Shipping might not be the sexiest form of transportation in the world, but there’s no getting away from the fact that it plays a vital role in all our lives. That is because around 80% of all goods are transported by sea, and as economies around the world start to re-open after the pandemic, boom times could be ahead for the industry, reports Forbes.
Aim for net zero emissions
However, it also contributes around 2.4% of global greenhouse gases each year and, like many other sectors, shipping is now grappling with the question of how to achieve net zero.
The International Maritime Organization (IMO) has agreed to at least a 50% cut in emissions by 2050, although many shipping firms would like to see it go further.
In September, the UK Chamber of Shipping called on the IMO to aim for net zero emissions by that date. And speaking last week in front of the transport select committee in Westminster, the Chamber’s policy director (safety and environment), Anna Ziou said such a goal is “achievable”.
She told MPs: “When we look at future pathways to decarbonize shipping, it is likely that is not going to be a silver bullet and a single technology. It is likely to be a mix of technologies.”
But in terms of attracting investment to help ship owners decarbonize, Sean McLaughlin, strategy consultant at marine specialists Houlder, told Forbes there is “plenty of private equity money just looking for dirty assets” to clean up. He added many existing ships could soon be classed as those “dirty assets” and without investment their operating life could become impaired.
“The question now for shipowners is do they grasp the opportunity to invest before their asset becomes someone else’s opportunity,” he added.
In addition, McLaughlin said that international shipping has “a loud enough voice to be heard in the financial community”, particularly as charter rates continue to soar.
But the boom in shipping and rising profits creates its own problems, as McLaughlin explained. Money might be there to retrofit clean technology to an existing ship. But taking the vessel out of the water for the necessary time needed might prove to be too expensive for some operators.
Financing of fleet upgrades needs to be more standardized and transparent to share costs and manage investment, said McLaughlin. However, in order to achieve this, it’s necessary to consider how financing and EU initiatives, such as carbon trading, impact shipping.
In conclusion, McLaughlin said shipping as a sector has “greater ambition than its regulator”.
He added: “The banks also recognise the value of their loans are at risk if they are not linked to clean ships. My concern is that we need to get clean technology into the existing fleet. One of my favourite analogies is that decarbonization is like a bath filling up with water. Turning off the tap off doesn’t empty the bath. The damage being done by our carbon emissions is cumulative, so we have got to start turning the tap down now on the existing fleet and not just hope we can turn it off completely at some point in the future.”
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