Speaking at the Asian Logistics, Maritime and Aviation Conference yesterday, Dr Martin Stopford, the non-executive president of Clarkson Research Services and the most famous shipping economist on the planet, laid out how he sees the industry’s decarbonisation path this decade.
On a panel at the centrepiece of this week’s Hong Kong Maritime Week, Stopford, who tends to mix maritime history into most presentations he gives, pointed out how previous big shifts in shipping technology had come about thanks to pioneering leaders such as Alfred Holt who transformed the industry from sail to steam, or the East Asiatic Line president who moved shipping from steam to diesel 110 years ago and Malcom McLean’s invention of the shipping container in the 1950s.
“I’m very confident we’re going to find a few Elon Musks kicking around the industry somewhere,” Stopford said, referring to the Tesla and SpaceX pioneer.
The crucial difference today with decarbonisation compared to the previous changes mentioned earlier by Stopford is that they were all driven by economics, today’s challenge is not.
With constraints driven by tech R&D and shipyard output, shipping will need to focus heavily on retrofits in the coming decade, Stopford said.
The dynamics of supply and demand will be a massive problem and there has to be some sort of retrofitting
The existing fleet will create half of all shipping emissions over the next 30 years, Stopford predicted. Ships ordered today still use “fairly conventional technology” Stopford said, saying LNG propulsion is”just scraping the surface”. It will take through until the end of the decade before owners can have confidence to use hydrogen and ammonia technology in deepsea trades. The problem with this time lag, Stopford said, is that there will be enormous pent up demand for these new ship types as replacement tonnage by 2030 and yet shipyards can only deliver a few percent of the extant fleet a year.
“The dynamics of supply and demand will be a massive problem and there has to be some sort of retrofitting,” Stopford stressed, adding: “When we build a ship today we need to build it to be retrofitted.”
This is not a new phenomenon, the eminent maritime historian pointed out. The first diesel ship, the Selandia, built in 1911, had its engine replaced twice over its first 15 years and the engine on the ship after about 20 years was roughly a third the size from when the ship was first delivered.
Stopford told delegates attending the Hong Kong government-convened event that is was vital that shipping and charterers get carbon into the cost revenue equation fast.
“It used to be if you chartered a ship it was revenue minus the cost. If you charter a ship from now on it is the revenue minus the cost plus the carbon,” Stopford said, suggesting owners will need to demonstrate with good digital technology that the ships they propose for chartering are using less carbon.
“Big companies are willing to pay for less carbon … It is something extremely quantifiable that you could almost put into the balance sheet,” Stopford said.