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Emission regulations for greener shipping – is shipping doing enough?

Although MEPC71 was focusing on ballast water management, the Pacific Islands reminded the shipping world of a pressing issue: emissions. Cuts to ships’ greenhouse gas (GHG) emissions is an on-going debate in the IMO’s chambers, and for now, SOX and NOX regulations are in place, but what about CO2 emissions?

Thomas Kirk of the American Bureau of Shipping (ABS) recently reviewed a multitude of emission challenges in 2018. The maritime sector is expected to comply with the EU’s MRV regulation, IMO’s Data Collection System, and by 2020, ships need to cut sulphur emissions.

A group of international shipping industry leaders will join forces at the 23rd session of the Conference of the Parties (COP23) to the UN Convention on Climate Change (UNFCCC) in November to drive industry ambition and action on exploiting opportunities presented by decarbonisation.

The UN acknowledges that if the world is planning to keep up with the terms outlined in the Paris Agreement, the shipping industry must play a role in it. Research by Smith and Raucci et al. suggests that shipping is forecast to increase its greenhouse gas emissions, unless the industry is regulated.

“MEPC71 saw the agreement of a three-phased approach, with the first phase being the collection of fuel oil consumption data”, Maurice Meehan, Director of Shipping Operations at Carbon War Room, explains.

“The timeline on data-collection is promising”, Meehan continues. “It keeps shipping to its own timetable of implementing GHG emissions reduction by 2023. However, the language used still accommodates the possibility of inaction – ‘decision making on what further measures, if any, are needed’.”

Without having data, however, passing a regulation on CO2 cuts is impossible. And without a specific goal to aspire to, it is difficult to expect the maritime industry to implement technologies which aid lower emissions blindly, especially since the industry is struggling financially.

“Since the signing of the Paris Agreement and a deal at the International Civil Aviation Organization to commit air transport to carbon neutral growth from 2020 based on carbon offsetting, shipping is now the only industry without global legislation to limit or offset GHG emissions”, Meehan observed.

Shipping was omitted from the Paris Agreement, developed during COP21 at UNFCCC in 2015. Despite this, the shipping industry’s regulatory body, the International Maritime Organization (IMO), has pushed for regulatory action around shipping’s GHG contributions. Momentum has started gathering during the IMO’s Marine Environmental Protection Committee (MEPC) meetings.

The need for shipping to contribute it’s ‘fair share’ of GHG reductions is paramount. The industry needs to decarbonise quickly, and deeply enough to meet the high ambition climate change target. The 1.5-degrees goal, set by the Paris Agreement, has catalysed the need for a business-focused approach that pushes ahead of regulatory mechanisms.

“We encourage the IMO to recognise the good work already being done by businesses in readying the digital and physical technology for decarbonisation, and the organisations implementing them in advance of regulation. We also need businesses to align and support the IMO in the development of regulations for decarbonisation”, Meehan said.

The ultimate goal is to put shipping in line with the Paris Agreement’s 1.5-degree trajectory. Smith and Raucci et al. outline several ways the industry can do this; however, these plans need to be put into action.

“The industry must reduce its total emissions by 50% from 2008 levels by 2050”, Meehan stated. “The current rate of both innovation and uptake of new tech and fuels will not get us there, or even to the limits being discussed at IMO in advance of the GHG emission reduction strategy set for introduction next year.”

Academic research by Smith and Raucci et al. supports Meehan’s statement that improved energy efficiency using digital technologies or alternative fuels is not enough to achieve the goals set out in the Paris Agreement. The sulphur cap will have a positive impact on the environment, but CO2 regulations and official guidance are also needed.

“We know that by 2050 we must cut emissions to 50% of 2008’s levels, but critically, we need a clear, unified vision of what that looks like and how we get there”, Meehan explains. “Essentially, we need a decarbonisation pathway laid out by the industry for the industry. It would give focus to our collective work, define clear objectives, and describe what needs to be achieved to meet them. We recognize the actions already being taken by IMO to develop this roadmap and are encouraged by such, but the implementation of a successful decarbonisation pathway is more urgent than timelines currently on the table.

“We know that the industry needs to begin by implementing the proven existing physical and digital efficiency technologies already on the market. The industry also needs to ensure effective decision-making and reporting metrics are freely available, and it needs to share information on more efficient and profitable operations across the value chain. The demand by customers on Scope 3 emissions reporting is growing and we are encouraging the industry to prepare and align with those demands.”

Technological innovation, however, is not the only way to go about aiding emission goals.

“In chartering and finance, simple changes in decision-making can have a significant carbon reduction impact”, Meehan illustrates. “Carbon War Room has a strong focus on engaging companies with financing decisions that support decarbonisation of ready newbuilds or implementing charter party agreements that support and reward fuel efficiency.”

“With that in mind, energy efficiency that still relies on fossil fuel propulsion can only get the industry so far down the road to decarbonisation.”

Indeed, shipping’s heavy fuel oil is notorious for damaging for the environment, especially in the Arctic. Greener fuel options include liquefied natural gas, but yet again, it is just another fossil fuel. Many experts see gas as a transition fuel that will lead the world to more sustainable and renewable energy sources like wind and solar, and shipping is no exception.

“Hardware, software, and processes already in use by some parts of the industry could have a significant impact on reducing the industry’s GHG emissions. There are latent efficiencies in operations and ‘quick win’ technology solutions that could deliver huge fuel and cost savings to the industry if implemented at scale.”

But to achieve the Paris Agreement’s 1.5-degree goal, shipping needs to aspire to operational sustainability by implementing new digital technologies in its business models.

“Innovative digital and physical technology, like blockchain, IoT, sails, solar, batteries, advance materials and low-carbon fuels and infrastructure need to be in place in the medium-term to achieve the 50% reduction target. Finance to support R&D, infrastructure and market roll-out is required to prepare these for the next stage of decarbonisation.”

According to a 2015 study by Smith and Rehmatulla, shipping’s stakeholders are looking for commercially viable options first and foremost. Rehmatulla (2015) analysed these attitudes and found that market factors like low earnings, and low fuel prices are not encouraging stakeholders to invest into green shipping.

“There are significant market barriers that prevent the uptake of efficiency solutions and that stop capital from flowing towards decarbonisation initiatives and projects. However, making decarbonisation profitable is critical to making it possible. To increase progress in cutting GHG emissions, we need to work together to remove these barriers and get proven, profitable, existing physical and digital efficiency technologies implemented at a large scale.”

This calls for new business models that incorporate energy efficiency solutions – digital or technical.

“To profitably decarbonise, the industry must pursue various routes of implementation. Action can and should be taken now to optimise operations and implement proven, market-ready energy efficiency technologies at scale.

“But as I said before, energy efficiency based on fossil fuels alone can only get the industry so far. Shipping must learn from other sectors that have embraced disruptive technologies and fuels. A combination of effective planning, development of infrastructure, increased adoption, and getting capital behind promising solutions - both for R&D and market roll-out – is essential.

“The industry must recognise that profitable low-carbon shipping is not a pipedream. The industry can and must act now, achieving the most energy efficient industry possible and applying low-carbon technologies as they hit the market. It must broaden, deepen and accelerate its ambition on decarbonisation.”

Smith and Raucci et al. suggest that to achieve the Paris Agreement goals, shipping’s net emissions should peek in 2025, and plummet by 2050.

“Profitably decarbonising the shipping industry could be construed as a daunting challenge especially given the industry’s current market issues”, Meehan admits. “However, shipping needs to be considering its future in the wider context of global environmental, political, economic and social trends. The industry is under increasing pressure from its customers, key industry organisations, shareholders and consumers to play its part in holding global temperatures well below 2-degrees Celsius – how the shipping community reacts to that will impact its global standing and its ability to remain secure and profitable.”

“Significant and visible parts of the shipping industry are already acting on decarbonisation and there is a strong future ahead for shipping. The Danish Maritime Forum 2016 clearly indicated the need for a decarbonisation pathway to be developed for and by the industry. This convening of industry leaders raised questions around how to reshape a market in turmoil to deliver profitability in a carbon-constrained environment, and how to ensure this extends to the whole industry and not just a leading few. A decarbonisation pathway would give clarity, focus and define clear objectives for the road ahead. This, married with effective regulation to stimulate innovation would give the industry the tools it needs to have the strongest future possible.”

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