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Container shipping grapples with environmental ambitions versus short-term improvements

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Shippers want cheap freight rates, shipowners need ships on the water to trade today, and regulators want an agreed approach on technology, fuels and distribution; these are the conflicting factors container shipping is faced with as it tries to set course for zero-emissions.

On the regulatory front, John Butler, President And CEO, World Shipping Council, speaking at TPM21, said that the industry faces a complete change of direction in about the lifespan of a typical vessel. The necessary engineering work to create appropriate technology needs to take place alongside development of a regulatory and policy structure to both drive change and ensure the shipping industry can continue to operate in the transition period.

Keeping trade moving was a priority, said Butler, “We have to change the propellor while this ship’s still moving.”

For Bud Darr Executive Vice President, Maritime Policy And Government Affairs, MSC Group, part of the challenge is minimising emissions from ships during the transition period and making sure that ships invested in today can trade for their whole lifetime and aren’t rendered inoperable by future developments.

For now, container lines have three options: energy efficiency improvements, use of liquid biofuels and use of fossil fuel LNG. There are sustainability issues around Biofuels and LNG, and none of the current options are perfect, but they can lead to reduced well to wake emissions, said Darr.

While the currently available solutions do not reach the zero emissions target the industry must reach, Budd believes these solutions should be adopted to benefit from their environmental improvements over burning traditional fuels.

Shippers look beyond intermediary measures

Leaders among shippers are looking beyond intermediary measures, said Ingrid A Irigoyen, Associate Director, Ocean And Climate, Aspen Institute Energy And Environment Program. Shippers are concerned about the imperfections of current emissions reduction technologies and want a clear view of the zero carbon solution. “What they want to understand is: what investments can I make now that will lead to the long-term solution, not being distracted by temporary band aids, but really making an investment that leads to long-term change.”

Part of an initiative at the Aspen Institute is to tap that energy they have and harness their combined buying power as a force of accelerating change for longer term solutions.

But while shippers and regulators look ahead, containers still need to be taken from one place and moved to another.

Lack of clarity on future technology

For MSC, the lack of a clear future technology informs their thinking when it comes to ordering what are long-lived capital-intensive assets, said Darr, but MSC cannot wait to have new, more efficient capacity in the fleet, it needs to move now.

“We’ve got to bring new vessels into service and so you’ve got to do the best you can. One of the things that you can do is think about flexibility in your fuel choice, so you’re not just thinking about picking one size fits all today,” said Darr.

Darr gave the example of MSC’s newest ships which were built to allow conversion to LNG fuel at a later date. While fossil-based LNG is not a perfect solution to shipping’s emissions, the 20% reduction in well-to-wake CO2-equivalent emissions is an improvement and one which may lead to bio-LNG or synthetic LNG as a fuel in the future. e-methanol also holds potential as a future drop-in fuel of the future, allowing reduced emissions from assets that would otherwise be stranded, Darr said.

“It’s going to take different solutions sets for different types of ships,” said Darr.

The decision for container likes goes beyond choosing a technology and ordering ships, said Butler: “In some ways that may be the simplest part of the problem… Carriers don’t build their own ships, they don’t design those engine systems and they don’t build the global fuel networks that are necessary to fuel those ships with whatever we may come up with in the end.”

“So this takes us back to investment certainty and uncertainty, not just in reference to the ship but with respect to the potential types of fuels and the green power it is going to take to produce those fuels in a way that is ultimately sustainable.”

Incentives for investment 

Butler said that investment and adoption of zero-carbon shipping relies on increased certainty as to which future fuels will be viable and available for the long-term.

“One of the great ways to organise people is economic incentive. You can have a thousand conferences, but if people don’t see a business case for going out and producing this fuel or producing this ship or producing this engine, they’re not going to do it. The sooner you can send not just regulatory signals but clear technology and business signals [that] this investment may pay off for you, the sooner we will get that kind of collaboration and innovation that we need.”

For the shipper’s part, Ingrid said that for the most part procurement departments are still focussed on price and reliability; the sustainability factor is increasingly important but there’s also a need for professional incentives for buyers in the industry structured around sustainability. “Right now, you’re just rewarded for getting the best deal,” said Irigoyen.

“I think the other challenge that a lot of these other [shipper] companies are facing is the lack of good information about GHG emissions and how different carriers compare with each other. Pushing towards greater transparency could make a big difference,” said Irigoyen, adding that a shipper once said the information out there was “garbage”.

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