While the market cannot accelerate shipping decarbonization by its own, it is by far the most important tool regulators have in their hands in order to deliver tangible solutions, experts agreed during a recent webinar organized by Global Maritime Forum.
Regulators will not dictate technology, regulators should not dictate fuels; they should dictate mechanisms so that the market finds the best possible solution.
…noted Lasse Kristoffersen, Chief Executive Officer at Torvald Klaveness.
Amid a growing discussion on the need to align shipping with the Paris Agreement trajectory if the world is to see results in the fight against climate change, GMF gathered leaders from the maritime ecosystem to discuss what is needed from policy makers within the next two years to make an equitable decarbonization of shipping in line with the Paris Agreement possible and investable.
The technology required for zero carbon shipping is already here, both on ships and in terms of sustainable fuels production, but the key challenges still lying ahead are in terms of that scaling commercialization and deployment, said Katherine Palmer, Global Sustainability Manager, Marine & Offshore at Lloyd’s Register.
“What we need to really focus on and to get clarity on is the safety, the sustainability, the regulatory framework that enables that safe and sustainable application of these technologies and also the training and the skills and competencies needed of those working in the maritime sector to be able to competently use and maintain these new technologies,…she stressed.
What about MBMs?
On its part, a key way in which policy can bridge the gap is the implementation of a Market Based Measure for shipping, which means a legal framework that will deploy financial incentives to encourage stakeholders in the whole supply chain to use low carbon or zero carbon fuels, speakers agreed.
As the potential of carbon pricing seems to increasingly gain momentum -let’s not forget that the EU has already revealed plans for a carbon pricing by 2023- the question is not “if we will have carbon pricing” but “who should regulate international shipping and the price of carbon”, said Kristoffersen.
I think what finance needs is to see those market-based measures, so we can see how the competitiveness gap can be closed and how that can be narrowed to the point that zero emission fuels and vessels become the norm and the preferred route.
…added Michael Parker, Chairman, Global Shipping, Logistics and Offshore at Citi.
But what might be some of the guiding principles for ensuring that the funds collected through the market-based measures are allocated in the most appropriate way to both fuels and infrastructure? The key to this will be to ensure that the industry looks at equity and the full life cycle of the fuels for any carbon price, said Aoife O’Leary, Director, International Climate at Environmental Defense Fund Europe.
If we have the right guidance from life cycle guidelines degree in the IMO, then the carbon price and the market should follow.
…added on this O’Leary.
Safety and technology along policy
And although the constant issue of discussion across the industry is about policy and how that policy needs to remedy this missing market for zero carbon fuels, it should not neglect also the regulatory frameworks around safety, added Palmer. They are things that that need to happen as well from a regulatory perspective, and we need to get those standards set, she said.
“It is imperative that that the zero carbon fuels we’re going to be using in the future are safe, so we need to have those that work starting now so we can understand where the risks are and start to put in mitigation measures into the design…all this needs to be considered across the supply chain so safety is at the core”…she added.
On his part, Mr. Parker also agreed that data has a key role to play along policymaking in the transition to greener shipping.
Data is this key change key game changer because the transparency of data on emissions is really going to identify where these emissions are being created and reward and motivate people who are performing in a much cleaner way in that supply chain.
…he said.
The way forward
In every expert discussion, it becomes evident that the industry knows it has to decarbonize, because there is scientific evidence and because the society is demanding it, as expressed through Paris Agreement. In this landscape, there is a crucial role for policymakers along with the industry to do whatever possible. But moving forward, both the industry and the regulators need to realize that they will not be the ones to decide the pathway for decarbonization, but the science society will do, stressed Kristofersen.
“The whole world fleet will be replaced over the next 30 years anyway probably a ship that lives between 20 maybe 25 years so if we can get our act together and get regulations right over the next five years, we will have a transition to zero mission shipping with hardly any cost to society,…he said.
Concluding, Nigel Topping, UN High Level Climate Action Champion for COP26, noted that ambition seems to be growing in many sectors and many of those sectors have shipping as part of their supply chain, which will be a key driver for the way forward.
I am really hopeful that IMO is hearing from non-state actors all around the world that we need to make this transition to net zero emissions fuels in such a way that is also just and leaves no country behind.
…he said.
