Decarbonisation is shipping’s D-Day
Opening a second front on mainland Europe was vital to the war effort. So is our industry’s contribution to fighting climate change
Former US presidential contender John Kerry used a speech at Nor-Shipping to compare the industry’s fuel transition to the Allied invasion of Normandy. When a decorated Vietnam veteran uses military metaphors, pay attention
BIDEN climate tsar John Kerry is a highly decorated US Navy veteran who won five medals on the battlefields of Vietnam. When he uses military metaphors, listen up.
That’s what he did in a speech to attendees at the Nor-Shipping conference in Oslo on Tuesday, in which he compared shipping’s equitable transition to sustainable fuels to the D-Day landings in Normandy in the penultimate phase of Second World War.
American politicians routinely use hyperbole to arrest audience attention. Few allusions are more dramatic than a reference to what remains the largest amphibious operation in the annals of military history.
“We cannot get the job done in terms of meeting the Paris targets of holding the earth’s temperature increase to 1.5°C unless shipping is at the table in a big way,” he argued.
Cynics will note that many scientists now see a 1.5°C shift as already irreversible, no matter who does what this late in the day. But the line must absolutely be held at 2°C, for humanity’s sake.
Unsurprisingly, Kerry’s rhetoric went down well. Everybody likes to be told they are important, and the crowd nodded vigorously in agreement.
But applause in a conference hall comes easily. The challenge will be — to use the British political cliché du jour — delivery.
Kerry’s focus was on 2050, and even making net zero promises for 27 years hence is not that easy.
But it’s far easier than achieving an absolute reduction by 2030. That goal requires action today. And by action, we don’t mean feasibility studies.
The problem is that nobody wants to make a financial commitment to an uptake of alternative fuels, because that would represent signing 10-year contracts. Signing 10-year contracts means hedging your price for a decade. Owners are understandably reluctant.
Surveys and progress reports repeatedly celebrate the smallish minority of companies on board. Such celebrations will be beside the point without concrete targets.
These must, in turn, be science-based and transparent, and augmented by detailed and verifiable transition plans.
As other celebrity Nor-Shipping speakers such as Fortescue Metals chief executive Andrew Forrest and Nobel prize-winning economist Joseph Stiglitz reminded those present, we are not moving fast enough. Climate change is an emergency, and time is running out.
Talking shops urging collaboration have their value, and Nor-Shipping saw an important conversation. But the gravity of the situation demands more than words.
Sadly, there are still too many dinosaurs thundering around the conference circuit, as heedless as their predecessors of the imminent asteroid strike.
They are the leftovers of an analogue industry competing for talent in a digital world. And they are disadvantaging themselves in other ways, too.
As a banker friend confided, one of the biggest challenges is choosing the right partners. “Sooner or later, we will have to part ways with the ones who are not getting it,” he explained.
The dinosaurs’ counter argument is that trade is always changing. Shipping has been adapting since the Phoenicians first set sail. Why should it be any different this time?
What they miss is that decarbonisation will upend the global economy as we know it. Renewable resources are more democratically dispersed, geographically speaking, than the petrostate strongholds that govern economics today.
The assumption is that once the world adopts carbon pricing, the transition to new fuels will proceed much like the transitions from sail to steam and from steam to bunkers.
This fundamentally misreads the messy reality of that history, which was not a linear process. This is about so much more than fuel availability and regulatory clarity.
Somehow, the structure of shipping continues to reward inefficiency. Delays are profitable. Worse still, there is no incentive for owners or charterers to improve the efficiency of their vessels or the basic structures of charterparty contracts, most of which are decades, if not centuries, old.
Even if such incentives were in place, lawyers would advise against a shake-up. Legal precedent has created reliability and the essential rules of the road. Change those and people get hurt.
The future requires scaled companies prepared to invest in transport infrastructure, including vessels that become part of the energy offtake agreements of the future. That entails long-term contracts to better balance the financial risks.
If Kerry’s analogy is correct, we are now on Omaha Beach under massive enemy fire. As anyone will know from reading accounts of June 6, 1944, or even watching The Longest Day or Saving Private Ryan, heavy casualties are certain.
But opening a second front on mainland Europe was vital to the war effort. So is shipping’s contribution to the fight against climate change.