Ships await their turn to cross the Panama Canal from the Pacific to the Atlantic Ocean. Credit: Emilio Godoy / IPS

By Emilio Godoy
PANAMA, Aug 9 2024 (IPS)

In 2021, the Panama Canal welcomed a French experimental ship on a world tour, the Energy Observer, the first electric vessel powered by a combination of renewable energies and a hydrogen production system based on seawater.

The vessel exemplifies Panama’s aspiration to become a regional hub for hydrogen, the most abundant gas on the planet, but faces the existential decision of whether to generate it from renewable energy or fossil gas.

This Central American nation of just over four million people is developing, albeit belatedly, the first phase of its roadmap to materialise the National Green Hydrogen and Derivatives Strategy, approved in 2023.

For Juan Lucero, coordinator of the Ministry of the Environment’s National Climate Transparency Platform, green hydrogen would be the best option, given its renewable energy, strategic position and the influence of international policies to reduce greenhouse gas (GHG) emissions in sea transport.

“Panama has natural gas, and companies are interested in taking part in this business, in this case blue hydrogen. If Panama wants to be a hub, then blue is a good option,” he told IPS."For Panama, it has always been a priority to provide services, to be an energy hub. We have tradition, experience, history, as a hub for supplying bunker ships. The idea is to achieve that transition”: Juan Lucero.

He stressed that “for Panama, it has always been a priority to provide services, to be an energy hub. We have tradition, experience, history, as a hub for supplying bunker (a petroleum distillate) ships. The idea is to achieve that transition.”

The production of hydrogen, which the fossil fuel industry has been using for decades, has now been transformed into a coloured palette, depending on its origin.

Thus, “grey” comes from gas and depends on adapting pipelines to transport it.

By comparison, “blue” has the same origin, but the carbon dioxide (CO2) emanating from it is captured by plants. Production is based on steam methane reforming, which involves mixing the first gas with the second and heating it to obtain a synthesis gas. However, this releases CO2, the main GHG responsible for global warming.

Meanwhile, “green” hydrogen is obtained through electrolysis, separating it from the oxygen in water by means of an electric current.

The latter type joins the range of clean sources to drive energy transition away from fossil fuels and thus develop a low-carbon economy. Today, however, hydrogen is still largely derived from fossil fuels.

In its different colours, Panama joins Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Paraguay, Peru and Uruguay in having national hydrogen policies.

Penonomé wind farm, located in the central Panamanian province of Coclé. Credit: Emilio Godoy / IPS

Ambition

In 2022, the Panamanian government created the High Level Green Hydrogen and Green Hydrogen Technical committees to drive the roadmap in that direction.

But it has not made progress in the creation of free zones for trade and storage of green hydrogen and derivatives; updating regulations; and encouraging port activities to use electric vehicles, install decentralised solar systems, introduce energy efficiency and generate heat through solar thermal energy.

The green hydrogen strategy approved in 2023 includes eight targets and 30 lines of action, foreseeing the annual production of 500,000 tonnes of this energy and derivatives, to cover 5% of the shipping fuel supply by 2030.

In 20 years, the estimate rises to the supply of 40% of shipping fuels.

But this potential would require 67 gigawatts (Gw) of installed renewable capacity, which is a substantial deployment in a country whose economy is highly dependent on the activity of the inter-oceanic canal between the Pacific and the Atlantic, inaugurated in 1914 and expanded a century later, in a project that doubled its capacity and came into operation in 2016.

In 2023, the Panamanian energy mix relied on hydropower, gas, wind, bunker, solar and diesel, with an installed capacity of 3.47 Gw at the start of 2024. Panama currently has at least 31 photovoltaic plants and three wind farms.

Electricity generation accounted for some 24 million tonnes of CO2 emissions in 2021, with the largest contributors being energy (70%) and agriculture (20%).

But in 2023, the country declared itself carbon neutral, i.e. its forests capture the pollution released into the atmosphere, having a negative balance in GHG emissions.

The national strategy includes the construction of a 160 megawatt (MW) solar plant and an 18 MW wind power farm in the centre-south of the country, as well as a second 290 MW photovoltaic plant in the northern province of Colón.

In this province, a green ammonia production plant is planned to supply the future demand for shipping fuel, with an annual production of 65,000 tonnes and an investment of US$ 500 million.

The global shipping sector considers hydrogen, ammonia and its derivative, methanol, to be viable. The latter, which is also used to make fertilisers, explosives and other commodities, can be obtained from green hydrogen.

A demand of up to 280,000 tonnes of green ammonia per year is projected by 2040, which would require the installation of 4.2 Gw of electrolysis.

Leonardo Beltrán, a non-resident researcher at the non-governmental Institute of the Americas, told IPS about the process of building strategies, institutional vision, and short, medium and long-term goals.

“They have taken giant steps in a relatively short period of time. They already have the infrastructure, the canal. If that demand is met, it could be a game changer. If you can connect the canal to other ports, to the United States or Europe, they could very well have that (green) corridor that would anchor a relevant demand. That would boost on-site and also regional generation,” he said from Mexico City.

With support from the Inter-American Development Bank (IDB) and the United Nations Environment Programme (UNEP), Panama is developing pre-feasibility projects on the production of green hydrogen, its conversion to ammonia and the installation of an ammonia dispatch station as a clean shipping fuel, and on the production of green aviation paraffin.

The roadmap found to be more feasible the production of hydrogen in Panama, the import of green ammonia and the processing of green shipping fuel.

Panama aspires to become a regional hub for green hydrogen, obtained from water and renewable energy sources, including gas and ammonia production plants. Infographic: National Energy Board

Also, the country is considering manufacturing green paraffin for aviation, given that it hosts an air transport hub in the region, although testing is in its infancy and involves a much longer process than in the case of shipping.

Harmonisation

The hydrogen strategy is a function of Panama’s logistical, energy and climate change needs.

Panama currently has 10 tax-free fossil fuel areas, with storage capacity of more than 30 million barrels (159 litre) equivalent and one liquefied fossil gas area, which are tax exempt and could be the model for future hydrogen generation areas.

In 2021, the country shipped 42.79 million tonnes of fuel to more than 44,000 vessels, a figure that will grow by 2030. By comparison, hydrogen passing through the canal would total 81.84 million tonnes in 2030 and 190.96 million in 2050.

In its voluntary climate contributions under the Paris Agreement, Panama pledged to reduce total emissions from the energy sector by at least 11.5% in 2030, from its 2019 level, and by 24% in 2050.

In parallel, as of 2021, the Panama Canal, through which 6% of world trade passes, is implementing its own Sustainable Development and Decarbonisation Strategy.

The autonomous Panama Canal Authority’s plan includes the introduction of electric vehicles, tugboats and boats using alternative fuels; the replacement of fossil electricity with photovoltaics and the use of hydropower, to become carbon neutral by 2030, with an investment of some US$8.5 billion over the next five years.

The canal reduces some 16 million tonnes of CO2 each year.

Tolls and shipping services are its biggest sources of revenue, and thus the importance of developing shipping fuels based on clean hydrogen.

In the first nine months of 2023, 210.73 million long tons (1,016 kilograms) went through the interoceanic infrastructure, down from 218.44 million in the same period in 2022.

Of the total cargoes, one third are fossil fuels. Container, chemical, gas and bulk carriers are the main transports.

Lucero said the country is looking for investments in renewable energy, particularly green hydrogen.

“This market has to be developed in an orderly way. Demand has to be driven; otherwise, the investment will not be profitable. There are uncertainties, but the line that has been taken is that hydrogen is the future and we want to break away from being followers to become leaders, to seize the moment to develop and be prepared when the boom arrives,” he stressed.

For expert Beltrán, if the government that took office on 1 July follows this route, it would send a strong signal to the sector and thus pull the shipping sector toward energy transition.

“Replacing imports with local product is more convenient, and the way would be with the available, renewable resource. That would impact local development and contribute to the energy transition agenda,” he said.

A ship passes through the Pedro Miguel lock on its way to the Miraflores system to cross the Panama Canal. The infrastructure faces water shortages due to drought in the country, which limits the pace of maritime cargo transport through the bioceanic route that moves six percent of the world's maritime trade. CREDIT: Emilio Godoy / IPS

By Emilio Godoy
PANAMA CITY, Feb 8 2024 (IPS)

At the bar that Sandra manages in Panama City’s central financial district, the variety offered on the menu has shrunk due to delays in ship traffic through the Panama Canal, one of the world’s major shipping routes.

“We are out of stock of some of our foreign beers, because the shipment didn’t arrive. I hope it will get here one of these days,” the Panamanian bar-keeper told IPS, as she pointed to a half-empty refrigerator in the bar nestled between skyscrapers. "Above and beyond the ship traffic, the canal should provide raw water for the populations of (the provinces) of Panama and Colon. The difference is that now there is more traffic and the problem is that in the dry season the salt level rises and damages the raw water for potabilization." -- Óscar Vallarino

The delays have been repeated since drought took hold in this Central American nation throughout 2023, exacerbated by the effects of the climate crisis and the cyclical El Niño Southern Oscillation (ENSO) weather phenomenon that warms the waters of the Pacific Ocean.

This mixture of phenomena has repercussions on the forested areas surrounding the canal and the Alhajuela, Gatun and Miraflores artificial reservoirs that supply it and provide water for more than half of the country’s total population of 4.7 million people.

Due to the lack of rain, the level of Gatun Lake, the main source of water for the canal inaugurated in 1914, dropped from its normal height of 26 meters above sea level to less than 24 in recent weeks.

Six percent of the world’s maritime trade, especially container trade, goes through the canal connecting the Atlantic and Pacific oceans.

In addition, the interoceanic waterway has lost volume through evaporation due to warming water temperatures, according to a 2022 study by the Netherlands Water Partnership (NWP), a network of 180 public and private organizations.

Oscar Vallarino, a former official of the state-owned autonomous Panama Canal Authority (ACP), founded in 1978 to manage the company, said the situation stems from including the canal in its current watershed and expanding it since 2016, which doubled its capacity and the volume of ships, in addition to leading to the prohibition of the construction of more dams.

“Above and beyond the ship traffic, the canal must provide raw water for the populations of (the provinces) of Panama and Colon. The difference is that now there is more traffic and the problem is that in the dry season the salt level rises and damages the raw water for potabilization,” he told IPS.

The cruise ship Queen Victoria, owned by the British company Cunard, prepares to lower the first eight meters in the Miraflores locks of the Panama Canal, heading for the Atlantic Ocean. CREDIT: Emilio Godoy / IPS

From the Bridge of the Americas, which connects Panama City with the western part of its metropolitan area, the ships lined up to enter the canal look like figures in a board game moving slowly over a blue board. The waiting time varies, mostly en route to a U.S. port.

But the slowdown stems from the crucial element of the infrastructure: water, whose scarcity means fewer commercial vessels can cross from one ocean to the other. The reservoirs that feed the canal have a capacity of 1,857 hectoliters and currently hold only 900.

At the same time, the demand for different activities is increasing, leading to greater competition for consumption and conflicts that will intensify throughout this century.

Law 93 of 1999, modified by Law 44 of 2006, establishes the limits of the canal’s watershed, which covers 343,521 hectares and is one of 52 in the country.

The rainy season in this tropical country runs from May to November, but the last quarter of last year recorded lower rainfall, and the drought will worsen in the first half of 2024.

The population of the provinces of Panama and Colon also depends on water from the canal. But the problem is aggravated by waste, the leakage of at least 40 percent of the water due to broken pipes and the lack of efficient infrastructure.

This is despite the fact that this nation ranks fifth in the world in annual rainfall, has six times the world average of fresh water per person, in addition to 500 rivers, in an area of only 75,517 square kilometers.

But on the other hand, it has the highest individual consumption in Latin America, with 507 liters per inhabitant. Panama has an availability of about 115,000 cubic meters per inhabitant/year, according to the Inter-American Development Bank (IDB).

The consequences of the climate crisis and ENSO cloud the outlook for the water supply, since they mean that both excess and scarcity of water will create trouble for this Central American country. El Niño has reappeared in its strong phase, as meteorologists define the worst of its three modalities.

The ACP estimates that the basin captures almost 4.4 billion cubic meters (m3) annually, of which the canal consumes 70 percent for navigation and 15 percent for drinking water.

A view of Panama City, where population growth is driving up water demand. Drinking water for the city and the neighboring province of Colon comes from the Panama Canal and faces chronic management problems and infrastructure failures, now compounded by drought. CREDIT: Emilio Godoy / IPS

Victim of nature

In response to the crisis, the ACP adjusted the maximum draft, the daily traffic capacity and the reuse of diverted water.

As a result, it reduced the number of vessels crossing the 82-kilometer route to 24 per day from an average of between 38 and 40, which could drop to 18 this February, when traffic is expected to decline by one-third from its usual level.

In addition, it charges 10,000 dollars for water rights and auctions quotas for diverting water. Each passage requires 250 million liters of water per vessel, which is then returned to the system.

The canal already suffered an acute water crisis in 2016, but it has been aggravated now by a strong ENSO.

William Hugues, a member of the non-governmental National Front for the Defense of Social and Economic Rights, said the crisis was foreseeable and exposed the underlying aim of prioritizing the canal over the water supply to the local population.

“We issued a warning in 2006, when the expansion was being discussed, that larger locks would cause more salt water to enter Gatun. This demand would threaten the supply of drinking water. We have to accept that the canal has physical limits and we cannot respond to the dynamics of the international economy,” the economist, whose group includes social organizations, trade unions and other groups, told IPS.

Hugues, author of a book on the expansion of the canal traffic, pointed out that there is always a line of ships waiting to cross during the dry season and that the measures applied are the same as before the expansion.

Due to cargo demand, the expansion, undertaken in 2007 and completed in 2016, added two locks to accommodate the larger, heavier Neopanamax cargo ships, which need more water to transport up to 120,000 tons, especially gas cargo. But the expansion has had repercussions on the demand for water.

The use of the canal brings more than four billion dollars into the Panamanian coffers annually, approximately six percent of GDP. The drop in traffic could mean a financial loss of more than 200 million dollars a year and, therefore, will have an impact on the already stressed finances of this Central American nation.

Although it had promised to do so, the ACP did not respond to an IPS query about forecasts for canal activity in 2024.

The crisis has forced ships to take longer and more expensive routes, such as around Cape Horn, to the south of Chile, or to move cargo overland from coast to coast in Panama, before reloading it onto ships.

Drought has caused lines of ships waiting to cross the Panama Canal, where traffic could shrink even more in the face of the increasing scarcity of rain. Infrastructure managers are already limiting daily ship crossings to one-third of the usual number. CREDIT: ACP

Palliative measures

To face the recurring crises, the ACP is studying the construction of a dam and reservoir on the Indio River, west of Gatun, and the use of the Bayano dam, which would entail different costs.

The dam costs 800 million dollars and involves the flooding and displacement of some 1,900 people in an area of 400,000 hectares, while the use of the Ascanio Villalaz hydroelectric dam, owned by the Panamanian state and the private U.S. company AES Global Power, costs three times as much.

But the effects of the climate crisis may worsen, as several recent analyses suggest.

Between 1971 and 2020, Panama experienced significant drops in precipitation, although rainfall trends varied between regions.

Thus, the eastern and central Pacific provinces were significantly drier, especially during the summertime, while the western and central Caribbean provinces were wetter, particularly during the fall, according to the Panama climate risk study published by the World Bank earlier this year.

By 2050, precipitation patterns are expected to increase, when the Pacific territories should experience a jump in rainfall, mostly in summer and autumn, and the Caribbean/Atlantic should see no net change.

The study warns that the frequency of intense floods and droughts related to ENSO will become more common and are especially critical to monitor in the canal basin and the Dry Arc, an area in the west of the country characterized by scarce rainfall.

Meanwhile, the study by the Dutch organizations warns that the measures adopted are short-term and will only limit the canal’s customers in the long term, which will affect the national economy and global pollution.

In addition, several swaths of the country, including the capital and Gatun, are expected to be flooded by 2050.

Panama has an Action Plan 2022-2026 for the integrated management of water resources, composed of 35 actions, but its implementation is proceeding slowly.

The plan seeks to contribute to water security through the prioritization of concrete actions based on national priorities, climate change scenarios, the needs of the different sectors and the institutional and financial capacity for their implementation.

The ACP itself recognizes the need for long-term investments to meet the challenges.

The country has 56 water treatment plants, seven of which are located in the canal. The expansion of several facilities and the construction of two would add some 851 million liters to the flow.

According to Vallarino, a new reservoir and the use of the Bayano dam would eventually be needed.

“We have to ask ourselves if it is feasible. Studies projecting the future should be done, to assess the options. The population is a priority. If it is well managed, we may have some setbacks, but there will be enough water for the public,” he said.

Meanwhile, Hugues said that the canal’s mercantile development rate is unsustainable.

“With the expansion of the canal, shipowners will continue to expand ships, they’ll keep growing and growing. That means we would have to make the basin the whole canal. If they follow the thesis that the canal must continue to be expanded, there will never be enough water to meet demand,” he argued.

Under the circumstances, the canal must adapt, because if it does not, drinkable water will choke in the pipes and businesses such as Sandra’s will continue to have half-empty refrigerators.

An oil spill has threatened the coral reefs and marine ecosystems in the Milne Bay Province of Papua New Guinea. Credit: Mauricio Ramos/IPS

By Catherine Wilson
SYDNEY, Jan 7 2013 (IPS)

Coral reefs and marine ecosystems in the Milne Bay Province of the Pacific Island nation of Papua New Guinea are at serious risk of long-term environmental damage. The reason: an oil spill from a ship that ran aground on a reef on Kwaiawata Island on Christmas Eve, and authorities’ long delay in mobilising an appropriate response to the accident.

“The area has some of the fastest currents in the world and this delay has increased the likelihood of the oil spreading quickly beyond the vessel,” Chalapan Kaluwin, professor of environmental science at the University of Papua New Guinea, told IPS.

“It is too early to assess the full scale of the damage, but there are fragile marine and island ecosystems in this area and the impacts on reefs, marine life and the marine resources that island communities depend on is likely to be long term, rather than short term.”

The MV Asian Lily aground on a reef on the remote Kwaiawata Island in Milne Bay Province, Papua New Guinea. Photo Credit: National Maritime Safety Authority.

The Japanese-owned 136-metre reefer vessel MV Asian Lily, which wasn’t carrying any refrigerated cargo at the time, was negotiating Milne Bay – a province comprising 160 islands to the southeast of the Papua New Guinean mainland – en route from New Zealand to the Philippines, when the incident occurred.

Milne Bay Governor, Titus Philemon, only learned the news from local villagers several days after the ship ran aground.

Nurur Rahman, executive manager of Maritime Operations at the National Maritime Safety Authority (NMSA), told IPS that fuel oil, which leaked from one of the ship’s tanks, had spread along approximately 115 metres of the island’s coastline.

The remote Kwaiawata Island, which is no more than three kilometres long and located in the Samarai Murua District north of the Jomard Passage – a busy international shipping lane – has a population of about 200 people.  Henry Vailasi, Milne Bay Provincial Administrator, said there weren’t any coastal villages in the direct vicinity of the stricken vessel, but the oil spill had impacted the island’s shoreline.

Milne Bay contains a high diversity of corals and marine life, including more than 1,000 species of fish, 630 species of molluscs and 360 species of hard coral, as well as seagrasses and mangrove forests.  Coral reefs are vital to the livelihoods of local communities, providing habitats for fish and protection to island coastlines. Seventy percent of households in the Samarai Murua District depend on fisheries and other marine resources for subsistence.

In a public statement the NMSA said a Papua New Guinea tugboat has been at the site of the MV Asian Lily since Dec. 27 and a team of international salvage experts was currently onboard the vessel with its crew.

Representatives of the ship owners met with local villagers last week regarding the incident, a meeting that will likely be followed in due course by a consultation between national and provincial authorities and affected communities.

A spokesperson for Pacific Towing PNG Ltd, which is working to salvage the vessel, said the oil leak had been contained and the scale of the damage to the vessel was being assessed. Preparations are currently underway for an attempted refloating of the ship on Jan. 10.

On Jan. 5, the International Tanker Owners Pollution Federation, which has been engaged to advise the government on how best to address the oil spill, presented a shoreline clean up proposal to authorities in Papua New Guinea.

Milne Bay presents serious navigational challenges to shipping, with hazards including extensive reef systems and many maritime areas not yet properly charted.  The Jomard Passage, which lies to the west of the Louisiade Archipelago in the south of the province, connecting the Coral and Solomon Seas, is plied by up to 1,000 ships, including bulk carriers, every year.  Many are engaged in commerce between the Australian east coast and North Asia.

There have been several maritime mishaps in recent years.  In 2006, the bulk carrier, Zhi Qiang, with a cargo of 40,000 tonnes of raw sugar, ran aground on a reef in the Louisiade Archipelago during a voyage from northern Queensland, Australia, to Korea, releasing heavy fuel oil and raw sugar into the sea.

Vailasi told IPS that the provincial government was seriously concerned about the level of guidance and monitoring of ships through Milne Bay and the Jomard Passage.

“This vessel did not have a pilot onboard at the time it went aground,” he said. “We want the region to be a compulsory pilot area and we have asked the NMSA to advise us on how this can be done.”

“This is a wakeup call for the government and ship owners,” Kaluwin stressed.  “There is a regional oil spill contingency plan, but developing national and provincial oil spill contingency plans remains a challenge facing the government.”

A recent National Marine Pollution Risk Assessment conducted by the NMSA and PNG Ports Corporation, in association with international consultants, reported that the country’s maritime laws need to be updated and aligned with all International Maritime Organisation (IMO) conventions.

The report further stated that until five new marine pollution bills, drafted by the NMSA, are fully enacted, the government’s powers to prevent and control marine pollution from ships, and enforce the payment of compensation from polluters, are constrained.

(END)