EXCLUSIVE: Making successful bids for decarbonisation grants

With net zero targets to work towards, government edicts to be followed and ever more pressure coming from both the public and media, ports are facing growing requirements to decarbonise and improve air quality.

To date, help towards these aims has been limited and inconsistent, varying greatly by location.

However, 2024 will see huge grants made available around the world enabling ports to both plan their route towards net zero and implement immediate changes to cut emissions.

In the US, the Environmental Protection Agency’s (EPA)  ‘Clean Ports Program’ will release $3 billion dollars, all to be allocated in a single solicitation period. A Notice of Funding Opportunity (NOFO) could be announced as soon as February, with all successful awards confirmed by the end of the year.

Meanwhile, the United Kingdom government is expected to announce a revised ‘Clean Maritime Plan’, updating the much-revised 2019 plan and the European Union is also giving renewed focus to decarbonising the shipping industry. In December 2023, the European Council announced a focus on reducing maritime emissions in line with the European Commission’s vision to “set shipping on a path towards zero emissions, pollution and accidents.”

Funding could become available at both national and Europe-wide level.

In Australia ports including Melbourne are demonstrating renewed commitment to cut their emissions, one target for Melbourne announced in 2023 being to source 100% of the electricity needed for business operations from renewable sources and to provide large-scale bunkering for renewable methanol.

With this unprecedented level of funding for port decarbonisation projects available in the US and potentially on the horizon elsewhere, how can operators best position themselves to pitch for grants?

Start preparing now

There is an urgency to the bid process in the United States with the NOFO expected in the coming months. Ports serious about pitching for funding need to get their case in order quickly.

However, this need for action applies to ports in all nations as when funding schemes are announced they often only open for a brief window. Only giving thought to decarbonisation planning once a funding window opens may prove to be too late.

Key is to bring your c-suite on board and fully briefed on decarbonisation opportunities within your port in readiness for when grant funding becomes available. Senior management will need to ensure the bid team gets all the help it can to move quickly.

You then need to establish your starting point as ports will be at different stages of readiness. Some ports will have total operational control of their terminals, a baseline emissions inventory, and some decarbonisation measures in place. Other ports meanwhile will have little control over private terminals and limited emissions inventory.

Regarding the grants set to become available in the US, our advice for ports still needing an emissions inventory would be to pitch for the planning grants, where a specialist consultancy such as Tunley can perform a baseline assessment of emissions and a net-zero pathway.

But if your port has already started on the decarbonisation pathway, then you could pitch for the zero-emission technology (ZET) grants to accelerate (or enact) your net zero roadmap. However, to maximise your chances of success it is vital to robustly review your baseline emissions data, so you can provide emissions savings estimates in your grant application.

An emissions baseline is the reference point against which a port’s greenhouse gas (GHG) emissions will be measured going forward. Baseline emissions are calculated by looking at a ‘baseline emissions period’, usually the past one – five years of an organisation’s activity. If no action is taken to reduce emissions and activity levels stay the same, this is the level emissions are expected to remain.

Once you have your inventory detailing all the equipment and activity which creates emissions you can work out how you can tailor your grant bid to your specific operations. It will be important to have a clear net zero plan with specific timebound objectives ideally produced by a specialist. Such an adviser needs to have a deep understanding of emissions data, the underlying science behind new technologies, port economics and the grant process.

Although every port is different as a measure of the work potentially involved Tunley has spent nearly 12 months putting together the Port of Detroit /Wayne County Port Authority baseline emissions inventory and 2040 zero carbon plan.

In this case the project took time due to the complex ownership structure of the terminals. However, if your port owns its terminals then the collection of raw emissions data can be much quicker. In this case you could build a case for a ZET grant at speed as you could compile an emission inventory and zero carbon plan in time for the NOFO in February/March.

But our advice would be to kickstart the process now as time is very tight.

Target grants to your pain points

The big funding available through the EPA is the ZET grants. EPA staff said they intend to fund a handful of mega projects in the $200-$500 million range. They will also fund many smaller projects but applicants have been told to ‘think big’.

The law stipulates that funds must be used to purchase or install zero-emission port equipment/technology, or for ‘planning’ (building an emissions inventory and net-zero pathway). The equipment/technology must be used at a port. Funds can also be used for planning related to equipment/technology purchase and installation. Ports in non-attainment for air quality will be higher priority.

Eligible recipients include port authorities, state or local governments that have jurisdiction over a port, an air pollution control agency, or a private entity that is partnered with one of the above.

Our advice is to look very carefully at what ZET equipment is most suited to your operations which can solve your emissions pain points. Low hanging fruit includes investing in retrofit or replacement of diesel powered trucks, quay cranes and goods handling equipment. This will pay huge dividends as the operational costs of electric equipment are far lower with op-ex savings estimated to be as high as 50%. So with the grant contributing to the capital expenditure, there is huge scope for carbon reduction, cost reduction, and improving air quality.

Another big opportunity is to tackle ship emissions, often one of the biggest causes of port emissions. Shore power has been successfully employed at the Port of Los Angeles for a number of years, allowing vessels to operate their non-propulsion ‘hotel’ electricity load using grid energy, rather than by running diesel powered generators.

Ship to shore power works well for long dock times, especially for cruise ships and can have huge benefits for air quality where ships are docked.

The best results however, will vary from port to port, hence the importance of carrying out a baseline assessment. This will identify what the prime sources of your emissions are and where you should target your grant application for maximum impact.

The EPA repeatedly stressed in its briefing that community engagement will be required for all successful grant applications with an emphasis on environmental justice communities.

Our advice is to show you have meaningful communication with community organisations living and operating near the port (or to start building those relationships now. Show evidence of correspondence, surveys and meetings with clear minutes and actions. You must show you are listening, sharing information and have clear intent to make air quality and emissions improvements. Even if carbon measures are still to be put in place the key is to demonstrate you are engaging the community and are planning to action positive change.

Tunley has seen this done effectively with Southwest Environmental Vision (SDEV) in Detroit. We would advise port authorities to start building relationships with such community groups now, in readiness for a successful grant application.

Planning a starting point

As advised, ports must be realistic about their starting point. If a port has no emissions inventory baseline and perhaps a complex ownership structure where terminals may be independently owned and operated it may be tough to apply for the bigger ZET grants in a short time frame, and show emissions savings in context to overall emissions.

In this case the EPA is accepting planning applications of up to US$3 million per application for creating a baseline emissions inventory and air quality indicators mapping out a net zero plan, stakeholder engagement and community engagement.

In our experience working in Detroit, this stakeholder engagement can take time but is the building block to pitching successfully for grant funding.

Again working with a specialist would be key to pulling together a joint planning/implementation grant but you would have to move very fast. If a grant application is not realistic in the time frame, securing funding for a net zero plan will enable you to pitch for other funding. A specialist will be able to help identify alternative funding and grants for you.

There is no universal funding for port decarbonisation and the availability of grants varies greatly by country. Most funding has been from individual governments, though it often arrives with short periods within which pitches are allowed.

However, the United States funding could signal the start of some more ambitious grants with money available for major projects in many other nations and regions.

This means that for all ports there is no time like the present to work on a baseline assessment, creating a plan for how they could use money in readiness for any funding for emissions reduction.

If, for instance, a port has a baseline assessment and knows what its emissions are and how changes would cut this, they already have the basis for a strong pitch. They might for example be able to show that replacing much of their equipment with for less polluting electrical alternatives would cut emissions by 40%.

If and when funding does become available, on whatever scale, there will be a number of ports rushing to have their own baseline assessment carried out. Being ahead of that demand, with an assessment in place and plan ready to go can only be advantageous.

Ports will all face growing legislative requirements to work towards net zero. Being able to take advantage of any grants that become available to help make the necessary infrastructure changes will be a huge competitive advantage.

Detroit – a case study

Tunley is presently working with Detroit/Wayne County Port Authority on a 2040 zero carbon plan.

The complexity of creating a baseline assessment and plan will vary by port – Detroit has been an interesting case study.

This port has unique characteristics, with a number of private businesses operating but limited reporting obligations. To create a plan it has therefore been essential to bring all the operators together and those at the port have done a wonderful job in facilitating this.

However, there was definitely an initial challenge and this was just getting everyone together and convincing them to trust us Tunley with their data.

Tunley split the scope into emissions from shipping, then emissions from goods handling, with forklifts and wheel loaders for instance, and a third strand of emissions from trucking.

The work revealed that a lot of the equipment can’t be electrified immediately, for instance electric versions of wheel loaders are currently too small for the required use.

Broadly speaking, the strategy may be to implement biodiesel now, then full electrification later, as and when suitable equipment becomes available. However, stage one still has huge impact. Biofuels are compatible with most of the equipment in use and can reduce carbon emissions by around 74%.

Working with Detroit was a good example of how reducing emissions can be tackled when all stakeholders come together and a long-term plan is created.

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