[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 
[email protected].
    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
    
                              [all]