Ports of innovation: How ABP is turning maritime hubs into clean energy powerhouses

This interview is part of the Inside the Mind of the CxO series, which explores a wide range of critical decisions faced by chief executives around the world.

Maritime ports have long been engines of the global economy. Of crucial importance as trading and supply chain hubs, they have a deep history in commerce, with some dating back thousands of years. Now, they’re emerging as leaders of a 21st-century tech-enabled energy transition. Responsible for 80% of worldwide trade, ports host and service a range of adjacent industries. They’re uniquely positioned at the nexus of an ecosystem of businesses urgently responding to emerging technologies, geopolitical risks, and climate change.

The climate crisis, in particular, has been a catalyst of innovation for Associated British Ports (ABP), which handles a quarter of the UK’s seaborne trade. The company has been privately held since 1982, and it’s now owned by a mix of pension and sovereign wealth funds. ABP’s 21 port locations and 8,600-acre land portfolio are central to its strategy: rethinking and repurposing land use for renewable energy projects like offshore wind and solar installation, and exploring diverse business models, including partnerships with climate tech start-ups.

Max Harris, ABP’s group head of strategy and sustainability, oversees its new Energy Ventures Accelerator (EVA) program. The initiative is poised to help deepen the port operator’s relationship with its carbon-intensive industry customers, including shipping companies and steel manufacturers, by connecting them with climate tech start-ups that can help tackle big challenges, like decarbonizing industrial heat. It’s also a chance for ABP to invest in potential customers of the future, as these start-ups seek to scale commercially.

Harris recently talked to strategy+business about how the evolving role of ports creates opportunities for ABP to test new business models, address its own climate challenges, and help its customers advance hydrogen power, offshore wind, carbon capture and storage, and other sustainability-related goals.

The following is an edited version of the conversation.

S+B: How have the needs of your traditional ports customers changed?
MAX HARRIS: Decarbonization is, overwhelmingly, the main megatrend that customers want to talk about. These customers include shipping lines and logistics companies with heavy-goods vehicles coming in on ferries. Aside from that, it’s about supply chain cost efficiency and having greater visibility of interconnected operations. But, absolutely, decarbonization is a key focus. Access to green power, greener fuels, and lower-carbon fuels is important for our customers, and that access is seen as a key enabler of their broader strategic ambitions.

One of the biggest challenges that we’re facing in the UK, in terms of our net-zero trajectory, is how to decarbonize industrial heat, which is required for all sorts of different manufacturing processes. Hydrogen is the leading candidate to help to decarbonize the creation of industrial heat. But the challenge is to provide that clean hydrogen at a competitive cost, where the green premium that manufacturers and big industrial users pay is not so significant that it becomes unattractive. So ABP is working with a number of innovative hydrogen producers that are looking at different technologies to reduce the cost of hydrogen production, which will then feed into industrial users, so that they can decarbonize their heat production. It’s a really exciting journey, where we can look to make hydrogen more cost-competitive whilst also driving the net-zero agenda.

S+B: This seems like a radical departure from the role that’s typically associated with ports. Can you tell us more about ABP’s evolving remit as a modern port?
HARRIS: The fundamental role of ports has been the same throughout history: lifting cargo on and off vessels, and getting it to end-customers. That’s still, by far, the majority of our business. But we deploy a mixture of business models. We have land assets and infrastructure assets. Customers come and use our land, and then they’ll pay us to rent it, so that’s basically a landowner model. But we’re also an infrastructure business, because our customers use our cranes, our quaysides, our jetties and marine infrastructure, and sometimes they will operate the terminals.

To meet the needs of our customers, we’ve broadened our business model from facilitating and enabling the import and export of cargo to also include enabling the energy transition. It doesn’t mean that we’re not focused on trade anymore: that will always be the foundation of our business. And, really, [these new business models] are just an expansion of what we’re trying to do by looking at the energy transition and how we support hydrogen, carbon capture and storage [CCS], and offshore wind, for example.

S+B: How are you leveraging your existing assets to expand your business models?
HARRIS: There has been a business shift at ABP toward an increased focus on land assets. We see this as part of a broader adjustment in the industrial landscape of the UK, where there’s a shift toward those low-carbon infrastructure types—hydrogen, offshore wind, or manufacturing facilities for CCS.

Over the last few years, we’ve seen an increase in manufacturing taking place at our ports. A great example of that is Siemens Gamesa’s Green Port Hull [GPH] offshore wind [turbine] blade-manufacturing facility, located at the Port of Hull. That’s, by far, the biggest example of offshore wind manufacturing in the UK, using state-of-the-art technology. Since the project became operational at our port in 2016, GPH has supported both growth in the UK offshore wind sector and the broader European deployment of offshore wind.

Likewise, we’re seeing that manufacturers want to be located at the heart of large industrial ecosystems, including our ports in the Humber region of the UK, in South Wales, in Southampton, and in East Anglia. We see the use of our land beside the water as a critical driver for us in terms of attracting investment and manufacturing, which brings with it jobs and investment in coastal communities.

Ports are also perfect locations to test next-generation technologies. At the Port of Southampton, we worked with Verizon to deploy the first private 5G network on an industrial site in the UK. [Our initiatives] are really focused on industrial, internet of things use cases. And one great example of that is how we work with our automotive customers that are bringing vehicles into the UK market. With better 5G connectivity, we can use our terminal operating systems to optimize the path of the vehicles from the ship or to the storage location, based on either time or cost, and now, carbon. Having better 5G connectivity really makes a difference not only to supply chain cost reduction but also to CO₂ reduction.

S+B: Can you tell us about ABP’s approach to its own climate change challenges?
HARRIS: We can’t credibly talk about enabling the energy transition without taking care of our own house when it comes to sustainability. There are, inevitably, a number of challenges that we’ll face over the next ten, 20, 30 years. Rising sea levels are certainly high among them, and that’s one of our biggest long-term risks. So, we’re making sure that our quay walls are the right height to protect against floods and storm surges. We also need to work with public sector authorities around broader flood defenses and support them in their investments.

As part of our sustainability strategy, we have an operational net-zero target of 2040. One of the ways we are pursuing this goal is to invest in solar energy generation. ABP’s ports have a lot of warehouses with roof-mounted solar panels, to optimize the use of space for renewable energy generation. Alongside onshore wind turbines, we have 32 megawatts of installed capacity for clean energy generation around our ports, and that reduces our reliance on the UK’s national grid and allows us to use cleaner, cheaper power. In addition, our customers can take advantage of that cleaner, cheaper power at our ports: We own the local grid around our port assets. Many of our ports are large-scale industrial sites reaching over 1,000 acres in size. So, we sell power to our tenants and our customers on those port sites.

S+B: With sustainability playing a greater part in business strategy, we’re seeing C-suite roles evolve. Can you tell us a bit about your role, and why ABP has decided to unite strategy and sustainability in one office?
HARRIS: There are three elements to my role. Firstly, I lead on corporate strategy development and implementation. This goes hand in hand with developing and delivering our sustainability strategy. And then a new piece of my role, one that crosses both strategy and sustainability, is taking the first steps into innovation and supporting start-up ventures. This is a new commercial model we’re looking to explore—to make sure that we can support the changing needs of our customers as the energy transition takes hold and as decarbonization becomes the norm for the UK economy.

Sustainability is inherent in our business model and our commercial focus, because all of our major customers are either challenged by the decarbonization imperative, seeking to reduce emissions and pivot their business to a cleaner future, or they’re looking to scale their clean energy initiatives, which requires a lot of investment infrastructure enablers—which we can help provide. Our coverage across those different segments of the UK economy means that our role in enabling the energy transition, and broader sustainability objectives, is massive.

S+B: Tell us about ABP’s Energy Ventures Accelerator. How did the idea for this climate tech start-up platform first take shape?
HARRIS: It’s gone from a seed of an idea around corporate venturing to a groupwide strategy anchored in using our land more effectively and supporting growing green energy markets such as hydrogen and offshore wind. We know who the established players are in those markets, but we’d also like to explore who the emerging players are and how we can work with them. [Start-ups] don’t necessarily have the balance sheet strength to be a traditional ABP customer, because we look to sign ten, 15, 20-plus-year contracts. They can’t necessarily commit to that length of contract. So, we needed to come up with a different commercial model in order to work with those types of start-ups—moving into commercial scale operations and looking to really commercialize the products that they’re manufacturing.

S+B: Give us an overview of the accelerator. What types of technology solutions are you zeroing in on?
HARRIS: The Energy Ventures Accelerator is a 12-month program to identify the highest-potential energy transition start-ups in the hardware space. Our existing customers—steelworks, oil refineries, cement works—are looking to decarbonize, and they need technology and these hardware solutions to get there. And we want to build relationships with the big players of the future: the start-ups that will become scale-ups that will become fully established industrial players. Our thesis is that our existing customers will also be the start-ups’ customers. So, we’re looking to attract the best and brightest international start-ups to come to our ports to leverage our land and infrastructure assets, and also to meet our customer base and meet the local stakeholders, local government, local councils, and local enterprise partnerships.

We’re working with Plug and Play, a large Silicon Valley–headquartered innovation platform and VC investor; but they don’t just do software—they’re also focused on hard tech deployment. The Energy Ventures Accelerator is all about hardware. It’s not SaaS [software as a service] solutions or AI. This is about physical, tangible products being manufactured, like offshore wind components. There are over 65,000 start-ups in Plug and Play’s global network. They have a window into a whole different world than we’re accustomed to working in, and so they can help us broaden our reach.

S+B: Give us an example of how these sorts of partnerships might work.
HARRIS: One good example of ABP working with start-ups to support innovative solutions is when we worked with Terberg, which manufactures terminal tractors. They wanted to test hydrogen propulsion units within their terminal tractors. So we worked with them and with Air Products, a customer of ours, to trial these terminal tractors. It went really well, and our staff and employees tested the fuels, using hydrogen versus diesel. And we’re going to do a lot more of that, where we’re working with early-stage businesses.

We’re looking at a few different start-up collaboration models. On the one hand, there’s pilots and proof-of-concepts, through which start-ups can test their technology at our port sites, also working with our existing customers to trial real-world applications. On the other, we might take equity stakes in start-up businesses in exchange for discounted leases and commercial support. But we could also look at special-purpose vehicles—companies set up specifically to build a product in one of our ports, and then we do a revenue-sharing agreement, for example.

We also provide go-to-market support, connecting start-ups with our customers and with the broader industrial scene, especially in places like the Humber and South Wales. Part of those investments could be cash-based. And then there are other models, like a go-to-market partnership, where ABP plus the start-up can offer solutions to shipping lines, for example, to help decarbonize their operations.

S+B: Fast-forward ten years, when these new projects and pilots will have had a chance to develop. What will ABP’s port operations and business look like?
HARRIS: There’ll be at-scale deployment of carbon capture on large industrial units around our ports. That captured CO₂ will be used for alternative fuels—e-fuels, synthesized hydrogen, and CO₂ that supports low-carbon [maritime] shipping through e-methanol and low-carbon aviation through sustainable aviation fuel.

Our customer base will be more diverse. Our existing customers will have made huge progress on their decarbonization journeys and will be joined by new types of customers at our ports—big hydrogen companies, floating offshore wind developers and manufacturers. I see our ports as focal points for a really vibrant, dynamic mix of medium-sized companies that are growing and that are really innovating, together with large players that are also innovating in order to decarbonize their operations. I think ports are going to be a real center of gravity for the industrial energy transition, and so all the investment that we’re making and all the investment that our customers will make on top of that is going to make a really big impact on net zero in the UK.