Green ships ahoy along vital corridors

Australia's biggest miners are preparing for a day of reckoning.

Shipping accounts for two to three per cent of global greenhouse gas emissions so manufacturers and retailers are no longer just considering what appears in national targets.

Even though individual governments are not on the hook for these supply chain emissions, some of Australia's largest companies are getting ready.

BHP is the world's largest charterer of ships, which means marine emissions are a problem for future profits and reputation.

Rio Tinto is in the same boat as iron ore makes up a third of Australian exports.

They have lined up a small number of LNG-fuelled bulk carriers as an immediate solution to lower emissions.

Some say green ammonia made with hydrogen, using a water electrolysis process powered by solar and wind energy, could become the marine fuel of choice one day.

Nuclear power could also be a clean but more expensive and currently illegal source of electricity for producing hydrogen and ammonia through electrolysis.

Australia will still be shipping almost $100 billion a year in coal and gas by 2050, according to federal government modelling.

A treasure trove of iron ore for global steelmaking and construction will also need to get to market even as the world tries to limit global warming to 1.5C.

Iron-ore dependent Fortescue Metals is staking a massive bet on green hydrogen to swap out fossil fuels and retain its business model.

For both BHP and the world's second-largest resources company Rio Tinto, it's a matter of scope and degrees.

But when the commodities are sold, there's no accounting for what customers do, so the mining majors are looking at their own pollution value chain.

A shorter shipping route from Western Australia's Pilbara to Singapore is a win for Rio Tinto and emissions, compared to the longer shipping service from Fremantle.

Sending essential rail parts, tyres and equipment to support iron ore operations from the Port of Dampier removes diesel-guzzling road trains from the freeways.

Emissions linked to operations are known as Scope 1 and 2, while Scope 3 emissions are produced up and down the supply chain and could be more than five times larger than direct emissions.

BHP's sustainability and climate change vice-president Fiona Wild said about 95 per cent of the company's Scope 3 emissions are downstream from BHP.

"That's really hard because we don't have operational control over what our customers do with our products," Dr Wild said.

"However there are lots of things that we can do to enable that carbon risk in the value chain to be reduced."

She said BHP acknowledged the size of the problem about four years ago and started looking at where the most material sources of Scope 3 emissions are for BHP and where the company could have the most influence.

Maritime emissions, along with steelmaking, is where they focused their efforts.

Hydrogen and ammonia-based fuels could work for bulk carriers, but research projects are years away from being commercially viable.

Ideas about small nuclear reactors for commercial shipping have been floated by former Microsoft boss Bill Gates, and an Australian federal parliamentary inquiry, but remain controversial and theoretical.

"When we think about maritime, it's about working with the full maritime ecosystem in terms of the types of ships that we charter, the types of routes that we take and the way that we might be able to influence the sector as a whole to decarbonise," Dr Wild said.

"We're the first company to develop LNG-fuelled ships."

Rio Tinto is also using some LNG-fuelled bulk carriers and intends to introduce net-zero emission vessels by 2030.

Using more efficient vessels will be supported by tools such as weather routing and better scheduling, the company told AAP.

"We expect further gains in the short-term as we explore broader efficiency solutions and the integration of alternative fuels, such as the use of biofuels and our investment in nine LNG dual-fuel vessels this year," a Rio Tinto spokesman said.

Fortescue offshoot Fortescue Future Industries (FFI) wants to produce 15 million tonnes of green hydrogen per year by 2030, but not necessarily just for shipping.

"FFI retrofitted a huge mining haul truck to run on hydrogen, producing only steam, in just 130 days," chair Andrew Forrest said.

A small team from the firm's manufacturing arm developed an innovative electrolyser in their Western Australia facility, producing industrial grade hydrogen for the first time just before Christmas.

FFI is installing solar panels at the facility, aiming to produce green hydrogen in 2022.

Fertiliser giant Incitec Pivot had planned to close its Gibson Island ammonia-production facility near Brisbane by the end of 2022, but is now working with FFI to see if it could be run using zero-carbon green hydrogen.

If approved, on-site electrolysis plant could produce up to 50,000 tonnes of hydrogen per year for conversion into green ammonia.

The Global Maritime Forum says zero-emission fuels and innovative vessels are needed this decade to fully decarbonise shipping by 2050.

Specific trade routes, or green corridors, could be set up between major port hubs to kickstart change.

Companies are laying the groundwork for green ammonia to be a potential marine fuel of choice, assuming safety concerns can be resolved.

An exporting stakeholder group for the Japan-Australia route has been formed by the three companies that are responsible for approximately 90 per cent of iron ore exported along that corridor - Rio Tinto, BHP and Fortescue Metals Group.

Bunkering in North West Australia would replace the Singapore stopover, supported by new infrastructure.

Regulatory bodies on both ends of the corridor could boost the uptake of sustainable shipping for iron ore, forum research found.

For example, Japan's target to source three million tonnes of ammonia fuel per year by 2030 could be aligned with Australia's aim under the national hydrogen strategy to become one of the top three exporters to Asia.

Rio Tinto is already working with one of Japan's largest trading companies, Itochu, on using green ammonia as an alternative marine fuel.

Although hydrogen has a role in Australia's "technology not taxes" climate policy, Energy Minister Angus Taylor and his department were unable to say whether any specific work is being done to support green shipping.

In the meantime, Minister for Resources Keith Pitt is cock-a-hoop about the scale of mineral and fossil fuel exports to be sent around the world as the structure of the Australian economy remains unchanged.

Resources and energy earnings passed $300 billion for the first time in 2020-21 and will surge towards $400 billion in 2021-22, according to December figures.

"The resources sector once again has been shown to be the bedrock of the Australian economy and would strongly support the nation's future growth," he said.

Meanwhile the Maritime Decarbonisation Centre in Singapore, is looking at LNG and biodiesel as maritime fuels, as well as studying alternative types of ships.

A separate Getting to Zero Coalition aims to have commercially viable zero-emissions vessels (ZEVs) operating along deep-sea trade routes by 2030.

And momentum is building beyond mining and its immediate manufacturing customer base.

Global giants including Amazon, Ikea, Michelin, Patagonia and Unilever pledged in October to use zero-carbon marine shipping by 2040 to reduce their carbon footprint.

The US-based Clean Air Task Force (CATF) suggests going smaller with battery-powered ships, where the fuel cell gets swapped out when the vessel docks, but that's not an option for bulk carriers.