From the News Desk: Does coronavirus threaten shipping’s green push?
Could the need for governments to rebuild their economies, combined with low oil prices, see decarbonisation timelines extended?
With all meetings at the International Maritime Organization currently suspended, and the full effect of the coronavirus outbreak yet to be felt, doubts are already being raised over the timeline for shipping’s decarbonisation efforts
DECARBONISATION remains a key topic for the shipping industry despite the ongoing troubles brought about by the coronavirus outbreak.
With the International Maritime Organization suspending all its currently scheduled meetings to the end of May in order to comply with the UK’s lockdown measures, questions have been raised about whether or not the current timeline for reducing greenhouse gas emissions can be achieved.
The IMO has targeted reducing greenhouse gas emissions in shipping by at least 50% by 2050, which looms large over the corporate strategy of many maritime businesses.
Environmental lobby groups such as the Clean Shipping Coalition, Greenpeace International, Pacific Environment and WWF International have this week urged the IMO to develop online meetings to ensure that the pace of implementation for its decarbonisation strategy remains in place.
The 75th session of the Marine Environment Protection Committee, originally due to take place on March 30-April 3, could have agreed on new emissions measures to come in as early as 2022 and would have debated a highly publicised industry proposal for a $5bn research and development fund.
According to documents seen by Lloyd’s List, the industry faced the near certainty of at least one new measure coming into force in a couple of years’ time, primarily geared towards the IMO’s target of reducing carbon intensity of vessels by at least 40% by 2030 compared with 2008.
Not that the shipping industry should wait for the IMO to draw up these new regulations before acting, according to Michael Parker, chairman of Citi’s shipping and logistics division and one of the leading architects of the Poseidon Principles.
“The pace of change cannot wait for regulators like the IMO,” he told Shell vice-president of shipping and maritime Grahaeme Henderson during last week’s Capital Link International Shipping Forum.
The IMO has an important responsibility to set down the rules, Mr Parker clarified, adding that he wants a global regulator for the industry that draws up good regulation. But the industry cannot wait for it to set those rules.
“I think it is up to practitioners, like yourselves, like the big container shipping companies, everyone in the shipping space, not to set up new rules but, if you like, to move ahead, not wait for those rules. The rules will catch up,” he told Mr Henderson.
Ships cannot sail in breach of regulations, but where there are no regulations companies should not wait for IMO to come up with them, Mr Parker said.
However, Columbia Shipmanagement chief executive Mark O’Neil told the same event a day earlier that he feels coronavirus could completely derail efforts to establish a firm timetable for decarbonisation.
“I don’t think that shipping is in any place yet to decide on a decarbonisation timeframe and alternative fuels until we see what the landscape looks like and the appetite looks like, post this pandemic,” he said during a panel discussion.
The length of time and depth of the downturn created by this pandemic is also being woefully underplayed, said Mr O’Neil. “We are not going to be through this in anytime soon,” he said.
One of the very few positives of this situation, is that the next generation could put the focus on humanitarian, freedom and environmental issues, as people have a lot of time to reflect on what matters to them, Mr O’Neil said, and hence fuel the environmental movement.
He also deemed it to be a “wonderful opportunity” to tear up the old, comparing it with the build-up of the UK’s National Health Service, which he said would not have happened without the massive disruption caused by the Second World War.
The reality, though, according to Mr O’Neil, is that governments around the world will have to fix broken economies, which will require spending money. “And is that a time when governments really want to be considering green issues, which cost money, or will they be pushing those issues into the long grass?” he asked.
Low oil prices could also derail decarbonisation efforts, according to Star Bulk president Hamish Norton. He pointed out that the reduced value of the commodity could help to rebuild economies in the short term, but at the same time could be detrimental to efforts related to reducing GHGs.
While there are signs that the volatility in crude oil prices could soon come to an end, with a production agreement between Russia and Saudi Arabia potentially in place by the end of this week, one of the key drivers of decarbonisation will be making alternative fuels financially attractive compared with fossil fuel for end users and investors. Low oil prices make that a more challenging endeavour.
Future Fuels Webinar
The impact of coronavirus on the decarbonisation of the shipping sector will be a key topic for the panel at Lloyd’s List’s Future Fuels Webinar on April 23, 2020. It will be held as an online event rather than as originally scheduled to take place during Singapore Maritime Week.
While the long term goals remain unchanged, the short- and medium-term effects of coronavirus could throw further uncertainty and confusion into a market that was already struggling to make tangible investment decisions.
And yet progress cannot be paused completely. Strategies will have to adapt and decisions will have to be taken. Previous assumptions regarding bridging technologies and fuel flexibility that would facilitate the transition from traditional fuels, may now need to be revisited as timelines extend.
Some of the key talking points for the webinar include the risks and impacts of changing emission regulations, the changing fuels landscape, and an analysis of the feasibility of alternative fuels in the R&D pipeline.
Chaired by Richard Meade, managing editor of Lloyd’s List, the panel for this webinar includes:
Christos Chryssakis, Business Development Manager and maritime fuel expert at DNV GL – Maritime
Unni Einemo, Director, International Bunker Industry Association
Chris Chatterton, Chief Operating Officer of the Methanol Institute
The webinar is part of our revised digital programme for 2020 in lieu of in-person conferences and events. The first series of special online events will have a Singapore Focus, with a hub page available here to provide you with the latest content.
Follow the link here or in the banner above for free registration to the Future Fuels Webinar.