Regulating and financing shipping decarbonization, an article was published on Tanker Operators.
Shipping decarbonization
Shipping decarbonization won’t happen unless rules are made, incentives created and investment is available. An ICS panel debate explored this, with a former EC DG of transport, the chairman of V.Group, and head of HSBC’s Centre of Sustainable Finance.
Shipping decarbonization is not free. To get there we need carrots – incentives and investors who want to put money behind it – and sticks – penalties for not doing it.
Both are around the corner, at least in Europe, where the European Union’s Emission Trading Scheme (ETS) is expected to be applied to shipping, and where there are investors with funds looking for a home with some sustainability score.
The International Chamber of Shipping (ICS) put together an online panel debate on the subject on Jan 13. Speakers included a former director-general of both transport and competition with the European Commission, the chairman of ship management company V.Group, and the head of the Centre of Sustainable Finance with HSBC Bank.
Esben Poulsson, Chairman of the International Chamber of Shipping (ICS), said he thought “there is currently a lot of misunderstanding between the shipping industry and regulators. But the misunderstanding goes in both directions. The industry is both not understood and misunderstands what policymakers are trying to do”.
European Union
Discussions are continuing in the European Commission about how to disincentivize emissions from the maritime sector. The main method of doing this in Europe is putting a price on carbon, via the “Emissions Trading Scheme” (ETS), where companies are required to buy the rights to emit carbon, at a price set by a market.
“The aim is not itself to generate money for the European Union. The original aim is to incentivize operators to use technologies which are low in carbon.”
Regulation
The European Union may also introduce regulations to decarbonize. “As a former director of competition, I am not immediately in favor of regulating. Ideally one should look for a market-based mechanism. But a market-based mechanism doesn’t make sense if there are no alternatives [a market can choose from]. Regulation of certain structures and conducts is probably inevitable.” The Commission is thinking about whether there should be some additional legislation to limit the carbon content of maritime fuels on a transitional basis. The Commission is also looking at the availability of clean fuels and how they can be increased. Maybe we need slower ships and bigger ships, but that’s precisely the opposite of the direction we’ve been going in.
Coalitions
Sir Philip suggested that the maritime industry could form coalitions with other organizations to achieve its climate goals.
A similar approach has been successful in cities. “The biggest successes in terms of sustainability in West Europe and elsewhere have been coalitions run by city institutions together with industry, local communities, regulators to reach a result,” he said. A lot of the better regulation has come through those successful city initiatives. The shipping industry should be “taking examples from other sectors in transport, mobility and urban planning.” A port cannot have an objective of being a clean port unless it has a strong coalition with shippers who use the port.
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Source: Tanker Operator
