FEATURE:
Shipping’s Headwinds – The Drivers for Decarbonisation
In April 2018, the IMO adopted its initial Green House Gas (GHG) strategy, setting a target of reducing GHG emissions in the global shipping sector by at least 50% by 2050 with a strong emphasis by many countries on reducing this to 100% by 2050 wherever possible. GHG emissions of shipping are a consequence of the carbon intensity of shipping's energy supply, the energy efficiency of shipping and the demand for shipping. Around 90% of world trade is transported by ships and as demand for shipping continues to grow, another way of looking at this is reducing carbon intensity – the carbon emissions relative to the transport demand (CO2/tonne-mile). An average of 85% reduction in carbon intensity would put the shipping sector on course for a 2degC pathway, whilst representing significant ambition given the forecast growth in the volume of world trade to meet the needs of a global growth in population.
This provides a clear signal to the industry that the overarching solution is ending the use of fossil fuels, requiring commercially viable zero-emission vessels (ZEVs) to be entering service by 2030. These vessels, with operational emissions containing zero or negligible GHGs, would need to represent a significant proportion of newbuilds from this point onwards. With virtually all 50,000 or so merchant ships burning heavy fuel oil (HFO), marine distillate oil (MDO) or liquefied natural gas (LNG), consideration will need to be given to how ships that are financed, designed and built in the 2020s can switch to a non-fossil fuel later in their operational life. Further, given that a typical ship has a lifespan of at least 20 years, investors, ship builders, ports and fuel suppliers need to know in which infrastructure they should start investing.
To deliver this goal, zero-emission vessels need to be commercially viable, technically feasible and safe. This means we need to not only design zero-emission ships, but also build the infrastructure and supply chains for zero-carbon fuels.
Impact of oil markets 2020
‘Supply glut’ and ‘demand destruction’ were the watchwords in Q1 leading into Q2 2020 following the collapse in OPEC/OPEC+ talks, leading to an opening of the world’s oil spigots. A belated attempt by the 23-member producers’ alliance to reduce supply, with intervention from the USA and other producing nations, was viewed as ‘too little too late’ to rescue crude prices against a backdrop of 30 million bpd, or 30% of global demand deletion.
Shipping’s Headwinds –
The Drivers for Decarbonisation
By Tim Rockell, Chairperson, Energy & Utilities Committee,
Peter Godfrey, Energy Institute,
and Douglas Raitt, LLoyd's Register.
On Earth Day, April 22, 2020, a panel of experts joined an online discussion on the medium- to longer-term drivers for decarbonisation in the shipping sector and
the impact of the current oil markets turmoil. This event was co-organised by BritCham’s Energy & Utilities, Transport, Logistics and Supply Chain and Sustainability committees. It served as the launch event for the chamber’s
‘Road to Net-Zero’ campaign, bringing together activities in the period
leading up to the United Kingdom’s hosting of COP26.