| Global automakers have more options for reducing carbon emissions in their supply chains beyond going electric and checking on the provenance of their battery ingredients. But like most things, it'll come at a cost. Last month, in sweltering heat during a ceremony at a Chinese shipyard that featured traditional lion dancers and colorful firecrackers, Norway's Höegh Autoliners named a new China-built car carrier — the largest, most environmentally friendly one ever built. It's just one of a total of 12 that Oslo-listed shipping company is building with China Merchants Heavy Industry, in the eastern Chinese shipbuilding hub of Nantong, with a total price tag of $1.2 billion. The first vessels will run on liquefied natural gas, biofuels and low-sulfur oil. The goal is that from around 2027 the last four ships would use ammonia. Supply of that fuel remains limited and costs prohibitive. How quickly that happens depends on carmakers' willingness to transition to new fuels, as well as how rapidly regulators move to push the industry to reduce or cut emissions altogether by slapping on carbon taxes. As pressure mounts, Höegh foresees more companies seeking out all sorts of ways to cut emissions, including so-called scope-three emissions that include those generated while goods are in transit. Read More: World's Biggest Car Carrier Warns Charter Rates Will Come Down Höegh said fitting the new vessels in a way that gives customers the choice of fuel, adds between 5% to 10% to the cost of a ship. It's confident it can pass that cost to customers, partly because it adds a modest 1% to the price of a $30,000 to $40,000 car. Demand Outlook "We believe demand will increase and the regulators will tighten," Chief Executive Officer Andreas Enger said. Mirjam Peters, Höegh's chief customer sustainability officer, says there's been a noticeable uptick in inquiries about options for reducing emissions in the supply chain — even though shipping emissions are not the largest contributor to the auto industry's overall carbon footprint. "Transportation in general is not the biggest headache of our customers — instead it's the emissions during lifetime of a car," she said. "Our idea is that we make them aware already, even though they might not be ready today, because they have bigger issues, one day they will need us." Read More: Chinese EV Makers Suffer Setback in Europe as Tariffs Start Shipping accounts for 3% of global emissions. Regulators are giving the operators a long leash to reduce their carbon footprint. The International Maritime Organization is requiring fleets to cut 20% of their emissions by 2030 and 70% by 2040 on their way to eliminating them entirely by 2050. The ultimate goal will be unreachable without carbon-free energy sources like ammonia. One thing's certain: Shipping is not going to disappear any time soon. "We all buy our things overseas — cars, our goods, we like to eat strawberries in January in Germany," Peters said. "New vessels that bring things in a more environmentally friendly way are going to make a big difference." —Colum Murphy in Beijing Click here for more of Bloomberg.com's most-read stories about trade, supply chains and shipping. | 
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