Shipping, which transports about 90% of world trade and accounts for nearly 3% of the world’s CO2 emissions, is under growing pressure from environmentalists to deliver more concrete action including a carbon levy.

The International Maritime Organization (IMO), the UN’s specialist shipping agency, has said it has made progress on short-term greenhouse gas (GHG) reduction measures.

But that timeline is not seen as fast enough by environmentalists and a number of the IMO’s 175 member countries.

“At the MEPC (IMO committee) meeting in June next year there will be a lot of heat and pressure on regulators to ensure that they come prepared to negotiate a solution rather than kicking the can down the road because of misalignment or negotiation tactics. It is really not acceptable,” said Christian Michael Ingerslev, chief executive of Maersk Tankers.

Last month countries including the United States at the COP 26 climate summit pushed for the IMO to adopt a zero emissions target by 2050.
So far, its goal is to reduce overall GHG emissions from ships by 50% from 2008 levels by 2050.

“As far as the IMO is concerned, the negotiations process in 2022 will likely be very slow and onerous,” said Faig Abbasov with green group Transport & Environment.

“The problem is in the very belief that a U.N. organisation with 175 members can come together and take tough decisions to decarbonise an entire economic sector.”

The IMO said concrete progress was made in 2021 on combating climate change including new regulations to improve the energy efficiency of the world fleet, adding that it would “work very hard” next year on the development of a revised GHG strategy, which will be finalised in 2023.
“Where this is willingness to act, then processes can move faster,” said Roel Hoenders, head, air pollution and energy efficiency with the IMO.
A proposal submitted at the IMO to create a $5 billion research and development fund to find the right technology to meet the targets is still under discussion with further talks kicked forward to next year.

Underscoring the challenges ahead will be the impact on poorer countries such as Pakistan.

While the country was a small carbon emitter, climate change had “directly impacted us hard”, Pakistan’s Federal Minister of Maritime Affairs Ali Haider Zaidi said.

“Developing countries cannot afford to spend on the type of infrastructure needed and therefore, developed countries must support the process at the IMO,” he told Reuters referring to the R&D fund.

Financing the path ahead is another hurdle. Shipping will need $2.4 trillion to achieve net-zero emissions by 2050, with around $500 billion required by 2030, according analyst estimates.

“Certainly, the European banks at least and not far behind the American banks will have to meet criteria that satisfy sustainable finance,” said Tony Foster, chief executive of specialist asset manager Marine Capital.

“When it comes to new assets it is going to be increasingly difficult to fund anything that does not quite qualify and the same will be true, perhaps even more so, with existing assets.”

Darren Maupin, founder of leading fund manager Pilgrim Global, said companies in the shipping sector were grappling with how to secure finance with more ESG pressure.

“Capital is afraid – how do you invest in a 25-year asset when you have no idea what the IMO is going to do in five years,” Maupin said.
“The industry has a far reduced ability to build ships and limited capital available to do so. Simple supply-demand suggests rates are going to be higher and the industry is going to have to generate more capital to fund itself.”

Source: www.marinelink.com

Image: www.pexels.com

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According to the latest UN estimate, cargo ships carry 10.7 billion tones of cargo in the oceans each year. Almost all carriers have so far used fossil fuels, which currently account for 2% -3% of global carbon dioxide emissions. This means that if the shipping industry were a country, it would be the sixth largest emitter of carbon in the world. If shipping companies do not take additional measures to reduce emissions in the coming years, the sector’s CO2 emissions are projected to increase by 50-250% by 2050.

Carbon emissions are one of the main causes of adverse climate change, including rising average air temperatures and increasing rainfall, which in turn is accelerating the melting of ice, increasing salinity and water levels in water bodies, and increasing coastal erosion.

To prevent the world from reaching a climate crisis, many industries, including logistics, are looking for effective ways to reduce their negative impact on nature.

The goal is to become a carbon neutral industry

At present, maritime freight companies are ambitiously moving towards the goal of becoming a carbon-neutral industry. However, this is not a one-day issue, and carbon emissions need to be reduced gradually to reach this goal. The International Maritime Organization (IMO) has set a target of reducing total international GHG emissions from international shipping by at least 50% by 2050 compared to 2008.

The decarbonization of the shipping industry will not only help reduce the sector’s negative impact on the environment but will also help to achieve other climate-related goals, such as the switch to renewable fuels by 2050. The Environmental Defence Fund estimates that this could boost up to $ 6 trillion in renewable energy infrastructure worldwide.

The first steps towards the goal

The Danish freight company Maersk has taken the first serious step towards decarbonization. The company has announced the purchase of eight cargo ships that will run on methanol, reducing CO2 emissions by 1 million tones. This decision follows the carrier’s commitment to become a fully climate-neutral company by 2050.

Maersk is not the only industry to start realizing its ambitions to become an environmentally friendly company. Similar decisions have been made by other companies, such as DHL and UPS, which offer their customers the option of delivering orders using sustainable fuels for a fee. Amazon, meanwhile, signed a commitment in October with companies such as Ikea and Unilever to make sure that by 2040 they could only transport goods on carbon-free ships.

Choice or necessity?

Over the last five years, the number of players in the logistics, freight and shipping sectors that are moving towards a greener future is growing, and the above companies are just some of the players in the logistics sector who have already made their first choice in favor of decarbonization. That, of course, is to be welcomed, but before companies are praised and put on the podium, it would be important to understand their motivation. Here are some facts that can help you find the answer to this question!

A study on corporate social responsibility conducted in 2017 found that consumers today increasingly choose companies that adhere to the principles of sustainable business. 87% of people are more positive about companies trying to reduce the environmental impact of their industry in various ways. In turn, 88% of respondents trust service providers to contribute to the fight against social and environmental issues. The research data show that the position of companies on environmental issues is especially important for the younger generation of adults and millennials. This means that promoting an environmental awareness plan is an effective strategy to increase customer purchases, gain trust and maintain loyalty.

Account must also be taken of the fact that the goal of making shipping an environmentally friendly industry is being set not only by companies or leading associations, but also by countries. For example, from 2030, Norway has committed to purchase only those cargo ships that will have access to zero-emission technologies. Norway’s climate strategy also provides for an international ban on the use of non-climate-neutral fuels from 2050 onwards. This, in turn, could mean that the demand for water transport that is not fueled by this type of fuel will fall sharply over the years.

Under the EU Emissions Trading Scheme, which will be phased starting 2023, the European Union (EU) will also start regulating shipping emissions. In addition, legislation is being proposed requiring shipping companies to pay for the carbon dioxide emissions they emit when traveling to, from and between EU ports.

These are just some of the facts that make it clear that the noble step towards climate-neutral action is not only a free choice of companies, but also a strategic step in gaining customer loyalty and surviving at a time when tackling the climate crisis is a top priority. As the Latvian poet Rainis wrote: “Only that which remains in constant change, shall persist!”

Author: Roland Peterson, logistics expert

Image: www.pexel.com

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Shipping, which transports about 90% of world trade, accounts for nearly 3% of the world’s CO2 emissions.

U.N. shipping agency the International Maritime Organization (IMO) has said it aims to reduce overall greenhouse gas emissions from ships by 50% from 2008 levels by 2050. The goal is not aligned with the 2015 Paris Agreement on climate change and the sector is under pressure to be more ambitious.

The signatory countries involved in the ‘Clydebank Declaration’, which was launched at the COP26 climate summit in Glasgow, agreed to support the establishment of at least six green corridors by 2025, which will require developing supplies of zero emissions fuels, the infrastructure required for decarbonization and regulatory frameworks.

“It is our aspiration to see many more corridors in operation by 2030,” their mission statement said.

Britain’s maritime minister Robert Courts said countries alone would not be able to decarbonize shipping routes without the commitment of private and non-governmental sectors.

“The UK and indeed many of the countries, companies and NGOs here today believe zero emissions international shipping is possible by 2050,” Courts said at the launch.

U.S. Transportation Secretary Pete Buttigieg said the declaration was “a big step forward for green shipping corridors and collective action”.

Buttigieg added that the United States was “pressing for the IMO to adopt a goal of zero emissions for international shipping by 2050”.

The IMO’s Secretary General Kitack Lim said on Saturday “we must upgrade our ambition, keeping up with the latest developments in the global community”.

Industry needs regulatory help
Jan Dieleman, president of ocean transportation with agri business giant Cargill, one of the world’s biggest ship charterers, said “the real challenge is to turn any statements (at COP26) into something meaningful”.

“The majority of the industry has accepted we need to decarbonize,” he told Reuters.

“Industry leadership needs to be followed up with global regulation and policies to ensure industry-wide transformation. We will not succeed without global regulation.”

Christian Ingerslev, chief executive of Maersk Tankers, which has over 210 oil products tankers under commercial management, said it had spent over $30 million over the last three years to bring their carbon emissions down through digital solutions.

“We need governments to not only back the regulatory push but also to help create the zero emissions fuels at scale,” he said.

“The only way this is going to work is to set a market-based measure through a carbon tax.”

Other signatory countries are Australia, Belgium, Canada, Chile, Costa Rica, Denmark, Fiji, Finland, France, Germany, Republic of Ireland, Japan, Marshall Islands, Netherlands, New Zealand, Norway and Sweden.

Source: www.marinelink.com

Image: www.pexel.com

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In the course of their transformation paths towards climate-neutral steel making, thyssenkrupp Steel and HKM are going to require large and increasing quantities of hydrogen to produce steel without coal. For decades, both companies have been importing coal, iron ore and other raw materials via their own terminal in Rotterdam, using inland barges as well as rail to transport it to their blast furnaces in Duisburg.

The partners will explore hydrogen import opportunities via Rotterdam as well as a possible pipeline corridor between Rotterdam and thyssenkrupp Steel’s and HKM’s steel sites in Duisburg. The partnership may serve as a framework for additional initiatives and aims at supporting existing initiatives and projects the partners are involved in.

The Port of Rotterdam is already investigating the import of hydrogen from a large number of countries and regions all over the world. Green hydrogen is a sustainable alternative to coal, oil and natural gas. Vast imports of hydrogen are necessary if Europe and Germany want to reduce CO2 emissions and become climate-neutral by 2050, while maintaining its strong industrial backbone.

Rotterdam is also setting up a carbon transport and storage system, Porthos, which is also being considered as a CO2 storage site for the production of blue hydrogen by the “H2morrow steel” project, which includes thyssenkrupp Steel as partner as well.

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Image by Markus Christ from Pixabay

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