The environment featured sizeably in discussions at LISW19, held earlier this month
With increasing societal attention levelled at improving the world’s green credentials, it comes as no surprise that the topic of the environment came up over and over again during London International Shipping Week 2019 (LISW19), which this year saw over 200 seminars, functions and meetings. Even on the first day of the event, WISTA UK’s LISW conference (WISTA standing for the Women’s International Shipping & Trading Association) had the environment at the heart of its agenda.
Future fuel mix
Following a keynote speech from University Maritime Advisory Services principal consultant Isabelle Rojon, there was a panel discussion about the International Maritime Organization’s (IMO) emission-free plan for shipping (the body’s 2018 initial strategy confirms the IMO’s commitment to phasing out greenhouse gas, or GHG, emissions as soon as possible in this century as a matter of urgency). Katharine Palmer, global head of sustainability for Lloyd’s Register Marine & Offshore, called for “policy to enable and drive the incentives”, “the commercial environment to reward lower emissions” and “substantial collaborative effort across all maritime stakeholders where everyone has a role to play, so we can design our future, rather than leaving it to others to determine the road ahead for us”. Her organisation sees shipping moving from being an industry where everyone operates on the same fuel to having much more of a portfolio mixture of fuels, though there may be a family of dominant fuels within this.
“Shipping has a number of technologies and zero-carbon fuel choices available to it,” Ms Palmer noted, later saying: “We have been looking at various different pathways, and those pathways use fuels that are derived from biomass and fuels that are derived from renewable electricity such as hydrogen and ammonia, but also pathways that use hydrogen and ammonia that is produced in natural gas.”
Currently, the price spread is too great. Right now, the cheapest zero-carbon fuel in 2030 is two to three times more expensive in comparison to a fossil fuel vessel today. To close the gap, Ms Palmer’s organisation feels that policy intervention and fundamental change is required to lower the dependence on hydrocarbon-based fuels.
The topic of the environment came up over and over again
On the Wednesday of LISW19, IMO secretary-general Kitack Lim didn’t shy away from discussing his organisation’s drive to lower GHG emissions. At the International Chamber of Shipping’s (ICS) 2019 Conference — focused on “Setting Course for 2050” — Mr Lim quickly turned to the topic while delivering a keynote address. According to the IMO boss, the body’s third GHG study in 2012 estimated carbon dioxide emissions from international shipping to be about 800m tonnes, or around 2.2% of world emissions. While the fourth IMO GHG study, set to be presented in 2020, will tell of whether that statistic has changed substantially, the amount will inevitably still be significant, whatever the study reveals.
“Let us be in no doubt: we really need to accelerate our efforts towards the ultimate goal of phasing out GHG emissions from international shipping,” said Mr Lim.
According to the IMO boss, the goals in the strategy will not be realised with fossil fuels alone and it is anticipated to “drive a new propulsion revolution”. He called for making zero-carbon vessels more attractive, as well as directing investments towards innovative sustainable technologies and alternative zero and low-carbon fuels. So said the IMO leader, battery-powered and hybrid ferries, vessels testing biofuels/hydrogen fuel cells, wind-aided propulsion and other ideas are currently being actively investigated.
“The IMO GHG strategy has sent a clear signal to innovators that this is the way forward,” Mr Lim enthused. “However, action needs to be accelerated if its goals are to be achieved.”
A difficult change
Discussing the roadmap in the opening address to the ICS conference, Emanuele Grimaldi, ICS vice-chair and Grimaldi Group’s boss, said that there exist no clear solutions or “silver bullets” that will allow shipping to be easily transformed.
“There will need to be trade-offs, new ways of working, and yes, there will be losers,” he noted, later adding: “The reality is that companies are going to need to place orders in the first half of the next decade in a context of uncertainty about the future. The reality is that we have seen in other sectors success and failure, and we need to learn from this.”
During the gathering, The Lord Adair Turner of Ecchinswell, chair of the Energy Transitions Commission, felt that shipping’s starting point for achieving a zero-carbon scenario involves one key issue and one key benefit. The problem concerns “the fragmentation of the industry: the complexity of owners and operators, short-term contracts”. This, according to Lord Turner, generates what economists describe as a ‘principal–agent problem’ — where one person or entity can make decisions and/or take actions on behalf of, (or which affect) another person or entity — or an issue of coordination, or the question of who possesses incentives to act. However, shipping’s big benefit is that it is regulated and has the IMO, which can set regulations for what should be the design of new ships, how energy-efficient they must be and, eventually, what the price of fuel should be (or whether the fuel must be from zero-carbon sources).
The Baltic Exchange’s International Shipbroking Forum, held in collaboration with shipping news service TradeWinds, featured discussion about the environment too. In a brief panel on regulation and shipping, Brian Nixon, Lavinia Bulk managing director, said that although his company is looking at a very positive slant on “IMO 2020/2030/2050”, “in the short-term, it’s quite a stressful time”. In response, Baltic Exchange chief executive Mark Jackson replied that he believed a common theme emerging is that everybody is beginning to discuss it from the point of view of managing the management risk.
As for Stefan Albertijn, chairman of the Baltic Index Council, he said he felt that any sensible shipowner is thinking about the effect of their actions on the environment. Perhaps the combination of the growing environmental focus in society more generally, plus the attitudes of the changemakers in the maritime sector, are coming to bear. What feels certain is that given the amount of time devoted to the environment at LISW19, it doesn’t look like the green agenda will be disappearing from the industry any time soon.
The Baltic Exchange will hold its next Freight Derivatives & Shipping Risk Management course on October 7 and 8 in UK capital London. More information can be found here.