually moving to other forms. The huge cost of carrying hydrogen in liquid form and its hazardous nature are two challenges that need to be overcome. To this end, ammonia and its behaviours are well known to the industry as mitigating factors.
The GreenVoyage2050 project is also supporting India’s energy transition. It is a partnership project between the Government of Norway and the IMO, launched in May 2019. The project aims to help the shipping industry transition towards a lower-carbon future, and provide guidance on meeting the commitment to relevant climate change and energy efficiency goals for international shipping. The objective of the partnership is to provide solutions for eliminating carbon emission.
Environment, social and governance (ESG) initiatives
Three “scopes” have been established for greenhouse gas (GHG) accounting and reporting purposes. These are meant to aid in separating direct and indirect emission sources, increasing transparency, and aiding various organisations, different types of climate policies and various business goals. Scope 1 accounts for the direct GHG emissions that occur from sources owned or controlled by a company. Scope 2 accounts for GHG emissions from the generation of purchased electricity (defined as electricity that is purchased or otherwise brought into the organisational boundary of the company) consumed by the company. Scope 3, which will emerge in the near future, has a much broader scope than the other two. It includes extraction and production of purchased materials, transportation of purchased fuels, and use of products and services.
It is worth pointing out that the Securities and Exchange Board of India has made the Business Responsibility and Sustainability Report (BRSR) mandatory for the top 1,000 listed companies (by market capitalisation) from financial year 2022-23. The BRSR is an initiative towards ensuring that investors have access to standardised disclosures on ESG parameters. To reduce carbon emissions in the port sector, ports and the port ecosystem need to be ESG-compliant in the near future. To this end, all stakeholders in the port sector need to adopt relevant measures.
India’s port sector needs to be a front runner in this green transition. Port authorities and industries should join hands. Working groups should be set up with port authorities/port-based industries, port operators, renowned Indian consultants and the consultancy wings of renowned international ports, who can share the experience gathered in their respective countries. Moreover, all new and upcoming ports (such as Vadhavan, Nicobar and Tuna Tekra) need to embrace green/net zero goals right from the planning stage. In the coming years, most projects will be implemented in the public-private partnership (PPP) mode. As such, PPP documents need clauses to ensure that the net zero mission is implemented in a phase-wise manner. Moreover, for environmental impact assessment clearance for any project, the terms of reference need to ask the project proponents about their action plans to achieve net zero.
Industries around ports need to embrace green initiatives, thereby contributing to the decarbonisation of the entire port ecosystem. Ports/Terminals have already started electrifying equipment. There is also a need to think about a circular economy, ie a bio-based economy. Jawaharlal Nehru Port is the first port in India to undertake the preparation of a feasibility report/detailed project report for green power supply to ships. All Indian ports need to implement shore-to-ship green power supply. The future ecosystem will include liquid organic hydrogen carriers, green methanol carriers and green ammonia carriers. Such ships will require new bunkers. In future ports may incentivise ships to adopt best practices for carbon emission, including the environmental shipping index. Moreover, green gateways will provide spatial management protection for flora and fauna. Thus, ports will play a pivotal role in the path to decarbonisation.
As per the Maritime India Vision 2030, the share of renewable energy will be increased to more than 60 per cent across major ports by 2030. Other immediate measures include cleaner fuel adoption within the port ecosystem, gradual phasing out of diesel locomotives at ports, green hydrogen tugs, recycling and reuse of water, recycling of waste, electric vehicle charging infrastucture and LNG bunkering stations, green warehousing, green buildings and sustainable eco-friendly way of dredging etc. The “Harit Sagar Green Port guidelines 2023″, a very comprehensive document by the MoPSW, also mentions the incentives to be introduced to facilitate a green culture at India’s major ports. This journey will require a systematic, phase-wise approach, with capex infusion by private players through attractive PPP mechanisms.