Unprecedented federal funding opens possibilities for the American maritime industry
DecarbonizationThe once-in-a-generation funding available to the U.S. maritime industry to modernize infrastructure and prepare for a decarbonized future is presenting opportunities and challenges that Green Marine’s association members are helping to navigate. Green Marine Magazine touched base with representatives of the American Association of Port Authorities (AAPA), the National Association of Waterfront Employees (NAWE), and the Chamber of Shipping of America (CSA).
“Never in our nation’s history has there been this much public money available for port decarbonization,” emphasizes Ian Gansler, the AAPA’s manager of Energy, Resilience and Sustainable Policy.
A significant portion stems from the $1.2 trillion approved by the Bipartisan Infrastructure Law. Another $369 billion is derived from the Inflation Reduction Act for energy security and climate change investment.
AAPA was among the organizations to relate the need to Congress.
When asked by staff members how much it would cost to electrify every American port, we said there wasn’t possibly enough money, but we gave a sense of the scope required
Congress also responded to port-area communities long advocating for cleaner air by providing $3 billion to the Environmental Protection Agency (EPA) to distribute through the Clean Ports Program. It’s had port authorities bustling to submit applications by May 28.
“The deadline was relatively short, but many ports had already been thinking about what has to be done,” Gansler says.
Buy America requirements have posed a conundrum for ports hoping to acquire electrified mobile equipment that isn’t manufactured in the U.S. “The EPA is seeking a waiver for ports to be able to obtain this equipment from allied European countries,” Gansler adds. “But such waivers can take a long time to adjudicate, leaving port authorities uncertain as to what they should request in applications.”
Many of the applications for other grants involve on- or near-dock rail projects to load cargo directly onto trains. Ports have sought funding to install the infrastructure to charge electric yard tractors, drayage trucks, and/or gantry cranes.
“Some ports are looking at hybrid equipment, as these models can reduce air emissions by upwards of 90%,” Gansler adds.
The Bipartisan Infrastructure Law has also dedicated up to $7 billion to the Regional Clean Hydrogen Hubs Program (H2Hubs) to establish six to 10 regional clean hydrogen hubs across the country. “It has led to proposals from multiple state-level partnerships that includes port authorities in some case to set up these quasi-governmental entities,” Gansler confirms. AAPA has also endorsed a bill introduced early last year to establish the Hydrogen for Ports Act which aims to support infrastructure for hydrogen-derived fuels, including ammonia. The bill calls on the U.S. Department of Transportation to award grants that support having these fuels at ports and within the shipping industry.
With the myriad of grant opportunities, the AAPA is advising port authorities to focus on making one or two proposals as strong as possible given all the effort involved. “It takes a lot of resources to prepare a plan, a budget and in some cases to identify key stakeholders as partners for a process still often done all on paper,” Gansler says. “And if you get a grant, there’s a lot involved in relating how monies are spent with most federal agencies having different accounting software.”
Certification advantages
AAPA regularly holds online and in-person sessions with federal agency staff to relate how best to prepare applications. Technical committee sessions are likewise held so port authorities can learn from each other.
Our member ports with Green Marine certification are reminded that they already have some of their necessary environmental analysis done through their port emissions inventory and other requirements. The certification is a straightforward way to show agencies what a port has already done and the steps it needs to take next.
A major concern is the delay between a successful funding application and the often long and cumbersome federal permitting process to get a project started, Gansler adds.
The National Environmental Policy Act (NEPA) of 1970 requires federal agencies to assess environmental impacts before deciding on proposed actions. “Everyone agrees it’s essential to analyse environmental consequences and involve communities in this process, but the process is excessively bureaucratic with federal agencies doing simultaneous reviews, for example, and having to sign off on each other’s assessments,” Gansler explains. “The long timeline led to private partners opting out of projects.”
At least one port authority returned its grant after finding out how long federal permitting would take. Others have decided not to apply. Delayed permitting further adds to the difficulties already resulting from a resurgence of U.S. construction when labour is limited.
In early March, Representatives Mary Peltola (D-Alaska) and David Rouzer (R-North Carolina) introduced the Permitting Optimization for Responsible Transportation (PORT) Act with the goal of streamlining the permitting and materials regulations for maritime transportation.
It should not take longer to permit a federally funded infrastructure project than it actually takes to build it
Establishing required electricity often poses another challenge. “Some ports that have approached their utility ready to build charging stations have been told it will take years to obtain the necessary megawatts,” Gansler says. “There’s also concern – especially since it’s already happened in California – that a port will be asked to forego its plug-in power when the grid is overtaxed by a heatwave or other circumstances.”
Tax credits
Robert W. Murray, NAWE’s president, also welcomes the unprecedented funding, but warns the marine terminal operators (MTOs) within his organization that demand will quickly outpace availability.
“For those unsuccessful – and even those who are – with an application, it’s important to check with accounting experts about possible tax credits,” he says. “One example is the EPA offering a $40,000 tax credit for zero-emission cargo handling equipment, which is significant when you consider the full cost of transitioning equipment to electric power.”
NAWE is working on legislation to expand the Capital Construction Fund (CCF) so its tax deferral fund extends to new cargo handling equipment. “Under the current CCF program, funds can be used to install a crane on a ship,” Murray notes.
If the funds can be used to install equipment offshore, they should apply to shoreside as well.
Prioritizing possibilities
While all the funding opportunities may seem overwhelming, the results can be significant, Murray adds. One example: Port of New Orleans received a $226 million Nationally Significant Multimodal Freight & Highway Projects (INFRA) grant and $73.77 million from the National Infrastructure Project Assistance (MEGA Grant) program for the first phase of its $1.8-billion container terminal project.
“Think about potential partners, including industry-specific trade associations such as NAWE, as well as port authorities in the case of MTOs, to discuss the kind of project you might be able to put together,” Murray advises. “Then come and see us to help advocate for that funding on your behalf.”
Once the application is made, Murray also encourages MTOs to meet with Congress members, and other government representatives to talk about the project’s importance. “As you do so over the months awaiting your application’s reply, you’re likely to also gather new ideas and resources to advance your concept, which you can use when you get the funds or if you need to reapply.”
Receiving a smaller grant and successfully completing that project can help with future applications, Murray adds. When it comes to new technologies, he also reminds applicants to think about the new job positions and/or training for existing employees required.
Uncertain expectations
At the Chamber of Shipping of America (CSA), Kathy Metcalf has primarily been focused on future fuels and their related infrastructure and policy issues as the CSA’s president and CEO.
However, I can tell you that funding is all over the place with a lot of people in the industry not yet really talking with each other.
She’s finding the same challenges in terms of future fuels which makes it difficult for ship owners to know what kind of funding to seek. Until the International Maritime Organization (IMO) and the EPA determine fuel standards, well-to-wake lifecycle analysis methodologies, and carbon intensity rules, exact needs remain uncertain.
Metcalf adds that technology already exists to build a ship that runs on e-methanol or e-ammonia, but there’s still the looming question of which non-fossil energy sources will be produced and distributed sufficiently. “Biofuels also sound great but we’re already in competition with land-based demands for it,” she adds.
Funding applications will also depend on whether the IMO will permit fleet averaging: allowing a ship owner to progressively lower a fleet’s overall emissions by a predetermined timeline with the introduction of new vessels while allowing existing ships to serve out their life.
“The Jones Act fleet is so old that it’s doubtful that any of the ships can be retrofitted to meet the 2030 benchmark,” Metcalf says.
“So we need to look at what can be done to fund Jones Act operators who need to consider either costly new-builds or huge retrofits involving engine replacements?”
CSA members are doing their best in the meantime, she adds, with Crowley for example just launching the first fully electric tug in the U.S. on the nation’s West Coast.