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Carbon pricing key to shipping’s emissions pathway

Collaboration between all stakeholders is essential if the shipping industry is to come anywhere close to meeting its decarbonisation targets, as laid out by the IMO.

This was the main message from a webinar held late last week, Trade Evolution and Partnership: Impact on Decarbonization, organised by classification society ABS.

Cargill Ocean Transportation’s George Wells, head of assets and structuring, stressed that charterers have a vital role to play. He revealed that Cargill, a prominent member of various shipping sustainability initiatives, already supports shipowners from whom it charters tonnage in their energy-saving and carbon-reducing measures but much more engagement is necessary, he said, suggesting that some form of carbon pricing will be necessary. A major barrier to the adoption of new technologies and future new fuels is cost. Low- and zero-carbon fuels must make economic sense, he insisted.

Maersk’s Ole Graa Jakobsen, vice president head of fleet, who is closely involved in the company’s carbon-reducing strategy, stressed that industry-wide engagement is essential to adopt low- or zero-carbon fuels because the associated costs would be too great for the industry to bear without its customers’ involvement. Conceding that there are many steps that can be taken today to improve shipping’s emissions profile, the adoption of new low-carbon fuels will need a more concerted effort from all parties, he said.

Lindsey Keeble, webinar moderator and global maritime sector head at law firm Watson Farley & Williams, pointed out that there are already sources of ‘green finance’ potentially available for shipping, but the investment community needs to be assured that shipping’s entire supply chain is determined to pursue the decarbonisation ambitions set out by the IMO. That includes the industry’s customers. Green investment financiers have similar lending criteria and covenants to conventional lenders, and shipowners whose business models rely on the ups and downs of the spot market are unlikely to find any green money.

Meanwhile, Cargill’s Wells stressed that the shoreside investment in infrastructure for new fuels should not be underestimated. Cargill uses a wide range of bulk carriers, he said, from small coastal ships right up to newcastlemax vessels which usually operate in tramp trades. Unlike container ships deployed on fixed schedules between nominated ports, these bulk carriers trade everywhere, calling potentially at hundreds of ports. Huge investment ashore will be necessary, he said, and someone will need to pay.

Bo Cerup-Simonsen, ceo of the recently established Maersk Mc-Kinney Møller Center for Zero Carbon Shipping, revealed that a large number of enquiries had been received from companies seeking to join the centre. This was encouraging, he said.

ABS’ global sustainability director Georgios Plevrakis disclosed that ABS has established four new sustainability centres to support shipowners’ carbon-reducing initiatives in Houston, Copenhagen, Athens and Singapore.

Meanwhile, Professor in Ocean Science and Engineering at the Massachusetts Institute of Technology, Michael Triantafyllou, said that the pandemic had impacted progress on research projects to some extent but that they will resume at full speed as soon as the virus is brought under control.

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