Shipowners say they are willing to collaborate on decarbonisation, but there are barriers to overcome before the reality matches the rhetoric, says Sean McLaughlin, strategy consultant at Houlder.
While regulators, financiers, charterers, and consumers are making plans and setting decarbonisation goals, the harsh reality is that shipping companies must manoeuvre multi-decade assets forward and address many of the practical challenges involved.
Fuel saving, clean technology can reduce GHG emissions, but Houlder’s recent survey of shipowners from the container, tanker, bulk, cruise and ferry sectors demonstrates that collaboration between owners as well as collaboration between owners and clean technology providers, remains a barrier to the uptake of new technology.
Every senior industry player interviewed confirmed that there is a willingness to collaborate on projects that will enable the uptake of new technology. They understand that it is critical to achieving rapid, fundamental change. However, collaboration is less evident in practice, as owners, understandably, focus on achieving emissions reductions while safeguarding competitive advantage.
Several interviewees identified a lack of good quality and relevant data as a barrier to the uptake of clean technology. There is also a perceived shortage of independent corroboration for the claims made by some technology vendors. No participant accused technology providers of suggesting deliberately misleading results but reflected that the data in a brochure will inevitably relate to another ship.
The work we do with shipowners supports the comments made about the lack of good quality data. Often, there is a need for significant work to interrogate the data that is held, and a common need to invest time into gathering new data to support investment decisions.
Securing the funding to undertake clean technology projects was another key challenge identified by the shipowners. Large organisations saw access to green finance as being relatively straightforward, with the challenge being finding projects that match the funder’s criteria.
By contrast, smaller owners seeking to explore clean technology options are much more reliant on being able to access grant and other government funding. A resource hungry process where ship owners often find themselves diverted from their core objectives to those set out in the funding call.
Many owners also reflected on the fact that they are being asked by their debt and equity providers for more data linked to their environmental performance when seeking new finance or renewing facilities. This data is then often used to set environmental performance covenants. As with clean technology selection, bridging the data gap is an increasing challenge when it comes to securing finance facilities.
Shipowners can’t be expected to sort this out on an ad hoc basis. There is a need for more proactive, independent convenors to facilitate project collaboration. Flag states, the international and national chambers, industry coalitions, financial institutions and independent consultants can fulfil this role. They can safeguard the competitive and financial interests of collaborators and act as a central black box, amalgamating sensitive information to paint the full picture while protecting the confidentiality of individual data owners. A paradigm shift makes it incumbent on all stakeholders to find new mechanisms to deliver change.
The existing fleet is worth about $1.8trn, and, directly or indirectly, most of that sits on the balance sheets of financial institutions. Let’s bring convenors, financiers, clean technology providers and shipowners together and make collaboration work in 2023.
