    [House Hearing, 117 Congress]
    [From the U.S. Government Publishing Office]

                    PRACTICAL STEPS TOWARD A CARBON-FREE MAR-
                     ITIME INDUSTRY: UPDATES ON FUELS, PORTS,
                     AND TECHNOLOGY

    =======================================================================

                                    (117-12)

                                 REMOTE HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                    COAST GUARD AND MARITIME TRANSPORTATION

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 APRIL 15, 2021

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

         Available online at: https://www.govinfo.gov/committee/house-
         transportation?path=/browsecommittee/chamber/house/committee/
                                 transportation

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    44-944 PDF                  WASHINGTON : 2021

    --------------------------------------------------------------------------------------

                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

      PETER A. DeFAZIO, Oregon, Chair
    SAM GRAVES, Missouri                 ELEANOR HOLMES NORTON,
    DON YOUNG, Alaska                      District of Columbia
    ERIC A. ``RICK'' CRAWFORD, Arkansas  EDDIE BERNICE JOHNSON, Texas
    BOB GIBBS, Ohio                      RICK LARSEN, Washington
    DANIEL WEBSTER, Florida              GRACE F. NAPOLITANO, California
    THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
    SCOTT PERRY, Pennsylvania            ALBIO SIRES, New Jersey
    RODNEY DAVIS, Illinois               JOHN GARAMENDI, California
    JOHN KATKO, New York                 HENRY C. ``HANK'' JOHNSON, Jr.,
    BRIAN BABIN, Texas                   Georgia
    GARRET GRAVES, Louisiana             ANDRE CARSON, Indiana
    DAVID ROUZER, North Carolina         DINA TITUS, Nevada
    MIKE BOST, Illinois                  SEAN PATRICK MALONEY, New York
    RANDY K. WEBER, Sr., Texas           JARED HUFFMAN, California
    DOUG LaMALFA, California             JULIA BROWNLEY, California
    BRUCE WESTERMAN, Arkansas            FREDERICA S. WILSON, Florida
    BRIAN J. MAST, Florida               DONALD M. PAYNE, Jr., New Jersey
    MIKE GALLAGHER, Wisconsin            ALAN S. LOWENTHAL, California
    BRIAN K. FITZPATRICK, Pennsylvania   MARK DeSAULNIER, California
    JENNIFFER GONZALEZ-COLON,            STEPHEN F. LYNCH, Massachusetts
      Puerto Rico                        SALUD O. CARBAJAL, California
    TROY BALDERSON, Ohio                 ANTHONY G. BROWN, Maryland
    PETE STAUBER, Minnesota              TOM MALINOWSKI, New Jersey
    TIM BURCHETT, Tennessee              GREG STANTON, Arizona
    DUSTY JOHNSON, South Dakota          COLIN Z. ALLRED, Texas
    JEFFERSON VAN DREW, New Jersey       SHARICE DAVIDS, Kansas, Vice Chair
    MICHAEL GUEST, Mississippi           JESUS G. ``CHUY'' GARCIA, Illinois
    TROY E. NEHLS, Texas                 ANTONIO DELGADO, New York
    NANCY MACE, South Carolina           CHRIS PAPPAS, New Hampshire
    NICOLE MALLIOTAKIS, New York         CONOR LAMB, Pennsylvania
    BETH VAN DUYNE, Texas                SETH MOULTON, Massachusetts
    CARLOS A. GIMENEZ, Florida           JAKE AUCHINCLOSS, Massachusetts
    MICHELLE STEEL, California           CAROLYN BOURDEAUX, Georgia
                                         KAIALI`I KAHELE, Hawaii
                                         MARILYN STRICKLAND, Washington
                                         NIKEMA WILLIAMS, Georgia
                                         MARIE NEWMAN, Illinois
                                         Vacancy
                                    ------                                7

            Subcommittee on Coast Guard and Maritime Transportation

                      SALUD O. CARBAJAL, California, Chair
    RICK LARSEN, Washington              BOB GIBBS, Ohio
    JAKE AUCHINCLOSS, Massachusetts      DON YOUNG, Alaska
    SEAN PATRICK MALONEY, New York       RANDY K. WEBER, Sr., Texas
    ALAN S. LOWENTHAL, California        MIKE GALLAGHER, Wisconsin
    ANTHONY G. BROWN, Maryland           JEFFERSON VAN DREW, New Jersey
    CHRIS PAPPAS, New Hampshire          NICOLE MALLIOTAKIS, New York
    PETER A. DeFAZIO, Oregon (Ex         SAM GRAVES, Missouri (Ex Officio)
        Officio)

                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................     v

                     STATEMENTS OF MEMBERS OF THE COMMITTEE

    Hon. Salud O. Carbajal, a Representative in Congress from the
      State of California, and Chair, Subcommittee on Coast Guard and
      Maritime Transportation, opening statement.....................     1
        Prepared statement...........................................     3
    Hon. Bob Gibbs, a Representative in Congress from the State of
      Ohio, and Ranking Member, Subcommittee on Coast Guard and
      Maritime Transportation, opening statement.....................     6
        Prepared statement...........................................     6
    Hon. Peter A. DeFazio, a Representative in Congress from the
      State of Oregon, and Chair, Committee on Transportation and
      Infrastructure, opening statement..............................     7
        Prepared statement...........................................     8
    Hon. Sam Graves, a Representative in Congress from the State of
      Missouri, and Ranking Member, Committee on Transportation and
      Infrastructure, prepared statement.............................    57

                                   WITNESSES

    John W. Butler, President and Chief Executive Officer, World
      Shipping Council, oral statement...............................    10
        Prepared statement...........................................    12
    Kristin Decas, Chief Executive Officer and Port Director, Port of
      Hueneme-Oxnard Harbor District, oral statement.................    16
        Prepared statement...........................................    18
    Morgan M. Fanberg, P.E., President, Glosten, Inc., oral statement    23
        Prepared statement...........................................    25
    B. Lee Kindberg, Ph.D., GCB.D, Head of Environment and
      Sustainability-North America, Maersk, oral statement...........    28
        Prepared statement...........................................    30
    Dan Rutherford, Ph.D., Marine and Aviation Program Director,
      International Council on Clean Transportation, oral statement..    33
        Prepared statement...........................................    34

                           SUBMISSIONS FOR THE RECORD

    Submissions for the Record by Hon. Salud O. Carbajal:
        Letter of April 14, 2021, from Daniel Hubbell, Shipping
          Emissions Campaign Manager, Ocean Conservancy..............     4
        Letter of June 22, 2021, Regarding Port of Hueneme and the
          Vessel Speed Reduction Program, from Kristin Decas, Chief
          Executive Officer and Port Director, Port of Hueneme-Oxnard
          Harbor District............................................    43
    Statement of Jennifer States, Director for Blue Economy, DNV
      Energy and Maritime North America, Submitted for the Record by
      Hon. Bob Gibbs.................................................    57

                                    APPENDIX

    Question from Hon. Alan S. Lowenthal to Dan Rutherford, Ph.D.,
      Marine and Aviation Program Director, International Council on
      Clean Transportation...........................................    67

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                 April 12, 2021

        SUMMARY OF SUBJECT MATTER

        TO:      LMembers, Subcommittee on Coast Guard and Maritime
    Transportation
        FROM:  LStaff, Subcommittee on Coast Guard and Maritime
    Transportation
        RE:      LHearing on ``Practical Steps Toward a Carbon-Free
    Maritime Industry: Updates on Fuels, Ports, and Technology''
    _______________________________________________________________________

                                    PURPOSE

        The Subcommittee on Coast Guard and Maritime Transportation
    will hold a hearing on Thursday, April 15, 2021, at 11:00 a.m.
    EDT to examine emissions output from vessels and ports, and the
    future of zero emissions technology. The hearing will take
    place in 2167 Rayburn House Office Building and via Zoom. The
    Subcommittee will hear testimony from Glosten, International
    Council on Clean Transportation, Maersk, the Port of Hueneme,
    and World Shipping Council.

                                   BACKGROUND

    MARITIME EMISSIONS

        Maritime transportation is vital to the world economy. With
    over 80 percent of global trade by volume carried onboard ships
    and handled by seaports worldwide, the importance of maritime
    transportation for trade cannot be overemphasized.\1\ In order
    to meet the stringent demands of shippers and compete on a
    worldwide playing field, shipping companies have traditionally
    relied on cheap and readily available fuels, often including
    fossil fuels such as bunker fuel. As a result of fossil fuel
    consumption, shipping accounts for 3 percent of the world's
    carbon emissions and if shipping were a country, the sector
    would be the world's sixth-largest emitter.\2\
    ---------------------------------------------------------------------------
        \1\ United Nations Conference on Trade and Development. ``Review of
    Maritime Transport 2017.'' https://unctad.org/system/files/official-
    document/rmt2017_en.pdf. Accessed on April 5, 2021.
        \2\ Bloomberg. ``Huge Container Ships' Biggest Problem Is
    Emissions.'' https://www.bloomberg.com/opinion/articles/2021-03-30/
    huge-container-ships-biggest-problem-is-
    emissions. Accessed on April 5, 2021.
    ---------------------------------------------------------------------------
        For nearly 100 years, ships have run on cheap bunker fuel.
    When burned, bunker fuel emits large amounts of carbon dioxide
    (CO2) as well as black carbon, a fine particulate that can
    absorb a million times the incoming solar energy as CO2.\3\
    Black carbon accounts for 21 percent of CO2-equivalent
    emissions from ships, making it the second most important
    driver of the shipping industry's climate impacts after CO2.\4\
    Currently there are no regulations controlling black carbon
    emissions from shipping.\5\
    ---------------------------------------------------------------------------
        \3\ Bloomberg. ``Huge Container Ships' Biggest Problem Is
    Emissions.'' https://www.bloomberg.com/opinion/articles/2021-03-30/
    huge-container-ships-biggest-problem-is-
    emissions. Accessed on April 5, 2021.
        \4\ Transport & Environment. ``Shipping and climate change.''
    https://www.transportenvironment.org/what-we-do/shipping-and-
    environment/shipping-and-climate-change. Accessed April 5, 2021.
        \5\ Id.
    ---------------------------------------------------------------------------
        At current growth rates, shipping could represent about 10
    percent of global greenhouse gas (GHG) emissions by 2050.\6\
    The Third International Maritime Organization (IMO) GHG Study,
    completed in 2014, estimated that for the period 2007-2012,
    shipping emitted about 1,000 megatons of CO2 per year, equaling
    approximately 3.1 percent of annual global CO2 emissions.\7\
    ---------------------------------------------------------------------------
        \6\ Id.
        \7\ International Maritime Organization. ``Third IMO GHG Study
    2014: Final report.'' https://www.imo.org/en/OurWork/Environment/Pages/
    Greenhouse-Gas-Studies-2014.aspx. Accessed April 5, 2021.
    ---------------------------------------------------------------------------
        Vessel fuel efficiency has not kept pace with other modes
    of transportation. Ships built in the first decade of the 2000s
    were, on average, less fuel-efficient than those built in the
    1990s, according to the first CE Delft study on the historical
    development of the design efficiency of new ships.\8\ On
    average new ships built in 2013, such as bulk carriers,
    tankers, and container ships, were 10 percent less fuel-
    efficient than those built a quarter of a century ago.\9\ These
    findings contradict the shipping industry's narrative that it
    has been constantly improving its environmental
    performance.\10\ CO2 emissions grew to 1,056 million tons in
    2018 versus 962 million tons in 2012, the study showed.\11\
    According to the International Council on Clean Transportation
    (ICCT), the growth of shipping is outpacing efficiency
    improvements and by 2050, emissions from the industry are
    projected to be up to 130 percent higher than 2008 levels.
    Improvements in fuel efficiency have slowed since 2015, with
    annual improvements of only 1 to 2 percent.\12\
    ---------------------------------------------------------------------------
        \8\ Id.
        \9\ Transport & Environment. ``Shipping and climate change.''
    https://www.transportenvironment.org/what-we-do/shipping-and-
    environment/shipping-and-climate-change. Accessed April 5, 2021.
        \10\ Id.
        \11\ Reuters. ``Shipping's share of global carbon emissions
    increases.'' https://www.reuters.com/article/us-shipping-environment-
    imo/shippings-share-of-global-carbon-emissions-increases-
    idUSKCN2502AY. Accessed April 5, 2021.
        \12\ Id.
    ---------------------------------------------------------------------------
        Within the shipping sector investments in the research,
    development, and deployment of zero emission technologies may
    put the sector on a sustainable path towards achieving carbon
    reductions. The IMO has set a goal of reducing carbon emissions
    from ships to 50 percent below 2008 levels by 2050, and groups
    like the Getting to Zero Coalition and ``Blue Sky'' Maritime
    Coalition have brought together companies and organizations
    across the maritime sector to achieve this goal. In fact, many
    shipping companies have adopted their own ambitious goals for
    reducing their operational carbon footprint.\13\
    ---------------------------------------------------------------------------
        \13\ Bloomberg. ``Huge Container Ships' Biggest Problem Is
    Emissions.'' https://www.bloomberg.com/opinion/articles/2021-03-30/
    huge-container-ships-biggest-problem-
    is-emissions. Accessed on April 5, 2021.
    ---------------------------------------------------------------------------

    PORT INFRASTRUCTURE

        The most immediate reduction in emissions will come from
    investment in port infrastructure. Shore-side power (i.e.,
    shore power) allows ships to shut off their engines when
    berthed in port and connect to the electricity grid to reduce
    local air pollution and GHG emissions.\14\ Shore power
    infrastructure varies by ship type but is being implemented
    worldwide. Unlike other technologies for which research and
    development are still underway, this technology exists and is
    available to ports for immediate adoption.\15\ For vessels such
    as tankers, cruise ships, and roll-on/roll-off (i.e., ro-ro)
    vessels that commonly berth at the same dock and do not use
    cranes, shore-side connection is easier. At container terminals
    where vessels do not always dock at the same position, there is
    a need for more connection points.\16\ These variables present
    challenges to ports and create a need for worldwide shore power
    consistency and standards.
    ---------------------------------------------------------------------------
        \14\ The Conversation. ``How shipping ports can become more
    sustainable.'' https://theconversation.com/how-shippingports-can-
    become-more-sustainable-156483. Accessed April 5, 2021.
        \15\ Id.
        \16\ International Council on Clean Transportation. ``Costs and
    Benefits of Shore Power at The Port of Shenzhen.'' https://theicct.org/
    sites/default/files/publications/ICCT-WCtr_ShorePower_
    201512a.pdf. Accessed April 5, 2021.
    ---------------------------------------------------------------------------
        A major benefit of using shore power is the improvement in
    local air quality.\17\ Emissions at berth are replaced by
    emissions from electricity generation elsewhere that provides
    the shore power; emissions from electricity generation are
    usually lower and occur further from population centers.\18\
    Reducing harmful emissions at ports would also mitigate the
    public health impacts associated with port operations, which
    disproportionately affect low-income communities and people of
    color.\19\
    ---------------------------------------------------------------------------
        \17\ Id.
        \18\ Id.
        \19\ Ocean Conservancy. ``Economic Recovery and a Zero-Emission
    Shipping Sector: A Roadmap for Federal Investment.'' Page 1.
    ---------------------------------------------------------------------------
        However, the installation of shore power technology at
    ports can lead to a drain on local electrical systems and a
    substantial increase in electricity demand. Some ports are
    exploring the use of microgrids to establish electrical
    security and demand stability. Microgrids provide a way for
    ports to minimize the use of diesel generators, their common
    form of power backup, and can allow for the integration of
    renewable energy technology to decrease the overall emissions.
    A primary hurdle to integrating shore power and microgrid
    technologies is the upfront costs, which can cost millions of
    dollars and require significant resources from port and marine
    terminals. For example, the Port of Los Angeles invested $27
    million on a microgrid project in 2018, which required
    financial assistance in the form of state grants.\20\
    ---------------------------------------------------------------------------
        \20\ ``Enabling Smart Ports Through the Integration of Microgrids:
    A Two-Stage Stochastic Programming Approach'' http://www.ie.uh.edu/
    sites/ie/files/faculty/glim/SPMicrogrid_Elsevier-AE-2019.pdf. Accessed
    April 6, 2021.
    ---------------------------------------------------------------------------
        Beyond the capacity demand for shore power plug-in will be
    the need for refueling infrastructure as new, lower emission
    fuels are adopted. Fuel sources such as green hydrogen present
    unique carbon zero emissions possibilities, though there is a
    lack of refueling infrastructure in place for maritime
    uses.\21\ This presents a challenge in which shipping companies
    may wish to build vessels that operate on a new fuel source,
    but cannot refuel due to the lack of infrastructure;
    conversely, the opposite could occur where a port may wish to
    invest in the refueling infrastructure but lack consumer demand
    for utilization.
    ---------------------------------------------------------------------------
        \21\ DNV. ``Building a marine supply infrastructure as part of a
    future hydrogen society.'' https://www.dnv.com/expert-story/maritime-
    impact/Building-a-marine-supply-infrastructure-
    as-part-of-a-future-hydrogen-society.html. Accessed April 9, 2021.
    ---------------------------------------------------------------------------

    ALTERNATIVE FUELS

        The IMO has established increasingly stringent targets for
    CO2 emissions reductions in international shipping from the
    2008 baseline: a 40 percent reduction by 2030, and a 70 percent
    reduction by 2050 regardless of trade growth, with full
    decarbonization shortly thereafter.\22\ The IMO Energy
    Efficiency Design Index requires all ships built after 2013 to
    meet mandatory reductions with progressive targets every five
    years up until 2030, which is currently incompatible with
    continued long-term use of fossil fuels by commercial
    shipping.\23\ While demand for seaborne trade is projected to
    grow by 39 percent through 2050, energy-efficiency measures,
    hull and machinery improvements, and speed reduction are
    readily available to reduce vessel emissions; however, the use
    of carbon-neutral fuels will need to grow 30-40 percent to meet
    world fleet energy needs by 2050 to achieve IMO greenhouse gas
    ambitions.\24\ According to the Global Maritime Forum and is
    demonstrated by figure 1 below, zero emissions adoptions need
    to be at 5 percent of the market share by 2030 to reach full
    decarbonization by 2050.\25\ Slow adoption of zero emissions
    technology is anticipated at first but is expected to grow
    substantially as cost decreases and availability increases.\26\
    ---------------------------------------------------------------------------
        \22\ International Maritime Organization. ``IMO Action to Reduce
    Greenhouse Gas Emissions from International Shipping.'' IMO 2019.
        \23\ Nishatabbas et al. ``The implementation of technical energy
    efficiency and CO2 emission reduction measures in shipping.'' Ocean
    Engineering, Vol. 139, 2017: 184-197, https://www.sciencedirect.com/
    science/article/pii/S0029801817302160?via%3Dihub. Accessed April 6,
    2021; DNV GL, ``Maritime Forecast to 2050 Energy Transition Outlook
    2019.'' https://eto.dnv.com/2018/download. Accessed April 6, 2021.
        \24\ DNV GL. ``Maritime Forecast to 2050 Energy Transition Outlook
    2019.'' page 15. https://eto.dnv.com/2018/download. Accessed April 6,
    2021.
        \25\ Global Maritime Forum. ``Zero Emission Fuel Adoption Rate.''
    https://www.globalmaritimeforum.org/news/five-percent-zero-emission-
    fuels-by-2030-needed-for-paris-
    aligned-shipping-decarbonization. Accessed April 8, 2021.
        \26\ Id.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

     Figure 1_Global Maritime Forum. ``Zero Emission Fuel Adoption Rate''
      available at https://www.globalmaritimeforum.org/news/five-percent-
         zero-emission-fuels-by-2030-needed-for-paris-aligned-shipping-
                                decarbonization

        Additionally, by 2025, the IMO will require all new ships
    to be 30 percent more energy efficient than those built in
    2014.\27\ The international fleet has made substantial
    improvements to vessel design, emission scrubbing technologies,
    and fuel efficiency to mitigate emissions, but to reach the
    goals established by the IMO shipping companies will need to
    invest in new vessels, alternative fuels, shore and supply
    infrastructure, and logistics facilities.
    ---------------------------------------------------------------------------
        \27\ Reuters. Chestney. N. ``IMO agrees on stricter efficiency
    targets for some ships.'' May 2019. https://www.reuters.com/article/us-
    imo-shipping-efficiency/imo-agrees-on-stricter-efficiency-
    targets-for-some-ships-idUSKCN1SN2BV. Accessed April 6, 2021.
    ---------------------------------------------------------------------------
        Ships are highly capital-intensive assets with typical
    operating lives of 20-30 years.\28\ As such, and with the
    ratification of new emissions standards by the IMO, shipping
    companies must consider zero-carbon fuels and associated
    technologies now to meet established deadlines. Vessels coming
    online after 2030 will need to be zero-emission vessels (ZEVs)
    or very low emission vessels to assure they can operate for
    their full expected commercial life. The technical
    applicability and commercial viability of alternative fuels and
    power sources will vary greatly for different ship types and
    trades, like deep-sea vessels or coastwise shipping
    operators.\29\
    ---------------------------------------------------------------------------
        \28\ Journal of Physics. IOP Conference Series: Materials Science
    and Engineering. ``Maritime vessel obsolescence, life cycle cost and
    design service life.'' https://iopscience.iop.org/article/10.1088/1757-
    899X/95/1/012067/pdf. Accessed April 8, 2021.
        \29\ DNV. ``Alternative Fuel Technologies can Bridge the Gap.''
    https://eto.dnv.com/2019/Maritime/alternative-fuels. Accessed April 9,
    2021.
    ---------------------------------------------------------------------------

    INTERNATIONAL SHIPPING

        International, oceangoing vessels will need different fuel
    sources and technologies than inland and coastal vessels due to
    their size and the length of their voyage. Further, cargo ships
    vary widely in performance and design. In addition to
    retrofitting existing ships, compliant vessels can be designed
    efficiently and built to meet the new emissions standards. New
    vessel designs, including battery electric propulsion, wind
    propulsion, hydrodynamic designs, internal engine
    modifications, humid air motors, and other internal engineering
    adjustments are no longer theoretical options for shipowners.
    Rotor sails, for example, can reduce a ship's fuel use by 5-20
    percent.\30\ Norsepower in Finland, Ladeas in Norway, Mitsui
    O.S.K. Lines, Ltd. and NYK Line in Japan, have acquired
    detailed design contracts for wind-assisted propulsion; some
    projects already have operational wind-assisted vessels on the
    water today.\31\ For existing vessels, operators can assess
    vessel efficiency based on each ship's design specifications
    and engine type, helping to lower their fuel costs and reduce
    emissions associated with moving goods around the world.\32\
    ---------------------------------------------------------------------------
        \30\ Kornei, K. ``Spinning metal sails could slash fuel
    consumption, emissions on cargo ships.'' Science. https://
    www.sciencemag.org/news/2017/09/spinning-metal-sails-could-slash-fuel-
    consumption-emissions-cargo-ships. September 2017. Accessed April 6,
    2021.
        \31\ Grist. Gallucci, M. ``Dreamboats.'' October 21, 2019. https://
    grist.org/fix/dream-ships-could-turn-the-tide-for-trans-ocean-
    shipping/. Accessed April 6, 2021.
        \32\ Grist. Gallucci, M. ``Shipping industry takes a page from
    bitcoin to clean up its act.'' https://grist.org/article/shipping-
    industry-takes-a-page-from-bitcoin-to-clean-up-its-act/. Accessed April
    6, 2021.
    ---------------------------------------------------------------------------
        Starting January 2020, the IMO placed a global upper limit
    of 0.5 percent (reduced from 3.5 percent) on the Sulfur content
    of marine fuel.\33\ Known as ``IMO 2020,'' the reduced limit is
    mandatory for all ships operating outside certain designated
    Emission Control Areas where the limit previously was 0.1
    percent.\34\ Existing technologies and fuels deployed to meet
    IMO 2020 and other emissions caps include scrubbers, a
    mechanical treatment of high sulfur fuels to remove sulfur from
    the exhaust of the vessel, and switching to low sulfur fuels
    like liquefied natural gas (LNG), which remains price-
    competitive with distillate fuels and requires limited
    installation of additional processing technology. Alternative
    technologies under consideration by operators to meet the new
    IMO emissions caps include hydrogen, ammonia, methanol, and
    electricity. Another concern that arises from the use of these
    fuels is the availability, supply, and potential impacts on
    consumer prices of the increased demand for source material.
    ---------------------------------------------------------------------------
        \33\ International Maritime Organization. ``IMO 2020--cleaner
    shipping for cleaner air.'' https://www.imo.org/en/MediaCentre/
    PressBriefings/Pages/34-IMO-2020-sulphur-limit-.aspx#::text
    =and%20the%20environment.-
    ,From%201%20January%202020%20the%20global%20upper%20
    limit%20on%20the,the%20limit%20is%20already%200.10%25. Accessed April
    6, 2021.
        \34\ Id.
    ---------------------------------------------------------------------------
        Importantly however, LNG does not deliver the emissions
    reductions required by the IMO's initial GHG strategy, and its
    consumption could actually worsen the shipping industry's
    climate impacts.\35\ Over a 100-year time frame, the maximum
    life cycle GHG benefit of LNG is a 15 percent reduction
    compared with other bunker fuels, and this is only if ships use
    a high-pressure injection dual fuel (HPDF) engine and if
    upstream methane emissions are well-controlled.\36\ There are
    concerns that continued investment in LNG infrastructure on
    ships and on shore might make the transition to low-carbon and
    zero-carbon fuels in the future more difficult.\37\ Over a 20-
    year time period, methane traps 86 times more heat than the
    same amount of CO2.\38\ Depending upon the state of engine
    technology, LNG-fueled ships might become less viable if GHG
    limits are established well before 2050. Concerns about such
    GHG limits might lead to a decrease in orders of LNG-powered
    ships over time.
    ---------------------------------------------------------------------------
        \35\ Id.
        \36\ International Council on Clean Transportation. ``The climate
    implications of using LNG as a marine fuel.'' https://theicct.org/
    publications/climate-impacts-LNG-marine-fuel-2020. Accessed April 5,
    2021.
        \37\ Id.
        \38\ Id.
    ---------------------------------------------------------------------------
        Companies like Maersk are leading initiatives to develop
    carbon neutral vessels by 2023.\39\ These vessels would run on
    fuels such as biofuels or methanol. While these fuels do emit
    carbon, it is derived from plant material, which first pulls
    carbon out of the atmosphere during photosynthesis and the
    equivalent amount of carbon is released during usage.\40\ This
    would not add any new CO2 to the atmosphere, like fossil-based
    fuels do, but does not reach the zero-emission mark and still
    places emission burdens on port adjacent communities.\41\
    ---------------------------------------------------------------------------
        \39\ Maersk. ``A.P. Moller--Maersk will operate the world's first
    carbon neutral liner vessel by 2023--seven years ahead of schedule.''
    https://www.maersk.com/news/articles/2021/02/17/maersk-first-carbon-
    neutral-liner-vessel-by-2023. Accessed April 9, 2021.
        \40\ International Council on Clean Transportation. ``The potential
    of liquid biofuels in reducing ship emissions.'' https://theicct.org/
    sites/default/files/publications/Marine-biofuels-sept2020.pdf. Accessed
    April 9, 2021.
        \41\ Id.
    ---------------------------------------------------------------------------
        Hydrogen is a potential energy carrier that can potentially
    supplement traditional fuel sources or complement electricity
    on vessels. When produced from electricity, these fuels are
    called electro or e-fuels and include ammonia, methanol, formic
    acid, synthetic methane (SNG), or higher hydrocarbon synthetic
    fuels (syn-fuel).\42\ Currently, hydrogen is predominantly used
    as feedstock for the chemical and petro-chemical industries and
    produced from natural gas through steam reforming or partial
    oxidation (blue hydrogen if combined with carbon capture and
    storage). Hydrogen has great potential to decarbonize
    industrial processes and facilitate the energy transition as it
    can also be produced from renewable electricity, termed ``green
    hydrogen''.\43\ Some ports are natural hubs for connecting
    offshore wind given their often-close proximity to wind farms,
    and therefore have easy access to abundant renewable
    electricity, which can be converted to green hydrogen through
    electrolysis. The economic competitiveness of green hydrogen
    will likely require investments in both ports and vessels.
    ---------------------------------------------------------------------------
        \42\ DNV. ``10 transitions to turn ports into decarbonization
    hubs.'' https://www.dnv.com/power-renewables/themes/green-ports/
    index.html. Accessed April 5, 2021.
        \43\ University of Houston. ``Advancing Sustainable Low-Carbon
    Energy through Convergence.'' https://uh.edu/uh-energy/research/ccme/
    advancing-sustainable-low-carbon-energy/adv-sus-
    low-carbon-energy-convergence. Accessed April 9, 2021.
    ---------------------------------------------------------------------------

    U.S. DOMESTIC SHIPPING

        Coastwise vessels, traveling shorter distances and with
    variable power demands relative to international shipping
    vessels, make electric or hybrid-electric power systems
    (including diesel/gas electric) more efficient than traditional
    mechanical drives. The wide range of engine load profiles in
    the coastwise fleet increases flexibility for battery storage,
    fuel cells and waste heat, as well as renewable sources (e.g.
    solar, wind, waves).
        Electrification of the domestic industry will be enabled by
    a massive deployment of additional renewable energy source
    capacity, the associated grid and storage infrastructure, green
    hydrogen production, electric boilers, and heat pumps.
    Electrification of vessels could result in a 50 percent
    decrease of fossil cargo (oil, gas, LNG). Companies have worked
    with state and local entities on electrification conversion
    projects--for example, Glosten partnered with the state of
    Alabama to convert the historic Gee's Bend Ferry into the first
    all-electric passenger/car ferry \44\ in the United States.
    These projects have demonstrated the applicability to the
    coastwise fleet, but hurdles still exist for electric vessels
    that need more powerful systems and operate in locations
    without the necessary infrastructure. This could have a
    significant impact on the surrounding industry, improve the
    local electricity grid, and support utility services and other
    electricity production facilities should the proper investments
    in infrastructure to support these projects be made.\45\
    ---------------------------------------------------------------------------
        \44\ Glosten. ``The Nation's First All-Electric Vehicle Ferry''
    https://glosten.com/sectors/the-nations-first-all-electric-vehicle-
    ferry/. Accessed April 9, 2021.
        \45\ DNV. ``10 transitions to turn ports into decarbonization
    hubs.'' https://www.dnv.com/power-renewables/themes/green-ports/
    index.html. Page 21. Accessed April 5, 2021.
    ---------------------------------------------------------------------------
        To develop, prove, scale, and commercialize
    electrification, operators are establishing collaborative joint
    ventures with fuel technology companies, equipment
    manufacturers, and energy developers from other industrial
    sectors outside of shipping. The U.S. Department of Energy,\46\
    the Maritime Administration's Marine Environmental Technical
    Assistance office,\47\ and the U.S. Coast Guard \48\ have
    initiated conversations about the availability and viability of
    new fuels and energy sources for use throughout the maritime
    industry.
    ---------------------------------------------------------------------------
        \46\ Department of Energy. ``DOE Shows Fuel Cells Used in Maritime
    Applications Can Increase Efficiency by 30%.'' https://www.energy.gov/
    eere/fuelcells/articles/doe-shows-fuel-cells-used-
    maritime-applications-can-increase-efficiency-30. Accessed April 9,
    2021.
        \47\ Maritime Administration. Maritime Environmental and Technical
    Assistance (META) Program. https://www.maritime.dot.gov/innovation/
    meta/maritime-environmental-and-technical-assistance-meta-program.
    Accessed on April 9, 2021.
        \48\ United States Coast Guard. ``Energy Management Performance.''
    https://www.dcms.uscg.mil/Our-Organization/Assistant-Commandant-for-
    Engineering-Logistics-CG-4-/Program-Offices/
    Energy-Management/. Accessed April 9, 2021.
    ---------------------------------------------------------------------------

                                  WITNESS LIST

         LMr. John Butler, President and Chief Executive
    Officer, World Shipping Council
         LMs. Kristin Decas, Chief Executive Officer and
    Port Director, The Port of Hueneme
         LMr. Morgan Fanberg, P.E., President, Glosten
         LDr. Lee Kindberg, Director of Environment &
    Sustainability, Maersk
         LDr. Dan Rutherford, Program Director and Regional
    Lead, International Council on Clean Transportation

      PRACTICAL STEPS TOWARD A CARBON-FREE MARITIME INDUSTRY: UPDATES ON
                          FUELS, PORTS, AND TECHNOLOGY

                                  ----------

                            THURSDAY, APRIL 15, 2021

                      House of Representatives,
                        Subcommittee on Coast Guard and
                               Maritime Transportation,
                Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 11:04 a.m. in
    2167 Rayburn House Office Building and via Zoom, Hon. Salud O.
    Carbajal (Chair of the subcommittee) presiding.
        Members present in person: Mr. Carbajal, Mr. DeFazio, Mr.
    Larsen, Mr. Gibbs, Mr. Weber, and Ms. Malliotakis.
        Members present remotely: Mr. Auchincloss, Mr. Lowenthal,
    Ms. Brownley, and Mr. Van Drew.
        Mr. Carbajal. The subcommittee will come to order.
        I ask unanimous consent that the chair be authorized to
    declare a recess at any time during today's hearing.
        Without objection, so ordered.
        I also ask unanimous consent that Members not on the
    subcommittee be permitted to sit with the subcommittee at
    today's hearing and ask questions.
        Without objection, so ordered.
        For Members participating remotely, please let committee
    staff know as soon as possible if you are experiencing
    connectivity issues or technical problems.
        To avoid any inadvertent background noise, I request that
    every Member please keep their microphones muted when not
    seeking recognition to speak. Should I hear any inadvertent
    background noise, I will request that the Member please mute
    their microphone. And finally, to insert a document into the
    record, please have your staff email it to
    DocumentsT&I@mail.house.gov.
        With that, we will commence our hearing.
        Good morning and welcome to today's Coast Guard and
    Maritime Transportation Subcommittee hearing on practical steps
    toward a carbon-free maritime industry. Today we will examine
    the progress towards eliminating carbon emissions in the
    maritime industry, and how Congress can support these efforts.
        This work is crucial to mitigating the effects of climate
    change. Without decisive action in the maritime industry and
    elsewhere, we are going to experience severe impacts on our way
    of life from sea level rise, flooding, and more frequent
    extreme weather events.
        Climate change is one of the most important challenges of
    our time. As we seek solutions, we must capitalize on the
    opportunity to promote American innovation and bolster the
    American workforce. Burning fossil fuels in the maritime
    industry and elsewhere results in emissions of greenhouse gases
    and other pollutants that are harmful to human health.
    Greenhouse gases also absorb and trap heat in our atmosphere,
    which has led to shifts in regional climate patterns that have
    consequences for our food and water systems, public and private
    infrastructure, and national security.
        The science is crystal clear: We are vulnerable to climate
    changes due to human actions. Over the past 171 years, human
    activities have raised atmospheric concentrations of carbon
    dioxide by 48 percent above pre-industrial levels found in
    1850. The last time the atmospheric carbon dioxide amounts were
    this high was more than 3 million years ago--let me say that
    again: more than 3 million years ago--when the temperature was
    3.6 to 5.4 degrees higher than during the pre-industrial era,
    and sea level was 50 to 80 feet higher than today.
        Unfortunately, many of the worst air pollution problems can
    occur in our communities comprised of minority populations.
    Port communities are directly exposed to nitrous oxide, sulfur
    dioxide, and particulate matter, and have some of the country's
    highest asthma rates. Many of these citizens make up our
    maritime and longshore workforce, so their health is not only a
    moral issue, but also a public good for sustaining maritime
    commerce.
        Commerce by sea is cleaner and safer than transportation by
    land, and we should do everything possible to encourage more
    waterborne transportation. But traditional maritime fuel emits
    harmful greenhouse gases, contributing to global and regional
    climate change. International shipping accounts for 3 percent
    of the world's carbon emissions, and if it were a country, the
    sector would be the world's sixth largest emitter.
        The International Maritime Organization has set an
    ambitious goal of reducing carbon dioxide emissions by 50
    percent before 2050, which is not possible unless the industry
    takes immediate and aggressive action. But that is not enough.
    Maritime carbon emissions must be eliminated if we are to avoid
    the most devastating impacts of climate change.
        While the challenge can seem daunting, we must recognize
    and capitalize on the opportunity for American industry to
    innovate and lead the pack. If we develop new forms of energy
    generation, we can also create jobs for the American people. We
    are already seeing positive steps taken by ports, vessel
    owners, shipyards, academic institutions, and State and local
    governments, such as the Santa Barbara Air Pollution Control
    District in the central coast of California, which I represent.
        The Air Pollution Control District has developed a vessel
    speed reduction program, ``Protecting Blue Whales and Blue
    Skies,'' that has not only cut carbon emissions, but has
    reduced noise pollution in our local waterways, and avoided
    vessel strikes with local marine mammals. I know Representative
    Lowenthal had a lot to do with these efforts in his area, as
    well, in the Port of Long Beach and the Long Beach region.
        I am convinced that, if we think outside the box, we can
    bolster our maritime industry, create new jobs, and position
    America as a leader in maritime technologies. I look forward to
    hearing from our expert witnesses on ways to reach our
    ambitious emissions goals, while stimulating the U.S. economy
    and domestic job growth.
        [Mr. Carbajal's prepared statement follows:]

       Prepared Statement of Hon. Salud O. Carbajal, a Representative in
    Congress from the State of California, and Chair, Subcommittee on Coast
                       Guard and Maritime Transportation
        Good morning, and welcome to today's Coast Guard and Maritime
    Transportation Subcommittee hearing on ``Practical Steps Toward a
    Carbon-Free Maritime Industry.'' Today, we will examine the progress
    toward eliminating carbon emissions in the maritime industry, and how
    Congress can be supportive. This work is crucial to mitigating the
    effects of climate change. Without decisive action in the maritime
    industry and elsewhere, we are going to experience severe impacts on
    our way of life from sea-level rise, flooding, and extreme weather
    events.
        Climate change is the most important challenge of our time. As we
    seek solutions, we must capitalize on the opportunity to promote
    American innovation and bolster the American workforce.
        Burning fossil fuels in the maritime industry and elsewhere results
    in the emission of greenhouse gases and other air pollutants that are
    harmful to human health. Greenhouse gases also absorb and trap heat in
    our atmosphere, which has led to shifts in regional climate patterns
    that have consequences for our food and water systems, public and
    private infrastructure, and national security. The science is crystal
    clear, we are vulnerable to climate changes due to human actions.
        Over the past 171 years, human activities have raised atmospheric
    concentrations of carbon dioxide by 48% above pre-industrial levels
    found in 1850. The last time the atmospheric carbon dioxide amounts
    were this high was more than 3 million years ago, when temperature was
    3.6 to 5.4 degrees higher than during the pre-industrial era, and sea
    level was 50 to 80 feet higher than today.
        Unfortunately, many of the worst air pollution problems occur in
    communities comprised of minority populations. Port communities are
    directly exposed to nitrous oxide, sulfur dioxide, and particulate
    matter, and have some of the country's highest asthma rates. Many of
    these citizens make up our maritime and longshore workforce, so their
    health is not only a moral issue but also a public good for sustaining
    maritime commerce.
        Commerce by sea is cleaner and safer than transportation by land,
    and we should do everything possible to encourage more waterborne
    transportation, but traditional maritime fuel emits harmful greenhouse
    gases contributing to global and regional climate change. International
    shipping accounts for 3 percent of the world's carbon emissions, and if
    it were a country, the sector would be the world's sixth-largest
    emitter.
        The International Maritime Organization has set an ambitious goal
    of reducing carbon dioxide emissions by 50 percent before 2050, but
    that is not possible unless the industry takes immediate and aggressive
    action. But that is not enough. Maritime carbon emissions must be
    eliminated if we are to avoid the most devastating impacts of climate
    change. While the challenge can seem daunting, we must recognize and
    capitalize on the opportunity for American industry to innovate and
    lead the pack. If we develop new forms of energy generation, we can
    create jobs for American workers.
        We are already seeing positive steps taken by ports, vessel owners,
    shipyards, academic institutions, and state and local governments such
    as the Santa Barbara Air Pollution Control District in California's
    24th Congressional District. The Air Pollution Control District has
    developed a vessel speed reduction program that has not only cut carbon
    emissions but has reduced noise pollution in our local waterways and
    avoided vessel strikes with local marine mammals. I am convinced that
    if we think outside the box, we can bolster our maritime industry,
    create new jobs, and position America as the leader in maritime
    technologies.
        I look forward to hearing from our expert witnesses on ways to
    reach our ambitious emissions goals while stimulating the U.S. economy
    and domestic job growth.

        Mr. Carbajal. I ask unanimous consent to insert a statement
    from the Ocean Conservancy into the hearing record.
        Without objection?
        Without objection, so be it.
        [The information follows:]

       Letter of April 14, 2021, from Daniel Hubbell, Shipping Emissions
     Campaign Manager, Ocean Conservancy, Submitted for the Record by Hon.
                               Salud O. Carbajal
                                                        April 14, 2021.
    Hon. Salud Carbajal,
    Chair,
    Subcommittee on Coast Guard and Maritime Transportation, House
            Committee on Transportation and Infrastructure, 2165 Rayburn
            House Office Building, Washington, DC 20515.
    Hon. Bob Gibbs,
    Ranking Member,
    Subcommittee on Coast Guard and Maritime Transportation, House
            Committee on Transportation and Infrastructure, 2165 Rayburn
            House Office Building, Washington, DC 20515.
        Dear Chair Carbajal and Ranking Member Gibbs,
        Ocean Conservancy would like to thank the Subcommittee on Coast
    Guard and Maritime Transportation for holding this important hearing on
    emissions from the maritime industry, entitled Practical Steps Toward a
    Carbon-Free Maritime Industry: Updates on Fuels, Ports and Technology.
    Emissions from shipping and ports demands urgent action, and we are
    encouraged to see this Committee's consideration of the issue. Our
    nation's ports and the shipping sector are both directly impacted by
    climate change and a large contributor to air pollutants and global
    greenhouse gas emissions, which impact air quality, our climate, and
    our economy. Efforts to decarbonize domestic ports and make the United
    States a leader in the global transition to zero emission shipping must
    be part of the solution to ensure a clean energy future, create jobs
    and boost the economy. As you hear from other expert witnesses and
    consider infrastructure investments and policy solutions to move us
    towards a decarbonized maritime industry, we would like to take the
    opportunity to add our recommendations to the record for today's
    hearing.
        Over 80% of the world's trade by volume is carried on oceangoing
    vessels, and America's ports are the key points of access for this
    trade. In a given day, billions of dollars' worth of goods flow through
    our ports, supporting the employment of nearly 31 million Americans in
    2018.\1\ The ships that we rely on to deliver our goods to port are
    responsible for an estimated 2.9% of global carbon dioxide emissions
    \2\, and emissions from the sector are expected to rise by as much as
    130% by 2050.\3\ In order to protect livelihoods, human health, and our
    ocean, we cannot afford to delay this industry's transition to a clean
    future. A zero-emission future for the sector is possible, but
    significant investment will be needed for research and development to
    build out true zero emission fuels, port infrastructure such as shore
    power, and retrofits and construction of vessels. While this transition
    is an ambitious undertaking, it is feasible, fiscally responsible and
    urgently necessary. If shipping were decarbonized by 2050, it could
    yield an estimated net benefit of $1.2-9.1 trillion to the global
    economy, or roughly $84-637 billion for the United States alone.\4\
    ---------------------------------------------------------------------------
        \1\ American Association of Port Authorities (2019). 2018 National
    Economic Impact of the U.S. Coastal Port System: Executive Summary.
    Available at: https://www.aapa-ports.org/advocating/
    PRdetail.aspx?itemnumber=22306
        \2\ Saul, J. (2020). Shipping's share of global carbon emissions
    increases. Reuters. Available at: https://www.reuters.com/article/us-
    shipping-environment-imo/shippings-share-of-global-carbon-emissions-
    increases-idUSKCN2502AY
        \3\ Ibid.
        \4\ Michelin, M., et al. 2020. ``Opportunities for Ocean-Climate
    Action in the United States.'' Report. San Francisco, CA: CEA
    Consulting. Available online at: www.oursharedseas.com/
    oceanclimateaction.
    ---------------------------------------------------------------------------
        In addition to economic benefits, decarbonizing the shipping sector
    and our ports has direct impacts on air quality. Ports, at-berth
    vessels and supporting equipment such as trucks are often major
    producers of air pollution, disproportionately affecting lower income
    communities and communities of color.\5\ In California alone, the
    California Air Resources Board (CARB) estimates that ports and goods
    movement are responsible for 3,700 premature deaths each year.\6\
    Solutions such as installing onshore power for ships to utilize at-
    berth, rather than burning fuel in their own engines alongside the
    dock, serves the dual purpose of reducing carbon emissions and
    improving air quality.
    ---------------------------------------------------------------------------
        \5\ EPA (2017). Shore Power Technology Assessment. EPA-420-R-17-
    004. Available at: https://www.epa.gov/ports-initiative/shore-power-
    technology-assessment-us-ports
        \6\ Michelin et al. 2020
    ---------------------------------------------------------------------------
        There are a number of recommendations relevant to this Committee
    outlined in Ocean Conservancy's recently-published report, entitled All
    Aboard! How the Biden-Harris Administration Can Help Ships Kick Fossil
    Fuels. As this Committee advances an infrastructure package and
    considers policy solutions to decarbonize the shipping sector and our
    nation's ports, we would like to highlight the recommendations below:
        1.  Increase funding for existing programs that can fund zero-
    emission research & development, port infrastructure projects, and
    construction and retrofitting of ships. This includes the following:
          a.  Funding for the Port Infrastructure Development Program
    (PIDP) with prioritization for green port infrastructure that reduces
    greenhouse gas emissions, including shore power, and replacement of
    polluting equipment.
          b.  Funding for federal financing through MARAD's Title XI to
    provide retrofits to existing vessels, including upgrades to enable
    vessels to accept shore power, and provide for new construction of
    zero-emission vessels.
          c.  Funding for MARAD's Maritime Environmental and Technical
    Assistance (META) Program. The program has demonstrated success with
    carrying out projects that support research, demonstration and
    development of emerging technologies and initiatives to improve
    environmental sustainability of the maritime sector. Increasing funding
    would allow the program to support additional research into zero-
    emission vessels, fuel cell applications for ships and ports, port
    electrification, and energy efficiency.
        2.  Set federal clean ship standards with identified, progressive
    targets for decarbonization of 50% by 2025, 80% by 2030 and 100% by
    2035.
        3.  Support new grant programs through proposals such as the
    Climate Smart Ports Act (CSPA), which would add a $1 billion per year
    fund dedicated to improving sustainability in America's ports. Reaching
    zero-emission targets and preparing ports for zero-emission ships will
    require significant investment. The EPA, working with the Department of
    Transportation, should establish a new fund and grant program to
    jumpstart the zero-emission transition at American ports.
        4.  Leverage the Marine Highway Program to establish a domestic
    zero-emission Marine Highway corridor. This would encourage uptake of
    zero-emission technologies for shipping and ports while at the same
    time relieving congestion and emissions on interstate highways.
        5.  Encourage the Department of Transportation to collaborate with
    the Department of Energy to accelerate the research, development, and
    deployment of zero emission fuels for shipping, including through ARPA-
    E and the creation of an Advanced Technologies Loan Program for zero-
    emission shipping.
        6.  Support collaboration across ports. In the long term,
    collective investment by multiple ports could open the possibility of
    zero emission short sea shipping by U.S. flagged ships.
        7.  Allow for the procurement of low and zero-emission vessels for
    Maritime Training Institutes to ensure mariners can develop the
    necessary skills to safely operate these ships.
        8.  Require port emission inventories. U.S. ports are not currently
    required to conduct an annual inventory of air pollutants or greenhouse
    gases. Uniform reporting of emissions is needed to set and track
    compliance with zero-emission targets.
        9.  Establish a short-term Zero Port Pollution Tax. While public
    dollars are necessary and appropriate for many infrastructure projects,
    American taxpayers alone should not bear the burden. A Zero Port
    Pollution Fund could support zero-emission vessel development and green
    port infrastructure through a tax on deadly criteria pollutants (NOx,
    SOx, and black carbon, the most dangerous component of particulate
    matter), as well as greenhouse gases (notably CO2 and CH4).
        10.  Establish an Environmental Justice Ports Advisory Commission
    or ports and shipping working group within the White House
    Environmental Justice Advisory Council to prioritize frontline
    community perspectives in port and shipping policy decisions.

        Our nation's ports and shipping sector have a critical role to play
    in our transition to a clean energy future, and Ocean Conservancy
    stands ready to work with this Committee and the administration to make
    zero-emission shipping and ports a reality. We encourage you to engage
    all stakeholders in this crucial area of the ocean economy, including
    frontline communities, as you consider our national infrastructure
    needs.
            Sincerely,
                                                Daniel Hubbell,
                Shipping Emissions Campaign Manager, Ocean Conservancy.

    cc:  The Honorable Peter DeFazio, Chair, House Committee on
    Transportation and Infrastructure
        The Honorable Sam Graves, Ranking Member, House Committee on
    Transportation and Infrastructure

        Mr. Carbajal. With that, I now call on the ranking member
    of the subcommittee, Mr. Gibbs, for an opening statement.
        Mr. Gibbs. Thank you, Mr. Chairman.
        In 2018, the International Maritime Organization issued its
    initial strategy on the reduction of greenhouse gas emissions
    from shipping, and a revised strategy is due in 2023.
        Industry has responded by beginning to develop, test, and
    use new fuels and new technologies. I look forward to hearing
    today what the costs are of the industrywide recapitalization
    that decarbonization will require, and who will bear the cost.
        I am also interested in if these changes will be done in
    line with planned vessel replacements.
        I am also interested in which technologies and fuels show
    promise for which sectors, and whether the witnesses expect
    multiple technologies and fuels to be used in the future,
    instead of a single fuel.
        In the past, wind-powered vessels were succeeded by coal,
    which was succeeded by bunker fuel. It appears the next
    transition may be to an array of fuels and technologies, rather
    than the linear movement from a single dominant fuel to a
    different single dominant fuel.
        In addition to decarbonizing vessel fuel, efforts to reduce
    air emissions are also underway at ports. Again, I am
    interested in the status and cost of these efforts.
        While the IMO has set goals for vessel emission standards,
    what are the goals for reductions of emissions standards at our
    ports? Will ocean carriers and ultimately U.S. importers and
    exporters bear these costs?
        I look forward to what today's witnesses have to tell us
    about methods, costs, and any efficiencies to be gained through
    efforts to decarbonize vessel and port operations.
        [Mr. Gibbs' prepared statement follows:]

    Prepared Statement of Hon. Bob Gibbs, a Representative in Congress from
    the State of Ohio, and Ranking Member, Subcommittee on Coast Guard and
                            Maritime Transportation
        Thank you, Chair Carbajal, for holding this hearing today.
        In 2018, the International Maritime Organization issued its initial
    strategy on the reduction of greenhouse gas emissions from shipping,
    and a revised strategy is due in 2023. Industry has responded by
    beginning to develop, test, and use new fuels and new technologies.
        I look forward to hearing today what the costs are of the industry-
    wide recapitalization that decarbonization will require and who will
    bear that cost. I'm also interested if these changes will be done in
    line with planned vessel replacements.
        I am also interested in which technologies and fuels show promise
    for which sectors, and whether the witnesses expect multiple
    technologies and fuels to be used in the future instead of a single
    fuel. In the past, sail was succeeded by coal, which was succeeded by
    bunker fuel. It appears the next transition may be to an array of fuels
    and technologies rather than the linear movement from a single dominant
    fuel to a different single dominant fuel.
        In addition to decarbonizing vessel fuel, efforts to reduce air
    emissions are also underway at ports. Again, I am interested in the
    status and costs of those efforts. While IMO has set goals for vessel
    emission standards, what are the goals for reductions of emissions
    standards at ports? Will ocean carriers and ultimately U.S. importers
    and exporters bear these costs?
        I look forward to what today's witnesses have to tell us about
    methods, costs, and any efficiencies to be gained through efforts to
    decarbonize vessel and ports operations.

        Mr. Gibbs. Again, Mr. Chairman, I yield back.
        Mr. Carbajal. Thank you, Mr. Gibbs.
        Now I would like to recognize Chairman DeFazio.
        Mr. DeFazio. Thank you, Mr. Chairman. I appreciate your
    having this hearing on this really interesting and important
    topic. I think I have tasked every subcommittee to look at ways
    to reduce carbon emissions within their jurisdiction, and this
    is an important contribution to that effort.
        With COVID-19 disrupting global cargo, the role of the
    maritime industry has become more apparent to many more people
    over the last year--and then, of course, the high publicity
    with the blockage of the Suez Canal by Ever Given.
        I think now that folks are becoming aware that the majority
    of everything they consume is involved in maritime
    transportation, that they will be a little more focused on the
    industry in the future. And I think this gives us an
    opportunity to begin to deal with the industry's carbon
    pollution.
        They are already moving away from the dirty bunker fuels
    under an international agreement. They are already the most
    fuel-efficient way, per ton, to move freight. But there are
    possibilities to move much more in a direction to reduce their
    carbon emissions. They are 3 percent of the world's industrial
    emissions now, and could be 10 percent by 2050 without
    significant changes.
        There is a lot of interesting research going on. There is a
    company in my State called Element One, and their technology
    utilizes seawater--the most, I guess, plentiful thing on
    Earth--and methanol to produce hydrogen, to run hydrogen fuel
    cells, and run a hydrogen fuel-cell ship. This has tremendous
    potential. Fifty percent carbon reduction, if you use standard
    methanol, and, obviously, carbon neutral if you use a renewable
    methanol.
        Our ports, as the chairman mentioned, coming from southern
    California, they are already hard at work to try and eliminate
    carbon pollution in the ports with the drayage trucks, with the
    equipment that moves containers around, and other operations.
    They are looking at electrification. It is capital intensive.
    And I am sure that our international competitors are going to
    be subsidizing this, and I think there is a role for the
    Federal Government to be involved.
        There are many steps that we could take: grant funding for
    ports looking to add shoreside power hookups for vessels to run
    on electricity while they are at dock, to purchase electric
    cargo handling equipment, and to construct microgrids that
    integrate clean energy sources which could involve offshore
    wind or tidal power or wave power, given the situation of our
    particular ports.
        We want to be the innovator in these areas, we want to lead
    the world, and we want to begin to export these technologies,
    just like we used to lead the world in so many things before.
    That is also part of the President's plan: to restore our
    international competitiveness instead of being a country that
    is totally dependent upon imports; to be again as someone who
    is more focused on exporting technology and creating jobs here
    at home.
        I think there are a lot of opportunities here for long-
    lasting, middle-class jobs: longshore mariners, shipbuilders--
    an industry that we need, is essential, as a maritime nation.
    And with these new technologies, we could be leading the world.
        There is no one-size-fits-all for this. Today in the
    hearing, we will hear of a number of different approaches. And
    I appreciate, again, the opportunity to become educated more on
    the subject.
        Thank you, Mr. Chairman.
        [Mr. DeFazio's prepared statement follows:]

       Prepared Statement of Hon. Peter A. DeFazio, a Representative in
          Congress from the State of Oregon, and Chair, Committee on
                       Transportation and Infrastructure
        Thank you, Chair Carbajal, and thank you for having a hearing on
    the important topic of reducing emissions and decarbonizing the
    maritime industry.
        This hearing builds upon our efforts across all modes of
    transportation to reduce carbon emissions in order to address climate
    change. This hearing comes at a crucial time as we aim towards Building
    Back Better, creating American jobs, and becoming global leaders in new
    technologies.
        With the COVID-19 pandemic disrupting global cargo movements, the
    role of the maritime industry is front and center. Between the EVER
    GIVEN's blockage of the Suez Canal and the major backlog on the West
    Coast, the American public is newly aware of the importance of the
    maritime supply chain. I hope that this presents an opportunity to
    discuss the industry's greenhouse gas emissions and practical ways to
    reduce them.
        Climate change is real and we're already starting to see the
    consequences. The international maritime industry accounts for 3
    percent of the world's carbon emissions with the potential to grow to
    10 percent by 2050 if significant changes are not made. The maritime
    industry cannot afford to waste any time; we must decarbonize now.
        We often hear of electric vehicles or revitalizing our energy grid,
    but what most fail to realize is the potential that exists within our
    maritime infrastructure. Industry is already hard at work researching
    and developing vessel infrastructure for the alternative fuels of the
    future, such as hydrogen, ammonia, methanol, and battery power.
        Some American companies, such as Element One in my home state of
    Oregon, are developing new technologies to utilize hydrogen fuel cells
    aboard ships using seawater and methanol--this technology is now
    available at various re-fueling hubs across the country and world.
        Ports are building out and investing in critical shore-side
    infrastructure to electrify their operations, and states are providing
    some financial aid to help cover the upfront costs. Projects such as
    these are capital-intensive and in their infancy, so federal investment
    may be necessary. I have no doubt that our foreign competitors will be
    subsidizing their maritime industries.
        The Biden administration is prioritizing emissions reduction across
    transportation sectors, and international agreements are setting
    targets for maritime carbon emissions reduction by 2050. But now is not
    the time for us to take the back seat; Congress needs to implement
    strong and progressive measures to reach the goal of a fully
    decarbonized maritime industry.
        There are many steps we can take to support this vital work. For
    instance, we can increase grant funding for ports looking to add shore-
    side power hookups for vessels to run on electricity, to purchase
    electric cargo handling equipment, and to construct microgrids that
    integrate clean energy sources such as offshore wind.
        We must identify ways to position the United States as a leader in
    new technologies across the transportation sector. Doing so will create
    lasting, middle class jobs for longshore workers, mariners, and
    shipbuilders as well as jobs associated with the research, development,
    and maintenance of new technologies.
        Today, I am excited to hear from an excellent panel of folks who
    are leading the charge on decarbonizing the maritime industry. There is
    no one size fits all, and we know there will be different solutions for
    different maritime problems. That's why it is our job to support a wide
    array of practical yet progressive steps as we steer the shipping
    industry toward a decarbonized future. And while we will hear some
    success stories today, I want to remind us all that there is still much
    more to be done to reach the goal of zero carbon emissions.

        Mr. Carbajal. Thank you, Chairman DeFazio. I would now like
    to welcome the witnesses on our panel.
        First we have Mr. John Butler, president and chief
    executive officer of World Shipping Council.
        Second we have Ms. Kristin Decas, chief executive officer
    and port director, the Port of Hueneme.
        Next we have Mr. Morgan Fanberg, president of Glosten.
        Next we have Dr. Lee Kindberg, director of environment and
    sustainability with Maersk.
        Last we have Dr. Dan Rutherford, program director and
    regional lead for International Council on Clean
    Transportation.
        Thank you for being here today, and I look forward to
    hearing your testimony.
        Before we begin I would like to turn it over and recognize
    my colleague, Representative Julia Brownley, who represents the
    district to the south of my district, to say a few words about
    Ms. Decas and the Port of Hueneme, which I also adopt as
    partially my port, because they are right on the border of her
    district and my district.
        And with that, Representative Brownley.
        Ms. Brownley. Well, thank you, Mr. Chairman, for allowing
    me to be here this morning to introduce Kristin Decas, a
    constituent of mine and the CEO and port director of the Oxnard
    Harbor District and Port of Hueneme and Ventura County.
        You could not have chosen a better witness for today's
    hearing, which is appropriately entitled, ``Practical Steps
    Toward a Carbon-Free Maritime Industry: Updates on Fuels,
    Ports, and Technology.'' Without a doubt, Ms. Decas is one of
    the Nation's leading experts in what our Nation's ports are
    doing to address the threats posed by the climate crisis.
        Ms. Decas has been instrumental in working to strengthen
    the Port of Hueneme's commitment to staying on the leading edge
    of environmental stewardship. Through her extraordinary
    leadership, the Port of Hueneme became the first port in
    California to earn the Green Marine certification in 2017. This
    is a voluntary industry program that looks at multiple
    environmental performance indicators at ports, including air
    emissions, prevention of spills and leakages, community
    impacts, and environmental leadership.
        Under her stewardship, the port has installed plug-in power
    systems for ships that come into the port, so that they can
    turn off their diesel engines and reduce carbon emissions. The
    port is also proactively developing its Port of Hueneme
    Reducing Emissions, Supporting Health Clean Air Plan, in
    partnership with our local air quality regulatory agency, the
    Ventura County Air Pollution Control District.
        This port has also implemented new technologies and best
    practices, including a new zero-waste policy, phasing in high-
    mast LED lighting to reduce energy use and light pollution,
    overhauling a harbor patrol boat to reduce emissions, switching
    to compostable supplies, and hosting zero-waste events, and a
    lot more.
        The port has been dogged in their pursuit of new grant
    opportunities to help the port build greener infrastructure and
    procure zero-emission cargo handling equipment. And Congress
    has a critical role to play to ensure our ports have access to
    necessary Federal resources to help them transition towards a
    cleaner, greener future.
        And I was delighted to have the chairman of the full
    committee, Peter DeFazio, visit the Port of Hueneme. And as the
    Port of Hueneme's Representative in Congress, along with our
    subcommittee chair here today, I could not be more proud of the
    work that is being done by the port commissioners and by Ms.
    Decas and her team of talented professionals to keep our local
    port clean and green. And I am very proud to be here today to
    introduce all of you to a wonderful leader, and my constituent,
    Ms. Kristin Decas.
        Thank you, Mr. Chairman, for the opportunity, and I yield
    back.
        Mr. Carbajal. Thank you, Representative Brownley. Let me
    just say I grew up in Oxnard, breathing a lot of those
    emissions. So I am grateful for the port becoming the greenest
    port in the Nation, and helping alleviate the public health
    concerns that are associated sometimes with some of our ports
    and neighboring communities.
        With that, we will proceed to our witnesses.
        Without objection, our witnesses' full statements will be
    included in the record.
        Since your written testimony has been made a part of the
    record, the subcommittee requests that you please limit your
    oral testimony to 5 minutes.
        Mr. Butler, you may proceed.

      TESTIMONY OF JOHN W. BUTLER, PRESIDENT AND CHIEF EXECUTIVE
    OFFICER, WORLD SHIPPING COUNCIL; KRISTIN DECAS, CHIEF EXECUTIVE
       OFFICER AND PORT DIRECTOR, PORT OF HUENEME-OXNARD HARBOR
    DISTRICT; MORGAN M. FANBERG, P.E., PRESIDENT, GLOSTEN, INC.; B.
          LEE KINDBERG, Ph.D., GCB.D, HEAD OF ENVIRONMENT AND
       SUSTAINABILITY-NORTH AMERICA, MAERSK; AND DAN RUTHERFORD,
      Ph.D., MARINE AND AVIATION PROGRAM DIRECTOR, INTERNATIONAL
                    COUNCIL ON CLEAN TRANSPORTATION

        Mr. Butler. Chairman Carbajal, Ranking Member Gibbs, full
    committee Chairman DeFazio, members of the subcommittee, thank
    you for the opportunity to testify today. I am John Butler,
    president and CEO of the World Shipping Council.
        Our members provide 90 percent of global containership
    capacity, and offer a significant percentage of the world's
    vehicle carrier fleet.
        Voice. The timer----
        Mr. Carbajal. Please proceed. Sorry about that.
        Mr. Butler. The subcommittee's focus today on practical
    solutions to decarbonization of shipping is right on point. We
    face a huge challenge.
        Over the coming decades, we need to convert the world's
    international fleet to low- or no-carbon fuels and associated
    technologies, and we have to do that in a way that does not
    undermine the essential transportation services that make the
    global economy function. I would like to emphasize two points
    today.
        My first point is that, although there are some promising
    low- and zero-carbon fuels and technologies under
    consideration, we simply do not yet know which of these options
    will end up being viable for the long haul. This is not a
    matter of simply picking an available fuel and getting on with
    it.
        The fact is that all of the future fuels under
    consideration have significant issues that have to be overcome
    in terms of safety, energy density, life cycle, carbon profile,
    and other challenges. In order to reach a point where
    investment capital will flow to create fuel production and
    delivery infrastructure for alternative fuels, we need much
    greater technological certainty about what fuels and
    technologies will turn out to be truly sustainable, from an
    operational, safety, environmental, and economic perspective.
        To get that technological and investment certainty, we must
    accelerate the necessary research and development now. Current
    R&D efforts are fragmented, and dedicated funding and global
    scale are missing. To address that R&D gap, the shipping
    industry in December of 2019 proposed that the International
    Maritime Organization create the International Maritime
    Research and Development Board, or IMRB.
        The IMRB would be a research coordination and funding
    effort paid for by industry that would deploy $5 billion over
    10 years to identify alternative fuels and move them towards
    commercial viability. That proposal has now been cosponsored by
    10 IMO member countries, along with the entire shipping
    industry, and the latest version of that very detailed proposal
    is attached to my written testimony.
        United States research institutions would be well placed to
    participate in the work funded by the IMRB, and there will be
    collateral clean air and technology development benefits beyond
    GHG reduction that would come from the work that the IMRB can
    do. We strongly urge the United States to back this proposal
    when it is next discussed in the IMO in June of this year.
        My second and final point is that it is critical for the
    United States to engage actively both at the IMO and with other
    nations. Decisions are being made today that will affect the
    industry and the country's international trade for the
    foreseeable future, and we have to get this right.
        One threat to a global solution is that the European Union
    is proposing to apply its internal carbon pricing scheme to
    ships operating far beyond EU waters. That raises trade and
    sovereignty concerns, and it threatens to undermine the ability
    of the IMO to implement a global solution. That EU proposal
    will be released in more detail probably in June of this year,
    and it is worth the attention of the United States Government.
        I thank you for your time, and I look forward to your
    questions.
        [Mr. Butler's prepared statement follows:]

      Prepared Statement of John W. Butler, President and Chief Executive
                        Officer, World Shipping Council
      1. Introduction: The World Shipping Council and the Liner Shipping
                                    Industry
        Chairman Carbajal, Ranking Member Gibbs, and Members of the
    Subcommittee, thank you for the invitation to testify today. My name is
    John Butler. I am President and CEO of the World Shipping Council \1\
    (``WSC'' or the ``Council''). WSC is a non-profit trade association
    whose goal is to provide a coordinated voice for the liner shipping
    industry in its work with policymakers, the public, and other industry
    groups with an interest in international transportation.
    ---------------------------------------------------------------------------
        \1\ A complete list of WSC members and more information about the
    Council can be found at www.worldshipping.org.
    ---------------------------------------------------------------------------
        WSC members comprise an industry that has invested hundreds of
    billions of dollars in the vessels, equipment, and marine terminals
    that are in worldwide operation today. Approximately 1,200 ocean-going
    liner vessels, mostly containerships, make more than 28,000 calls at
    ports in the United States during a given year--almost 80 vessel calls
    a day. This industry provides American importers and exporters with
    door-to-door delivery service for almost any commodity to and from
    roughly 190 countries. Approximately 35 million TEU \2\ of
    containerized cargo are currently imported into or exported from the
    United States each year. The container shipping industry is one of the
    most important facilitators of the nation's growth and ongoing economic
    activity. Ocean shipping is also--by far--the most fuel-efficient form
    of transportation on the planet.
    ---------------------------------------------------------------------------
        \2\ A TEU is a twenty-foot equivalent unit. Most containers are 40
    feet in length and equal 2 TEUs.
    ---------------------------------------------------------------------------
        Provided below for the subcommittee's consideration are a
    discussion of the industry's efforts to transition to zero or near-zero
    emission fuels and a description of the industry proposal to establish
    an International Maritime Research and Development Board (IMRB) and
    International Maritime Research Fund (IMRF) to accelerate the research
    and development work needed to create the technologies that are
    critical for ships to use low and zero-carbon fuels. WSC staff would
    welcome the opportunity to discuss these subjects further with
    subcommittee Members or staff.
       2. Reducing Greenhouse Gas (GHG) Emissions and the Technological
                   Challenge of Transforming the Global Fleet
        The Subcommittee's interest in reducing GHG emissions shipping is
    indeed timely. The issue of reducing GHG emissions is today the single
    largest issue under consideration by the International Maritime
    Organization (IMO), the specialized United Nations body that regulates
    international shipping and in which the U.S. plays an active role.
        International ocean shipping, including all sectors (container,
    bulk, tanker, etc.), carries over 80% of the world's international
    trade and generates between 2-3% of global CO2 emissions. In 2018, the
    IMO adopted a resolution that set two goals for GHG reductions from
    shipping. The first goal is a 40% increase in overall fleet efficiency
    by 2030. The second goal is a 50% reduction in absolute emissions by
    2050 (versus a 2008 baseline), with emissions to be reduced to zero or
    near zero as soon as possible after 2050.
        It will likely be possible to meet the IMO's 2030 GHG goal through
    a combination of the mandatory `Energy Efficiency Design Index'
    requirements for new ships that became effective in 2013, and new
    efficiency regulations covering the existing fleet that are expected to
    be adopted by the IMO in 2020. The existence of a highly competitive
    liner shipping market, the fact that fuel is the biggest variable cost
    for vessel operators, and increasing societal and customer requirements
    to reduce emissions provide vessel operators with powerful incentives
    to make their operations as efficient as possible and will help reach
    that goal.
        While the IMO's 2030 GHG goal can be met by operational and design
    modifications applicable to a fleet that remains fossil-fuel based, the
    2050 reduction goal, and the move thereafter to a zero or near-zero GHG
    emission status for ocean shipping, cannot be met by an industry that
    uses fossil fuels as its propulsion base.
        In order to meet these ambitious 2050 and beyond goals, it is
    imperative that new fuels and related propulsion, fuel storage, and
    fuel infrastructure systems are engineered and deployed. Moreover, the
    transformation in the fuels used by ocean-going vessels must begin in
    the near future in order for the change-over to occur in time to meet
    the IMO's deadlines. This is because ocean vessels have a commercial
    lifespan of 20-25 years, which means that investment decisions made
    today will be with us for a generation. Therefore, we must act now to
    develop new fuels and related technologies if we are to avoid locking
    in fossil-fuel based vessels for a period that extends beyond the 2050
    target date for the most drastic GHG reductions.
        The challenge the industry faces is that while there are promising
    possibilities for the fuels of the future, none of the candidate fuels
    available today can be used to power large ships serving trans-oceanic
    routes. Hydrogen, ammonia, and other fuels have been identified as
    potential replacements for fossil fuels in marine applications, but
    these fuels present safety, storage, handling, and production
    challenges that must be overcome before they are practically and safely
    available for widespread use. There may also be additional zero GHG
    emission options that have not yet received the same level of
    examination.
        Vessels that sail across oceans must obviously carry their fuel
    with them, and that means fuels must be safe to handle and carry, must
    be energy-dense so that they do not displace too much cargo space, and
    must be widely available. All of these criteria represent technical
    challenges that will require substantial effort and engineering
    expertise to resolve. The solutions to these challenges will not simply
    appear by themselves.
    3. The Proposal for an International Maritime Research and Development
                                     Board
        To address these challenges, WSC and all of the world's major
    shipping organizations \3\ in December of 2019, submitted to the IMO a
    comprehensive proposal to coordinate and fund the research,
    development, and demonstration work necessary to decarbonize shipping.
    Last month, an updated version of that proposal, now also co-sponsored
    by ten IMO member states, was submitted to the IMO. A copy of the
    updated proposal, which will be discussed at the IMO's Marine
    Environment Protection Committee (MEPC) meeting in June 2021, is
    attached as Exhibit A. The proposal would set up an International
    Maritime Research and Development Board (IMRB) that would manage a $5-6
    billion industry-funded research and development (R&D) effort over a 10
    to 12-year period to identify the fuels and related technologies of the
    future that will be needed to meet the IMO's aggressive decarbonization
    goals. The shipping industry would fund this R&D effort through
    mandatory contributions to the International Maritime Research and
    Development Fund (IMRF) via a proposed per ton contribution of GHG
    emissions to generate approximately $500 million per year. To track GHG
    emissions and contributions, the IMRB and IMRF would employ a fuel oil
    data collection system already established by IMO.
    ---------------------------------------------------------------------------
        \3\ See page 1 of Exhibit A for the list of co-sponsors.
    ---------------------------------------------------------------------------
        The critical importance of this R&D effort cannot be overstated.
    Without this industry funding of $5-$6 billion to accelerate R&D, there
    is no apparent technological pathway that would allow the industry to
    reach the IMO 2050 and beyond GHG targets. Put simply, the research and
    development will not occur on its own; it requires a coordinated
    ``push'' in the form of a well-funded and comprehensive international
    effort.
        Moreover, increased technological certainty that comes from the
    IMRB R&D will provide increased investment certainty as it becomes
    clear which near-zero and zero GHG emissions technologies will be worth
    investing in the long term. Creating such technologies, which provide
    practicable alternatives to fossil-fuel based propulsion, are also
    essential for market-based measures such as carbon pricing to work.
    Carbon pricing is designed to motivate the industry to change behavior
    to cleaner technologies by adding a cost to the continued use of fossil
    fuels. But carbon pricing can only function if alternatives to fossil
    fuels are practically available at commercial scale. Without such fuels
    and related technologies, market-based measures such as carbon pricing
    only add cost without reducing emissions.
        The IMRB proposal is at an advanced level of development, including
    detailed organizational plans, a viable funding mechanism, and proposed
    amendments to MARPOL Annex VI to provide the legal vehicle for the
    program. There is no other existing proposal in the world that can
    deliver the necessary research and development work in the time that we
    have to get this work done. Any further delay in doing that work will
    increase technological and investment uncertainty and make the process
    of decarbonization more expensive, with increased risk of stranded
    investment. The United States' support for the IMRB proposal at the
    June MEPC meeting will be critical to its approval and success. We
    therefore encourage the U.S. Congress to urge the Administration to
    communicate its support for IMRB at the upcoming IMO MEPC meeting and
    at other international engagements on climate change.
                       4. Discussion of the IMRB Proposal
        As mentioned above, the baseline facts that the international
    shipping industry faces with respect to GHG reduction may be summarized
    as follows:
          The 174 member countries that participate in the IMO have
    already set ambitious goals and deadlines for reductions in GHGs from
    shipping.
          The most ambitious of the IMO's GHG reduction targets
    cannot be met by a global vessel fleet that relies primarily or even
    substantially on fossil fuels.
          Although there are promising fuels and related
    technologies that may be practically applicable to trans-oceanic
    vessels at some point in the future, there are no low carbon or zero-
    carbon fuel/propulsion systems available today that can be used by
    large trans-oceanic vessels.
          Because ocean-going vessels are long-lived assets (20-25
    years), we must move as quickly as possible to develop and deploy low-
    carbon and zero-carbon propulsion systems and fuels to avoid stranded
    assets and delays in implementing next generation technologies.

        As the industry evaluated this set of facts, it became clear that
    an essential component in meeting the IMO's deadlines for reducing GHGs
    from international shipping is to create and support a dedicated
    research and development effort to identify and deploy practical
    application technologies that can replace fossil fuel propulsion for
    large ships. It also became apparent that, although there are a number
    of R&D efforts underway around the world, many of these are focused on
    short-sea applications or are not of a size and scale to be able to
    develop global solutions within the required timeline. Our focus
    therefore turned to the question of how the IMO could be used as the
    organizing body to create and sustain an R&D effort that could deliver
    the required solutions.
        The IMO is the only body in the world that is capable of bringing
    together the elements that are necessary for the successful creation
    and maintenance of an R&D effort of the size necessary to produce
    results within the time required. This is the case for several reasons:
          The IMO is the only existing body with the reach to
    coordinate a global R&D effort focused on commercial maritime
    transport.
          Any global R&D effort must have a mandatory industry
    financial contribution mechanism in order to generate necessary
    funding, avoid free riders, and maintain a level commercial playing
    field.
          In order to implement a sustainable funding mechanism,
    any effective industry-wide R&D program will need to have access to the
    IMO's fuel consumption database, as well as a defined communication
    procedure with flag states, both of which the IMO already has in place.

        Once we determined that the magnitude of the challenge and the need
    for quick action required a substantial and sustained R&D effort to
    identify and develop the propulsion systems of the future, and we
    determined that the IMO was the right body to organize that effort, we
    began crafting a proposal to the IMO that describes how this critical
    R&D work can be undertaken and funded. After a period of over two years
    during which we consulted with IMO member states, environmental groups,
    technical experts, academics, and other industry groups, on December
    18, 2019, WSC and seven other international shipping organizations
    submitted to the IMO an initial proposal to create the IMRB. IMO
    considered this proposal and asked for comments on specific questions
    raised by Member States.
        On March 10, 2021, WSC and ten IMO member states and industry co-
    sponsors submitted a detailed and expanded IMRB proposal to IMO. The
    revised proposal is to be considered at upcoming meetings of IMO's
    Marine Environmental Protection Committee (MEPC) in June and November.
    A copy of the March 10, 2021 submission is attached to this testimony
    as Exhibit A.
        Boiled down to its essence, the IMRB's decarbonization R&D effort
    would be a global, targeted grant program funded by a mandatory
    contribution based on each ton of vessel GHG emissions. The IMRB
    proposal is detailed and addresses a number of issues regarding the
    purposes and management of the IMRB that will have to be considered in
    order for the proposed R&D structure and effort to yield the necessary
    results. Among the issues addressed by the proposal are:
        1)  R&D objectives of the IMRB;
        2)  Funding of the IMRB, including a structure that ensures that
    all funds are delivered directly to the IMRB, with no involvement of
    member country tax authorities;
        3)  Governance of the IMRB, balancing high-level IMO oversight with
    the need for an independent, knowledgeable board of directors and
    professional staff that is nimble and adaptable in deploying the assets
    of the IMRB to obtain effective R&D results;
        4)  Management of grants and contracts;
        5)  Provisions on conflict of interest;
        6)  Treatment of intellectual property generated through research
    efforts, balancing the need to incentivize participation by qualified
    experts, companies, and institutions with the need for the results of
    IMRB-funded research to be made broadly available in order to encourage
    competition in developing next-generation fuels and supporting
    technologies; and,
        7)  Dissolution of the IMRB upon completion of its work.

        The IMRB proposal, if adopted by the IMO, would substantially
    accelerate and increase the scope of R&D work that is essential to
    decarbonizing shipping. That research is not occurring today on a
    schedule or a scale that will yield results in time to meet the
    schedule set by the IMO or at the speed increasingly demanded by
    society at large, and there is no indication that any one company or
    any one country would be willing or able to undertake such a research
    effort on its own. Luckily, we have in the IMO an existing
    international organization with global participation that is already
    deeply involved in the issue of decarbonizing shipping. All that is
    required in order to bring this powerful R&D tool into being is the
    political will to consider and adopt the IMRB proposal.
        We are optimistic that, as more IMO member states understand the
    IMRB proposal, the more they will support it. In addition to the fact
    that this is the only proposal currently before the IMO that seeks to
    directly implement decarbonization through research and engineering
    solutions, making this industry-funded investment in R&D makes business
    and policy sense. The alternatives to finding technological solutions
    that allow the ocean transportation industry to ultimately eliminate
    its carbon emissions are to either reduce the transportation services
    that support world trade or to continue on a path of increasingly
    burdensome and low-yielding regulations of a fossil-fuel powered
    industry. Neither of those outcomes--artificially constraining trade or
    chasing ineffective regulation--is desirable. Finding non-fossil-fuel
    solutions will allow international ocean shipping to continue to grow
    to serve expanding world trade, thus providing a sustainable path for
    both climate and economy. It is possible to de-couple trade and GHG
    emissions, and for the former to grow while the latter declines.
       5. The Looming Concern of European Union Unilateral GHG Regulation
        Even as the IMO continues to work on global solutions, the European
    Union (EU) is unilaterally seeking to extend its own Emissions Trading
    System (ETS) to the global shipping sector by imposing extraterritorial
    GHG regulations on the last voyage leg into the EU, and the first
    voyage leg out of the EU, for all ships that arrive at or depart from
    EU ports \4\. The EU's GHG rules would, for example, apply to all
    vessels, including U.S. owned and/or flagged vessels operating within
    U.S. jurisdictional waters and on the high seas if those vessels also
    called at EU ports directly from U.S. ports.
    ---------------------------------------------------------------------------
        \4\ European Parliament 2019-2024, Amendments adopted by the
    European Parliament on 16 September 2020 on the proposal for a
    regulation of the European Parliament and of the Council amending
    Regulation (EU) 2015/757 in order to take appropriate account of the
    global data collection system for ship fuel oil consumption data
    (COM(2019)0038--C8-0043/2019--2019/0017(COD), (First reading) [European
    Parliament Amendments], available at: https://www.europarl.europa.eu/
    legislative-train/theme-environment-public-health-and-food-safety-envi/
    file-revision-of-the-eu-system-to-monitor-report-and-verify-co2-
    emissions-from-ships
    ---------------------------------------------------------------------------
        The EU's effort is in sharp contrast to the IMO's multilateral
    effort and has the potential not only to upset the IMO's role as the
    regulator of international shipping, but also to open the door for
    additional nation states to impose their own unique GHG regulations on
    global ocean carriers that call at their ports. Such approaches would
    create an impossible patchwork of GHG regulations applicable to ships
    carrying U.S. and international commerce to jurisdictions around the
    globe. WSC's paper examining the potential impacts of an EU ETS is
    attached as Exhibit B \5\. It is therefore critical for the IMO, with
    its global reach, to regulate GHG emissions from international
    shipping, and we encourage the United States to engage with the EU to
    limit application of its ETS scheme to intra-EU maritime transportation
    and to continue to support the IMO's efforts on maritime
    decarbonization.
    ---------------------------------------------------------------------------
        \5\ A copy of the WSC paper on the EU ETS is also available at:
    https://www.worldshipping.org/public-statements/regulatory-comments/
    WSC_EU_ETS_Discussion_Paper_10_
    September_2020_Final.pdf
    ---------------------------------------------------------------------------
                                 6. Conclusion
        International shipping is by far the most efficient means of cargo
    transportation on the planet, and advances in ship design, size, and
    operational strategies have allowed containerships, for example, to
    increase their efficiency by as much as 50% over the past decade. These
    are impressive advances, but the fact is that over time these advances
    will be overtaken by trade growth, and it is not possible in the long
    run to reach the world's decarbonization goals for shipping by
    continuing to burn fossil fuels.
        Because we do not yet know what specific fuels and related
    technologies will replace fossil fuels, the next logical step is to do
    the research to answer that question and to make the next generation of
    fuels available for commercial deployment in the world's fleet. The
    IMRB proposal to the IMO provides the funding and the structure to make
    that essential R&D work happen, and we look forward to working with the
    IMO member states to bring the IMRB into existence. We would welcome
    the active support of the United States in this vital work to reduce
    global shipping's impact on climate change.
                                   exhibit a
     ``Reduction of GHG Emissions from Ships: Proposed Draft Amendments to
     MARPOL Annex VI,'' by the Marine Environment Protection Committee of
                    the International Maritime Organization
    [The 36-page document is retained in committee files and is available
    online at https://docs.house.gov/meetings/PW/PW07/20210415/111423/HHRG-
    117-PW07-Wstate-ButlerJ-20210415-SD001.pdf]
                                   exhibit b
    ``EU ETS Discussion Paper,'' September 10, 2020, by the World Shipping
                                    Council
    [The 13-page document is retained in committee files and is available
    online at https://docs.house.gov/meetings/PW/PW07/20210415/111423/HHRG-
    117-PW07-Wstate-ButlerJ-20210415-SD001.pdf]

        Mr. Carbajal. Thank you, Mr. Butler, you are right on time.
        We will proceed next with Ms. Kristin Decas.
        Ms. Decas. Good morning, Chairman Carbajal, Ranking Member
    Gibbs, and members of the subcommittee, and Congresswoman
    Brownley. My name is Kristin Decas, and I am CEO and port
    director of the Port of Hueneme in southern California. On
    behalf of my Board of Harbor Commissioners, I would like to
    express my appreciation for the opportunity to appear before
    the subcommittee today.
        We are looking at a moment in history, where timely action
    by Congress promises to reshape the future of our Nation
    through Federal investment in transportation systems. Such an
    action will allow investments of taxpayer dollars to go where
    they are needed most: to the creation of family-sustaining jobs
    with higher-than-average wages for disadvantaged communities.
    The outcome will be the transformation of social equity, the
    advancement of a carbon-free transportation network, and growth
    in trade, ensuring our Nation is the most competitive in the
    world.
        It is critical to note the importance ports have in driving
    local and regional economies. The total economic value
    generated by U.S. coastal ports totals $5.4 trillion, roughly
    26 percent of GDP. U.S. port activity employs over 30.8 million
    Americans. Last year the Port of Hueneme's trade with the world
    reached $10.85 billion, generating over $1.7 billion in
    economic impact, and creating over 15,800 trade-related jobs.
        This profound economic stimulus does have an impact on our
    environment and community. And as with any negative, there is a
    cure and a pathway forward. California ports not only lead the
    Nation, but the world in environmental achievement. California
    ports are the only ports that require refrigerated cargo ships
    to electrify at berth, making them zero emission at port
    complexes. Collectively, California's 11 deepwater seaports
    realized emission reductions on the order of 80 percent in PM,
    90 percent in SOx, and 50 percent in NOx.
        At the Port of Hueneme, we more than live up to this legacy
    of environmental achievement and tradition. Since 2008, the
    port achieved an 85-percent reduction in diesel PM. In 2012, we
    completed a comprehensive environmental framework that sets
    goals in air quality, water quality, marine resources, soil and
    sediment, energy, and climate change. In 2014, we installed our
    shoreside power system to enable ships to plug in at berth. In
    partnership with Tesla, we installed five battery packs to
    purchase power at off-peak hours and store it for daytime use.
        We are currently engineering and installing new electrical
    infrastructure to power hybrid electric mobile cranes, zero-
    emission trucks, and zero-emission yard tractors. Our board
    approved the purchase of the first two zero-emission, heavy-
    duty port trucks in Ventura County. These American-made, Kalmar
    battery-powered trucks will move containers of fresh produce
    around the port, while producing zero pollution.
        I would now like to respectfully recommend the course of
    action Congress should take to propel the future of the goods
    movement industry to a sustainable and decarbonized
    transportation sector.
        Assess and invest. Assess, and assess, and build the
    blueprint. Abraham Lincoln once said, ``Give me six hours to
    chop down a tree, and I will spend the first four sharpening
    the ax.'' There needs to be a true understanding of all the
    complexities of a paradigm shift to decarbonization. This
    requires the development of a blueprint to effectively
    transition to a new fuel economy, which includes a nationwide
    feasibility and cost analysis.
        For example, the capacity of our Nation's utility networks,
    infrastructure availability, and upgrade costs need to be fully
    evaluated and understood. At the Port of Hueneme, the
    forecasted cost for electric infrastructure is $28.5 million.
    This cost does not include the utility company's own
    infrastructure improvements that will be required, estimated to
    run $50-plus million.
        Furthermore, the fees and building costs of retrofitting
    vessels and other private-sector assets need to be factored
    into the plan. The Port of Hueneme is one example of millions
    across the country where these dynamics need to be flushed out,
    and the roadmap defined, so the investments made by the Federal
    Government are well informed by true cost, science, and
    technological viability.
        Invest. Invest in maritime and transportation
    infrastructure. For California ports alone, experts forecast
    the cost to replace current equipment with zero-emission or
    near-zero-emission equipment to exceed $23 billion and $35
    billion to replace current equipment with electrified, high-
    density equipment and supporting infrastructure, all prior to
    utility upgrades. So invest. Invest in a zero-emission future.
    Invest in a new alternative fuel economy. Invest in resilient
    infrastructure, and invest in a just transition. Infrastructure
    investments in places like the Port of Hueneme and Oxnard will
    foster positive social reform and racial equity.
        In closing, California ports such as the Port of Hueneme
    are pioneers of testing, innovating, and taking on risk of
    implementing new technologies that lower emissions. As early
    adopters, California ports have expertise and best practices in
    what works. Today the Port of Hueneme is excited to partner
    with you to help prosper Federal action to assess and invest in
    our future.
        Thank you for the opportunity to provide testimony.
        [Ms. Decas' prepared statement follows:]

     Prepared Statement of Kristin Decas, Chief Executive Officer and Port
                Director, Port of Hueneme-Oxnard Harbor District
        Good morning Chairman Carbajal, Ranking Member Gibbs and members of
    the subcommittee. My name is Kristin Decas, and I am the Chief
    Executive Officer and Port Director of the Port of Hueneme-Oxnard
    Harbor District in Southern California.
        On behalf of the President of the Board of Harbor Commissioners,
    Jason Hodge and my entire Board, I would like to express my
    appreciation for the opportunity to appear before this Subcommittee
    today to discuss the vital role ports play in our economy and the
    actions the Port of Hueneme is taking towards making our Port the
    greenest port in the country.
        We are looking at a moment in history where timely action by
    Congress promises to reshape the future of our nation through federal
    investment in our ports, roads, bridges, rail, airports, and transit
    systems. Such action will ensure investments of taxpayer dollars go
    where they are needed most, to the creation of family sustaining jobs
    with higher-than-average wages for disadvantaged communities. The
    outcome will be the transformation of social and racial equity, the
    advancement of a carbon free transportation network and growth in
    trade, making our nation the most competitive in the world.
        It is critical to note the importance ports have in driving local
    and regional economies by providing the gateway for delivery of goods
    and employment opportunities. According to Martin Associates, an
    internationally recognized economic and transportation consulting firm,
    prior to the outbreak of the COVID-19 pandemic the total economic value
    generated in terms of revenue to businesses, personal income and
    economic output at U.S. coastal ports accounts for $5.4 trillion,
    roughly 26 percent of GDP. This research also showed that over 30.8
    million Americans are employed in jobs generated as a result of port
    activity. Ports also generate significant tax revenue, with $47.1
    billion of direct, induced and indirect federal, state and local tax
    revenue created through the economic activity taking place at ports
    across the nation.
        This profound economic stimulus does have an impact on our
    environment and community, and as with any negative, there is a cure
    and pathway forward. To deliver cargo from the dock to the consumer
    requires heavy equipment, which necessitates a significant use of
    energy to ensure efficient goods movement. This activity has led to
    historical environmental, social and racial equity issues for
    communities adjacent to ports, known as ``sacrifice zones.'' Globally
    companies and nations are stepping up and pivoting to sustainable
    energy sources and zero emission equipment. The future of the US
    economy, which consumer consumption of goods is the main driver and
    over 90% of goods transit through Ports, relies on keeping pace with
    other global partners in technology and climate solutions. Federal
    investment is vital to implementing climate mitigation, sustaining
    existing jobs, driving new jobs in innovation and technology and
    accelerating the movement to a decarbonized transportation system. The
    Port of Hueneme is at the nexus of this movement and an excellent model
    of how federal investment in port complexes can foster economic
    prosperity, especially in underserved communities, and at the same time
    lead the effort toward a carbon free maritime industry.
        For the purpose of background, the Port of Hueneme, an official US
    Port of Entry located within Ventura County, is the fourth largest
    California deep water cargo seaport and plays a crucial role in the
    vitality of the local, state and national economy. Naval Base Ventura
    County, a strategic military port, and the Port share the federal
    channel entrance and harbor. We have a rich history of partnership and
    joint use. The Port was initially built to support the agricultural
    sector in Ventura County. Today, Port of Hueneme serves as a top
    strategic auto and refrigerated cargo hub on the US West Coast,
    situated within sixty miles north of the Los Angeles metropolitan area,
    the largest population center on the West Coast with approximately 14
    million people. Trade related businesses operating out of the Port make
    it the County's fourth largest employer and a leading economic force in
    the region.
        As one of the state's strategic intermodal transportation ports,
    the Port provides the County with competitive advantages to attract
    private investment while creating family sustaining jobs. Last year
    Port of Hueneme's trade with the world reached a total of $10.85
    billion in value. Exports totaled $1.22 billion and imports reached
    $9.64 billion. The $10.85 billion in annual cargo, generates over $1.7
    billion in economic impact and creates over 15,800 trade related
    direct, induced, indirect, and influenced jobs. Annually, trade
    activity resulting from the Port currently yields on average $119
    million in state, county and local tax revenues which support vital
    community services. The Port closed fiscal year 2020 with a recorded
    total of 1.62 million cargo tons translating to only a slight 1.8%
    decrease in overall Port volumes despite COVID-19 caused shipment
    slowdowns. Of note, the modest 1.8% loss in tonnage follows a record-
    breaking fiscal year 2019. During the ongoing congestion crisis facing
    larger ports, the Port of Hueneme serves as a resiliency hub handling
    citrus exports to Asia.
        The Port of Hueneme has performed solidly even in times of economic
    slowdown. During the contraction of Ventura County's economic output
    between 2016 and 2017, according to a report by the Ventura County
    Civic Alliance, jobs at the Port grew 9.2% from 2015 to 2017,
    demonstrating the Port severing as a regional economic engine even when
    the rest of the economy was lagging. GDP data from the US Bureau of
    Economic Analysis shows that Ventura County's trade sector realized .4%
    growth compared to .2% in the state of California and .16% in Los
    Angeles County during this same period. The US Bureau of Economic
    Analysis measures local GDP performance by 12 major industry sectors.
    Ventura County's lowest performing sectors over the last decade
    include, ``nondurable manufacturing'' (biotech), and ``Finance,
    Insurance, Real Estate and Leasing.'' The County sits deeply in the
    negative in these two areas, enough to stagnate the entire County's
    GDP. Ventura County fails to achieve a mark of ``high performing'' GDP
    growth in all 12 sectors. Furthermore, the County underperforms the
    nation's average in 8 of the 12 sectors. However, Ventura County
    outperforms the national average in the areas of natural resources,
    construction and trade. Over the last decade Ventura County finds
    itself in the bottom 20% of all Metropolitan Statical Areas nationally
    for GDP growth. The positive take away being Ventura County shows a
    solid, competitive base in trade. Federal investment in small to medium
    size ports in counties similar to Ventura throughout the nation will
    unquestionably foster compounded economic growth while addressing
    socioeconomic justice issues in communities hit the hardest by COVID-19
    and recession.
        The Port of Hueneme acknowledges that the future of the logistics
    and global supply chains will be dictated by the effective investment
    and transition to electric technology. The Port plays an essential role
    in the health and vitality of the local and regional economies and
    takes very seriously our responsibility as an active community partner
    and as an environmental steward. This builds community trust, buy-in
    and the social license to operate. In sharing the Port's environmental
    stewardship and community engagement efforts with you today, it is our
    intention to build the foundation for prioritizing ports in the federal
    infrastructure plan.
        To bring context to where federal dollars can make a significant
    difference in the environmental movement toward decarbonization of the
    goods movement network, I will describe the environmental progress
    taking place at the Port of Hueneme and highlight the significant
    infrastructure needs requisite to a true transition to a zero emission
    port and supply chain. California ports not only lead the nation, but
    the world in environmental achievement. California ports are the only
    ports that require refrigerated cargo ships to electrify at berth,
    making them zero emission at port complexes. Collectively, California's
    eleven deep water seaports realized emission reductions on the order of
    80% in particulate matter, 90% in SOx and 50% in NOx. This advancement
    sets the stage for all our nation's ports. California is paving the way
    toward decarbonization and our initiatives are a sound model for all US
    port terminals. The California and Port of Hueneme model can be scaled
    up based on need, proportion and/or access to resources.
        At the Port of Hueneme, we more than live up to this legacy of
    environmental achievement and tradition on the global stage. In 2012,
    the Port completed a comprehensive Environmental Management Framework
    (EMF), that establishes both long and short-term goals and a vision of
    a sustainable green future. The EMF put forth evaluation strategies to
    monitor and track the Port's progress in each stated goal and creates
    key performance indicators (KPIs) to quantify results openly and
    transparently. The Port's environmental team implements, monitors, and
    evaluates environmental projects, in partnership with Port tenants,
    regulatory agencies, and the community. Specifically, the Port
    developed a set of environmental management goals in air quality, water
    quality, marine resources, soil and sediment, energy management and
    climate change adaptation.
        With the adoption of the EMF, the Port has realized significant
    milestones in environmental progress. The Port is proactively
    developing its Port of Hueneme Reducing Emissions Supporting Health
    (PHRESH) Clean Air Plan in partnership with our local air quality
    regulatory agency, the Ventura County Air Pollution Control District
    (VCAPCD). This comprehensive plan will include:
          An assessment of the regulatory setting in which the Port
    operates;
          A detailed review of the Port's emissions inventory,
    including an assessment of possible emissions growth scenarios;
          The establishment of specific air quality goals for the
    Port for both criteria pollutants and greenhouse gases;
          A summary of our community involvement;
          An analyses of possible emissions control strategies and
    cost, and cost benefit analyses;
          Estimates of funding and implementation and resources
    needed; and
          The establishment of a Community Coalition to provide
    insights into the plan and provide an open and transparent outlet to
    share data with the community.

        As part of PHRESH, the Port purchased and installed the only
    reference grade air quality monitors in South Oxnard at Haycox
    Elementary School. We have posted initial results in a power point
    presentation format delivered by our environmental manager. We are
    currently translating the presentation into Spanish and Mixteco (an
    indigenous language from Oaxaca, Mexico). Additionally, through this
    investment students will learn firsthand about air quality monitoring
    and about the importance of racial and environmental equity and access
    to clean air from Port staff members who come from their own community.
        We have also made significant strides in deploying zero emission
    technology. In 2014 the Port installed a high-voltage, shore-side power
    system which allows ships to shut down traditional diesel fueled
    engines while berthed and plug in, substantially reducing ship born
    emissions at berth. Since 2008 the Port achieved an 85% reduction in
    diesel particulate matter emissions from our ships at berth. To feed
    power to the shoreside system, the Port in partnership with Tesla,
    installed five battery packs to purchase power at off-peak hours and
    store it for daytime use by vessel plug-in systems. We are currently
    engineering and installing new electrical infrastructure to power a new
    generation of electric, zero emission cargo handling equipment,
    including newly arrived hybrid electric mobile harbor cranes and zero
    emission trucks. In the third quarter of this year, we will be
    deploying our first zero emission yard tractors. To further our pursuit
    of the goal to decarbonize cargo operations and help bring cleaner air
    to our community, the Port of Hueneme's Board approved the purchase of
    the first two zero emission heavy duty Port trucks in Ventura County.
    These American made Kalmar battery powered trucks will help to move
    containers of fresh produce around the Port while producing zero
    pollution. The trucks are part of a project in conjunction with the
    Port of Los Angeles funded by the California Air Resources Board, that
    will also include the installation of power vaults to run the Port's
    cranes on electrical power and the use of a hydrogen fuel cell big rig
    truck. Furthermore, this investment will create opportunities for Port
    maintenance and union machinery mechanics to learn new skillsets and
    become pioneers in the transition to a zero-emission economy.
        With environmental stewardship as a top priority, we have reached
    many additional historic benchmarks. We installed new cutting-edge LED
    lighting to significantly reduce energy use and associated emissions.
    The Port has developed and is implementing a zero-waste policy to
    reduce solid waste generation. The Port is dredging the harbor entrance
    and the sand is being deposited to support our local beaches and fight
    beach erosion. To protect the integrity of our water quality, we have a
    robust stormwater management plan and installed new stormwater
    filtering system. The port contracted a third-party auditor, Green
    Marine, a globally renowned environmental auditor to certify the Port's
    environmental agenda. Complimenting these successes, the Port is
    committed to forward-looking environmental and community initiatives
    including:
        1.  Industrial Operations Decarbonization: The Port is committed to
    a trucking and cargo handling equipment transition to zero emissions on
    and off Port, functioning as a regional leader in implementation of
    zero emission medium and heavy-duty equipment.
        2.  Jobs and Social Justice: The Port is committed to bringing
    economic equity to the region by providing employment opportunities for
    green jobs while pushing forward an agenda of transitioning Port
    equipment from diesel to less-polluting fuels of the future in
    collaboration with our community partners.
        3.  Education Initiatives for the Local Community: The Port is
    committed to providing new opportunities for the region and local
    community in STEM with an eco-maker space which has more than $3
    million of high-tech equipment for access by local students,
    environmentalists and entrepreneurs to develop and test ideas and build
    projects.
        4.  Clean Truck Initiatives: The Port is committed to developing a
    clean trucking coalition in Oxnard and to seek funding for zero
    emission trucks and infrastructure.
        5.  PHRESH Air Quality Community Project--The Port is committed to
    launching a Clean Air Plan, Port of Hueneme Reducing Emissions
    Supporting Health (PHRESH), and to providing local air quality data to
    the community as a mechanism to empower local knowledge.
        6.  Green Jobs Training Program: The Port is committed to creating
    a green jobs training program in coordination with other workforce
    development groups including, LA Clean Tech Incubator, Ventura County
    Workforce Development Board, local labor unions, state universities
    (CSU-Channel Islands and Cal Poly San Los Obispo, UC Santa Barbara) as
    a catalyst to prosper local jobs vital to the future of our region.
        7.  Aquaculture Partnership: The Port is committed to partnering
    with entrepreneurs, scientists and other experts for the development of
    an aquaculture campus on Port to develop foods and jobs of the future
    for equitable, decarbonized food production.
        8.  Habitat Restoration: The Port is committed to partnering on the
    restoration of Ormond Beach, a local habitat that has suffered from
    superfund level pollution from a former smelter company, with community
    and stakeholders including, the City of Oxnard, City of Port Hueneme,
    Coastal Commission, Nature Conservancy to achieve habitat restoration,
    safe equitable access, and recreation and education opportunities.
        9.  Community Outreach and Development: The Port is committed to
    listening and communicating with community members about their needs
    and concerns and is constantly creating opportunities to leverage its
    relationships with its customers to reinvest locally with the intention
    of creating social capital.

        I hope my testimony is a clear statement of the commitment by the
    Port of Hueneme's Board of Commissioners and staff to the continued
    advancement of decarbonization and environmental stewardship. I would
    now like to respectfully recommend the course of action Congress should
    take to propel the future of the goods movement industry. If the nation
    and you, our leaders, want a sustainable and decarbonized
    transportation sector, one of our largest sources of climate and air
    pollution, the stage must be set for cleaner vehicles, cleaner fuels,
    and active alternative transportation options, particularly for low-
    income and vulnerable communities around the nation. How do we get
    there? ASSESS and INVEST:
                          Assess--Build the Blueprint:
        Abraham Lincoln once said, ``Give me six hours to chop down a tree
    and I will spend the first four sharpening the axe.'' There needs to be
    a true understanding of all the complexities of a paradigm shift to
    decarbonization. This requires the development of a blueprint to
    effectively transition to a new fuel economy which includes a
    nationwide feasibility and cost analysis. For example, the capacity of
    our nation's utility networks, infrastructure availability and upgrade
    costs need to fully be evaluated and understood. At the Port of
    Hueneme, the forecasted cost for electric infrastructure is $28.5
    million. This cost does not include the utility company's own
    infrastructure improvements that will be required, an upgrade from a
    16.9 to a 66 kilo-volt power distribution system. This utility company
    infrastructure upgrade is necessary in order to provide enough power to
    the Port of Hueneme for its electrification projects and could run as
    high as $50+ million. The utility company has indicated that they are
    nearing maximum capacity and may not be able to support future high
    electrical capacity needs from the Port of Hueneme. Furthermore, the
    feasibility and costs of retrofitting vessels and other private sector
    assets needs to be factored into the plan. The Port of Hueneme is one
    of example of millions across the country where these dynamics need to
    be flushed out and the road map defined, so the investments made by the
    federal government are well informed by true costs, science and
    technological viability.
                Invest--Build the New Alternative Fuel Economy:
        The goods movement industry turns to its leaders in Congress to
    appropriate the funds requisite to incentivizing a transition to a
    carbon free future. For the decade spanning 2018-2028, AAPA identified
    $20 billion in multimodal and rail access needs at ports. For
    California ports alone, the Pacific Merchant Shipping Association
    estimates costs to replace current equipment with zero emission or
    near-zero emission equipment to exceed $23 billion and $35 billion to
    replace current equipment with electrified high-density equipment and
    supporting infrastructure, all prior to utility upgrades. As
    populations shift, as cargo volumes grow, and as we continue to embrace
    e-commerce and direct to consumer shopping, federal investments at
    these magnitudes will be critical to ensuring the United States has a
    21st century multimodal freight network that competes globally,
    delivers locally and runs on clean energy. INVEST:
          INVEST in a multimodal freight network program as
    contained in H.R. 511, the National Multimodal Freight Network
    Improvement Act
          INVEST in a Zero Emission Future: There are massive costs
    to the replacement and repowering every piece of equipment. Significant
    dollars are needed to provide funds for equipment replacement and
    infrastructure and to ensure the energy capacity exists to meet the
    full demands of the supply chain.
          INVEST in a New Alternative Fuel Economy: New alternative
    fuel infrastructure triggers vast costs and utilities complications;
    Federal funding for planning, engineering, permitting and construction
    are key to the transition.
          INVEST in Resilient Infrastructure: Congress needs to
    drive investment in our critical (e.g., grid) and natural (e.g.,
    forests, soil) infrastructure to create a more resilient, inclusive,
    and sustainable economy.
          INVEST in a Just Transition--Invest in training and
    educational programs that create high quality job opportunities for our
    nation's emerging decarbonized economy, with a focus on renewable
    energy, circular economy, and water and energy efficiency, thereby
    seeding the pipeline for a green workforce and social equity.

        To further expand on this last point, I would like to use the Port
    of Hueneme as example to demonstrate how investment in clean technology
    at ports results in a paradigm shift in the workforce for underserved
    communities. The cities of Oxnard and Port Hueneme are two communities
    adjacent to the Port of Hueneme. In Oxnard, 23.8% of the population
    lives in poverty and only 64.7% of residents have completed a high
    school education. Both the cities qualify as economically distressed
    areas under the Recovery Act based on their unemployment rates and per
    capita income being substantially less than the national average. Why
    is this so? Ventura County has traditionally been an agricultural hub
    for the harvesting of strawberries, lemons, celery, beets, and other
    crops. Given the nature of this history, most employment opportunities
    for minorities have come in the form of packing house labor or direct
    picking in the fields. Most of these jobs have been designated as
    unskilled labor and reserved for low-income Spanish speaking
    communities which are mostly categorized for immigrants of Mexican
    descent. Additionally, a recent influx of 20,000 Mixtec, indigenous
    immigrants from the Oaxaca region in Mexico, have brought the inclusion
    of a third language (Mixteco) which further adds to the language
    barriers and racial divide. In South Oxnard, which neighbors the Port
    of Hueneme, the neighborhood of Southwinds is home to upwards of 80% of
    the Mixteco indigenous groups which live in overcrowded conditions
    directly under the poverty rate.
        Utilizing the Port and its longstanding job creating contributions
    to the region, it is therefore imperative that these barriers be
    addressed through intentional interventions that can help create access
    and mobility within the local job markets. Eliminating barriers to
    participation in the green technology and renewable energy economy of
    the future should be a key ingredient to the federal approach to
    infrastructure investment and expanding job opportunities for
    disadvantaged communities. The Port of Hueneme is actively working to
    link those in need of economic opportunities with the educational and
    employment resources which the Port engages with in its day-to-day
    cargo work. Connecting those in need with education to those with jobs
    will help alleviate the barriers which have historically kept the poor
    in a vicious cycle of less equal access to jobs, housing, and
    educational opportunities in ``sacrifice zones.'' Federal investment in
    infrastructure and zero emission cargo handling equipment will bolster
    this job creation pipeline for the underserved.
        In closing, California Ports such as the Port of Hueneme have been
    early adopters of green technology solutions. California Ports are the
    pioneers of testing, innovating and taking on the risk of implementing
    new technologies that lower emissions. As early adopters California
    ports have expertise on best practices and what works. The Port of
    Hueneme and our customers have spent over $50 million in the last 10
    years on port related electric infrastructure improvements. We have a
    strong track record. Today the Port of Hueneme is excited to partner
    with you and to continue to serve as a role model for other U.S. Ports
    who are ultimately all going to be a part of the carbon free maritime
    industry. We stand ready to help prosper federal action to assess and
    invest in our future.
        I thank you for the opportunity to provide testimony to the
    Committee about the Port of Hueneme's role in the national and southern
    California regional economies and importance of continuing
    environmental improvements in maritime goods movement and strengthening
    of the national economy.

        Mr. Carbajal. Thank you, Ms. Decas. You were well ahead of
    your time, so thank you.
        Next we will proceed to Mr. Morgan Fanberg.
        Mr. Fanberg. Thank you, Chairman Carbajal, Ranking Member
    Gibbs, and subcommittee members, for the opportunity to speak
    with you today.
        As a U.S.-based naval architecture firm, Glosten has been
    working to decarbonize the marine industry for more than a
    decade. Creating a carbon-free maritime industry is an
    unprecedented challenge that creates a unique opportunity for
    U.S. technology developers. However, foreign competition is
    better funded, and is currently leading the decarbonization
    technology race.
        So how can the U.S. lead, when we have less than 3 percent
    of the world's oceangoing fleet? Well, we can make the greatest
    impact by focusing our decarbonization efforts on the U.S.
    domestic fleet, which is one of the world's largest, consisting
    of ferries, tugs, dredges, coastal tankers, and other vessels.
        We need a national strategic initiative plan with a focused
    vision and an urgent timeline. MARAD and the Department of
    Energy are the agencies to lead these efforts. This plan should
    include the following three actions to accelerate U.S.
    progress.
        First, DOE should increase port and terminal infrastructure
    funding for electric vessel charging and alternative fuel
    bunkering. Electrifying ships already comes at a premium.
    Therefore, adding cost for shoreside infrastructure will be
    quite difficult for private operators to fully bear without
    Government assistance. The benefits of electric harbor vessels
    cannot be realized without this infrastructure, much like the
    electric car industry cannot thrive without roadside charging
    stations. Likewise, bunkering alternative fuels can require
    specialized fueling infrastructure that will be difficult to
    scale without Government support.
        Second, MARAD has the experience to bring together
    academia, Government, technology providers, and vessel
    operators. By funding consortiums such as Washington State's
    Maritime Blue, we can pilot, demonstrate, and commercialize
    carbon-neutral and carbon-zero technologies for our domestic
    fleet.
        In the U.S. we have the needed resources from these
    following groups: universities and national labs for
    fundamental research into alternative fuels--hydrogen, ammonia,
    methanol, nuclear, green diesel, or other renewable fuels;
    industry partners, such as vessel operators, equipment
    suppliers, and naval architects to convert research into
    practical technologies that are ready for demonstration and
    commercialization; and maritime academies, where we can use the
    new fleet of training vessels now under construction as
    platforms for testing and proving emerging technologies, while
    also preparing cadets and midshipmen for the future.
        The third and final step in this plan is development of a
    streamlined regulatory process that encourages new
    technologies, provides certainty from design through
    construction, and prevents project time delays. This process is
    critical to the success of any U.S.-led effort.
        We at Glosten are involved in several collaboration
    projects. Two that represent partnerships are, first, the
    Glosten and Bieker foil ferry. This is a modern composite
    hydrofoil, all-electric passenger ferry. It requires less than
    half of the installed power of a typical high-speed passenger
    catamaran. This project is a great example of the partnership
    that MARAD can foster. In our case, Washington State's Maritime
    Blue has brought our technology team together with local
    operators, ports, builders, and the classification agency, DNV.
        Our cluster was recently awarded a $400,000 FTA grant to
    further the design, which is fantastic. However, by comparison,
    a U.K.-based developer of a competing design was awarded a $45
    million Government grant to not only design, but also build and
    demonstrate their concept.
        Second, as part of a MARAD-funded project, Glosten, Sandia
    National Laboratories, and Scripps Institution of Oceanography
    worked together to design a hydrogen-fueled coastal research
    vessel. The design proved the feasibility to build and operate
    a coastal research vessel powered solely by hydrogen fuel
    cells. This is a shovel-ready project requiring Federal funding
    for construction, so we can demonstrate the effectiveness of
    alternative fuel technology, not only for research vessels, but
    for other longer range coastal ships.
        By comparison, the EU's Horizon 2020 program funded,
    through a $25 million grant, the construction of a Norwegian
    hydrogen-powered cargo vessel. It will be launched in 2024.
        So in summary, the global maritime industry has not faced a
    more daunting challenge since vessels moved from sail power to
    steam. Action must be taken now to tackle the amount of
    scientific and engineering work required to move the industry
    to carbon-free in the next 25 to 30 years.
        We have the key resources ready to meet this challenge. But
    if we delay, we will watch as foreign countries develop future
    technologies and equipment, fuels, and infrastructure. We have
    a great opportunity to showcase American leadership and
    ingenuity. But similar to so many of our Nation's historic
    challenges, no single entity can get us to our goals.
        We need Government to partner with academia and private
    industry to develop, deploy, and demonstrate decarbonization
    technologies to achieve emission targets and position the
    United States as the global maritime leader.
        Thank you.
        [Mr. Fanberg's prepared statement follows:]

    Prepared Statement of Morgan M. Fanberg, P.E., President, Glosten, Inc.
                                  Introduction
        Thank you, Chairman Carbajal, Ranking Member Gibbs, and
    subcommittee members for the opportunity to speak to you today. It is
    my honor to share my perspective on how our nation can be a leader in
    the challenge to decarbonize marine transportation.
        Creating a carbon-free maritime industry is an unprecedented
    challenge that creates a unique opportunity for U.S. technology
    developers. If this is our goal, time is of the essence. We will soon
    lose to foreign competition that is better funded and better prepared
    to lead the maritime industry toward decarbonization.
        As a U.S.-based naval architecture firm, Glosten has been working
    to decarbonize the marine industry because we believe this is one of
    the most important and impactful marine industry transformations of our
    time.
        The U.S. domestic fleet as one of the world's largest, which in
    2020 was comprised of 3,652 \1\ self-propelled vessels of more than 100
    gross tons. This is a highly varied fleet that includes passenger
    ferries operating in population centers such as New York City and San
    Francisco Bay, offshore supply vessels in the U.S. Gulf, tug and barge
    operations plying our inland waterway system, near-coastal tankers,
    containerships, and dredges keeping our shipping channels open.
    ---------------------------------------------------------------------------
        \1\ Data search on UNCTAD STAT (12 April 2021) (https://
    unctadstat.unctad.org). Exported into a U.S. report.
    ---------------------------------------------------------------------------
        The U.S. is a major maritime trading center with an opportunity to
    define and supply the necessary infrastructure to support a
    decarbonized fleet.
        We believe the U.S. has the necessary academic, industrial,
    engineering, and marine operator resources necessary to meet the
    challenge facing our domestic fleet. We are at a point where we can
    either be late and adopt foreign technologies, or we can move quickly
    and lead the world.
        Meeting the global maritime carbon reduction goals requires an
    aggressive shift from burning fossil fuels to low or zero-carbon fuels
    and the electrification of certain short-run vessels. Today, these non-
    fossil fuels do not exist at commercial scale, port infrastructure
    cannot handle future demands, and regulations applying to these future
    technologies do not exist.
                          Steps Toward Decarbonization
        To reduce total greenhouse gas emissions from shipping by 50% by
    the year 2050, we will need to employ public-private partnerships. The
    immediate step is to develop a national strategic initiative with a
    clear vision, timeline, achievable metrics, and proper accountability.
        The Maritime Administration (MARAD) and the Department of Energy
    (DOE) are the government agencies ready to lead these efforts by
    developing this strategic initiative plan and executing projects aimed
    at reaching our goals of decarbonization. These agencies need to lead
    this initiative by increasing targeted funding for research and
    development, infrastructure improvements, and design and demonstration
    projects.
        The strategic initiative plan should include the following three
    actions to accelerate U.S. progress toward decarbonization:
        1.  The DOE should increase funding for port and terminal
    infrastructure projects targeting electric vessel charging and
    bunkering of zero carbon alternative fuel sources. Vessel
    electrification already comes at a premium; therefore, adding costs for
    shoreside infrastructure will be very difficult for private operators
    to fully bear without government assistance. The benefits of electric
    harbor vessels cannot be realized without this infrastructure, much
    like the electric car industry cannot thrive without roadside charging
    stations. Likewise, bunkering alternative fuels can require specialized
    fueling infrastructure that will be difficult to scale without
    government support.
        2.  MARAD should accelerate the path to commercialization for
    marine vessel decarbonization. Academia, government, and commercial
    entities must work together in close coordination to achieve successful
    pilot projects. Not only will this approach demonstrate the
    effectiveness of new innovations, but it will showcase the United
    States as a global leader in decarbonization and support the export,
    rather than import, of future maritime technology. These groups
    include:
          a.  Universities and National Labs for fundamental research into
    alternative fuels. Advanced battery technology is already available for
    all-electric propulsion on coastal vessels, but this technology is
    restricted to vessels operating on short routes or in other coastal
    water operations. To decarbonize vessels on longer duration routes,
    power systems will need to be fueled by hydrogen, ammonia, or other
    zero carbon and renewable fuels.
          b.  Industry partners that can convert research into practical
    technologies that are ready for demonstration and commercialization.
    This conversion will require marine equipment suppliers, naval
    architects, and marine vessel operators.
          c.  Maritime academies to leverage the new fleet of training
    vessels now under construction as platforms for testing and proving
    emerging technologies, such as hybrid and zero carbon fuel propulsion,
    and solar and wind capture, while also preparing cadets for the future.
        3.  Support and encourage the streamlining of the regulatory review
    and approval process for maritime decarbonization projects from design
    through construction. A streamlined regulatory process will help reduce
    costs to government and industry funded innovation projects without
    compromising safety or the environment.
                             What Glosten Is Doing
        The following project examples require support to advance U.S.
    competitiveness in marine vessel decarbonization:
    Foil Ferry
        Glosten has partnered with Bieker Boats to form Foil Ferry, LLC.
    This new company's vision is to design and bring to market a modern,
    composite hydrofoil passenger ferry. This ferry requires less than half
    of the installed power of a typical, high-speed passenger catamaran and
    could utilize all-electric propulsion on applicable routes.

                         Figure 1_Foil Ferry Rendering

        As part of the public-private Washington Maritime Blue Partnership,
    we were recently awarded a $372,910 USD Federal Transportation
    Administration grant to further this design. Once the design is
    complete, we will look for future grant funding to build a prototype
    vessel to showcase the technology with the aim of building vessels for
    future ferry system routes.
        By comparison, a UK-based developer of a competing design was
    awarded a $45M USD government grant to complete and build their design
    \2\.
    ---------------------------------------------------------------------------
        \2\ https://www.artemistechnologies.co.uk/en/technologies/news/
    23_Artemis-Technologies-to-build-zero-emissions-ferries-following-60M-
    funding
    ---------------------------------------------------------------------------
    Zero-V
        As part of a MARAD funded project, Glosten worked with partners
    Sandia National Laboratories and Scripps Institution of Oceanography to
    design a hydrogen fueled coastal research vessel that addressed the
    technical, regulatory, and economic feasibility challenges. This
    project assessed the benefits and determined the prospects for
    refueling such a vessel at expected points of call. The team determined
    it was feasible to design, build and operate a coastal research vessel
    powered solely by hydrogen fuel cells \3\ \4\.
    ---------------------------------------------------------------------------
        \3\ https://energy.sandia.gov/wp-content/uploads/SAND2018-
    4664_Zero-V_Feasibility_
    Report_8.5x11_Spreads_FINALDRAFT_compress.pdf
        \4\ https://www.sciencedirect.com/science/article/abs/pii/
    S036031992032156X

                        Figure 2--Zero-V Research Vessel

        This is an example of a shovel-ready project requiring federal
    funding to help demonstrate the effectiveness of alternative fuel
    technology, not only for research vessels, but other longer-range
    coastal vessels.
        As one of several comparison examples, the European Union's Horizon
    2020 program granted the Norwegian hydrogen cargo vessel Topeka $25M
    USD with an expected launch in 2024 \5\.
    ---------------------------------------------------------------------------
        \5\ https://www.greencarcongress.com/2020/12/20201219-topeka.html
    ---------------------------------------------------------------------------
    Skagit County's Guemes Island Replacement Ferry
        Washington State's Skagit County Public Works hired Glosten to
    develop a ferry design to replace their current 41-year-old diesel-
    powered vessel. An initial propulsion system selection showed favorable
    operational costs savings and a reduced life cycle cost with a battery
    electric propulsion system. With the Commissioners' decision to proceed
    with an electric ferry, Glosten developed the vessel design.

                   Figure 3_Skagit County All-Electric Ferry

        The County Road Administration Board awarded Skagit County $7.5
    million for the electric ferry project. An additional $1.5 million from
    Washington State Capital Fund has been awarded for shore charging
    infrastructure. The entire project is estimated to cost approximately
    $19.5 million. The County continues to seek funding through state and
    federal avenues to close the financial gap. Successful completion of
    this project with construction of this ferry will demonstrate the
    advances in technology for other ferry systems where routes could be
    served by battery-powered vessels.
                                   Conclusion
        In summary, the global maritime industry has not faced a more
    daunting challenge since vessels moved from sail power to steam. Action
    must be taken now to tackle the amount of scientific and engineering
    work required to move the industry to carbon-free in the next 25-30
    years. We have the key resources ready to meet this challenge, but if
    we delay, we will watch as foreign countries develop future
    technologies in equipment, fuels, and infrastructure.
        We have a great opportunity to showcase American leadership and
    ingenuity, but similar to so many of our nation's historic challenges,
    no single entity can get us to our goals. We need government to partner
    with academia and private industry to develop, deploy, and demonstrate
    decarbonization technologies to achieve emission targets and position
    the United States as the global maritime leader.

        Mr. Carbajal. Thank you, Mr. Fanberg. Next we will go to
    Dr. Lee Kindberg.
        Ms. Kindberg. Thank you, Chairman Carbajal. And may I get a
    sound check?
        Mr. Carbajal. We can hear you.
        Ms. Kindberg. Thank you. Thank you, Chairman Carbajal,
    Ranking Member Gibbs, Chairman DeFazio, and members of the
    committee. Thank you for the invitation to speak today. I am
    Lee Kindberg, and I am head of environment and sustainability
    for North America, for Maersk, a global logistics and container
    shipping company.
        This is a really exciting time to be in shipping, as you
    have heard, a time of change that will transform the industry
    as much as containerization did in the 20th century. And ocean
    shipping is already the most energy-efficient way to move cargo
    long distances and has the lowest carbon footprint of any mode
    of transportation. Those ships use very large diesel engines to
    move these mountains of cargo, and that generates greenhouse
    gases, primarily carbon dioxide, or carbon, and other
    pollutants.
        Now, reducing those emissions requires both improving
    energy efficiency and new, carbon-neutral fuels and
    technologies. There are likely to be several winners, since
    there are several types of shipping. Our customers and other
    stakeholders need us to provide carbon-neutral shipping to
    enable them to meet their zero-carbon goals.
        In December 2018, we made a commitment to do just that, to
    achieve carbon-neutral shipping by 2050 for our entire fleet.
    We also set 2030 goals for energy efficiency, and a goal of
    launching our first carbon-neutral vessel by 2030. At the time
    that really seemed like a moonshot goal. Today we see it as
    still a very challenging target, but clearly possible to reach.
    And I would like to report today on progress we are making on
    that. Since 2008 we have reduced our emissions by 47 percent
    per container moved. So this is an energy efficiency effort.
        Today's customers are actually paying a premium for our
    carbon-neutral eco-delivery shipping service that is new just
    in the last year. It is small, but it is growing.
        We are also already testing bio-based fuels, batteries, and
    other technologies on commercial vessels, and we are evaluating
    other fuels. And there is a table in the written statement that
    goes into details of some of those other fuels.
        We are developing a new renewable fuel using ethanol and
    lignin from agricultural and forest wood wastes. This work is
    supported in part by several of our major customers. So, again,
    the support from our customers is critical.
        In March of this year we announced that our first carbon-
    neutral container vessel would be operational by 2023, 7 years
    earlier than our 2030 commitment. This will be the world's
    first carbon-neutral liner vessel. This, and all of our new
    vessels, have been committed to be capable of using those new,
    carbon-neutral fuels. This particular vessel will be powered by
    green methanol, a fuel which is not available on this scale
    today.
        The limited supply of fuels like green methanol is a
    bottleneck for decarbonizing the industry. We believe this
    commitment is the best way to kickstart the rapid scaling of
    carbon-neutral fuels, and also give us operational experience
    and provide a carbon-neutral product for our customers.
        Now, the biggest challenges ahead are not just on the
    ships. The land-based industries and infrastructure must be
    there to supply those fuels and technologies at scale, and we
    have to do it sustainably, without jeopardizing food
    production, or forests.
        Economic and policy systems must also adapt to support this
    transformation, and there will probably be more than one winner
    in the work to develop new fuels and energy sources, and likely
    competition between shipping and other industries to develop
    and purchase those fuels.
        So what will it take to make this happen? Well-focused R&D,
    with collaboration across the industry, and with other related
    industries; alignment between national and international goals
    and metrics. The International Maritime Organization, the IMO,
    sets the rules for international shipping, and is tightening
    the metrics and goals for vessel emissions, even as we speak.
        And then measure what matters. For good decisionmaking and
    to avoid stranded assets, include the full set of greenhouse
    gases, both upstream and downstream impacts. And by that I mean
    the impact of fuel production, distribution, and use all count.
    You have to look at it from well to wake, and not just look at
    the stat gas emissions.
        Requirements need to be clear, performance-based, enforced,
    and encourage early action, not penalize it. And both
    incentives and enforcement should be part of the future climate
    programs.
        Ladies and gentlemen, this is an energy transformation. It
    is not a new fuel or a vessel modification. Huge changes to
    both vessel design and land-based infrastructures must happen
    to produce and distribute those new energy sources. And
    policies, metrics, and laws must adapt to enable that change.
        So thank you for this opportunity to provide this progress
    report, and I will be happy to take any questions.
        [Ms. Kindberg's prepared statement follows:]

         Prepared Statement of B. Lee Kindberg, Ph.D., GCB.D, Head of
              Environment and Sustainability-North America, Maersk
        Chairman Carbajal, Ranking Member Gibbs, and Members of the
    Subcommittee, thank you for the invitation to testify today.
        Maersk is a world leader in logistics and has long been committed
    to environmental leadership. We are headquartered in Copenhagen Denmark
    and our North American Headquarters is in Florham Park, New Jersey. We
    operate over 700 container vessels globally under brands including
    Maersk, SeaLand, Hamburg Sud, and Svitzer ocean-going tugs. Here in the
    U.S., Maersk Line, Limited is the owner and operator of our U.S. Flag
    vessels and the largest participant in the U.S. Maritime Security
    Program. On the land side we have APM Terminals (our marine terminal
    operating arm), and other supply chain logistics facilities in the
    United States and globally.
        We are committed to ensuring that our business practices are safe,
    responsible and transparent. This year the urgent priorities of the
    pandemic have kept us busy, however sustainability remains at the top
    of our agenda. We see increasing expectations from all stakeholders,
    and especially our customers, investors, governments and employees--
    expectations that we and our industry deliver more solutions, more
    visibility and more help in decarbonising supply chains. Our goals,
    strategies and progress are discussed in our annual Sustainability
    Reports, available on our website \1\.
    ---------------------------------------------------------------------------
        \1\ Maersk's annual Sustainability Reports are available on our
    website at https://www.Maersk.com/en/business/sustainability.
    ---------------------------------------------------------------------------
        The shipping industry emits 2-3% of the world's anthropogenic CO2
    and shipping is the only industry to have set global metrics and goals
    on energy efficiency, greenhouse gas emissions and other pollutants
    such as sulfur. These air emissions are produced by fuel consumption in
    our ships' very large diesel engines, and include both Greenhouse gases
    (GHG, primarily CO2, which is sometimes referred to as ``carbon'' or
    ``carbon footprint'') and criteria air pollutants (SOx, NOx, fine
    particles).
        Maersk alone emits approx. 0.1% of global anthropogenic CO2, so
    decarbonization is a cornerstone in our sustainability strategy. Our
    first focus is on ocean transport, which is the source of 98% of our
    ``Scope 1 emissions.'' Decarbonization goals will be extended to our
    marine terminals and other logistics services and transport modes over
    the coming years.
        Reducing fuel consumption does reduce operating costs and also
    reduces emissions of both greenhouse gases and other pollutants. In the
    last twelve years Maersk has reduced our fuel consumed and related
    emissions by 47% per container moved. This energy efficiency
    improvement was achieved in three primary ways: new larger vessels,
    retrofits of our existing vessels, and improved operational and vessel
    management practices. Our Radical Retrofit program involved investing
    $1Billion over 5 years starting in 2015. We continue to mature, harden
    and implement the ``Connected Vessel'' digitalization project to
    connect our fleet digitally with our global operations coordination
    centers and enable real-time optimization to reduce fuel consumption
    and related emissions.
        In December 2018 Maersk announced a goal of Net Zero Carbon
    Shipping by 2050. That commitment included launching our first zero
    carbon vessel by 2030 and continuing our energy efficiency work with a
    2030 goal of a 60% reduction in emissions vs. 2008.
        Just two years after setting that net zero ambition in December
    2018, we find we have come further than we imagined possible at that
    time. In 2018, a 2050 net zero ambition for shipping was a moonshot
    goal. Today, we see it as a challenging target, but clearly possible to
    reach.
        A prerequisite for Maersk to meet the Net Zero 2050 target is
    radical innovation in technologies and fuels. We have openly recognized
    the need for close collaboration with external stakeholders such as
    technology and fuel providers, researchers, investors, governmental
    officials and staffs, and especially our customers to meet the target.
    We plan significant future investments, including further energy
    efficiency work, alternative fuel development, and the technologies
    needed to build zero carbon vessels.
                         A First Carbon Neutral Vessel
        In March of this year we announced that our first carbon neutral
    container vessel will be operational by 2023. This has been made
    possible by the advances in technology, our strategic commitment to
    sustainable practices and the active support of our partners and
    stakeholders. Powered by biomethanol or e-methanol, this feeder vessel
    will pilot an industry-first, scalable carbon neutral product. This is
    encouraged by the strong support and commitment by our customers to
    keep accelerating the full transition to decarbonisation.
        This first vessel will give valuable operational experience, help
    accelerate our journey, demonstrate real demand to fuel suppliers, and
    provide a scalable, carbon neutral option for customers. We believe our
    commitment to put the world's first carbon neutral liner vessel in
    operation by 2023 is the best way to kick start the rapid scaling of
    the carbon neutral fuels needed, since the limited supply of green
    methanol is a bottleneck for decarbonising the industry.
                       Action on Zero emissions shipping
        Maersk is already engaged in several innovation projects and is
    significantly scaling up our innovation efforts. Currently we have more
    than 50 engineers in our technical innovation departments who focus
    primarily on reducing fuel consumption, and we are hiring more as we
    speak to broaden our efforts. At this point we are not ruling out any
    technological options and the innovation work covers many areas
    including the following:
        1.  Continue our cutting-edge fuel efficiency efforts such as
    retrofitting existing vessels with new technologies and setting new
    standards on fuel efficiency when we order new vessels. Maersk does not
    purchase standard vessels; we always optimize designs, with close
    collaboration between our technical experts and the shipyards.
        2.  Electrification. We installed a major marine battery on a
    vessel in 2020 to learn how this technology might be useful on a vessel
    and to drive further development on the technology. We also now connect
    vessels to shore power in California and China, allowing us to operate
    in port without emissions.
        3.  Research in new alternative fuels. We have a range of programs
    exploring new marine fuels, including several programs related to
    biofuels. Examples include:
            Biofuel-based ECO-Delivery: A pilot voyage with 4 major
    customers in April-May 2019 used renewable biofuel blends made from
    used cooking oils on an Asia-Europe roundtrip to prove applicability
    and test commercial opportunities. This successful trial led to a new
    carbon neutral shipping service called ``ECO-Delivery,'' which has
    grown even more quickly than we had hoped and continues to attract new
    major shipping customers.
            Lignin Ethanol Oil (``LEO'') biofuel: Maersk, together
    with a coalition of U.S.-based and international customers and in
    collaboration with the University of Copenhagen, has establishing a new
    sustainability innovation project to develop a biofuel tailor-made for
    shipping (LEO). This biofuel does not exist today but has the potential
    to have significant positive impact on CO2 emissions as well as other
    air emissions from shipping.
              The concept is to blend bio-based ethanol with the biopolymer
    lignin (a by-product of agriculture, paper making and wood-products
    production) to form a new relatively inexpensive biofuel with high
    energy content. The LEO biofuel should be a sustainable fuel meaning
    that it is: 1) Made from waste/by-products not competing with food
    uses--a 2nd generation biofuel, 2) Should be CO2 neutral, and 3) is
    economically feasible and price competitive with conventional fuels (or
    only small price premium). The current objectives of the LEO project
    are to confirm the feasibility of the fuel, test it on a vessel, and
    make it commercially feasible for uptake in the shipping industry.
            In the fall of 2020, the Maersk Mc-Kinney Moller Center
    for Zero Carbon Shipping was established by seven companies including
    Maersk, with the intent of accelerating development of the technologies
    and fuels needed to for carbon neutral shipping in the time frame
    needed.
       The Need for Strong Regulations, Global Standards and Enforcement
        Wise fuel choices depend on having global metrics and goals, and
    clear standards for how to measure, report and verify the full impact
    of fuels and operations. These metrics need to include the full suite
    of GHG--CO2, methane and nitrogen oxides--as well as the upstream and
    downstream impacts of fuel extraction, production, delivery and use.
    Global standards are strongly needed in this area to enable clear
    comparisons and impact assessments. And in this rapidly changing field,
    performance-based standards are needed rather than attempting to choose
    winners among the new fuels and technologies.
        The importance of enforcement is illustrated by the recent
    implementation of IMO's 2020 fuel rule. As of January 2020, all ships
    were required to reduce their sulfur oxide emissions by over 80%. This
    was a major transition and the vast majority of the global fleet
    (including Maersk vessels) has complied by switching to more expensive
    low sulfur fuel. This comes at a very steep price; for Maersk alone,
    the additional bill was estimated to be around $2 billion per year. The
    very large potential savings by non-compliance show the importance of
    strong enforcement. For example, a vessel trading from Asia to Europe
    could ``save'' close to $750,000 USD per ship per voyage by ignoring
    the IMO2020 rules. Companies rely on good enforcement to provide the
    ``level playing field'' necessary for competitiveness and environmental
    progress.
        The same strong enforcement concepts will need to be fundamental
    components of any climate-related programs. When developing climate
    programs at the national and international level it is of utmost
    importance that mechanisms are in place to ensure that international
    competition is not disrupted and that first movers are rewarded for
    early investments into emissions reducing technology.
        In closing let me reiterate that the changes required to achieve
    carbon neutral shipping will not be easy or inexpensive, either on the
    vessel side or the land-based fuels infrastructures. However, we
    believe it can and must be done. Massive innovative solutions and fuel
    transformation will be required to produce and distribute entirely new
    energy sources. Regulatory changes and standards development are also
    needed on a global scale to enable this transformation.
        Members of the Subcommittee, thank you again for the opportunity to
    discuss this important topic with you today. I will be happy to answer
    any questions.
                         Potential Carbon-Neutral Fuels

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Mr. Carbajal. Thank you, Dr. Kindberg.
        Now we will go to Dr. Dan Rutherford.
        Mr. Rutherford. Good morning, Chairman Carbajal, Ranking
    Member Gibbs, Chairman DeFazio, Congresswoman Brownley, and
    other subcommittee members. I appreciate the opportunity to
    testify today on behalf of the International Council on Clean
    Transportation.
        The ICCT is an independent, nonprofit research organization
    headquartered in Washington, DC, with offices in San Francisco,
    Berlin, Beijing, and Sao Paulo. ICCT employs a team of over 100
    transportation experts that advise policymakers on how to
    improve the environmental performance of the transport sector.
        Maritime shipping is a cornerstone of our modern economy,
    but it comes with impacts. Air pollution from shipping is
    linked to at least 64,000 premature deaths per year, globally,
    with the underprivileged and minority communities living near
    ports feeling the brunt of the impact. In 2018 global shipping
    emitted about 1 billion tons of carbon dioxide, or more than
    the German and Dutch economies combined.
        Much work lies ahead if the sector is to meet the U.N. goal
    of cutting greenhouse gas emissions from international shipping
    by at least 50 percent from 2008 levels by 2050. To meet this
    goal, we will need zero-emission, deep-sea ships on the water
    by no later than 2030. Key technologies include battery-
    electric ships for near-port operations and short-sea shipping;
    hydrogen, which, in pressurized or cryogenic form can power
    fuel cells that are already available and scalable; and
    ammonia, which is gaining attention as an easy-to-store
    hydrogen carrier. These fuels can be generated from abundant
    renewable electricity with a negligible climate footprint.
        Today we are already seeing fully battery-electric and
    fuel-cell zero-emission vessels, especially ferries and barges
    on short, dedicated routes. Infrastructure investments for fast
    charging for battery-electric ships can also support shore
    power to reduce at-port air pollution. We expect full-sized,
    deep-sea, zero-emission vessels running on hydrogen fuel cells
    or burning renewable ammonia to be possible as soon as 2030.
    Hybrid or fully zero-emission regional cargo ships will be
    available even sooner. Technologies like wind-assisted
    propulsion and hull air lubrication will help reduce energy use
    and make zero-carbon fuels more competitive.
        A word of caution: biofuels and liquefied natural gas are
    being used now, but neither is a reliable bridge to zero-
    emission vessels. Sustainable biofuel supply is limited, in
    demand by a variety of sectors, and must be generated from
    waste, and also not result in deforestation in order to be
    sustainable. LNG produces about 25 percent less CO2 when
    combusted. But due to methane leaks upstream during the
    production of LNG, and also downstream from the engine itself,
    LNG is often worse for the climate than conventional fuels
    after accounting for its full life-cycle emissions.
        The coming transition to zero-emission shipping can be a
    win for the U.S. economy, the environment, and human health.
    Zero-emission vessels eliminate air pollution from the ships
    themselves, easing the health burdens of coastal and near-port
    communities. ZEVs avoid the water pollution generated by ships
    that use sulfur scrubbers. There are also quieter, and ZEVs
    will unlock new careers to develop advanced engines, fuel
    cells, batteries, and fuels.
        The production and sale of zero-emission marine fuels in
    particular is a major opportunity for U.S. businesses. Today,
    the largest vessels visiting U.S. ports are often fueled
    abroad, not here at home. Producing zero-emission marine fuels
    like electricity, hydrogen, and ammonia domestically will
    provide new economic opportunities for Americans, while
    protecting vulnerable near-port communities.
        So what actions can the U.S. Government take to support the
    ZEV transition? First, we need substantial investments to
    develop and deploy zero-emission vessels and fuels, along with
    supporting port electrification and infrastructure. U.S.-
    flagged Jones Act vessels, which operate shorter routes between
    regular ports, can be used to demonstrate and mature the
    technologies we will need for deep-sea ZEVs.
        Second, the U.S. should work with key trading partners,
    including Canada, Mexico, the EU, and China, to establish zero-
    emission vessel corridors and associated infrastructure.
        Finally, the U.S. should lead in negotiating ambitious
    international standards for larger ships at the International
    Maritime Organization. These actions can reduce climate and air
    pollution from shipping, improve the health and well-being of
    port communities, and help unlock new markets for zero-emission
    vessels and fuels.
        Thank you for the opportunity to present today.
        [Mr. Rutherford's prepared statement follows:]

       Prepared Statement of Dan Rutherford, Ph.D., Marine and Aviation
        Program Director, International Council on Clean Transportation
        My name is Dan Rutherford. I'm the program director for shipping
    and aviation at the International Council on Clean Transportation. The
    ICCT is an independent, non-profit research organization headquartered
    in Washington DC, with offices in San Francisco, Berlin, Beijing, and
    Sao Paulo. ICCT employs a team of over one hundred transportation
    experts that advise policymakers on how to improve the environmental
    performance of the transport sector.
        I appreciate the opportunity to testify today on behalf of the
    ICCT. Maritime shipping is a cornerstone of our modern economy, but it
    comes with impacts. Air pollution from shipping is linked to at least
    64,000 premature deaths per year globally \1\, with underprivileged and
    minority communities living near ports feeling the brunt of that
    impact. In 2018, global shipping emitting about a gigatonne of carbon
    dioxide (CO2), or more than the German and Dutch economies combined.\2\
    Much work lies ahead if the sector is to meet the United Nations' goal
    of cutting GHG emissions from international shipping by at least 50%
    from 2008 levels by 2050.\3\
    ---------------------------------------------------------------------------
        \1\ Sofiev et al., 2018.
        \2\ Faber et al., 2020; Crippa et al., 2019.
        \3\ Rutherford & Comer, 2018.
    ---------------------------------------------------------------------------
        To meet this goal, we'll need zero emission deep sea ships on the
    water by no later than 2030. Key technologies include battery electric
    ships for near-port operations and short sea shipping; hydrogen, which
    in pressured or cryogenic form can power fuel cells that are already
    available and scalable; and ammonia, which is gaining attention as an
    easy-to-store hydrogen carrier. These fuels can be generated from
    abundant renewable electricity with a negligible climate footprint.
        Today, we're already seeing fully battery electric and fuel cell
    zero-emission vessels, especially ferries and barges on short,
    dedicated routes (Figure 1). Infrastructure investments for fast
    charging for battery electric ships can also support shore power to
    reduce at-port air pollution. We expect full-sized, deep-sea zero-
    emission vessels running on hydrogen fuel cells or burning renewable
    ammonia to be possible as soon as 2030. Hybrid or fully zero-emission
    regional cargo ships will be available even sooner. Technologies like
    wind-assisted propulsion and hull air lubrication will help reduce
    energy use and make zero carbon fuels more competitive.\4\
    ---------------------------------------------------------------------------
        \4\ Comer et al., 2019.
    ---------------------------------------------------------------------------
        A word of caution: biofuels and liquefied natural gas (LNG) are
    being used now, but neither is a reliable bridge to zero-emission
    vessels. Sustainable biofuel supply is limited, in demand by a variety
    of sectors, must be generated from waste, and not result in
    deforestation in order to be sustainable.\5\ LNG produces about 25%
    less CO2 when combusted but, due to methane leaks upstream during the
    production of LNG and downstream from the engine itself, LNG is often
    worse for the climate than conventional fuels after accounting for its
    full life-cycle emissions (Figure 2).\6\
    ---------------------------------------------------------------------------
        \5\ Zhou et al., 2020.
        \6\ Pavlenko et al., 2020.
    ---------------------------------------------------------------------------
        The coming transition to zero emission shipping can be a win for
    the U.S. economy, the environment, and human health. Zero-emission
    vessels (ZEVs) eliminate air pollution from the ships themselves,
    easing the health burdens of coastal and near-port communities. ZEVs
    avoid the water pollution generated by ships that use sulfur scrubbers.
    They're also quieter. And zero-emission vessels will unlock new careers
    to develop advanced engines, fuel cells, batteries, and fuels.
        The production and sale of zero emission marine fuels in particular
    is a major opportunity for U.S. businesses. Today, the largest vessels
    visiting U.S. ports are often fuelled abroad, not here at home (Figure
    3). Producing zero emission marine fuels like electricity, hydrogen,
    and ammonia domestically will provide new economic opportunities for
    Americans (Figure 4) while protecting vulnerable near-port communities.
        So, what actions can the U.S. government take to support the ZEV
    transition? First, we need substantial investments to develop and
    deploy zero-emission vessels and fuels, along with supporting port
    electrification and infrastructure. U.S. flagged ``Jones Act'' vessels,
    which operate shorter routes between regular ports, can be used to
    demonstrate and mature the technologies we'll need for deep sea ZEVs.
        Second, the U.S. should work with key trading partners, including
    Canada, Mexico, the EU, and China, to establish zero-emission vessel
    corridors and the associated infrastructure. Finally, the U.S. should
    lead in negotiating ambitious international standards for larger ships
    at the International Maritime Organization. These actions can reduce
    climate and air pollution from shipping, improve the health and well-
    being of port communities, and help unlock new markets for zero-
    emission vessels and fuels.
        Thank you for the opportunity to present today. I look forward to
    answering any questions the honorable members have for me.
                            Supplemental information

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Figure 1: Technologies for zero emission shipping through 2050.

               principles for assessing alternative marine fuels
        Flexible, technology-neutral standards set a level playing field
    for innovation and enable industry to find least-cost ways to reduce
    emissions. ICCT research has identified three key principles when
    evaluating fuels to support zero emission shipping:
        1.  CO2e not CO2: Some fuels and energy sources are zero-CO2, but
    not zero CO2 equivalents (CO2e ). For example, burning ammonia (NH3) in
    a marine engine will emit zero CO2, but could emit nitrous oxide (N2O),
    which has a global warming potential about 300 times that of CO2.
        2.  GWP20 not solely GWP100: Reducing pollutants with high 20-year
    global warming potential (GWP20), such as black carbon and methane,
    helps avoid additional near-term warming, which is essential for
    limiting warming to 1.5+C or well-below 2+C. GWP20 is a particularly
    useful metric for evaluating ``bridge'' fuels.
        3.  Well-to-wake not tank-to-wake: Consider the full life-cycle
    impacts of marine fuels and energy sources. Some fuels, such as
    hydrogen, are zero-emission when they are used, but they must be
    sourced from renewable energy, not fossil fuels, to be truly zero-
    emission.

        Collectively, these three principles highlight that LNG is unlikely
    to be a suitable future fuel for shipping. LNG is mostly methane, a
    potent GHG that traps 86 to 87 times more heat in the atmosphere than
    the same amount of CO2 over a 20-year time period. Methane leakage
    during extraction, processing and transport, and methane slip when
    burned, means that using LNG is often worse for the climate than
    conventional fuels, particularly over shorter timescales. For example,
    the most popular LNG engine technology today emits up to 70% more
    lifecycle GHGs (20-year GWP) than the cleanest oil-based fuel (marine
    gas oil, MGO), as shown in Figure 2.\7\
    ---------------------------------------------------------------------------
        \7\ Pavlenko et al., 2020.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

     Figure 2: Lifecycle GHG emissions by engine and fuel type, 20-year GWP

               centralized vs. distributed marine fuel production
        The largest oceangoing vessels can operate up to 50,000 miles,
    enough to circumnavigate the Earth twice, before refueling. As a
    result, the current centralized fossil fuel bunkering system means that
    a relatively small number of ports, mostly foreign, dominate global
    marine bunker fuel sales (Figure 3). This is particularly true for
    Pacific bunker fuel sales, which are dominated by Asian ports.

     Figure 3: Marine bunker fuel sales in 16 busiest ports, 2019 (Source:
                                 Ship & Bunker)

        In contrast, zero emission marine fuels like hydrogen and ammonia
    can be generated widely and, because of their lower energy density, are
    more likely to be sold and used near where they are produced. This is
    particularly true of renewable hydrogen. When my colleagues and I
    analyzed the potential for zero emission transpacific container
    shipping, we found that shifting to liquid hydrogen could generate
    substantial new refueling demand at U.S. ports, particularly in
    Southern California. Furthermore, our work highlighted the potential
    for Aleutian Islands ports to serve as a new refueling stop between
    Asia and the West Coast of the United States if hydrogen refueling
    infrastructure is built there (Figure 4).\8\
    ---------------------------------------------------------------------------
        \8\ Georgeff et al., 2020.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Figure 4: Hydrogen demand and refueling infrastructure for transpacific
                                container ships.

                                   references
    Comer, B., Chen, C., Stolz, D., and Rutherford, D. (2019) Rotors and
        bubbles: Route-based assessment of innovative technologies to
        reduce ship fuel consumption and emissions. Retrieved from: https:/
        /theicct.org/publications/working-paper-imo-rotorships
    Crippa, M., Guizzardi, D., Muntean, M., Schaaf, E., Lo Vullo, E.,
        Solazzo, E., Monforti-Ferrario, F., Olivier, J., Vignati, E.
        (2019). EDGAR v5.0 Greenhouse Gas Emissions. European Commission,
        Joint Research Centre (JRC) [Dataset] PID: http://data.europa.eu/
        89h/488dc3de-f072-4810-ab83-47185158ce2a
    Faber, J., Hanayama, S., Zhang, S., Pereda, P., Comer, B., Hauerhof,
        E., and Xing, H. (2020) Fourth IMO greenhouse gas study. Retrieved
        from: International Maritime Organization: https://docs.imo.org/
    Georgeff, E., Mao, X., Rutherford, D., and Osipova, L. (2020) Liquid
        hydrogen refueling infrastructure to support a zero-emission U.S.-
        China container shipping corridor. Retrieved from: https://
        theicct.org/sites/default/files/publications/ZEV-port-infra-
        hydrogren-oct2020.pdf
    Mao, X., Rutherford, D., Osipova, L., and Comer, B. (2020) Refueling
        assessment of a zero-emission container corridor between China and
        the United States: Could hydrogen replace fossil fuels? Retrieved
        from: https://theicct.org/sites/default/files/publications/Zero-
        emission-container-corridor-hydrogen-3.5.2020.pdf
    Olmer, N., Comer, B., Roy, B., Mao, X., and Rutherford, D. (2017)
        Greenhouse gas emissions from global shipping, 2013-2015. Retrieved
        from: https://theicct.org/publications/GHG-emissions-global-
        shipping-2013-2015
    Pavlenko, N., Comer, B., Zhou, Y., and Clark, N. (2020) The climate
        implications of using LNG as a marine fuel. Retrieved from: https:/
        /theicct.org/publications/climate-impacts-LNG-marine-fuel-2020
    Rutherford, D., and Comer, B., (2018) The International Maritime
        Organization's initial greenhouse gas strategy. Retrieved from:
        https://theicct.org/publications/IMO-initial-GHG-strategy
    Sofiev, M., Winebrake, J.J., Johansson, L. et al. Cleaner fuels for
        ships provide public health benefits with climate tradeoffs. Nat
        Commun 9, 406 (2018). https://doi.org/10.1038/s41467-017-02774-9
    Zhou, Y., Pavlenko, N., Rutherford, D., Osipova, L., and Comer, B.
        (2020) The potential of liquid biofuels in reducing ship emissions.
        Retrieved from: https://theicct.org/publications/marine-biofuels-
        sept2020

        Mr. Carbajal. Thank you, Dr. Rutherford.
        With that, we will move on to Member questions. Each Member
    will be recognized for 5 minutes. And first we will start with
    Chairman DeFazio.
        Mr. DeFazio. Thank you, Mr. Chairman.
        First, to Dr. Kindberg, the biofuel that you are going to
    use, right now there is virtually no availability for that 2023
    target. You are going to need it on both ends of a voyage,
    right? So I am just curious about the capability of supplying
    what we need to produce this.
        Ms. Kindberg. When I had an update on this--and thank you,
    Mr. Chairman--when I had an update on the fuel availability on
    this, I learned from our Maersk Oil Trading team that we were
    talking to something like 35 or 37 different suppliers of these
    fuels to start to ramp this up.
        The first time you do something like this, it is going to
    take some effort. But we feel that this is a really important
    signal to send to these suppliers, that there will be a demand
    for these. Otherwise, you get into the chicken and the egg.
        Mr. DeFazio. All right. And I was also intrigued by the
    bio-based ethanol with the polymer lignin. You want to tell me
    a little bit about that?
        I mean, what is the advantage of adding the lignin? Does
    that make it a higher value fuel, or what? What is that?
        Ms. Kindberg. Well, lignin actually has the--it comes from
    agricultural waste. It is what makes plant stems stiff. So it
    is the second most common biopolymer in the world. It is
    available from paper mill effluence, all kinds of waste
    products. And you can mix it into an alcohol, a renewable
    alcohol, and come up with a fuel that has the potential to be
    more cost effective.
        So as you know, one of the real costs with these new fuels,
    or one of the real challenges with these new fuels, is the
    cost. You are looking at something like double the cost, even
    for some of the fuels that are more readily available.
        So I probably ought to stop there, but I am pretty
    passionate about this topic, so----
        Mr. DeFazio. Well, no, no, I----
        Ms. Kindberg [continuing]. If you wanted to know more about
    it later, I am glad to have the conversation.
        Mr. DeFazio. Well, I just will say, I mean, we have this
    issue with straw. My district is the largest producer of grass
    seed in the world. And for years they would torch the fields to
    get rid of pests, potential weeds, and things like that. When
    it stopped raining, finally, in Oregon, the skies would go
    dark, and we are all breathing smoke all summer. Finally, it
    has been substantially banned, but now there isn't the market
    for that straw. So I assume that straw would be a potential
    lignin source.
        Ms. Kindberg. I would assume so, too. I know that the gas
    that is used for making sorghum, for example, is a source of
    lignin.
        Mr. DeFazio. OK, well, I am going to have to----
        Ms. Kindberg. So there could be all kinds of opportunities
    here, rather than just burning that stuff.
        Mr. DeFazio. Yes. They are dealing with it in alternative
    ways, and trying to ship it places. But the market is not that
    adequate. So thanks.
        And then to Mr. Fanberg, I have got to say, it sounded a
    little pessimistic, in terms of where we are vis-a-vis foreign
    competition in these areas. Do you want to be a little more
    specific about that, and what steps specifically we should take
    to begin to at least be partially competitive?
        Mr. Fanberg. Well, so on the foreign competition, that one
    example I used about our foil ferry project, we do have stiff
    competition, and it is very well funded. This is where the
    industry is headed with passenger ferries and efficiency, when
    it comes to foil-bound ferries. So that was one example of a
    very well-funded foreign competitor in the U.K.
        I didn't mean to sound overly pessimistic, because I do
    think that this meeting, and the action that is happening, not
    just from Glosten's point of view, but from other naval
    architects, is very encouraging, that we are working hard. But
    the funding source is our difficulty when it comes to
    demonstrating these new technologies. We have enough funding to
    get started, to do design work. But when it comes to actually
    demonstrating and putting something on the water, that is where
    the gap is.
        Mr. DeFazio. So you mentioned potentially MARAD and DOE,
    correct?
        Mr. Fanberg. Yes, that is true. Yes.
        Mr. DeFazio. OK, we will have to pursue that, then. Thank
    you very much.
        Thank you, Mr. Chairman.
        Mr. Fanberg. Thank you for the question.
        Mr. Carbajal. Thank you, Chairman DeFazio. Next we will go
    to Ranking Member Gibbs.
        Mr. Gibbs. Thank you. Thank you, Mr. Chairman. Thank you to
    the witnesses for being here today.
        The International Maritime Organization has set greenhouse
    gas reduction targets of 40 percent in 2030 and 50 percent in
    2050 from the 2008 levels. The World Shipping Council says
    these targets can only be met if shipping moves from fossil
    fuels to low- or zero-carbon fuels that are not available
    today.
        Mr. Butler, do you envision the industry will be able to
    convert existing vessels to the use of these new fuels?
        And I guess, if so, at what cost to the shippers and
    consumers? And if not, will existing vessels be scrapped early,
    and at what cost, Mr. Butler?
        Mr. Butler. Thank you, Congressman. A couple of points,
    just a clarification on the IMO 2030 goal. That 40 percent is
    an efficiency goal, as opposed to an absolute goal.
        We do think that, with current efforts underway, we will be
    able to meet the 2030 goal with existing ships through
    additional efficiency gains. The 2050 goal of 50 percent is an
    absolute reduction. And in order to get that, given the growth
    in trade, we are absolutely going to have to move to low- and
    zero-carbon fuels, and that is going to be the energy
    transition that Dr. Rutherford and Dr. Kindberg are talking
    about.
        In direct answer to your question about retrofitting
    existing vessels, there has been a lot of work already done on
    existing vessels in order to meet the requirements that we face
    in the immediate future. Whether or not existing vessels can be
    retrofitted to be essentially zero carbon will depend entirely
    on what technologies and fuels we end up using in the 2050
    timeframe. And as I testified earlier, we simply don't know yet
    what those are going to be. We don't know what is going to come
    out on top.
        And really, in order to answer your question, we have to do
    the research and development that I talked about, so that we
    know what technologies we are talking about.
        Mr. Gibbs. So there is a lot of unknowns, obviously,
    because we don't know what the technologies or the fuels are
    going to be. So you don't know if it is going to be one single
    fuel, or multiple, different fuels. That is just all up in the
    air right now, right?
        Mr. Butler. It is. I think, you know, I think for different
    ship types and different applications, we have already seen--
    and we have heard a bit today, for example--very short-sea and
    ferry applications. You can look at things like
    electrification, deep sea, transoceanic ships that have to
    carry their fuel for thousands and thousands of miles. Those
    solutions won't be there.
        We will probably see multiple fuels, but you have to
    remember that ships move all over the planet. And so, having a
    consistent source of fuel, no matter what port you go to, is
    pretty critical. I think that, for the deep-sea fleet,
    ultimately, that will push us in the direction of a smaller
    number of fuels than we have for the coastal fleets.
        Mr. Gibbs. Thank you.
        Mr. Fanberg, you stated that the Department of Energy and
    MARAD should take the lead in developing decarbonized U.S.
    vessels. Since the U.S. Coast Guard inspects and documents such
    vessels, what role should the Coast Guard play in this process?
        Mr. Fanberg. Thank you, Ranking Member Gibbs, for the
    question. Yes, the Coast Guard should actually take a very
    active role. As I mentioned in the three steps there in the
    strategic initiative plan, that third step was to coordinate
    with the Coast Guard to get ahead of these future technologies,
    and get regulations in place ahead of time, ahead of these
    projects that we put in place.
        Timely regulatory review, timely new regulations are
    critical to any of the success of these projects that are
    coming.
        Mr. Gibbs. Dr. Kindberg from Maersk, you talked about your
    feeder vessel being the first carbon-neutral container vessel.
    Was this vessel really a test bed for new technologies to be
    used later on your larger oceangoing ships?
        And because you also commented about the cost of fuel being
    double, so what is the role of this new vessel you just talked
    about that would be available in a couple of years, you said?
        Ms. Kindberg. Well, this new vessel will be powered by
    green methanol. We are actually testing several technologies on
    commercial vessels today. For example, we have a battery being
    tested on the Maersk Cape Coast, and we have, actually,
    commercial use of biofuels on several vessels sailing out of
    Europe, because that is where that fuel is available.
        So, yes, we are looking at test beds, but this vessel in
    particular is to give us some serious operating experience,
    particularly with a fuel that has a low flashpoint. In other
    words, it is more flammable than the typical bunker fuels that
    we are used to using.
        Mr. Gibbs. I am out of time, so I yield back. Thank you.
        Mr. Carbajal. Thank you, Ranking Member Gibbs. Now I will
    recognize myself, to be followed by each Member for an
    additional 5 minutes of questions.
        With that, Ms. Decas, as I mentioned earlier, in my
    district the Santa Barbara County Air Pollution Control
    District has done some remarkable work with vessels on lowering
    speeds as they approach the coast and ports through the
    ``Protecting Blue Whales and Blue Skies'' program. This work
    has reduced emissions from vessels still burning fossil fuels
    and has had a positive impact on our local air quality.
        Ms. Decas, can you talk about how your port has assisted in
    getting vessels to participate in reducing speeds, and how
    this, coupled with new emissions-reducing technology can help
    the port reduce overall emissions and improve air quality for
    the surrounding areas?
        The public health burden of port emissions often falls on
    nearby disadvantaged communities of color. What work has the
    Port of Hueneme done to engage local communities to ensure
    their concerns are heard?
        Ms. Decas. OK, I will start with the first one, Blue
    Whales, Blue Skies. Our customers do actively participate in
    this program. We strongly encourage it, and several of them
    have received awards, and I will submit those awards to you so
    they can get into the congressional record.
        We are looking in terms of clean air emissions, a variety
    of technologies. One is something called a sock. Well, not
    quite a sock, but it is a technology, a bonnet system where, if
    a vessel comes in, you will be able to cover the stack and
    capture emissions that way. That is something that is emerging
    as a new look, or a new opportunity for the industry in terms
    of capturing at-berth emissions.
        In terms of the social equity piece, this is exactly right.
    Adjacent communities at ports are often considered to be
    sacrifice zones. Particularly in Port Hueneme, we have a very
    large minority population. If we can develop green types of
    technologies, there are two things that can happen. One,
    immediately you have the direct relief from environmental
    mitigation. And then two, you can also develop a pipeline and
    workforce development into these green technologies, and that
    is exactly what we are doing at the Port of Hueneme.
        We are looking at ways to interface and get our populations
    the education that they need, so there is direct pipelines to
    new job and uplifting our social equity at the Port of Hueneme
    through workforce developments, local project labor agreements
    to hire local community players, and ensure apprentices in
    those types of things are happening so that we can really
    develop our workforce and uplift the economic health of our
    community, access to public healthcare, and all of that.
        Mr. Carbajal. Thank you. And I appreciate you submitting
    that information for the record. And without objection, it will
    be submitted, regarding the awards that you referenced.
        Ms. Decas. Yes.
        [The information follows:]

    Letter of June 22, 2021, Regarding Port of Hueneme and the Vessel Speed
    Reduction Program, from Kristin Decas, Chief Executive Officer and Port
      Director, Port of Hueneme-Oxnard Harbor District, Submitted for the
                        Record by Hon. Salud O. Carbajal
                                                         June 22, 2021.
    Hon. Congressman Salud Carbajal,
    2331 Rayburn HOB,
    Washington, DC 20515.
        Dear Congressman Carbajal,
        Thank you for the honor and opportunity to testify on April 15,
    2021 at the ``Practical Steps Toward a Carbon-Free Maritime Industry:
    Updates on Fuels, Ports, and Technology'' Coast Guard and Maritime
    Transportation Subcommittee hearing. I hope I offered insights that
    will help advance the decarbonization of the maritime industry and
    bring social equity to underserved communities. As part of my
    testimony, a question was raised specific to the work of the Port of
    Hueneme and the Vessel Speed Reduction Program (VSR), also known as the
    Blue Whales and Blue Skies Program. I committed to providing additional
    information for the record that highlights the efforts of our customers
    participating in this program and respectfully request this letter be
    accepted as my response.
        For the purpose of background, the VSR program includes shipping
    lanes through the Santa Barbara Channel off the coast of Ventura and
    Santa Barbara Counties and encourages participating shipping lines to
    reduce their vessel speeds. Under the National Oceanographic and
    Atmospheric Administration (NOAA) program, participating vessel lines
    are awarded financial incentives based on the amount their vessels
    travel below 10 knots in the VSR zones. These reductions in vessel
    speed translate into lower ship emissions of pollutants and greenhouse
    gases, reduced risk of vessel strikes of whales, and reduced ship noise
    in the offshore environment. Below are some additional facts relative
    to VSR:
          Every year, container ships and auto carriers make
    thousands of transits in the shipping lanes in the Santa Barbara
    Channel region and along the California coast.
          These vessels are a significant source of air pollution
    and ship strikes on endangered blue, humpback, and fin whales.
          The VSR incentive program is a voluntary program where
    the Project partners ask vessel operators to slow down to a speed of 10
    knots or less.
          Reducing air pollution and fatal strikes on endangered
    whales.

        The Port of Hueneme recognizes that participation in this program
    is essential for the environment at multiple levels. In the last few
    years, Port customers have received multiple awards for their voluntary
    participation in the program. Port of Hueneme customer participation
    and award levels are outlined in the table below for your reference:
          Port of Hueneme Customer Participation and VSR Awards Earned

                Hueneme Customers in VSR in Santa Barbara Channel
    ------------------------------------------------------------------------
                  Year                  Hueneme Carrier       Award Level
    ------------------------------------------------------------------------
    2016............................  Maersk............  n/a
    2017............................  Maersk............  n/a
      ..............................  NYK...............  n/a
      ..............................  K Line............  n/a
    2018............................  Maersk............  Silver
      ..............................  NYK...............  Gold
      ..............................  K Line............  Gold
      ..............................  Hyundai Glovis....  Gold
    2019............................  Maersk............  Gold
      ..............................  NYK...............  Gold
      ..............................  K Line............  Gold
      ..............................  Hyundai Glovis....  Silver
    2020............................  Maersk............  TBD
      ..............................  WWL...............  Gold
      ..............................  NYK...............  Gold
      ..............................  K Line............  Gold
      ..............................  Hyundai Glovis....  Gold
    ------------------------------------------------------------------------

        At the Port of Hueneme, we are excited to inform you that we are
    increasing our engagement with this program. In 2021 we will be
    undertaking a Memorandum of Understanding (MOU) with NOAA to work
    collaboratively to increase customer participation in the program and
    to more widely acknowledge the important work done by those
    participating customers. The important benefits including improved air
    quality for our community and the protection of maritime life such as
    rare cetaceans which call our local oceans home.
        In closing, I would like to add a few additional highlights showing
    our commitment to addressing the growing concerns around sustainability
    and climate change. The Port of Hueneme was recognized as the greenest
    port by the United States Green Shipping Summit in 2017. In 2016, the
    Port of Hueneme was also the first port in the State of California to
    earn the prestigious Green Marine certification which is an onerous
    third-party audit and verification of sustainability practices by
    maritime facilities. The Port has continued to be re-certified by Green
    Marine annually since 2016. The Port of Hueneme moves over $10 billion
    in cargo, provides employment for 15,000 local citizens, and in the
    last decade has realized a 26% growth in cargo while reducing diesel
    emissions by more than 80%.
            Sincerely,
                                                 Kristin Decas,
                                    CEO/Port Director, Port of Hueneme.

        Mr. Carbajal. And as somebody who grew up in that area, I
    am very grateful for, again, the strides that the Port of
    Hueneme has made to ensure that there is a reduction of
    emissions, and that the public's health is protected. So thank
    you.
        Mr. Rutherford, last week I introduced legislation that
    will double the authorization for the Maritime Environmental
    Technical Assistance program, or META, within the Maritime
    Administration. This program provides funding for research and
    development of new technologies, such as alternative fuel
    sources. Can you speak to the sort of research the META program
    has resulted in, and how this research has benefitted your
    work? And what more could we do to bolster that program?
        Mr. Rutherford. Thank you, Chairman Carbajal. The Maritime
    Environmental Technology Assistance program has been an
    important program, traditionally, in helping foster new
    technologies to support the maritime sector in the United
    States.
        In particular, ICCT has, over the years, done a variety of
    research related to black carbon emissions from international
    shipping. Black carbon is the second most important climate
    forcer that is emitted from ships. It accounts for somewhere
    between 7 and 21 percent of the total greenhouse gas impact of
    shipping. And META, in fact, has funded some of that work,
    along with partners at the University of California in
    Riverside.
        So that is, I think, one example of META work in this area
    that has been valuable over the years. I certainly think META
    will continue to have an important role in research and
    development in the sector in a variety of new opportunities
    that Morgan and other participants today have discussed.
        So certainly, electrification of the maritime sector,
    investments in technologies like shore power, alternative fuel
    development, and a variety of other technologies need to be
    matured for deep-sea ships no later than 2030.
        Mr. Carbajal. Thank you.
        Mr. Fanberg, I represent a coastal district that has a
    large passenger and small vessel presence. Your company's work
    on electrification of ferries in Alabama is of great interest
    to me, and I can see how it might apply to other vessels in our
    domestic fleet. Do you see coastwise and domestic vessels,
    whether commercial or recreational, adopting this technology?
    And what can Congress do to help accelerate that shift?
        Mr. Fanberg. Thank you, Chairman Carbajal, for the
    question, and thank you for recognizing our project in Alabama,
    the Gee's Bend Ferry. That was a great example of a retrofit,
    an existing ferry that was able to secure grant funding and
    convert from diesel to all electric.
        So your question about transferring that to other entities,
    yes, absolutely. Obviously, depending on the route of the ferry
    or the small craft, it will depend greatly on that route and
    whether or not it is applicable for all-battery power. So there
    is no question that there are so many other vessels, as they
    age out, and new construction projects start, that these
    vessels could be ripe for an all-electric propulsion system.
        To encourage that, more projects like the Gee's Bend
    Ferry--in my State we are also working on a project up in
    Skagit County to replace a 41-year-old diesel-powered passenger
    and car ferry. That will be another project that, if we can get
    more funding, will be all electric. So, to encourage other
    municipalities and ferry systems and private operators to go
    all electric, we need more of those initial projects to
    showcase the technology and actually show that there is a
    reduction in maintenance costs and life-cycle costs when you
    can move from a diesel engine to a rotating electric motor. So
    very encouraging.
        Mr. Carbajal. Thank you very much.
        Next we will go to the distinguished gentleman from Long
    Beach, Representative Lowenthal.
        Mr. Lowenthal. Thank you, Mr. Chairman, and I greatly
    appreciate your describing me, but I really also want to thank
    you, Chairman Carbajal, for your leadership in greening the
    maritime industry.
        And I also want to thank the panel. Reducing maritime
    emissions is a really critical priority for the well-being of
    our planet, and can have a tremendous impact upon port
    communities such as--I represent the largest port complex in
    the Western Hemisphere, and that is the port I represent, the
    Port of Long Beach, which is part of the L.A.-Long Beach Port
    Complex. And so my port backs up right into the Port of L.A. It
    is really one large complex.
        So my first question is really for Dr. Kindberg.
        It is very exciting, Dr. Kindberg, your ability to launch a
    carbon-neutral vessel within 2 years, and you have already
    begun to talk a little bit about what are some of the issues in
    scaling up the technology. And so I have a two-part question.
        One is, when am I going to see a carbon-neutral vessel at
    the Port of Long Beach? I am interested in your larger ships.
    And when am I going to see a carbon-neutral vessel there?
        And then, the question is, what else do you need to do to
    have the industry move in this direction?
        We have seen the progress that you are saying--the industry
    side, to have this carbon-neutral vessel within 2 years. What
    do you think is needed to ensure that these new shipping fuels,
    such as methanol, are pushed to markets so you can become
    competitive? What role can we play? Thank you.
        Ms. Kindberg. First, let me--Congressman Lowenthal, first
    let me thank you for your continued leadership to our industry,
    and your long-term involvement. It is always good to see you.
        Mr. Lowenthal. Always good to see you, too.
        Ms. Kindberg. Yes, it is more difficult this way, isn't it?
        I would say that, in terms of when, I would love to bring
    some of these bio-based fuel ships here today. And we are
    talking to various fuel suppliers and so forth, because, as you
    know, to be able to make those long trips we have to have fuel
    at both ends. So that is one of the things that we are talking
    to a number of people about, to get that fuel arranged, to be
    able to do the biofuels, which we can do in existing ships.
        And then, for some of the new fuel ships, again, I would
    love to see them come here. Again, we are talking to fuel
    suppliers. We have to be able to arrange the needed renewable
    fuels. And I can get into more detail with you, if you are
    interested in more detail on that. But I won't take up all of
    your time with my enthusiasm here.
        Mr. Lowenthal. Well, I was just wondering, what role do you
    think that the Federal Government and this committee, under the
    leadership of Representative Carbajal, can play in bringing
    these fuels to market?
        Ms. Kindberg. Well, I would have to say, first of all,
    engage actively in setting the international frameworks for the
    global industry. We need goals and frameworks that are future-
    proof, and those are being discussed right now. So the U.S.
    needs to play a very active role in those discussions.
        And we need to establish mechanisms that encourage and
    reward early actors, and bring up the laggards, both the carrot
    and the stick.
        And we need global mechanisms to develop those new fuels
    and make them available and affordable.
        I also think the U.S. could leverage our R&D muscle and
    decades of experience in renewables to accelerate work on new
    fuels and energy systems, and the landside infrastructure to
    support them: the national labs, the universities. We have got
    tremendous research muscle here, and we could use it and
    address that challenge.
        Mr. Lowenthal. Thank you. I have one question also
    following up on this to Mr. Rutherford, if I have time.
        Mr. Rutherford, I am very pleased. I think it was in your
    written testimony, you talked about the possibility of hydrogen
    infrastructure in the San Pedro Bay. Well, that is the Ports of
    L.A.-Long Beach. Can you talk more about how we can develop and
    deploy this technology?
        I have not heard very much discussion of hydrogen fuel
    cells. And maybe you can talk about that, or hydrogen
    infrastructure that would be needed to propel hydrogen as an
    alternative fuel.
        Mr. Rutherford. Thank you for the question, Congressman
    Lowenthal. I am a little bit concerned about the time. I am
    happy to provide more details for the record, but within my
    written testimony there are several links to studies that my
    organization have completed on this question. So I encourage
    you to review those, and I am happy to provide additional
    details for the record.
        Mr. Lowenthal. Thank you. I will do that, also, and request
    that, Mr. Rutherford.
        I believe, Ms.--I don't have in front of me----
        Mr. Carbajal. I think you are out of time, Mr. Lowenthal.
    We are going to have a second round of questions, so you
    certainly----
        Mr. Lowenthal. Thank you.
        Mr. Carbajal [continuing]. You are welcome back. Thank you
    so much, Mr. Lowenthal.
        With that we will go to the other distinguished gentleman
    from the State of Washington, Representative Larsen.
        Mr. Larsen. Thank you, Mr. Chairman.
        Mr. Fanberg, you might not be surprised I am going to ask
    you some questions. Skagit County is in my district, and Guemes
    Island Ferry is the project you are talking about with Skagit.
    What are the physics of an electric-powered ferry in a channel
    like the Guemes Channel, which has tidal currents running back
    and forth, compared to diesel power? And what are the
    challenges of physics on that?
        Mr. Fanberg. The challenges--you are talking about an area
    that has some extreme currents. And so that was part of our
    project, was to look at the environmental aspects of going to
    all electric.
        So when it comes to physics, it is, obviously, all about
    thrust and how quickly we can react in that channel, not only
    due to the environmental aspects, but also it is highly
    trafficked through that channel, as well, as you know.
        So when it comes to the design, it is really about either
    matching what a diesel-powered vessel can do when it comes to
    maneuverability. We also can look at different types of
    propulsion, whether it is an azimuthing thruster that can move
    the vessel in any direction, or even the propeller design can
    go into some of the physics and the maneuverability aspects.
        Mr. Larsen. OK, so there are other design features you can
    incorporate in order to address any of the thrust challenges
    you get with electric versus the classic diesel.
        Mr. Fanberg. Absolutely.
        Mr. Larsen. Yes. On that, Whatcom County, which is just
    north, has the ferry to Lummi Island, and they are looking at
    replacing their ferry, as well.
        Mr. Fanberg. Right.
        Mr. Larsen. And you mentioned the funding issue. Just a
    note: in the INVEST in America bill last year, which was
    incorporated into the Moving Forward bill last year, we did
    include low- and no-emission ferry funding in that. And I will
    be pursuing that again this year, over the next couple of
    weeks, as we put together the infrastructure bill. So there are
    opportunities.
        Our State ferry system is the largest, based on vehicles
    and passengers, as well. Those are, by scale, much larger
    ferries than, say, what we are looking at in Skagit County. And
    I don't know if you are involved with the State ferry system
    discussion on electric, I know that some other folks are.
    Again, getting to questions of scale, and thrust, and
    maneuverability, to make this a reality--that is where I am
    getting at, I want to make this reality--what do we need to be
    thinking about, when it comes to these larger platforms,
    compared to the smaller platforms you will see in Skagit?
        Mr. Fanberg. Congressman Larsen, good question, and yes, we
    are involved in the Washington State ferry projects. You know,
    there are two avenues there. They are looking to convert,
    actually, the ferry that I take home every day, the existing
    vessel, another conversion project to all electric. And then
    the new class of ferries, one of those, the fifth of the class,
    is in development to be an all-electric ferry.
        So the big issue when it comes to these longer routes--both
    of those will be all electric--it is that infrastructure
    problem, getting the power to the dock. We have a longer route.
    And if you don't have enough battery capacity to do a round
    trip, it is about getting the infrastructure at both ends of
    the dock, so you can recharge rapidly to make your return trip.
    So that is the big challenge right there--the battery
    technology exists, the engineering power is there to convert
    the vessels or to design them. It comes down to infrastructure
    and making sure we have power where we need it.
        Mr. Larsen. Yes, and I don't mean to ask this facetiously,
    but just as a matter of scale, to go from Anacortes to Friday
    Harbor with stops in Orcas and Shaw--and I invite everyone to
    my district to do that, by the way, call me any time--does the
    battery need to be as big as the ferry to make that round trip,
    what is the scale?
        Because you are not stopping, you don't get to stop. It is
    not really long enough. You land the ferry, you unload your
    load, you leave. Hopefully, all within 20 minutes.
        Mr. Fanberg. Those ferries that are existing are large
    enough for the density of the battery. So again, battery
    technology has come a long way--the power you can get in a
    footprint now, compared to 10 years ago, where you probably
    physically couldn't get a battery on those vessels to make
    those routes. So the density and the technology has come a long
    way, where the ferry sizes that are existing up there, it
    shouldn't be a problem to get the right-sized battery.
        Mr. Larsen. Yes, OK. Well, again, I will, in my last 10
    seconds, just remind folks we did put language in the Moving
    Forward Act, which was in the INVEST in America Act. We will be
    pursuing that again. My office will be pursuing that again as
    part of the American Jobs Plan.
        Thank you, Mr. Chair.
        Mr. Carbajal. Thank you, Mr. Larsen.
        Now we are going to proceed with another round of questions
    for those Members that would like to ask additional questions.
    Each Member will be recognized for 5 additional minutes, and I
    will start with myself.
        In your testimony, Dr. Kindberg, you say that Maersk is
    responsible for .1 percent of the global CO2 emissions. Most
    companies would not volunteer that information. You then
    proceed to explain Maersk's plan to exceed the IMO's goals on
    emissions. Why is Maersk seemingly going above and beyond the
    international standard?
        Is there a business case to be made here?
        Ms. Kindberg. Well, first, of course, the right answer is
    that it is the right thing to do. So thanks for asking that
    question.
        But also, it is very important that our customers provide
    us demand signals that this is indeed something that they want,
    that they need, and that they are expecting us to do. And we
    actually have customers who are paying a premium today to ship
    net-zero-carbon shipping. That is a change just in the last 2
    years.
        So we are really starting to see, I would have to say, a
    global change among cargo owners and shippers to really support
    some of these new investments.
        Mr. Carbajal. Thank you.
        Mr. Butler, what are the requirements that must be
    developed for non-carbon-based fuel delivery and storage?
        Mr. Butler. Mr. Chairman, there are a lot of things that
    have to happen, seemingly all at once, but at the same time
    they have to happen, I think, in a certain order, just as a
    matter of logic.
        I think, in answer to your question, when you think about,
    for example, storage and delivery, the first thing you have to
    figure out is, well, what is it that I am storing and
    delivering? So we have to look at what technologies can safely
    be placed on the ships.
        And then you turn to the--probably in many ways--much more
    daunting question of, OK, how do we produce those fuels in a
    way that is itself low-carbon or no-carbon?
        We have heard a lot of talk about electricity today. That
    is not going to work on big ships. But just to take that as an
    example, you can power a vessel with electricity, but if the
    electricity is being generated by a coal-fired powerplant, you
    haven't done a lot for greenhouse gas. So you do----
        Mr. Carbajal. We lost your microphone, Mr. Butler.
        Mr. Butler. Is it back now?
        Mr. Carbajal. We can hear you, just a little fainter than
    before. Keep going, you are fine.
        Mr. Butler. So, to get back to the direct answer to the
    question, first you need to know what the fuel is, and then you
    have to figure out what are the constraints on storage,
    reduction, and transportation of that fuel to make sure that it
    is available all the places that it has to be. So there is a
    series of steps that you have to take logically in order to
    answer that question.
        Mr. Carbajal. Thank you very much.
        And this is to all witnesses: While we understand that
    research and development is underway, which fuels are best
    suited for international shipping, coastwise shipping, small
    passenger vessels, and tugboats?
        [Pause.]
        Voice. I guess I can go first.
        Mr. Carbajal. Don't all at once, now.
        [Laughter.]
        Mr. Fanberg. If I could go first, Chairman Carbajal, I
    think, from my perspective as an engineer, you look at the
    technologies that are already in development and are already
    somewhat proven. So battery technology is, as you heard me
    mention, for more of the short routes when it comes to harbor
    craft and passenger ferries.
        And then, of course, hydrogen is--it might not be the most
    ideal going forward, and there may be better fuels in the
    future. But right now it actually could be used, and very
    efficiently, and there is good fuel cell technology that could
    be powered by hydrogen. There could be future technology
    [inaudible] but right now those are the two technologies that
    are the most promising.
        Mr. Carbajal. Thank you.
        Anyone else?
        Ms. Decas. I will go. Chairman Carbajal, I will just say,
    from an infrastructure side, from the port's standpoint, not
    looking at vessel technology, the electric infrastructure is
    proven at ports. I will add, though, that there is one
    challenge, and one I think Congress should influence, is entry
    into--and incentivize entry into the market. There is only one
    producer of shoreside power system, a company called Cavotec.
        So the ports in California compete for mechanics. There is
    really only one mechanic. So if our system goes down, there is
    only one mechanic that can come out, and we compete for that.
    So entry to market is really important, and encouraging R&D in
    these technologies.
        And then, just in terms of our handling equipment, and
    other infrastructure development, we too are looking at
    hydrogen solutions as a potential, and hydrogen fuel cells to
    run port operations that would complement what the vessel
    industry is doing.
        Mr. Carbajal. Thank you.
        Why don't you conclude, Mr. Rutherford?
        Mr. Rutherford. Thank you, Chairman Carbajal, I very much
    agree with Morgan and Kristin on this.
        To a first approximation, the problem is burning carbon
    fuels. So if you can move away from a fuel that contains
    carbon, and move towards a fuel that can support
    electrification of ships, starting with the ships near port and
    eventually branching out to the deep-sea ships, that is the
    ultimate long-term solution. So there we are talking about
    battery electric, hydrogen, and then some sort of hydrogen
    carrier, for example, ammonia or potentially green methanol.
        Mr. Carbajal. Thank you.
        And Ms. Kindberg, I see you wanted to say something. So in
    conclusion, if you could, conclude.
        Ms. Kindberg. Thank you. I just can tell you what we are
    working on for our big ships. We are focusing on biodiesel and
    biofuels, renewable alcohols, those lignin fuels that I
    mentioned, the lignin alcohol blends, and ammonia. The ammonia
    is a longer term option, due to safety and design
    considerations. So that is where we are really focusing. You
    have to have a really energy-dense fuel to be able to cross the
    Pacific.
        Mr. Carbajal. Thank you.
        Now, proceeding with the same complementary approach of all
    my colleagues, I will go to our distinguished ranking member
    from Ohio, Mr. Gibbs.
        Mr. Gibbs. Thank you, Mr. Distinguished Chairman.
        Mr. Butler, the organization, the World Shipping Council,
    proposes to establish an industry-funded International Maritime
    Research and Development Board and International Maritime
    Research Fund to accelerate the development of technologies to
    achieve low- and zero-carbon fuels. What happens if the
    industry-funded international research program is not
    established, and market-based measures are left to drive the
    industry to shift to cleaner fuel technologies, Mr. Butler?
        Mr. Butler. Congressman Gibbs, I would rather focus on what
    happens if it is implemented. But to answer your question
    directly, without a well-funded, international, coordinated
    research and development effort, it is going to take the
    industry much longer to figure out what technologies are----
        Mr. Gibbs. Can you speak up just a little bit? You are kind
    of fading away there.
        Mr. Butler. Sure. Without that research and development
    activity, it is going to take the industry much longer to
    figure out which technologies and which fuels are going to be
    viable to allow us to decarbonize. That translates into it
    takes us much longer to actually get the job done, and it also
    translates into a tremendous amount of investment uncertainty
    in the interim.
        So it is really critical that we use this mechanism of the
    IMRB to jump-start the technological work. The sooner we do
    that, the sooner you see the private investment come off of the
    sidelines and go into building the infrastructure necessary to
    supply those fuels. So it is really a question of timing, and
    time is not on our side. So it is absolutely critical that we
    take this step.
        Mr. Gibbs. Dr. Kindberg, one of your colleagues sits on the
    board of the World Shipping Council. And after hearing Mr.
    Butler's testimony, I noted that you were kind of silent in
    your testimony about the establishment of this International
    Maritime Research and Development Board and International
    Maritime Research Fund. Would you like to share your views on
    the establishment of this fund and development board?
        Ms. Kindberg. We absolutely support the proposal. There
    does need to be a way to coordinate this work globally. Without
    that coordination--and it is not just the funding, it is also
    the convening power of a body like this that could ensure that
    you can work together without jeopardizing antitrust
    considerations and things like that.
        So this organization would do more than just handle the
    money, it would also convene and designate kinds of projects
    that would enable us to really accelerate this work, and
    perhaps avoid dead ends.
        Mr. Gibbs. Thank you.
        Dr. Rutherford, I was trying to understand on your figure 3
    in your testimony. You have Singapore--it almost looks like
    they have a monopoly on refueling, or they move a lot more fuel
    than all the rest of the ports around the world. Was there
    something significant about that? Is Singapore so big that they
    move a lot of fuel?
        Mr. Rutherford. Thank you, Ranking Member Gibbs. Yes,
    Singapore definitely has advantages in terms of geography, and
    also economies of scale for selling shipping fuels.
        One of the points I was trying to make with that figure is
    that, because of today's centralized fossil fuel bunkering
    system, it is possible for ports outside of the U.S. to capture
    most of the fuel sales markets. That is because ships today are
    designed to have huge operating ranges. The largest oceangoing
    vessels, containerships or tanker ships, they are capable of
    operating up to 50,000 miles without refueling. Just to put
    that into perspective, that is a long-enough distance to
    circumnavigate the world twice without refueling. As a result,
    those ships can refuel once in a major hub like Singapore, and
    then operate up to 90 days before refueling, back and forth to
    the United States, for example.
        In contrast, some of these emerging zero-carbon fuels have
    a lower energy density. That means that there will need to be
    some minor operational or design changes to make them work. But
    it also means that the fuels can be generated and used closer
    to port, and that could create new business opportunities, for
    example, in the ports of southern California that Congressman
    Lowenthal was referencing earlier.
        Mr. Gibbs. Thank you, and my time is up. I will just make
    one quick comment, Mr. Chairman. It seems like there might be a
    lot of opportunities on some of these new biofuels that we
    might be able to get market share for that.
        Mr. Carbajal. Absolutely.
        Mr. Gibbs. I just wanted to mention that. So thank you, I
    yield back.
        Mr. Carbajal. Thank you, Ranking Member Gibbs. And next we
    will go to Representative Auchincloss.
        Mr. Auchincloss. I would like to thank Chairman Carbajal
    for convening this timely and important hearing.
        It is going to take a bold, all-of-Government approach to
    overcome the challenges of the climate crisis, and this hearing
    gives us the opportunity to delve into some aspects of that.
    And in my district, local colleges and businesses are already
    investing in the R&D necessary to strengthen the maritime
    workforce.
        Dr. Kindberg, I am particularly happy to get to speak with
    you today, because Maersk has partnered with Bristol Community
    College in my district to train students in wind skills
    development as part of the college's National Offshore Wind
    Institute, NOWI.
        Now, this year your company sold the world's first product
    tanker fit with wind propulsion technology to Norsepower Rotor
    Sails on board, and they showcased the drop in fuel
    consumption.
        So my question is, is there the opportunity to take, at the
    nexus of offshore wind and wind propulsion technology, a
    workforce development approach that trains people like the
    students of Bristol Community College in the skills necessary
    to advance both of those industries?
        Ms. Kindberg. And I must confess that I am not familiar
    with the program at Bristol Community College, and I apologize
    for that. We do work with colleges around the world and are big
    believers in workforce development. There will be a whole new
    set of skills needed to both build and install these new
    technologies, and to maintain them, and to handle all these
    fueling systems. So there absolutely will be needs for
    workforce development to support all of these things.
        Mr. Auchincloss. And do you think that there is--if you
    think of, like, a Venn diagram of the skills necessary to do
    offshore wind construction and maintenance and the skills
    necessary to do wind propulsion technology, how much of an
    overlap is there in terms of the programming that you would
    need for workforce development?
        Ms. Kindberg. You know, I am not that familiar with Maersk
    tankers. The Flettner rotors that they have actually been
    using, I have heard that they are getting good results. But I
    am not an expert on that one. I am happy to get you some
    information, if you need.
        Mr. Auchincloss. I would be interested in that.
        Mr. Fanberg, perhaps I could turn to you and get your
    thoughts on this. Some ports are natural hubs for connecting
    offshore wind, like the places in my district--Brayton Point,
    for example, in Somerset, Massachusetts. My district is right
    onshore of the greatest natural offshore wind resource, really,
    in the Western Hemisphere, and we are working hard to take
    advantage of that, in creating a cluster in southeastern
    Massachusetts devoted to offshore wind. Do you see a nexus
    between offshore wind manufacturing, logistics, R&D, with wind
    propulsion for international shipping?
        Mr. Fanberg. Thank you, Representative Auchincloss.
        So the crossover between the wind energy and wind
    technology for vessels, there is a--first of all, supporting
    the offshore wind industry off the coast, the east coast, is
    going to be a very large boom for the whole maritime industry
    in general. So maybe there is no crossover between the skill
    set for installing wind turbines and the skill set for
    operating a vessel with--like Maersk with the Flettner rotor,
    but there certainly will be a crossover in the maritime
    industry when it comes to jobs, and the maritime industry
    together.
        I don't necessarily see a crossover in the skill set for
    offshore wind and operating a vessel with Flettner rotors or
    other wind technology, except for the engineering side of
    things. I think, when it comes to the installation of offshore
    wind, certainly when we do deep-sea offshore wind, there is a
    crossover in skill set for naval architects to combine both of
    those technologies. So there is something there.
        Mr. Auchincloss. That is helpful feedback, I appreciate
    that.
        One of the things I expect Massachusetts will become a
    leader on is not just the installation, maintenance, operation,
    but also the latest R&D around this. Massachusetts is famous
    for its product development and putting the best minds to work
    on hard manufacturing problems. And I could see that there
    could be synergies between the best R&D for offshore wind and
    taking some of those learnings and applying them to wind
    propulsion. And I think Bristol Community College might be one
    of the leading centers of excellence for that.
        Mr. Chair, I yield back the balance of my time.
        Mr. Carbajal. Thank you, Representative Auchincloss. Next
    we will go to Representative Malliotakis.
        Ms. Malliotakis. Thank you very much, Mr. Chairman. I just
    wanted to follow up on some of the questions of the ranking
    member regarding achieving targets for greenhouse gas reduction
    that has been set up by the International Maritime
    Organization.
        In particular, I was wondering--and I guess this is a
    question for Mr. Butler--if you envision the industry being
    able to convert existing vessels to these new fuels. You
    touched on it slightly, but I am wondering what you would think
    the cost to shippers and consumers would be. And if they were
    to scrap existing vessels early, what would be the impact on
    that, as well?
        And if you have any information or insight into the
    construction costs of new decarbonized vessels compared to the
    current vessels.
        Mr. Butler. Congresswoman, thank you for the question. I
    will ask first whether you can hear me. I know there was a
    problem.
        Ms. Malliotakis. Yes, we can.
        Mr. Butler. OK, great. I mean, I am sorry to say that I
    can't give you very precise numbers about the cost of all of
    this, because we don't know quite yet what this is.
        You know, I have spoken earlier, we don't know which fuels
    and their related technologies are going to end up being the
    long-haul investments that the industry makes for the deep-sea
    sector. And whether or not those technologies and fuels will be
    suitable for retrofit is similarly an open question.
        I think it is safe to say that, at least in the short term,
    as we make this conversion, costs are going to go up. I think
    we need to be honest about that, and I really can't see a
    scenario where, at least based on what we know now, we have a
    no-cost transition. There will be cost. And that is one of the
    reasons that it is so absolutely critical that we avoid going
    down dead ends. And that means doing the research and
    development on the front end to figure out as early as possible
    which technologies are going to pan out.
        Ms. Malliotakis. Thank you, I appreciate that. And
    certainly, looking at the economic impact of all this, I think,
    should be a priority before we go down this path.
        And the second question I have, in recent conversations
    with the aviation industry, they had been talking about
    technology that they feel they could implement that would
    reduce fuel emissions. And this is a question for everyone, if
    you see that anything specific that you can share with us
    regarding possibly the same opportunities in the shipping and
    vessel industry.
        Ms. Kindberg. Well, shall I jump into that one first?
        Ms. Malliotakis. Sure.
        Ms. Kindberg. And thank you for your question. I am not
    sure exactly which technology you are talking about in the
    aviation industry, but I can tell you that, over the last 5
    years, we have done what we called our radical retrofit program
    to make dramatic energy efficiency improvements on about 100 of
    our vessels. And that program cost us $1 billion.
        Ms. Malliotakis. Could you share a little more about some
    of the impact that has had, and how many vessels, and sort of
    the success that you have seen?
        Ms. Kindberg. In that particular case--well, some of the
    success--these are vessels that commonly call the United
    States. And let me give an example in southern California--
    sorry, we also do call Port Authority of New York, New Jersey.
    But the example in southern California is one I happen to know
    quite well, because we did a study with the ports and with
    Scripps Institution of Oceanography.
        So not only did we improve energy efficiency of those
    vessels, we also reduced underwater radiated noise, which has
    an impact on the whales in Santa Barbara Channel and other
    places. So that happened to be a win-win. But we were just very
    fortunate to be able to have found that sweet spot. And we hope
    that underwater radiated noise and other environmental impacts
    can also be benefitted. So we really have to look at the whole
    picture, and not just greenhouse gases.
        Ms. Malliotakis. OK.
        Ms. Decas. Congresswoman, to complement what Maersk is
    saying, we do take on one of their vessels, a liner service,
    once a week in the Port of Hueneme, and they religiously plug
    in their vessel at berth, and that has led to profound impacts
    on the environment locally, here in our community, 85 percent
    reductions from shoreside power systems. So that is a
    technology worth pursuing.
        And I think, as the conversation moves forward around all
    these new fuels in the shipping industry, it is really
    important that ports are at the table, so they understand the
    infrastructure needs that are going to drive and coordinate
    with what is happening on the vessel side, so we are not
    working in silos, building one infrastructure at the ports and
    a different infrastructure for the vessels. So that is going to
    be a very important part of the conversation.
        Ms. Malliotakis. Thank you.
        Does anyone have any comments on what the potential impact
    will be of establishing zero-emission refueling stations in
    American ports, both environmentally and economically?
        Ms. Decas. I will speak to that. I can tell that you--and
    Port of Hueneme is interesting. We had $4 million in our
    reserves when I started in 2012, when we were regulated, to
    build a $14 million system, and we got it done. So it takes
    innovation and creativity, and working with different partners
    and investment. And we got it all across the board from the
    State, from the EPA. We got a new market tax credit deal to
    help us build the infrastructure to scale that up. And the
    larger ports, L.A. and Long Beach, invested well over $100
    million in infrastructure.
        But again, the payoff has been in the return to the
    communities, in terms of really significant and tangible
    emission reductions. So it is a solid investment, but the ports
    can't bear those costs alone, that we do need the assistance
    and the subsidies coming from State and Federal Governments so
    that we can really transition and transform into a decarbonized
    transportation network. In my testimony I said it is going to
    be about $35 million in California alone to retrofit our ports
    to zero-emission electric technology.
        Ms. Malliotakis. Thank you.
        Mr. Carbajal. With that, that concludes our hearing for
    today.
        I would like to thank each of the witnesses for their
    testimony today. I ask unanimous consent that the record of
    today's hearing remain open until such time as our witnesses
    have provided answers to any questions that may be submitted to
    them in writing.
        I also ask unanimous consent that the record remain open
    for 15 days for any additional comments and information
    submitted by Members or witnesses to be included in the record
    of today's hearing.
        Without objection, so ordered.
        The subcommittee stands adjourned.
        [Whereupon, at 12:41 p.m., the subcommittee was adjourned.]

                           Submissions for the Record

                                  ----------

      Prepared Statement of Hon. Sam Graves, a Representative in Congress
         from the State of Missouri, and Ranking Member, Committee on
                       Transportation and Infrastructure
        Thank you, Chair Carbajal and Ranking Member Gibbs, for holding
    this hearing today.
        As my colleagues on this Committee know, everything in this country
    moves.
        And as the current cargo surge has reminded us, 99 percent of
    everything moves at some point by water.
        Many consumer goods and parts needed for U.S. manufacturing arrive
    by container vessels, and any added costs placed on ocean carriers may
    get offset by cost increases for consumers and manufacturers.
        I would also note that today, U.S. agriculture exporters are being
    devastated by higher shipping costs related to the existing container
    shortages in many areas. We can see firsthand the need to keep shipping
    rates at reasonable levels.
        Therefore, we have to be mindful of how any new requirements on
    industry will add to the cost of transporting goods. With that said, I
    look forward to hearing from our witnesses about how they see the
    future of shipping and efforts being made to reduce the maritime
    industry's impact on the environment.
        Again, I thank the Chair, the Ranking Member, and the witnesses,
    and I yield back.

    Statement of Jennifer States, Director for Blue Economy, DNV Energy and
       Maritime North America, Submitted for the Record by Hon. Bob Gibbs
                                I. Introduction
        Chairman Carbajal, Ranking Member Gibbs, and Members of the
    Subcommittee, thank you for the opportunity to submit a statement for
    the record of the Subcommittee's recent hearing, Practical Steps Toward
    a Carbon-Free Maritime Industry. My name is Jennifer States, and I am
    the Director for Blue Economy with DNV.
        DNV is the independent expert in risk management and quality
    assurance. Driven by our purpose to safeguard life, property, and the
    environment, we empower our customers and their stakeholders with facts
    and reliable insights to make critical decisions with confidence. As a
    trusted voice for many of the world's most successful organizations, we
    use our knowledge to advance safety and performance, set industry
    standards and benchmarks, and inspire and invent solutions to tackle
    global transformations.
        In the maritime industry, DNV is the world's leading classification
    society and a recognized advisor. We enhance safety, quality, energy
    efficiency and environmental performance of the global shipping
    industry--across all vessel types and offshore structures.
        In the energy industry, DNV provides assurance to the entire energy
    value chain through its advisory, monitoring, verification, and
    certification services. As the world's leading resource of independent
    energy experts and technical advisors, DNV helps industries and
    governments to navigate the many complex, interrelated transitions
    taking place globally and regionally. DNV is committed to realizing the
    goals of the Paris Agreement, and supports customers to transition
    faster to a deeply decarbonized energy system.
        DNV was established in Norway in 1864 and has been operating in the
    United States for 123 years, since 1898. DNV USA is headquartered in
    Katy, Texas, and has 39 offices in 22 states, including major hubs in
    California, Ohio, and Pennsylvania. We employ 12,000 people worldwide
    (2,300 in the USA), and in 2020 generated global revenues of $2.4
    billion ($500 million in the USA). DNV is wholly owned by an
    independent foundation and invests five percent of its revenue in
    research and development.
        Decarbonizing the maritime industry requires a multifaceted
    approach that includes ships (the energy end-user), ports and shoreside
    infrastructure (to service and deliver the energy that the ships will
    use), and collaborative, cross-sector innovation to develop effective
    solutions for the ecosystem. Our statement discusses each of these
    three facets, followed by a summary of DNV's five recommendations to
    the Subcommittee, which are:
        1.  Develop a national maritime decarbonization strategy.
        2.  Renew the aging U.S.-flag merchant fleet.
        3.  Prioritize research, development, demonstration, and deployment
    funding for decarbonizing ships, ports, and supporting infrastructure.
        4.  Improve the framework and funding mechanisms with regional
    maritime cluster organizations to implement collaborative demonstration
    projects.
        5.  Set a uniform regulatory framework for port greenhouse gas
    (GHG) emissions.
                    II. Reducing carbon emissions from ships
        Shipping's main challenge over the current decade is to prepare for
    and start on a decarbonization pathway. Alternative carbon-neutral
    fuels are essential for achieving International Maritime Organization
    (IMO) greenhouse gas (GHG) emissions reduction goals in 2050, and the
    only practical way for shipping to achieve the ultimate vision of full
    decarbonization as soon as possible before 2100.
        Shipping is experiencing increasing pressure to decarbonize its
    operations and to reduce emissions to air. Most notably, in April 2018
    the IMO adopted an ambitious GHG emissions-reduction strategy for
    international shipping. Increasingly, we also see key stakeholders such
    as banks and cargo owners focusing on decarbonization, and legislation
    was introduced at the end of the 116th Congress to reduce/eliminate
    vessel emissions from ocean transportation (H.R. 8632, Ocean-Based
    Climate Solutions Act). All this points to a changing business
    environment for ships. It will shape the future fleet in important
    ways, particularly in the choice of fuels and technologies. This will
    likely impact costs, asset values and earning capacity more
    significantly than observed in the past.
        In contrast to previous environmental requirements, meeting GHG
    targets requires fundamentally more challenging technological and
    operational changes for shipping. The challenges include a transition
    to new and alternative zero-carbon/carbon-neutral fuels and
    unconventional technologies. In addition, the energy efficiency of
    ships requires rethinking, with the uptake of proven energy-recovery
    and energy-efficiency technologies to be intensified. These challenges
    also place a new and stronger focus on system-level thinking and
    integration of all available technologies. While the industry has been
    discussing emissions reduction for many years, all the most likely
    solutions face challenges and barriers. Meanwhile, shipowners postpone
    investment in new ships for fear of ordering a vessel that will be
    unacceptable under future GHG regulations.
        The decarbonization of shipping is part of a global transition
    across all industries towards greater use of renewable energy and less
    of fossil fuels. We have some ideas today on possible fuels for
    widespread adaptation in the decades to come, but cannot point to an
    entirely safe bet for the future at this point of time. In the 2019
    edition of our Energy Transition Outlook, we predicted that carbon-
    neutral fuels will likely supply around 40% of the total energy for
    international shipping in mid-century if the IMO's ambitions for
    reducing GHGs are to be achieved. The type and the pace of future
    regulations have an important role to play here, together with the
    future global energy mix, as well as fuel price and infrastructure
    development.
        An increasing number of studies consider ways shipping could
    decarbonize, developing scenarios for the transition from conventional
    to zero-carbon or carbon-neutral fuels, along with technical and
    operational energy optimization. The zero-carbon/carbon-neutral fuels
    will need producing from three primary energy sources; sustainably
    provided biomass, renewable electricity, or fossil fuels with carbon
    capture and storage (CCS). Decarbonization could be especially
    challenging in the deep-sea segment, which generates 80% of the global
    fleet's CO2 emissions.
    U.S. Government commitment
        Subsequent to the Subcommittee's hearing, the Honorable John Kerry,
    the U.S. Special Presidential Envoy on Climate Change, announced on 20
    April 2021 that President Biden is committed to achieving low to zero
    emissions from shipping by no later than 2050 and has recommitted the
    U.S. to discussions, debate and decisions at the IMO on GHG controls
    for international shipping.
        DNV welcomes and supports the U.S. Government's commitment of
    working with countries in the IMO. DNV recommends the United States
    develop a national action plan to reduce GHG emissions from
    international shipping, and thus align with the IMO's Marine
    Environment Protection Committee (MEPC) 75 resolution urging Member
    States to develop and update a voluntary National Action Plan (NAP).
        In addition to a national action plan for the U.S. international
    fleet, DNV recommends the United States also develop a maritime
    decarbonization strategy for the its domestic fleet by working across
    relevant agencies and with industry engagement. Based on DNV's
    international experience supporting governments with the development of
    their domestic maritime decarbonization strategies, public-private
    partnerships have successfully accelerated actionable goals. Some
    examples are:
          Washington Maritime Blue, USA: A cluster alliance
    launched by Washington State, committed to the development of maritime
    business, technology, and practices that promote a sustainable future
    contributing to economic growth, ecological health, and thriving
    communities. Discussed further in Section IV, below.
          Green Shipping Program, Norway: A public-private
    partnership program supporting the Norwegian Maritime Cluster's GHG
    initiatives to gather the maritime industry and escalate investment in
    green shipping.
          Maritime Decarbonization Center, Singapore: Foundation
    Det Norske Veritas--which owns DNV Group--has teamed up with the
    Maritime and Port Authority of Singapore (MPA) and five other industry
    leaders to establish a maritime decarbonization center in Singapore,
    supported by contributions from the founding members totaling $90
    million. The center's mission is to catalyze and facilitate
    decarbonization in the maritime sector.
          E4ships, Germany: promoting the use of fuel-cell systems
    and electric fuels in shipping.
          Vancouver Maritime Centre for Climate, Canada: an
    industry-led initiative with support from the Government of Canada,
    dedicated to accelerating the transition to a zero emissions shipping
    industry in British Columbia.
    Near-term actions benefitting decarbonization of shipping
        There are several near-term measures that can be taken to benefit
    decarbonization of the U.S. fleet. These measures also generate
    opportunities beyond decarbonization, including the creation of jobs in
    the maritime industry, in the American shipbuilding industry and in the
    related supply chains.
        To support near-term carbon reduction of the U.S. fleet, DNV
    recommends an increase of the existing funding to the Federal Ship
    Financing Program (MARAD Title XI) and the establishment of a priority
    for new ships that reduce their GHG emissions to federal and
    international levels. This is the primary financing mechanism for U.S.
    shipbuilding. With an average age of 24.5 years for the U.S. flag fleet
    compared to 13.3 years for the international fleet, the renewal of the
    U.S. flag fleet will contribute significantly towards the U.S. and IMO
    2030 and 2050 GHG reduction goals. Expanding the use of Capital
    Construction Funds (CCFs) or Construction Reserve Funds (CRFs), which
    provide deferred tax treatment on private capital used for
    shipbuilding/repair, could also increase the amount of private
    investment.
        In November 2020, the IMO introduced an Energy Efficiency Existing
    Ship Index (EEXI) when it approved amendments to MARPOL Annex VI at its
    MEPC 75 session. Subject to adoption at IMO's MEPC 76 in June this
    year, the requirements will enter into force in 2023. The EEXI will
    apply to all existing vessels above 400 gross tons and falling under
    MARPOL Annex VI. Guidelines on calculations, surveys, and verification
    of the EEXI will follow and be finalized at MEPC 76. Nevertheless, as
    the EEXI is the extension to existing ships of the newbuilding-related
    Energy Efficiency Design Index (EEDI), most procedures will be the same
    as for the EEDI (which has been applicable since early 2015), with some
    adaptions regarding limited access to design data. DNV findings show
    that some shipowners, including those of U.S.-flag ships engaged in
    international trade, may have challenges to meet the intended
    requirements. Therefore, these ships' urgent replacement will also
    benefit the decarbonization of the U.S. fleet.
        DNV also recommends that emissions reduction become a part of the
    selection criteria for funding/financing opportunities at federal
    agencies such as the Departments of Energy, Transportation, Commerce,
    Interior, and Homeland Security, and at independent agencies such as
    the EPA. The emissions reductions should be validated by U.S.
    shipowners and shipyards associations, plus MARAD, at a minimum. There
    are similar international programs that can be referenced, such as:
          Poseidon Principles launched in 2019 by three global
    shipping banks to provide a framework for integrating climate
    considerations into lending decisions that promote decarbonization of
    international shipping. Today, 24 leading banks, jointly representing
    approximately $175 billion in shipping finance, have aligned in
    commitment to the Poseidon Principles.
          Sea Cargo Charter was born from inside the Poseidon
    Principles to provide a global framework for aligning chartering
    activities with responsible environmental behavior to promote
    international shipping's decarbonization. Today, 20 major ship
    charterers are signatories.
    Promotion of alternative fuels and technologies to support
            decarbonization of shipping
        The future fuel and technology picture for the shipping industry is
    complex and getting more so. In the 2020 edition of our Maritime
    Forecast to 2050, DNV set out three decarbonization pathways forward
    and a detailed library of 30 scenarios we hope will enhance shipowners'
    ability to navigate technological, regulatory and market uncertainty
    due to decarbonization--and maintain their vessels' competitiveness,
    profitability and value over time.
        Our key messages are worth repeating here:
        1.  Over the next decade the shipping industry needs to start
    rolling out the next-generation ships running on carbon-neutral fuels.
    This will require accelerated technology development, large-scale pilot
    projects for deep-sea vessels and safety standards development.
        2.  A clear and robust regulatory framework must be in place to
    ensure the global availability of large volumes of carbon-neutral
    fuels; to enable their safe transportation, storage and use; and, to
    incentivize their uptake by ocean carriers while retaining a level
    playing field in the ocean transportation marketplace.
        3.  Picking the wrong fuel solution today can lead to a significant
    competitive disadvantage. Managing decarbonization risks is critical to
    protecting a vessel's future value, profitability and competitiveness,
    and for shipowners to ensure that their ships are on an acceptable GHG
    emission trajectory.

        To help ship owners and other maritime stakeholders monitor the
    global uptake of alternative fuels and assess the best options for
    their own vessels, DNV developed the Alternative Fuels Insight (AFI)
    platform. AFI provides a complete overview on developments of
    alternative fuels and technologies, covering both investments on ships
    and in bunkering infrastructure. A core aim is to improve clarity for a
    range of stakeholders allowing them to make informed decisions. It will
    assist ship owners in selecting a fuel for the vessels they order today
    and in coming years, and also fuel suppliers weighing up investment in
    new bunkering infrastructure. Maritime authorities will benefit from
    increased transparency, while equipment suppliers can gather
    intelligence for product development strategies.
        The U.S. Government can assist through promoting research,
    demonstration, and development of emerging technologies. The Maritime
    Administration (MARAD) does this through its Maritime Environmental and
    Technical Assistance (META) Program, with which it is funding several
    projects on alternative fuels (e.g., biofuels, LNG, methanol) and
    alternative energy (e.g., battery for auxiliary power and for hybrid
    use, fuel cells) to support decarbonization. Some examples are:
          SF-Breeze, a zero-emission, hydrogen fuel cell, high-
    speed passenger ferry, and establishment of a hydrogen refueling
    capability in San Francisco Bay, and
          Zero-V, a zero-emission, hydrogen fuel cell, coastal
    research vessel.

        DNV recommends that MARAD META funding be expanded substantially to
    accelerate research and development into alternative fuels and
    alternative energy to support maritime decarbonization.
     III. Ports and shoreside infrastructure to support decarbonizing ships
        While using low- to no-emissions fuels is crucial for the
    decarbonization of maritime transportation, decarbonizing the maritime
    industry also requires attention to ports and shore-side operations.
    Low- and zero-emissions fuels are still in the development stage, and
    strides have been made in electric ships, but the current U.S. and
    global fleet is still powered largely by petroleum fuel oils. For
    vessel owner/operators to make the transition to alternative energy and
    fuels, the availability of charging and fueling infrastructure at port
    facilities is critical. New business models that work for ports, their
    tenants and utilities are needed to enable the capital-intensive
    infrastructure to be built. In addition, as these technologies mature,
    it will still take time to retrofit or rebuild the fleet so that it is
    powered by low- or zero-emissions fuels.
        One near-term solution is to reduce emissions at ports. There needs
    to be an increase in spending for Research, Development and
    Demonstration (RD&D) for maritime energy technologies and fuels. In
    this regard, the EPA's Diesel Emissions Reduction Act (DERA) funding
    can be expanded building new and retrofitting existing vessels, as well
    as a priority set for port projects. DOE's EERE and ARPA-E should make
    maritime and ports a strategic priority, and increased funding should
    be used to support RD&D of novel low- and zero-carbon fuels and
    technologies that can scale in production and volume to help the
    maritime industry decarbonize rapidly. RD&D topics of interest include
    port operations and infrastructure, vessel hull design, energy sources
    and carriers (hydrogen, biofuels ammonia, batteries, marine renewable
    energy, etc.), vessel operations and energy efficiency, and exhaust
    treatment.
        As a major contributor to carbon emissions, ports and their users
    offer many largely untapped ways to reduce greenhouse gas emissions
    throughout their operations. In addition, reducing or eliminating
    carbon emissions in ports is beneficial to all stakeholders beyond the
    maritime industry; local communities can reap the benefit of cleaner
    air and fewer health impacts, a revitalized neighborhood surrounding
    the port, and job creation as necessary infrastructure is built.
        DNV's recent report, Ports: Green Gateways to Europe, outlined ten
    green transitions that would significantly reduce carbon emissions at
    and near ports. Three transitions stand out as solutions that would
    make a significant impact in reducing carbon emissions at ports:
    electrification of port-connected activities, including cold ironing
    and drayage trucks; uniform regulations at the federal level specifying
    carbon emission reduction standards and other related regulations; and
    integrating offshore wind transmission infrastructure into ports. In
    addition, integrating energy efficiency measures such as LED lighting
    can bring an overall reduction of the carbon footprint of ports. Last
    summer, DNV issued a series of white papers focused on North American
    waterfront decarbonization opportunities including shore power, drayage
    trucks and tugs.\1\
    ---------------------------------------------------------------------------
        \1\ The waterfront decarbonization white papers are available from
    DNV at https://www.dnv.com/services/waterfront-decarbonization-192317.
    ---------------------------------------------------------------------------
        However, the decarbonization of the electricity supply is a
    necessary step to reaching low- or no-emissions operations for ports.
    Fortunately, the current trajectory of the integration of renewables
    into the grid is accelerating across the United States. DNV's Energy
    Transition Outlook predicts that generation from solar PV and wind will
    dominate the generation mix, reaching about 45 percent total by 2050.
    With goals put forward by the Biden Administration recently, this
    percentage could dramatically increase.
        To balance electricity supply and demand, especially as more
    renewable energy comes on-line, the grid must have system flexibility,
    which can be provided by a mix of supply- and demand-side options,
    including flexible conventional generation, curtailment of renewable
    generation, new transmission, and more responsive loads.
    Port decarbonization
        DNV recommends incentivizing and funding the electrification of
    port operations to the largest extent possible, particularly cold
    ironing and drayage trucks. Electrification of port operations offers
    multiple benefits: decarbonization of port operations and reduction in
    emissions impacts for the nearshore communities, economic development
    opportunities for the local community for as new infrastructure is
    constructed, and new or increased revenue streams for utilities as
    loads from ports grow. There are obstacles that need to be overcome,
    and individual ports are hard pressed to achieve electrification
    without support and involvement from federal, state, and local
    governments. The single most important factor for achieving low- or
    zero-carbon emissions operations via electrification is ensuring that
    the electricity supply is primarily from renewable generation sources.
    As mentioned above, the Administration's goal to reach a carbon
    emission free electric sector by 2035 will accelerate the availability
    of clean energy.
        Electrifying specific areas of port operations, cold ironing when
    ships are at berth and drayage trucks that move cargo, and improved
    access to charging and alternative fueling for harbor craft and other
    vessels would make the largest impact on decarbonizing port operations.
    However, each require large investments by utilities, ports and
    industry, and greater funding is required to enable larger adoption of
    these practices. Each operation also has specific considerations to
    make them more readily feasible for both ports and, in the case of cold
    ironing and alternative energy/fuel bunkering, ship operators.
        Mandating cold ironing while at berth, as is required in
    California, can reduce the quantity of carbon emissions significantly--
    NOx emissions can be reduced by 30 percent and particulate matter by 65
    percent per call. The overall reduction in greenhouse gas (GHG)
    emissions depends on the local generation mix, but the average is about
    36 percent. From a strictly environmental standpoint, cold ironing is
    an effective way to reduce GHG in ports significantly, especially if
    the local generation mix is primarily renewables. However, the capital
    cost is about $2 million to $10 million per berth, and, depending on
    the design of the ship and the berth, may not work in all situations.
    However, innovative approaches to shore power that are currently in
    development, such as mobile fuel cells powered by hydrogen, that can
    adapt to a variety of ships at berth, can help to address this issue.
    Additionally, the utility itself needs to be able both supply the power
    that the ship needs, and to manage large and somewhat intermittent
    loads as ships come and go in the port.
        While ports can serve as the hosts for fueling and charging
    infrastructure, utilities are critical in providing decarbonized energy
    options. Utilities like Tacoma Power are leading the way in offering
    special tariff structures for shore power and for electro-fuel
    generation such as hydrogen. Going into effect April 1, 2021, this
    first in the nation electrofuel tariff is designed for industrial
    producers of electrofuels to take Tacoma Power's carbon-free
    electricity and produce hydrogen or hydrogen-rich compounds that can be
    used to store electricity for later use.
        As described in my testimony to the House Committee on Science,
    Space, and Technology on July 17, 2020, an example of utility
    leadership in this space is our Joint Innovation Project for growing a
    ``Maritime Hydrogen Ecosystem through Formic Acid Storage Pathways.''
    \2\ This is a cooperative pilot project for mobile shore power that is
    being developed between the utility, ports, industry and national labs
    that can demonstrate how to make, store, move and use hydrogen and
    liquid hydrogen carriers (such as formic acid). These new technologies
    and the system-based approach to solving the business case challenges
    offer promise for scaling production of hydrogen for future maritime
    uses.
    ---------------------------------------------------------------------------
        \2\ From Lab to Market: Accelerating Our Progress Toward Economic
    Recovery and a Clean Energy Future, Hearings before the Subcommittee on
    Energy of the House Committee on Science, Space, and Technology. 116th
    Cong. (2020). Testimony of Jennifer States.
    ---------------------------------------------------------------------------
        Drayage trucks in ports are commonly fueled by diesel engines.
    Electrifying this equipment can further reduce carbon emissions in
    ports. Battery electric and hydrogen fuel-cell trucks can virtually
    eliminate NOx and particulate matter and can decrease carbon emissions
    by about 60 percent. But, as with cold ironing, capital costs, which
    include drayage truck purchase and charging infrastructure, can be a
    barrier.
        Ports can also play a key role in enabling fueling/charging
    infrastructure for low-zero emissions alternatives for vessels and
    shoreside operations. This requires a coordinated planning and capital
    investment approach to find new hybrid public-private funding solutions
    and business models that can work across utilities, industry and ports.
    The Port of Seattle is leading the way in developing their Waterfront
    Clean Energy Strategy in partnership with their utility, Seattle City
    Light, as well as key port stakeholders from industry and the near-
    shore community. DNV is supporting the Port of Seattle by providing
    expertise in energy planning, engineering and project facilitation.
    Ports as a gateway to offshore wind
        To ensure that electrifying port operations has the most impact,
    the electricity supply must also be decarbonized. Options like
    microgrids that combine on-site renewables generation from solar PV
    with storage are viable and can mitigate the effects of the large loads
    ships at berth may have on the grid. However, the rapid growth of
    offshore wind generation on the East Coast presents an opportunity to
    integrate offshore wind infrastructure into ports. Many ports are
    heading in this direction now, e.g., the Port of Virginia, Bedford, MA
    and others. We applaud the statement by Secretary of Transportation
    Buttigieg to look favorably at ports with offshore wind infrastructure
    for the Port Infrastructure Development Program (PIDP) now open for
    funding. DNV recommends finding funding and incentives to help ports
    integrate offshore wind transmission infrastructure into their current
    footprints. Because ports are already industrialized areas, adding this
    infrastructure enables the preservation of less-developed areas of the
    shore. It also can solve the problem of access to renewable energy; by
    portioning off some of the electricity generated by offshore wind via a
    substation the port could readily use this energy for shore-side
    operations.
    Energy efficiency programs
        Port operations also include those that are typical of any
    commercial and industrial undertaking, with lighting, heating and
    cooling for buildings, refrigerated storage, and other functions that
    typically use electricity to operate. These functions also provide
    opportunities to reduce carbon emissions. DNV recommends that the
    federal government creates pathways for port-specific energy efficiency
    programs to be implemented in cooperation with local utilities. San
    Diego Gas & Electric currently offers a port-specific program that can
    be used as a model. Including incentives and funding for
    electrification, as well as more common efficiency measures to address
    energy use from lighting and buildings can also reduce the overall
    carbon footprint of ports and port operations.
        https://www.mytpu.org/tacoma-power-announces-the-nations-first-
    electrofuel-
    tariff/-
    ::text=Tacoma%20Power%20owns%20renewable%2C%20carbon,are%20from
    %20carbon%2Dfree%20sources.&text=The%20electrofuel%20tariff%20was
    %20approved,into%20effect%20April%201%2C%202021
    Regulatory framework for uniform carbon emission standards
        Given the expanse and diversity of U.S. coastal areas, it is
    inevitable that each port's emissions are regulated by different
    localized standards. While all ports must comply to federal Clean Air
    Act standards, those that operate in states that have fewer state and
    local regulations may operate at a competitive advantage. Ship owners
    must also contend with different needs for different ports, e.g. cold
    ironing requirements in California but not elsewhere, adding complexity
    to an already complex operation. DNV recommends a uniform regulatory
    framework for port greenhouse gas emissions to provide consistency
    across all ports, and to accelerate port decarbonization across the
    country. These regulations should address all port operations,
    including harbor craft (which emit the majority of carbon in port
    operations), decarbonizing electricity supply, and addressing and
    mitigating emissions from drayage trucks and other related
    transportation operations.
        As a significant contributor to carbon emissions, the
    decarbonization of ports operations is urgently required to mitigate
    the maritime industry's overall contribution to GHG emissions,
    especially as low- and zero-emissions fuels are far on the horizon. It
    also requires that the maritime industry work with other stakeholders--
    utilities, technology companies, the government, and local
    communities--to ensure that is both feasible and equitable. Championing
    new technologies and strategies to address global challenges like
    decarbonized and flexible cold ironing can create new jobs, improve
    local communities, and place the U.S. at the forefront of the energy
    transition in the maritime sector.
           IV. Cross-sector innovation to develop effective solutions
        Decarbonizing the maritime industry requires a multifaceted
    approach that includes ships (the energy end-user), ports and utilities
    for the shoreside infrastructure (to deliver the energy that the ships
    will use), and collaborative, cross-sector innovation to develop
    effective solutions. How can we foster an environment that brings
    together all these key players to accelerate clean energy innovations
    for maritime emissions reductions? I have seen first-hand how a
    collaborative organization coupled with government support can make all
    the difference in bringing players together to work towards a common
    vision and implement maritime innovation projects.
        In addition to my role at DNV, I serve as Project Director for
    Washington Maritime Blue. This Maritime Blue Cluster organization,
    launched in 2018 by Governor Jay Inslee, has brought diverse players
    together across the quadruple helix of government, industry, research,
    and community organizations to: first, agree on a common vision for
    values that focus on competitiveness and sustainability; And second, to
    work together in an independent, collaborative organization to meet new
    regulatory, economic, and innovation challenges. Getting ahead of the
    curve in addressing challenges also means the companies involved can
    turn challenges into a competitive advantage and growth opportunity for
    our local industries.
        Washington Maritime Blue is a non-profit cluster organization that
    is a partnership between public entities, private industry, community
    organizations and research institutions which is charged with
    implementing Washington State's Strategy for the Blue Economy \3\.
    Through Joint Innovation Projects (JIPs), incubator and accelerator
    programs, workforce development programs, and much more they cultivate
    collaboration as a key factor for the triple bottom line values of the
    blue economy: economic growth, healthy ecosystems, and thriving
    communities. DNV has been working with Maritime Blue since its initial
    conception to foster creativity across entities and find ways to take
    innovative ideas from drawing board to implementation. Maritime Blue's
    JIPs are driving development of new solutions in our region and
    demonstrating how we can work together to accelerate this maritime
    energy transition.
    ---------------------------------------------------------------------------
        \3\ Washington State's Strategy for the Blue Economy, Washington
    State Department of Commerce & DNV GL (2019).
    ---------------------------------------------------------------------------
        In his testimony to the Subcommittee for this hearing, Glosten
    President Morgan Fanberg described the Zero Emissions Fast Foil Ferry
    project being led by Washington Maritime Blue. This is a great
    collaboration example that brings together the key capabilities needed
    to demonstrate our leadership in zero-emission maritime transportation.
    But the lack of public funding available to build and demonstrate
    innovative vessels such as this puts U.S. companies at a disadvantage
    over global competitors. Washington Maritime Blue and the JIP team was
    fortunate to secure grant funding for advancing the design work from
    the Federal Transit Administration's Accelerating Innovative Mobility
    (AIM) funding opportunity. The team is also providing local public and
    private match funding to leverage the Federal investments. The Foil
    Ferry is the only maritime project selected for an AIM award, as the
    program is structured with a focus on land-based public transit. There
    was not an aligned opportunity under MARAD that could provide funding
    for this project at the time. Nor is there currently public funding
    available for the next step in building the demonstration vessel.
    Representative Larsen mentioned during this hearing re-introducing
    legislation to create a low and zero emission passenger ferry program
    in the Moving Forward Act, H.R. 2, 116th Cong. (2020). Chairman
    Carbajal mentioned plans to introduce legislation to double funding for
    MARAD's Maritime Environmental and Technical Assistance (META) program.
    DNV supports these proposals, which could serve as a conduit for
    providing funding opportunities for accelerating leading maritime
    transportation technologies such as the Fast Foil Ferry project.
        It is also essential to bring together the ports, utilities, and
    industry for planning the infrastructure needed to enable clean energy
    and fueling options for zero emissions. As described above, DNV and
    Washington Maritime Blue are supporting the Port of Seattle in their
    Waterfront Clean Energy Strategic Plan that brings together these key
    players to facilitate cross-industry planning. Clean energy planning
    processes such as these can bring together the necessary stakeholders
    to understand each other's value propositions and find new business
    models to enable implementation.
        Collaborative infrastructure planning and implementation is
    critical to the energy transition. The Federal government can support
    this with funding for implementing projects such as MARAD's Port
    Infrastructure Development Program (PIDP). But currently, only ports
    are eligible, and the infrastructure that can be funded is limited to
    projects that will improve the safety, efficiency, or reliability of
    the movement of goods into, out of, around, or within a port. Funding
    programs such as the PIDP could be better utilized to support rapid
    decarbonization of the maritime industry by requiring applicants to
    indicate in their grant applications how their project contributes to
    measurable emissions reduction. Or expanding the types of project to
    explicitly include energy and fueling infrastructure and making
    emissions reductions part of the grant selection criteria. In some
    ways, the PIDP and other federal grant programs are too stove-piped to
    achieve these objectives and we recommend that the GAO study how these
    programs could best be used to have a cross-sector approach to reducing
    GHG emissions.
        In addition to Washington Maritime Blue, there are new
    collaborations being launched to that will work across sectors in North
    America to advance zero-emissions vessel and shoreside infrastructure
    projects. The Blue Sky Maritime Coalition (the Coalition) is a non-
    profit, strategic alliance formed to accelerate the transition of
    waterborne transportation in the United States and Canada toward net-
    zero greenhouse gas emissions. The Coalition brings together industry,
    community, government, academia and other stakeholders across the
    waterborne transportation value chain to action projects that remove
    barriers to accelerating development, encourage innovation, and promote
    policies in support of zero emissions.
        These types of collaboration are key to advancing the maritime
    projects for maritime energy transitions. But public funding that is
    structured to support such efforts is critically needed. Organization
    funding for operations is needed for these collaborations and cluster
    organizations. Funding is needed for projects such as zero-emission
    vessels and shoreside infrastructure. This includes funding for
    planning, feasibility and demonstration phases. Funding should be
    structured with multi-entity eligibility. For the new charging and
    fueling infrastructure that is needed, the project could be led by
    ports, utilities, industry, or non-profit consortiums. More flexibility
    is needed to enable the partnerships for making the business cases
    work.
        Washington Maritime Blue and the Blue Sky Maritime Coalition are
    leading the way in developing collaborative, cross-sector innovations
    to deliver effective maritime emission reduction solutions. But
    leadership is needed at the Federal level to deliver a carbon-free
    maritime industry. Although Special Presidential Envoy John Kerry
    recently announced that the U.S. is committing to work with countries
    at the IMO to achieve zero-emissions from international shipping , this
    commitment does not fully address the U.S. domestic fleet or shore-side
    emissions challenges that especially impact our near-port and
    disadvantaged communities.
        We need a U.S. Maritime Decarbonization Strategy and goals that
    create the roadmap for funding and regulatory actions. The strategy
    should: identify core challenges in meeting international targets;
    prioritize the challenges based on climate, national defense, economic
    interests, and environmental justice needs; set national goals for
    maritime emissions reduction that address these prioritized challenges;
    specify how each agency can contribute to the goals; and how the
    respective agencies will work with the private sector. The goals should
    be jointly developed by DOE, MARAD, EPA, and the USCG, with support
    from other agencies, industry and nonprofits.
                               V. Recommendations
        In closing, DNV offers the Subcommittee the following
    recommendations as practical steps towards a carbon-free maritime
    industry.
        1.  Develop a national maritime decarbonization strategy. This
    strategy should include both a National Action Plan to reduce GHG
    emissions from U.S. ships in international trade (in alignment with the
    IMO MEPC 75 resolution on national action plans), and a maritime
    decarbonization strategy for U.S. ships in domestic service.
        2.  Renew the aging U.S.-flag fleet. The advanced age of the U.S.
    fleet makes renewal a more cost efficient and effective decarbonization
    strategy for many vessels. To support decarbonization through renewal
    of the U.S.-flag fleet, we recommend increasing the existing funding to
    the Federal Ship Financing Program (MARAD Title XI), with priority
    given to ships that incorporate effective decarbonization strategies.
        3.  Prioritize research, development, demonstration, and deployment
    funding for decarbonizing ships, ports, and supporting infrastructure.
          a.  Increase R&D spending on maritime fuels and energy
    technologies. The U.S. Department of Energy's EERE and ARPA-E should
    make maritime a strategic priority, in alignment with the interagency
    strategy. In addition, EERE, ARPA-E and MARAD should increase funding
    for maritime energy R&D to a combined total of at least $60 million
    annually. This funding should be used to support R&D of novel low and
    zero-carbon fuels and energy technologies that can scale in commercial
    production and volume to help the maritime industry decarbonize
    rapidly. R&D topics of interest include port operations and
    infrastructure, vessel hull design, energy sources and carriers
    (hydrogen, biofuels ammonia, batteries, marine renewable energy, etc.),
    vessel operations and energy efficiency, and exhaust treatment.
          b.  Review and expand existing decarbonization programs. There
    are several Federal grants and funding programs that are addressing air
    pollution, such as the EPA's DERA program. These programs should be
    expanded to specifically include maritime in their scope where
    applicable. Additionally, maritime emissions reduction and
    environmental justice components of these programs and grants should be
    strengthened. The application process for these grants should be
    reviewed to ensure that the forms are not unnecessarily onerous or
    complicated and that the funds are available to all types of business,
    both large and small, and equally distributed among all geographic
    regions.
          c.  Increase incentives and funding to decarbonize port
    operations. Decarbonization efforts should include electrification of
    port operations to the largest extent possible, particularly the cold
    ironing of ships and the electrification of drayage trucks. To ensure
    that electrifying port operations has the most impact, energy
    efficiency needs to be improved and the electricity supply
    decarbonized. The federal government should create pathways for port-
    specific energy efficiency programs to be implemented by local
    utilities and provide ports incentives to integrate offshore wind
    transmission infrastructure into their current footprints.
          d.  Make emissions reduction mandatory in grant and funding
    selection criteria. There are many existing Federal programs that
    provide financial support for port infrastructure, ship construction,
    or maintenance and retrofits (e.g., for the PIDP, BUILD and Small
    Shipyard Grants). These mechanisms should be better utilized to support
    rapid decarbonization of the maritime industry by requiring applicants
    to indicate in their funding applications how their project contributes
    to measurable emissions reduction. Existing programs should be reviewed
    and modified as necessary to include emissions reduction and
    environmental justice in the selection criteria of awardees. This
    increased incentive will hasten the adoption of low- or zero-emission
    technologies and/or fuels.
        4.  Improve the framework and funding mechanisms with regional
    maritime cluster organizations to implement collaborative demonstration
    projects. The Federal government should support maritime cluster
    organizations, incubators, accelerators, and other innovation hubs that
    foster entrepreneurs and startups focused on maritime decarbonization.
    Since 2015 the cumulative number of incubators, accelerators, and other
    innovation hubs globally that were founded to support maritime startups
    has more than tripled as of 2020. These organizations are inherently
    regional in their respective scopes and work directly with the local
    communities to create new businesses and jobs. Federal support could
    come from the U.S. Department of Commerce and MARAD.
        5.  Set a uniform regulatory framework for port GHG emissions. This
    framework should provide consistency across all ports and address all
    aspects of port operations, including harbor craft, electricity supply,
    and emissions from drayage trucks and other related transportation
    operations.

        In addition to the above five priority recommendations, we offer
    one further suggestion: to Green the Federal Fleet. The U.S. Government
    owns thousands of ships and boats which are operated by the Navy, Coast
    Guard, Army Corps of Engineers, National Park Service, NOAA, and
    others. The Navy alone is responsible for more than 30% of all U.S.
    Government fuel consumption. The U.S. Government should lead the
    maritime industry by example. Where possible these vessels should be
    retrofitted to use non-fossil fuels or be used as test and
    demonstration platforms for new low- and zero-carbon fuels and
    technologies to help with technology de-risking. The training vessels
    currently being built for the state maritime academies (National
    Security Multi-Mission Vessels or NSMVs) are excellent opportunities.
    Additionally, selection criteria for the acquisition of Federal vessels
    should be weighted to favor vessels that reduce or eliminate the need
    for fossil-fuels.
        Mr. Chairman, Ranking Member Gibbs, and Members of the
    Subcommittee, thank you for this opportunity to share with you DNV's
    experience, insights, and recommendations for practical steps that the
    U.S. Government can take to decarbonize the maritime industry. We
    welcome continued dialogue with you and your staff on this most
    important topic.

                                    Appendix

                                  ----------

     Question from Hon. Alan S. Lowenthal to Dan Rutherford, Ph.D., Marine
         and Aviation Program Director, International Council on Clean
                                 Transportation

        Question 1. During the hearing you began to speak about the
    possibility of hydrogen infrastructure in the Port of Los Angeles, Long
    Beach but did not have the chance to finish. Please provide your
    response and include details on how this technology is best developed
    and deployed. What is necessary to effectively build up the
    infrastructure needed to propel hydrogen as an alternative fuel?
        Answer. Thank you for the opportunity to provide supplemental
    information. Hydrogen is an energy carrier that can be produced in a
    variety of ways, including by splitting water using renewable
    electricity (``green hydrogen''). Subsequent processing can generate
    compressed hydrogen (CH2) or liquefied hydrogen (LH2). Each has its
    advantages and disadvantages as an energy carrier. Liquid hydrogen is
    cooled and cryogenically stored, is more energy dense, but requires
    significant energy for liquefaction and storage. Compressed hydrogen
    can be stored at room temperature under high pressure but is less
    energy dense and requires more storage space onboard a vessel.
        When used on a ship, hydrogen generates no pollution (only water)
    if used in a fuel cell and can also be burned in specialized diesel
    engines. Fuel cells can be powered by either liquid or compressed
    hydrogen. We envision hydrogen being first adopted by harbor craft,
    tugs, and ferries as a compressed fuel, transitioning to short-range
    cargo carrying ships using either compressed or liquefied hydrogen.
    Fuel cells are the most likely propulsion technique, with a prototype
    3.2 MW fuel cell under development today. Larger, oceangoing vessels
    will require liquid hydrogen to achieve transoceanic ranges. Marine
    engine manufacturers are working to commercial diesel engines capable
    of burning hydrogen and ammonia, an easy-to-store hydrogen carrier that
    is already commonly used as agricultural fertilizer.
        In contrast to fossil fuel bunkering, which is dominated by a few
    ports worldwide, hydrogen is more likely to be generated, sold, and
    used in a distributed fashion given its lower energy density. That's
    because, as a more difficult to store fuel, oceangoing vessels would
    need to shift from a strategy of fueling once every 90 days for a
    30,000 mile plus range using heavy fuel oil (HFO) towards a strategy of
    refueling at each major port they visit. This creates a business
    opportunity for US ports, which are responsible for 14.5% of maritime
    trade by mass (UNCTAD, 2020; ITA, n.d.) but capture only 7% of bunker
    fuel sales (Ship & Bunker, 2021). For container ships, Georgeff et al.
    (2020) predicts that the San Pedro Bay Ports of Los Angeles and Long
    Beach (PoLA and PoLB) could become the dominant Pacific Rim ports for
    LH2 sales. Ports on Alaska's Aleutian Islands could also become
    important refueling locations for transpacific ships powered by
    renewable hydrogen.
        Regarding steps to support hydrogen use in shipping, fully
    developing a green LH2 bunkering infrastructure at the PoLA and PoLB
    will require significant planning, infrastructure investments, and
    policy support. It would include local hydrogen generation capacity,
    including excess renewable wind and solar electricity and dedicated
    hydrolyzers to generate hydrogen; port storage, initially in the form
    of 2,500 cubic meter cryogenic spherical tanks but eventually larger
    flat-bottom tanks; at-berth bunkering infrastructure to support stable
    demand; and dedicated barges for ship-to-ship bunkering to meet
    seasonable and/or flexible demand. See Georgeff et al. (2020) and Mao
    (2020) for further details.
        Expanded leadership is needed from the U.S. to support zero carbon
    fuels in shipping to combat climate change, reduce air pollution
    impacting vulnerable near-port communities, and to support American
    jobs. A recent (March 2021) compilation of zero emission shipping
    demonstration projects (Fahnestock & Bingham, 2021) highlights the need
    for action. In that Global Maritime Forum report, 106 discrete
    demonstration projects for hydrogen ships and fuel are highlighted,
    followed in importance by projects to develop ammonia as a fuel for
    larger ships. Only three projects in North American were identified.
                                   references
    Fahnestock, J., Bingham, C. (2021). Mapping of Zero Emission Pilots and
        Demonstration Projects. Global Maritime Forum, Getting to Zero
        Coalition. Retrieved from https://www.globalmaritimeforum.org/
        content/2021/03/Mapping-of-Zero-Emission-Pilots-and-Demonstration-
        Projects-Second-edition.pdf
    Georgeff, E., Mao, X., Rutherford, D., and Osipova, L. (2020) Liquid
        hydrogen refueling infrastructure to support a zero-emission U.S.-
        China container shipping corridor. Retrieved from: https://
        theicct.org/sites/default/files/publications/ZEV-port-infra-
        hydrogren-oct2020.pdf
    Mao, X. (2021). ``Could San Pedro Bay Become the First Ship Refueling
        Hub for Liquid Hydrogen?'' em Plus. Air and Waste Management
        Association.
    Ship and Bunker. (2021). ``Bunker Volumes: Overview.'' Retrieved from
        https://shipandbunker.com/bi/bunker-volumes.
    United Nations Committee on Trade and Development (UNCTAD). (2020).
        Review of Maritime Transport, 2019. Retrieved from https://
        unctad.org/system/files/official-document/rmt2019_en.pdf.
    United States International Trade Administration (ITA). (n.d.).
        ``Maritime Services Trade Data: U.S. International Trade in Goods
        by Transport Mode and Tonnage: 2018.'' Retrieved from https://
        www.trade.gov/maritime-services-trade-data

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