Just a few short months ago in Paris the world united behind the clear goal to ensure that global increase in temperatures does not exceed 2°C. The Paris Treaty even made reference to an ambitious aim of keeping temperature rises to below 1.5°C.
In order to achieve this big goal every country in the world committed to emission reduction targets known as INDCs (Intended Nationally Determined Contributions). Shipping, empowered by the UN to effectively act like a nation state, was not included in the agreement, and did not submit an INDC. This is a problem. Not just for shipping, but also for the planet’s climate.
An increase in temperature of 2°C doesn’t sound so bad, certainly as I write I could use a bit more warmth. Unfortunately, the meteorological system isn’t quite so straightforward. The impact of just 2°C of warming will create massive ecological system change. Sea level rises will make many of our major centres of population uninhabitable, leading to mass migration. Food crops will be more likely to fail increasing scarcity and cost of food; storms, flooding, prolonged heat waves and forest fires will increase in frequency and intensity.
This is not a challenge we can afford to kick down the road. We are already within a hair’s breadth of exceeding the more ambitious 1.5°C Paris goal. February 2016 “smashed a century of global temperature records by a stunning margin”, according to data released by NASA which warned of a “climate emergency”. The NASA data shows average global surface temperature in February was 1.35°C warmer than the average temperature for the month between 1951 and 1980, a far bigger margin than ever seen before. The previous record, set just one month earlier in January, was 1.15°C above the long-term average for that month.
We must create a new global system fast enough to mitigate the impact of climate change risks which the US military describe as the ‘threat multiplier’. To contextualise the danger, it is worth reading historian Timothy Snyder’s chilling analysis of similarities in our current economic and political situation to the conditions that led to the rise of Naziism. Snyder’s conclusion is that to avoid a repeat of history we must invest in science and technology.
Shipping as part of the solution
Under current policy, shipping’s CO2 emissions are expected to rise by 50-250% by 2050. Paris gives us a target of reaching net-zero carbon emissions by then. That gives little more than a ship’s economic working lifetime, around 30 years, to turn things around. There is simply no room for the sector’s currently expected 1.2-2.8 gigatonnes of carbon emissions in the fast approaching zero emission world.
The International Chamber of Shipping, Armateurs de France and the Norwegian Shipowners’ Association - which amongst their collective membership represent most of the world’s ship owners - invited industry representatives, regulators and thought leaders to discuss shipping and climate change mitigation in Paris during COP 21. As a panellist I can report that the conversation was intense with the industry seeking a clear emissions reduction target goal from the IMO. Edmund Hughes, IMO’s head of air pollution and energy efficiency, put forward the view that ships were “mobile power stations” and as such could not change in the next 20-30 years; he added that it simply would not be possible to use alternative energies.
Look to the Land
We only have to look to land based industries to see that the once unthinkable is becoming unstoppable. The extraordinary growth in renewable energy is dramatically impacting both the fossil fuel and investment communities.
The coal industry is collapsing. Scottish Power’s Longannet station closed over the Easter weekend leaving Scotland with no coal powered stations. In the US, Patriot Coal Corp., Walter Energy Inc. and Alpha Natural Resources Inc. have all filed for bankruptcy in the past year. Now that Arch Coal Inc., the second largest coal miner in the U.S., has joined their ranks, along with the Peabody Energy Corp., which reportedly filed for Chapter II bankruptcy protection in the US on 13 April. Most major international corporations like Unilever, Tata, and Virgin have, very publicly, committed to becoming net zero emission by 2050. They will not fail.
As shipping is the servant of global trade it must urgently provide the ultra-low carbon logistics service that the cargo owners need to enable them to reach their own national and/or commercial emissions commitments. Public pressure on high profile organisations, like Walmart, to measure and reduce their shipping emissions is driving increased pressure on the industry from cargo owners.
I’m fortunate enough to have worked in both F1 and offshore yacht racing. It’s that mind-set that is beginning to be unleashed in the shipping sector. The challenge the international community has set commercial shipping, is that within the lifetime of a ship, vessels will have to operate in a net zero emission economy. How can shipping achieve that? It starts with innovative thinking and 21st century technology; naval architects are the people to design the new golden-green age of shipping. In embracing the new post-Paris reality, far from being a threat, de-carbonisation is slowly being embraced as an opportunity. Of particular interest is the potential of renewable energies wind and solar power sources that are abundant, free and exclusively available to ships. Envisioning a rapid transition to maritime renewables was considered crazy just five years ago but certainly the winds of change are being felt. Small but highly significant investments in maritime renewables are being put in place.
Savvy investors across the world have internalised the logic of the Paris Agreement’s goals and recognise that the days of carbon intensive business models are over.
More than twice as much investment went into capacity to generate electricity with renewables than into fossil fuelled power stations, according to a study by the Frankfurt School of Finance and Management for the UN Environment Programme. Over the past decade, technology development has cut the cost of solar panels and wind turbines by up to 80%. Renewable energy is often now no more expensive than that derived from fossil fuels and, critically important from a business planning and management perspective, offers much greater long term cost certainty once the capital cost is funded fuel is free, whereas fossil fuelled assets are dependent throughout their lifetime on volatile commodity fuel prices, which come with the very real potential that a carbon tax will be levied on them, which then brings the added risk of becoming stranded assets.
Investors eager for new opportunities in this burgeoning clean energy space are warming to the idea that there’s great potential in maritime renewables. After all, today’s global economy was built on wind-powered ships and we can expect a 21st century renewable powered vessel to be as different from the Cutty Sark as an offshore wind turbine is to an 18th century Dutch windmill. Same power source, new technology.
Committing to the Paris Treaty
For the technology transition to be fast and deep shipping’s leadership must join the rest of the world in setting ambitious goals for decarbonisation. The UN empowered the IMO to act on behalf of shipping in international climate negotiations. Between 18 and 22 April the IMO’s Marine Environment Protection Committee (MEPC) had its first post-Paris opportunity to discuss greenhouse gas (GHG) emissions at MEPC 69. The political process for adopting any target is laborious, but there is a distinct change in the air.
The International Chamber of Shipping, representing over 80% of the world’s merchant fleet, has called upon the IMO to develop an INDC to clarify CO2 reduction targets for the international shipping sector as a whole, signifying a fundamental shift in the organisation’s stance on GHG emission reductions. The ICS submission was received with great media interest and has been welcomed by environmental organisations.
The Marshall Islands together with the Solomon Islands, Belgium, France, Germany and Morocco have co-sponsored a paper to MEPC 69 calling for the development of a work plan to define shipping’s fair share in reducing its GHG emissions. Canada, the Netherlands and Vanuatu have pledged to support the motion from the floor and work is ongoing to rally further support.
The Clean Shipping Coalition is supportive of the proposed ‘fair share’ discussions and underlines the need for ship GHG emission reductions to contribute towards keeping global warming “well below” 2°C.
The World Shipping Council, Cruise Lines Industry Association, INTERTANKO, and International Parcel Tanker Association are also publicly supportive of the proposed ‘fair share’ discussion.
Elsewhere major ship owners along with industry associations have publicly voiced their disappointment about shipping not being included in the Paris Agreement, including Maersk, Wallenius Wilhemsen, the Danish Shipowners Association, and the European Community Shipowners’ Associations. As a reaction, the latter three are reported to be planning the formation of a new global industry alliance aimed at exerting an increased level of pressure on IMO towards introducing further GHG reduction measures. The Danish Shipowners’ Association plans to set out its own CO2 reduction goals; Swedish Shipowners are committed to become zero emission.
The IMO’s stance on the topic also seems to be changing. At the beginning of February, IMO Secretary-General Kitack Lim, who took over the post from Japan’s Koji Sekimizu on 1 January, stated that “contributing to the fight against climate change is a top priority for IMO”. While the decision rests with member states, he believes “that IMO will be able to agree on the appropriate way forward”, adding that “IMO looks to play a leading role in the drive towards a sustainable maritime sector.” This should be viewed against the statements of the outgoing Sekimizu in September 2015, warning that an emissions cap would “artificially limit” the sector’s growth.
There are also an increasing number of voluntary industry schemes aimed at reducing GHG emissions from ships. The most notable example is the green ship initiative launched in January 2015 by the Liberian Registry, the world’s second largest ship registry. The initiative is designed to reduce global carbon emissions, enhance fleet efficiency and competitiveness, and promote a greener Liberian fleet, and offers special tonnage tax discounts for participating ship owners.
The conducive environment
The necessary conditions for rapid technology change are coming into alignment. Shipping’s customers are creating the strong commercial demand pull for low carbon ships. Simultaneously, policy is looking increasingly likely to implement a ‘push’ through of targets and / or regulation.
To rapidly accelerate the necessary design and development there is much we can learn from the evolution of the onshore wind industry. Three different but dynamically interconnected disciplines need to be stimulated to accelerate the uptake of maritime renewables technology design, finance and reliable performance analysis.
The first wind turbines were capable of producing 50kW power, now, within just a few years, offshore turbines with 8MW generating capacity are being installed far out to sea.
The Smart Green Shipping Alliance (SGSA) has the same ambitious trajectory of development for commercial shipping.
Minimising carbon starts on naval architects’ drawing boards. Designing for 100% reuse reduces carbon by 29% according to research led by Dr Paul Gilbert from the University of Manchester and Dr Peter Hodgson from Tata’s sustainability team. Build the vessel for extreme longevity, looking to condition based monitoring, new materials and operational approaches to extend use of asset, which further reduces embedded carbon over time. Power the vessel with 100% renewable energy allowing fuel costs to be predictable over the lifetime of the ship and we can envisage today an ultra-low carbon, future-proof resilient asset through combining existing and proven technologies in new ways.
Once the collective creativity of the shipping industry realises the potential in maritime renewable energy we can anticipate an exponential growth mirroring that of onshore renewable energy.
New financial products triggered the onshore renewable revolution and the SGSA is creating innovative business models for the maritime sector that reflect the fundamentally different economics enabled by renewable energy the asset is decoupled from volatile commodity fossil fuels and harnesses, through technology, freely and infinitely available power.
The final piece in the jigsaw is the replication for the maritime sector of the analysis tool that underpinned the development of onshore wind. ‘Virtual Met Mast’ created by the Met Office enabled all contracting parties asset developer, financier, end-user to be able to confidently predict the value of the wind to any project, to effectively monetise the value of renewable energy and give all contractual parties confidence.
Of course maritime analysis is inherently more complex. The windy hill where we might develop a fleet of wind turbines is static, unlike hybrid-wind powered ships which move through waves and currents as well as variable meteorological conditions. But by mobilising the power of Big Data the SGSA is, with the Met Office, developing a tool called Tradewind to perform a similar function to Virtual Met Mast. It can analyse new vessel designs against 30 years hindcast data in wind, wave and currents, enabling a reliable valuation of the contribution from the wind on any ship on any route. Monetising the value of the wind and making the unpredictable predictable enables rapid design optimisation.