Panama Canal’s secret recipe: How to achieve carbon neutrality by 2030?

While the Panama Canal contributed to a reduction of more than 13 million tons of CO2 equivalent emissions in 2020 by offering a shorter route for ships, the waterway also wants to make its own operations carbon neutral by the end of the decade.

Earlier this year, the Panama Canal Authority (ACP) set an ambitious target of becoming carbon neutral by 2030.

As part of this plan, the authority is looking into using alternative fuels for its tugs as well as encouraging customers to use clean fuels and reduce their carbon footprint.

Recently, the waterway purchased four electric vehicles as part of a pilot program that will collect data to inform the migration of the canal’s entire fleet away from fossil fuel dependence.

What is more, the ACP announced significant investments in technological updates to improve safety on tugboats and transit reliability. These investments are expected to contribute to the longevity of the canal’s vessels to keep them operational and sustainable for the next 50 – 60 years.

“We are currently in the planning process to develop a roadmap in short, mid, and long-term commitments,” Alexis Rodriguez, Panama Canal’s Environmental Protection Specialist, revealed in an interview with Offshore Energy – Green Marine.

“The Panama Canal plans to reach net-zero emissions and, therefore, will look to reduce its carbon emissions to the maximum possible extent via new measures that transition its operations and then offset the remaining emissions,” he explained.

According to Rodriguez, the canal team is in the process of defining how and when this will translate to changes to the canal’s daily operations.

“We have identified measures we will implement, such as the substitution of electricity production processes in favor of photovoltaic plants, the use of hydraulic energy, and ensuring that all facilities and infrastructure projects are environmentally responsible and sustainable.”

“This will help transform the canal into a much greener organization, which has already begun adopting electric cars, adapting the design of facilities, among other actions.“

Specifically, the waterway is also evaluating the emissions of its customers and exploring ways to build on existing efforts and encourage more green transits in the coming years. The authority plans to take into consideration not only customers’ atmospheric emissions but also their responsibility and committment to water conservation, pollution control, etc.

The Panama Canal has already implemented programs such as the Green Connection Environmental Recognition Program, which include initiatives that encourage and/or reward customers for emissions reductions. They include the Emissions Calculator, Environmental Premium Ranking, and Emissions Dashboard, among others.

Since the Green Connection Environmental Recognition Program was introduced in July 2016, the Panama Canal has saved 40 million tons of CO2, contributing to over 830 million tons of CO2 saved in the waterway’s years of operations.

Vessels that are committed to sustainability are all participants in the Green Route; by choosing the Panama Canal, ships are choosing to travel a shorter distance, reducing overall emissions.

The canal also offers a larger TEU capacity and a 50-foot draft in the Neopanamax Locks, which allows ships to consolidate cargo, resulting in fewer transits needed.

“The Green Connection Environmental Recognition Program is an ever-growing initiative. Its most recent additions include the Emissions Calculator in 2019 and the CO2 Emissions Dashboard just earlier this year,” Rodriguez continued.

“One of the key takeaways is that this work is truly collaborative. The initiatives that we continue to build on and adapt are only possible through the strong partnerships with and participation of the shipping industry,” he pointed out.

Through the Green Connection Environmental Recognition Program, the canal has implemented several initiatives that encourage and incentivize customers to transit the waterway sustainably.

For instance, the Environmental Premium Ranking is an incentive that “rewards qualified customers who demonstrate excellent environmental stewardship”, including the use of low-carbon fuels and environmentally conscious routes. These customers have the opportunity to improve their position within the Customer Ranking System, which is considered when booking transits through the Panama Canal.   

The waterway also launched the CO2 Emissions Dashboard in 2021, which publishes monthly data of the emissions saved by vessels that chose to transit the Panama Canal over the most likely alternative route. The dashboard allows shipping lines to compare CO2 emissions reductions by route, segment and customer. Through this dashboard, the waterway can be transparent about how its route helps shipowners reduce emissions with each transit while tracking its own growth as a green route for global maritime trade.

As an enhancement to these efforts, the Panama Canal is currently analyzing the possibility of taking into account in its dynamic pricing strategy the vessels’ technology and its carbon footprint, which makes it more efficient during transit.

Apart from programs and initiatives already mentioned above, the canal has customer incentives such as the Green Connection Award, which is awarded to customers who comply with the highest environmental performance standards set by the International Maritime Organization (IMO).

The Panama Canal also carries out several programs in the surrounding canal watershed region that contribute to the reforestation and protection of the species in the region. This is accomplished through agroforestry, periodic reforestation monitoring reports, and partnerships with local stakeholders to design new strategies that enhance the forest cover and encourage sustainable business initiatives.

“The canal is confident that its goals for carbon neutrality can be met through continued partnership and the implementation of environmental stewardship practices,” Rodriquez stressed.

So far, the canal has reforested over 22,000 acres of land and planted over 5 million seeds since the program began in 2009.

As reported earlier, the IMO adopted efficiency measures to reduce carbon intensity from ships, targeting a 1.5% annual ship CO2 intensity cut between 2023-2026.

The measures are expected to result in an estimated 11% improvement by 2026 compared to 2019 levels and will take the form of a mix of technical and operational approaches.

When asked about the implications of these measures on the Panama Canal, Rodriquez said:

“Both global and local commitments to reducing carbon dioxide emissions must be considered. In order to fully comply with the IMO, the canal must take into account the available technology, fuel, and operational measures needed to reach carbon neutrality.“

He said that the standard will require a process that will take almost a year to implement.

“That is why we speak of voluntary actions, because through the Carbon Intensity Index (CII), we see that there are measures that are not being contemplated. So, as the main actors, we must promote them and indicate to the industry that we can make this change.“

He went on to say that the main next steps coming out of the meetings involve the evaluation of results and the identification of productive actions that will allow for this progressive transition to the decarbonization process.

“Meanwhile, as mentioned before, we must keep in mind the technologies that will allow us to meet these needs,” Rodriquez noted.

The canal intends to continue implementing best practices for promoting clean fuel, efficient operations and international standards that help reduce emissions.

“The Panama Canal will continue promoting environmental best practices. The ports and canals are not regulated by the IMO, however we are part of the maritime industry. For that reason, we will continue implementing measures that help to achieve the Paris agreement and IMO targets,” the waterway’s Environmental Protection Specialist concluded.