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Published on 23/10/2019

Industry To Achieve Zero Emissions By 2030

It’s looking like the maritime sector really means business, where tackling emissions and reducing CO2, are concerned and they’re putting their money where their mouth is – literally.

We’re already in the run-up to the enforcement of Sulpher 2020 and September saw the launch of another initiative. Led by ports, oil and shipping companies in the industry, for the first time ever on this scale, this one includes the banks too.

The aim of the initiative is for ships on the high seas and their marine fuels to have zero carbon emissions by 2030. These are no small feats – many shipping companies are currently feeling the pressure to meet the criteria of the impending Sulpher 2020 legislation and the effects of the new initiative look to be more challenging.

Why Now?

The global shipping industry is responsible for 90% of the volume of world trade – without it, it would not be possible to import or export most of our manufactured goods and food.  This contributes around 2.2% to global carbon dioxide (CO2) emissions and the long term goal of the U.N.’s International Maritime Organization (IMO), is that by 2050 greenhouse gas emissions will be half of what they were in 2008.

If you factor in that the ongoing growth of the global seaborne trade between 2018 and 2023 was predicted to be almost 4% a year, it highlights that this isn’t just a quick fix. As our food trade grows globally, so will the shipping emissions and obviously food is only a part of the picture.

Addressing climate change is a need that can no longer be overlooked. By creating such a united front on reducing emissions – one of the largest factors in global warming – this initiative is going to make it impossible for any shipping company to hide from.

Who’s Involved?

It’s blatantly clear that change is definitely expected across the globe and this drive is a clear indicator that the approach as a whole needs to move with the times. With sixty commercial groups committing to the new “Getting to Zero Coalition” this framework is set to have a much deeper impact than the fuel change imposition of Sulpher 2020.

Some of the key players involved in the coalition are…

The scale of the initiative is huge with the endorsement of the governments of Belgium, France, Denmark, Palau, Chile, Morocco, South Korea, Ireland, Britain, Sweden and New Zealand as well as leading ports being involved such as Rotterdam and Antwerp.

This is the first time that the financiers have involved themselves in initiatives of this type though. Many banks and financial institutions are backing Getting to Zero, so if you’re thinking you can get away with not playing ball, be warned – any ship financing plans you may have are about to become as buoyant as a tanker in dry dock.

The Challenges…

Whilst the initiative is targeting a 2050 deadline, the coalition is driving for an infrastructure to be created to help vessels and fuels to be ready by 2030. The fact that there isn’t a quick solution here is widely recognised with one member of the coalition, Ben van Beurden, chief executive of Royal Dutch Shell (RDSa.L) saying:

“Decarbonizing maritime shipping is a huge task with no simple answer, but it has to be done” 

“We intend to be part of the long-term, zero-carbon, solution by seeking out the most feasible technologies that can work at a global scale. Starting now is essential because ships built today will stay on the water for decades.” 

A.P. Moller Maersk’s chief executive Soren Skou also suggested that as well as cleaning the fuels up, a shift in propulsion technologies was required too “which implies close collaboration from all parties… the coalition launched today is a crucial vehicle to make this collaboration happen”. 

Potential Solutions

With part of the emphasis being on new technology, vessels being built will be expected to meet new criteria – the IMO has adopted mandatory rules on boosting fuel efficiency to cut down CO2 emissions from ship engines but their plan on how to do this isn’t expected until 2023. 

Allowing for the life expectancy of a ship, introducing more deep-sea zero-emission vessels (ZEVs) between now and 2030 is part of the impetus, as any new vessel put into operation in 2030 will be on the water for at least another 15 years.

One proposed solution is to increase the number of electric vessels, though this can only be entertained for shorter journeys. Electric ferries are already in use extensively in Norway, Denmark and Sweden and despite the growth in deploying electric ferries being exponential, the size of batteries needed for longer distances means .a different solution is needed for the deep-sea vessels.

Fuel is next on the agenda as the low tech nature of big ships means they can run on the dredge that other modern engines such as cars can’t cope with. It’s known that they often use the lowest quality fuel dismissed by more refined products, so other fuel options are being explored.

One such solution could be biomass-derived fuels – biofuel or biogas. These hydrogen and synthetic non-carbon fuels, such as ammonia, are either derived from renewable energy or from a combination of fossil fuels combined with CCS (carbon capture & storage). 

These fuels have the advantage of being able to burn on existing combustion engines but the challenge here is mainly going to be sourcing enough of it to meet demand. It needs to be produced in parallel with food production and with other industries increasing their use of biofuel in their own eco transition, there’s going to be serious competition which the shipping industry might not be ready for.

Responsible Lending…

Where this initiative differs is the inherent financial implications. They say money makes the world go round and in this instance, it couldn’t be truer as the whole world comes crashing to a halt without shipping.

When you consider the level of finance and investment in the shipping industry, that’s a whole heap of big wallets. Add to that, the growing interest in where they are investing and the global impact of their commercial strategy, they are under increasing pressure to behave responsibly.

Back in June, a separate initiative was launched, called the Poseidon Principles which will overhaul how banks make their decisions when providing loans to shipping companies.  For the first time ever, their lending process will take into account the companies measures in place to cut their CO2 emissions. This can be facilitated using IMO benchmarks as the gauge to measure standards against as part of their decision making.

Under the Poseidon Principles, signatories have committed to publishing their portfolios annually to include the carbon intensity of their portfolios. The banks will then measure this against a set of trajectories to mark how aligned or misaligned their vessels are against the IMO targets.

Each time an old vessel or new build requires financing, this is often for significant periods ie 10 or 12 years. The impact of the vessel across that timescale will now be assessed, including their carbon footprint allowing banks to finance the more ‘green’ vessels.

Eleven banks, whose combined portfolios account for 20% to 25% of global shipping loans signed up for the agreement and many others are seriously paying attention too. 

It Starts With A Clear Picture…

As you’ve now gathered, dirty emissions are a dirty word. The impact of air pollution from your ships is now going to be under such close scrutiny, that any gaps in your processes are going to be heavily frowned upon. Taking control of a reliable emissions reporting process is the absolute minimum in the journey ahead of us and the Evolution EMS™ can help you with this.

The Evolution EMS™ sends real-time emissions data direct to your desktop so your reporting is accurate and timely and already incorporates all regulatory requirements ensuring your reporting is fully compliant. It’s also future proof so that any future regulatory changes can be incorporated too via plug and play functionality.  

Let’s be realistic – if your reporting process looks remotely clouded, you’re going to attract much more scrutiny from the authorities as well as potentially risk any future lending needs you may have. 

Ask our team how you can use  Evolution EMS™ to easily take control of your emissions reporting now.