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Shipping reacts to $1,000,000,000,000 decarbonisation bill

Shipping will need far greater collaboration, both among existing players as well as with governments and land-based business partners, to work out how it pays for the transition necessary to meet the 2050 decarbonisation goals set out by the International Maritime Organization (IMO).

Following on from yesterday’s news that at least $1trn of capital investment in land-based and ship-related infrastructure will be required to halve international shipping’s greenhouse gas emissions by 2050 compared to 2008 levels, a host of shipping experts have urged for swift collaboration across the maritime supply chain to pay for this switch in a timely manner.

A new study released yesterday by UMAS and the Energy Transitions Commission for the Getting to Zero Coalition put a dollar figure on the challenge that lies ahead for shipping over the next three decades.

Depending on the production method, the cumulative investment needed between 2030 and 2050 to halve shipping’s emissions amounts to approximately $1-1.trn, or an average of $50bn to $70bn annually for 20 years. If shipping is to fully decarbonise by 2050, this will require further investments of some $400bn over 20 years, bringing the total to $1.4trn to $1.9trn.

Reacting to the report, UK Chamber of Shipping chief executive Bob Sanguinetti told Splash today: “We have been clear that industry, government and others need to formulate new plans and co-ordinate work better to tackle climate change and now we can see the scale of the challenge. Only by working together through increased collaboration and more joined up thinking will we develop the infrastructure and technology needed to ensure we meet our climate change targets.”

Anne Steffensen, CEO at Danish Shipping, said the “big numbers” involved in the report clearly shows that shipping can’t do this transformation alone. 

“The way towards zero emission in shipping requires a paradigm shift in the energy sector and that will need at strong collaborative effort across sectors,” Steffensen said. 

The biggest share of investments, according to yesterday’s report, which made headlines around the world, is needed in the land-based infrastructure and production facilities for low carbon fuels, which make up around 87% of the total. This includes investments in the production of low carbon fuels, and the land-based storage and bunkering infrastructure needed for their supply.

Only 13% of the investments needed are related to the ships themselves. These investments include the machinery and onboard storage required for a ship to run on low carbon fuels in newbuilds and, in some cases, for retrofits. Ship-related investments also include investments in improving energy efficiency, which are estimated to grow due to the higher cost of low carbon fuels compared to traditional marine fuels.

The 13% figure cited in the report came in for criticism by a number of people contacted by Splash today.

Michel van Roozendaal, president of Scandiavian ship equipment manufacturer MacGregor, said the 13% figure was wrong.

“At the end of the day, the ship is where the actual emissions are taking place. The opportunity is in making shipping a more technically sophisticated industry where innovation will have a real impact waking up this industry that lags perhaps 50 years behind what is now technically available and which is having a lot of waste in the system,” van Roozendaal said.

“Applying low GHG fuels only gets you so far. Let us also focus for example on electrification for short journeys, using other means of propulsion and further automation eliminating waste in the system,” van Roozendaal suggested.

Di Gilpin, who heads the Smart Green Shipping Alliance, also took issue with the majority of spending going towards land-based infrastructure.

“Zero emission fuels are essential for fleet decarbonisation but transferring responsibility to land-based actors exposes the sector to multiple price, availability and quality risks,” she said, adding: “The transition to low sulphur fuels underlines that.”

Gilpin described the headline grabbing $1trn figure in yesterday’s report as an “eye-watering sum of money”, with other studies suggesting the actual sum could be even higher.

“To mobilise that amount of capital will take enormous corporate and political courage – we have been woefully short of that over the last few decades,” Gilpin said.

Dr Tristan Smith, reader at the UCL Energy Institute and one of the author’s of yesterday’s report, told Splash the eventual numbers involved could be less than feared.

“Normally, when academics make estimates for future costs/prices of technology transitions they are proved wrong for overestimating rather than underestimating, because its so hard to foresee the impacts of innovation and the creativity of the markets for achieving cost reductions,” Smith said.

Greg Atkinson, chief technology officer at Japan’s Eco Marine Power, commented that yesterday’s report serves a wake-up call for the sector, and that a complete overhaul of operations will be required.

“Shipping will need to fundamentally change to meet the IMO’s greenhouse gas emission reduction target and this includes not only ramping up investment in new technologies, alternative fuels and low emission propulsion systems but also changing how companies operate and manage their fleets,” Atkinson said.

Splash columnist Nick Chubb, who founded maritime innovation consultancy Thetius last year, argued today that the IMO might struggle to engage the land-side of the decarbonisation challenge.

“The most important take away for me here is that the IMO has enacted a policy that requires massive investment in an industry over which it has no jurisdiction,” Chubb said, pointing out how the last two years’ preparation for the sulphur cap saw the refining industry not cope well in readying and communicating its changing fuel mix.

“Making the decarbonisation of shipping work at scale will require a joined up approach across multiple industries, something which we are traditionally not very good at,” Chubb warned.

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Comments

  1. Decarbonisation within shipping finally might similarly end up like with wind turbines; building plants for and construction itself, construction and operation of vehicles, huge cranes, barges, ships and jack-up vessels with huge cranes and decommissioning will need more energy (CO2) than that windmills are able to save within their lifetime cycle of about 25 years. But one thing is sure: The taxpayer has to pay for this and for all people involved in this irrational game. It serves only the happy few which gain advantage of it working for governments, NGOs, transportation and not at least the manufacturing industry. For everybody else this is a disadvantage and no ‘carbon’ gain, not even less use of fossil fuels, although – pointing only on the benefit side of the wind turbine this is happily told differently. What about forests, birds, insects, decommissioning?
    Where decarbonisation within shipping will take place – flogging the hobbyhorse along – it will be again the taxpayer who finally will pay the bill. Products will be logically more expensive where propulsion and vessels will be more expensive. Furthermore there will be less vessels sailing. Less net income and higher prices will make life even more difficult. A bitter taste appears – similar to wind turbines – when it shows that ‘carbon’ needed for building many smaller vessels with expensive propulsion, and erecting shore-based installations and production plants and the higher amounts of energy needed for the high-tech fuels and ecologically questionable batteries will add and add to carbon and will (over-?) balance any advantages gained with ‘low-carbon’ and ‘zero-carbon’ vessels. And again – everybody will struggle to pay the bill – only a few again gain advantage. And that just because everyone believes climate experts with presently defective climate simulating software. Note, that the polar ice cap melted the last 12.000 years without any human interference and seawater levels rose about 120 m (394 ft) which everyone (?) gladly forgets. Logically climate changes, being rather marginally nowadays. The only reason left to search for real alternative fuels is that some fossil fuels are endless. And that is where we should look at, thinking of our children’s children.

  2. When we read of the proposed $1 trillion cost of modifying all of the world’s marine engines to run in compliance with the IMO’s demands that all shipping operators and owners comply with the ‘Decarbonisation’ rules by 2050, I do wonder at the combined ability of a huge industry to accept, without question, the alleged ‘Science’ which has somehow been accepted by many without a close observation; both of the facts and of the many Science-based opponents of this ‘Climate Change’ / Global Warming / ‘Decarbonise or Perish’ /‘We’re all doomed, I tell you’; (delete the terms unacceptable or unproven) load of hysterical garbage.

    If anyone attempts to speak out against the AGW (anthropogenic global warming) school of thought, they are immediately condemned as ‘Deniers’, and as the ONLY other Denier label is that of Holocaust Denier, any opponents of AGW are immediately slotted alongside a small bunch of freaks who are denying the truth of the greatest crime ever imagined.

    The simple truth is that no-one can state, with any certainty, that the generation of tonnes of Carbon Dioxide has been proven, without any doubt whatsoever; to be associated with the disappearance of glaciers, or of the alleged increases in the global temperature; or indeed of the ability of mankind to believe, without demure, the words of a fact-cat politician on the make, or the findings of a science team, whose own data has been ‘massaged’ to allow one thesis to take preference over another.

    As the vast majority of the word’s population is still healthily ‘Sceptical’ about the AGW mob and their claims, perhaps it would be better if the ships and ship owners of the world were allowed to make their own minds up, instead of being forced to comply with a directive which would indeed cost a cool $1 trillion dollars without a single piece of proof that their efforts would make one iota of difference!

  3. The point about climate change is that industries either accept that change must occur, and advantages will eventuate (offshore wind is now offering electricity for less than a gas turbine; solar is approaching 1c/kWh in many regions); or we face the inevitable catastrophic result. Specifically for the shipping industry this will mean sea level rise of 2 meters by 2100, and much more to come which is already locked in. In terms of other costs, we can see the collapse of the global economy also affecting trade, if governments go into recession, crop harvests collapse and migration is endemic. If temperatures continue to climb, and agriculture fails, there is nothing the world can do – we are dependent on something that can’t survive beyond about 36 degrees Celsius.

    But we already know we are approaching a €1.50/kg cost for hydrogen within 10 years. Combined with much higher durability fuel cell power units (TCO for fuel cell buses will be *lower than diesel or battery* by 2024), ship owners should make significant savings.

    The fact is, our planet is falling apart. If we want to even survive in a hundred years we had better start fairly soon.

  4. @ Daniel Williams:
    Your contribution is interesting. Some points I’d like to comment, to show you a more positive view, or more realistic, where appropriate:
    1) The industry is confronted with a fait accompli, based on people who – like mentioned above – believe defective climate simulating computer programs. You and I know that even the most powerful weather computing software cannot ‘look’ further than 14 days ahead, when it comes to a realistic estimation.
    2) “mean sea level rise of 2 meters by 2100”
    The last 150 years there is a continuous (linear) rise in seawater levels worldwide between 1,8 and 2,5 mm per year – with no any evidence of progressive acceleration !
    This means in 80 years, average sea level will rise worst case 80x 2,5 = 200 mm = 20 cm as a maximum. Perhaps 30 cm, but that’s it! Deviations are mostly related to effects of techtonic plates, sea levels can fall (like in California). In Scandinavia sea levels fall, since the land rises due to the effect that the weight of the arctic ice cap is no longer there.
    Your figure “2 meters” is a not scientifically obtained figure. Do not believe this!
    It might be based on defective computer models used in fake-science.
    Furthermore, compared to the 120-m rise of seawater levels since the last glacial period (also called “little ice age”) this 20-30 cm is rather marginal, not?
    3) “If temperatures continue to climb” and “beyond 36 degrees Celsius”
    Let’s take Africa: There are only a few weather stations that collect temperature over a period of 100 years. The average temperatures are not all rising! There is even one that shows a falling average temperature. The linear figure of an eventual rise shows no influence of human-related carbon!
    Note: Since the the last little ice age of course ! temperatures rose, how would the artic ice cap otherwise have melted?
    Going back 600.000 years and looking on the global temperature curves, the temperatures went up 3x; about 130.000 years of warming, followed by about 30.000 of cooling down. From which the arctic ice cap originates.
    Also bones of ice bears have been found older than 500.000 years.
    Logically, earth and life on earth have an answer to the climate changes, which show to be periodical and this is just literally “natural”.
    4) Presently the weight of a battery with the same amount of energy compared with let’s say diesel is about 10 to 1. Hence, a ship that needs 800 tons of bunker will need a battery capacity of about 8000 tons. That might be 90-100% of the deadweight of the vessel. Logically there is no reason to sail a battery, if there is no bouyancy left for cargo. And it would take days and days, if not weeks, to reload the battery. The cost of the battery itself might be more than a billion dollar.
    (This has been calculated by DNV.GL for a coastal vessel –> No Go ! )
    5) “The fact is, our planet is falling apart”
    No, see point 3), don’t believe people (and sources) who say so, they either (simplified big 5):
    – have no clue (just follow that what is obviously told by media)
    – have a clue, but prefer to chum up with friends who think so (social behavior)
    – use it to make a living out of it (books, newspapers, magazines)
    – use it to gain and hold political power (using ideologie to influence people)
    – make a lot of money with it (selling eco-indulgencies, manufacturers)
    Note: The last 3 groups of people live of it and will say “this is to come” all others have to pay the extra costs accompanying, whether justified or not…
    Just a logical question: Would you have your legs amputated now, if somebody would tell you that his computer program shows that there is a chance that you might have cancer in your legs after 20 or 30 years or so? With climate-hysteria people do!

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