Global politics and economics have always had a substantial influence on shipping. As an industry, shipping is connected through various channels to many other sectors, connecting all geographies.
This global connectivity is simultaneously a benefit and a challenge. Regional conflicts, political upheaval and even internal (national) political shifts can, and are, influencing national green policies and, therefore, the environmental ambitions of countries.
In many countries, fuel prices, living costs, inflation and interest rates are on the rise. This causes unrest and increased national anxieties that could become greater than environmental worries and aspirations.
Shipping’s decarbonisation goals are ambitious and will rely on a significant shift in technology use in the next 10 to 30 years. Owners and operators of existing ships know they must meet the CII and EEXI requirements. While these may be tough, critics from some environmental groups believe they will have little impact on ship emissions.
The long-term solution is a shift to new fuels, new energy sources that are either net zero or absolute zero. This long-term drive will essentially require investment in new tonnage capable of using those fuels.
Shipping’s ambition, through the IMO, is based on reducing its emissions in alignment with the promises of the Paris Agreement, an agreement that few countries are living up to with their own national promises, and which could become less critical as global security and cost of living concerns escalate.
The tipping point (technology competitiveness, economics, and social pressure)
Because international events influence shipping closely, a tipping point toward zero-emission shipping is likely to be coupled with a global tipping point. The risk is that our goals become harder to reach if politics and policy are the two motivations to achieve that change of balance.
If a political will is lacking, regional and international policies risk being weak and unenforced. The tipping point towards zero emissions will need to come from the other two influences on shipping; economics and social pressure.
The decarbonisation of shipping relies on an increase in new fuel use, fuels that are currently both more expensive and less energy dense than current fuel oils.
The tipping point here would come when clean energy production is de-coupled from hydrocarbon pricing or when policies, such as those from the EU, can push green electricity production prices down to enhance the cost efficiencies of electro-fuels.
Should global regulation development slow down, we must ensure the other two influences can work more effectively. We know from the circa 2011 increase in bunker prices that shipping took more interest in fuel efficiencies, and we saw how interest grew in digital technologies and engineering advancements.
Now we have the potential to generate cheaper green fuels and use societal pressure, through pressure from shippers, manufacturers, and consumers, to enhance this transformation.
Shipping will not see regulation removed. We will not see the EEDI, EEXI; SEEMP and CII rescinded, nor will the sulphur in fuel requirements change. We will see a market-based measure become a reality, even if regional efforts such as the European ETS become the primary developments.
But as geopolitical turmoil rumbles around shipping, we need to maintain the momentum. Shipping will reach this tipping point; the question is when, not if. But to achieve this, we need yards to see current alternative fuelled designs as a typical design, for digital performance tools to be standard, and for fuel supply to not fall into the chicken-and-egg supply/demand quandary LNG went through. We need the first movers to be able to test the waters without too much policy risk and for pricing to be attractive.
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Co CEO of Tototheo Maritime, President, WISTA INTERNATIONAL