COP26, taking place in Glasgow for another week, is being heralded as the “last chance for the planet”. An opportunity for the international community to come together and demonstrate the commitment, and actions, required to limit global warming. So, what will it mean for the shipping industry? Can we expect even sharper decarbonisation trajectories? Knut Ørbeck-Nilssen, CEO of DNV Maritime scans the horizon.
COP26 is a unique meeting, for a unique challenge. Set against the backdrop of the recent Intergovernmental Panel on Climate Change (IPCC) report, detailing how close we stand to an environmental precipice, it is clear the time for unified action is now. Expectations are running higher than this summer’s mercury levels, with an increasingly engaged global society expecting not just words, but progress. All eyes are focused on Glasgow. There’s no denying we all must act, but how? What will the outcome of the conference be for the maritime industry? How much political pressure will mount on shipping?
First things first. It is highly unlikely that COP26 will directly result in new regulations for the shipping industry. What we’ll see is a bold ramping up of ambition, with concrete measures and actions to follow at a later stage (once agreed by the IMO). Discussions will revolve around how to get nation states onboard with more ambitious global targets, and it’s not hard to see why. When the IMO announced its goal for shipping to cut emissions by 50% by 2050, and achieve carbon neutrality before 2100, the targets were, by and large, celebrated for their ambition. That was 2018. Fast forward to today and they look positively conservative in comparison to an EU and US aiming for shipping to be carbon neutral by 2050, with China targeting 2060 for its land-based emissions. Now the current IMO ambitions appear out of sync.
So, expect pressure for all transport modes (sea, rail, air and road) – to commit to stricter targets. Why should shipping, people will ponder, be the odd ones out?
IMO is working to revisit those original targets in a review in 2023. The likelihood is these will be pulled into a line clearly drawn at COP26. Who would be surprised if the decarbonization target was brought forward? After all, the governments gathering in Glasgow are the same ones that are members of IMO. So, why would there be a disparity of ambition? It’s also important to remember that it’s not all down to regulations. There’s been a clear move from commercial interests to put the environment at the top of the agenda, with bold new requirements from financiers, charterers and cargo owners. They may end up defining the decarbonization trajectories as much as regulators, and shipowners and operators have to determine the right course to satisfy increasingly complex demands.
Mechanisms for change
So, how will nations manoeuvre at COP26 to create a structure for change? It’s here where the finer details of upcoming discussions come into play. Firstly, governments will be asked to set their Nationally Determined Contributions (NDCs), basically how much they will cut their emissions and agree to how often they will update those commitments. Then there will be a focus on carbon markets – how to operationalise these to create an international framework for trading carbon (and offsetting emissions) – an essential piece of the net zero puzzle. In addition, time will be devoted to boosting Climate Finance and the Green Climate Fund (under the Paris Agreement this was set at USD100bn per annum – commitments are currently far below that). If the IMO rolls out market-based measures, the pressure will be on for some of shipping’s levies/taxes to flow into the fund. But will they flow back to help our own green transition?
Together towards tomorrow
These are technical matters, but essential to progress. In terms of the bigger picture, if shipping is to aim for 2050 then it needs assistance, just as other transport modes do. When we’re all expected to move together in the same direction that creates an enormous demand for low/zero carbon fuels. Not to mention an urgent need for cross-sector collaboration, research, technology development and piloting. At the end of the day, or the conference, this is all about working together – creating a unity of purpose. By doing so we can develop the technology, create the alternative fuels (and infrastructure), and drive the necessary levels of investment. At COP26 the pressure will be on for us all to work as one, as an industry and with other sectors and society, to turn targets into achievements. This collaboration is our one true ‘fuel of the future’.So, expect a new level of ambition post COP26. The world demands it.