Over the last decades, climate change has been having an increasing impact on the environment, changing the landscape both literally and metaphorically. As a global industry that spans over the entire world, shipping has not remained untouched by the effects of climate change not climate change by the effects of shipping.
Global warning
According to data from the World Meteorological Organization, the global mean near-surface temperature in 2023 (to October) was around 1.40 ± 0.12 °C above the 1850–1900 average. Consequently, is virtually certain that 2023 will be the warmest year in the 174-year observational record.
Global warming poses multiple threats to communities and business sectors, including shipping, ranging from rising sea levels due to melting ice, to extreme drought and low river levels.
Case in point, the severe impact of drought due to rising temperatures, which became very apparent to shipping organisations this year, as the operation of one of the world’s most crucial waterways, the Panama Canal, was affected.
In particular, the combination of the El Niño phenomenon (refers to a warming of the ocean surface, or above-average sea surface temperatures, in the central and eastern tropical Pacific Ocean) with rising temperatures due to global warming, has led to the Canal facing a period of extreme drought and constantly taking measures to adapt to the situation and keep operating.
The situation in Panama has severely impacted shipping, as the Canal is one of the world’s most crucial routes. Traffic has seriously impacted operations, with stakeholders dreading the waiting times. For instance, reportedly, a vessel had to pay $2.4 million, besides a transit fee of approximately $400,000 to get a slot permit for its carrier to traverse the channel faster.
Apart from the Panama Canal, the Amazon River is also facing increased water levels, which has led to vessels grounding in the area. Furthermore, trade in the Mississippi river was also impacted by drought.
However, apart from making water levels drop, climate change is also making water levels rise, as ice in the Artic melts due to increasing temperatures. This may seem like bad news to the rest of the world, but Russia has been increasingly shifting its focus towards the use of the Northern Sea Route (NSR), which has become more navigable due to melting ice.
Russia sees this route as an alternative to Black Sea shipping, which poses great difficulties for Russia due to the ongoing war with Ukraine and the resulting sanctions.
Shipping’s influence on climate change
As explained, Earth’s temperature keeps rising which severely impacts the environment. To mitigate this effect, adopted by 196 Parties in 2015, the Paris Agreement has been a landmark move from global community in recognizing the effects of climate change, aiming to limit global warming to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels.
Global shipping emits 3% of worldwide greenhouse gases (GHG). While it may not seem like a lot, shipping contributes to GHG emissions because of the great volume involved. For instance, Maritime transport carried out 74% of the goods traded to and from the EU in 2021.
Regulatory changes and international alliances
Noticing the effect of ever rising temperatures, governments and international organizations are increasingly implementing regulations to address climate change, including measures to reduce greenhouse gas emissions from the shipping sector.
Two major regulatory changes surfaced in 2023 in relation to the environment, the one being the revised GHG strategy by the International Maritime Organisation (IMO) during the meeting of the Marine Environment Protection Committee (MEPC 80), and the other being the EU Emissions Trading System (EU ETS), which comes into force in January 2024.
Key points of the revised 2023 GHG Strategy include, among other things the uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030, as well as to peak GHG emissions from international shipping as soon as possible and to reach net-zero GHG emissions by or around, i.e. close to 2050.
However, the Climate Action in Shipping, Progress towards Shipping’s 2030 Breakthrough published by UMAS, the Getting to Zero Coalition, and Race to Zero warned that while it is possible for scalable zero-emission fuels to account for 5% of international shipping fuels by 2030, the window of opportunity is closing quickly, and the industry must act rapidly.
DNV also highlighted in their Pathway to Net Zero Emissions report that we will need to remove 6 gigatons (Gt) of emissions per year between 2050 and 2100 to achieve the 1.5°C goal.
UN committing against emitting
Encouragingly, the 2023 United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, or COP28, took place in Dubai from November 30 to December 12, 2023, where a major decision towards reducing emissions was made.
COP28 reached, after a prolonged debate and much controversy, the UAE Consensus that plans to phase out fossil fuels. Major commitments contained in the final negotiated text include:
- An unprecedented reference to transitioning away from all fossil fuels to enable the world to reach net zero by 2050.
- A significant step forward in the expectations for the next round of Nationally Determined Contributions (NDCs) by encouraging “economy-wide emission reduction targets.”
- Building momentum behind the financial architecture reform agenda, recognising the role of credit rating agencies for the first time, and calling for a scale-up of concessional and grant finance.
- A new, specific target to triple renewables and double energy efficiency by 2030.
- Recognizing the need to significantly scale up adaptation finance beyond the doubling to meet urgent and evolving needs.
The shipping industry may not be directly influenced, but it remains an industry that needs to decarbonise and accelerate the adoption of alternative fuels. In any case, apart from the UAE Consensus, COP28 was a major event for the future of the shipping industry in the sense that major partnerships materialised in the event.
For example, The CEOs of Maersk, CMA CGM, Hapag-Lloyd, MSC, and Wallenius Wilhelmsen issued a joint declaration at COP 28 calling for an end date for fossil-only powered newbuilds, urging the IMO to create the regulatory conditions to accelerate the transition to green fuels.
Additionally, thirty leaders in the shipping sector – including cargo owners, ship operators, ports, bunkering companies, and equipment manufacturers – signed a Joint Commitment, organized by the UN High Level Champions and RMI, at COP28 to enable the use of renewable hydrogen-derived shipping fuel this decade to meet maritime industry decarbonization targets.
Moreover, during COP28 the Maritime Just Transition Task Force launched a training project for seafarers, to help them train for zero- or near-zero-emission ships. This decision came after research identified that 800,000 seafarers may require additional training by the mid-2030s.
At a glance
Overall, 2023 has been a pivotal year, marked by both challenges and proactive measures, as the shipping industry navigates the complex intersection of climate change and maritime operations.
As the industry looks ahead, it is crucial for stakeholders to continue collaborating and investing in research and development to find innovative solutions that can mitigate the environmental impact of shipping.
Additionally, policymakers and international organisations will play a key role in setting clear regulations and standards to ensure a sustainable future for the global shipping industry.
