Authors: Dr. Theo Notteboom, Dr. Athanasios Pallis and Dr. Jean-Paul Rodrigue
Ports are strategically important locations in the collection, storage, transformation and distribution of energy. In recent years, many have undertook a transition toward alternative energy sources.
A. Ports as Energy Platforms
Energy products are massive and are carried in bulk. Conventionally, ports played a strategic role as energy platforms, particularly for fossil fuels. The coal trade and the transformation of shipping with the steam engine. The switch to petroleum. The setting of petrochemical complexes.
The importance of ports as energy platforms relies on two interrelated functions; ports as energy transport platforms (economies of scale) and energy transformation platforms (economies of agglomeration). Depending on their position within energy supply chains, the clustering of energy transformation activities can either be upstream or downstream of the supply chain. Ports are also energy generation platforms (economies of scope) that can provide conventional and alternative energy sources to their users.
The relations of ports with energy markets are undertaking an energy transition in their functions as providers, consumers, and energy processors. Even if ports and maritime shipping only account for about 3 to 5% of global carbon emissions, there are pressures to improve their environmental performance, mainly become of their high level of integration with energy supply chains.
B. The Decarbonization of Ports
The decarbonization of ports involves a series of potential strategies and a network of actors clustering around energy generation, electrification, and distribution:
- Transformation of port-centric energy generation. Ports have conventionally been highly involved in energy generation, such as coal and gas power plants. Since resources were brought in bulk by maritime shipping, ports were effective locations for energy generation systems built on the principle of economies of scale, including centralized distribution. Any future energy system relying on this principle will be inclined to use port facilities. Still, ports are not in the business of energy generation. They are convenient locations for energy generation facilities operated by third parties, particularly public or private energy companies.
- Ship energy supply systems. The ongoing regulations toward low sulfur bunkering, including LNG, will involve a new energy transformation process and related port-centric activities. The location of bunkering is likely to remain the same, but the transition can offer opportunities to ports able to provide lower-emission fuels first. Another transformation concerns cold ironing, which supplies docked ships with electrical power instead of power generation by the ship’s power generator. Using shore-generated power has a net cost advantage since the electricity is cheaper than the supply generated using onboard generation systems.
- Electrification of port-centric activities. These activities include terminal operations, bunkering, logistics, and freight distribution, cold storage facilities, service vessels (e.g. tugboats), and supporting buildings. In addition to reducing carbon emissions, the electrification of port equipment lowers noise emissions and their negative community impacts. However, this requires a network of recharging stations that must be supplied by an energy production system.
- Electrification of port-centric industries. Many heavy industries located within port facilities depended on fossil fuels as a core energy input. The transition of port energy systems will be accompanied by a transition of the port industrial ecosystem.
- Offshore wind power generation. Through the maritime interface, ports can access large coastal oceanic areas offering wind generation opportunities. The port and its industries already offer an existing demand for installed wind generation capabilities and can offer port authorities new revenue sources. The port can also act as the platform to procure, install and maintain offshore wind power systems.
- Integration of port energy systems. Port clustering allows different energy systems (conventional and alternative) to operate independently, seeing a better integration between supply and demand. This allows for an energy trading system where energy surpluses could be traded between suppliers and users within the port community. A more efficient electric grid and energy storage capabilities have to be developed in tandem.
Once the energy transition of ports has matured, it is expected that ports will play a more strategic role within the respective regional energy systems as platforms to generate and distribute energy.
The challenges that ports face in the energy transition are note few. They include securing funding, finding the right expertise, strategic planning of land use, complex operations, collaboration with stakeholders, and dealing with technical uncertainty. Applying a “one plan fits all” approach is problematic. Every port has its profile defining its options, priorities and potential role. Seaports often play a role in connecting multiple flows of cargo and energy. In general, ports increasingly need to balance commercial and economic objectives. At the same time, the energy transition offers opportunities in terms of cost savings, securing market share and attracting new cargo and industries.