The Global Warming Fightback within the Shipping Industry.

November 16, 2016 0Logisitcs

2016 is on course to be the hottest year on record.  Temperatures are standing at a minimum of 1 oC above average and with experts warning that by 2040 there could be no Artic sea ice left, the shipping industry like many other sectors is receiving enormous pressure to reduce carbon emissions.  By 2050 the sector is expected to account for 17% of the worlds emissions – which is the same as those produced by Germany, making it a fast-growing source of greenhouse gases.

International negotiations on climate change have previously excluded the aviation and ocean freight shipping sectors.  The nature of shipping means that the emissions are discharged within the jurisdictions of many countries not just from where they originate, so there is trouble allocating the gases to a particular nation to take responsibility.  Attempts to include the UN ‘s International Maritime Organisation (IMO) and The International Civil Aviation Organisation (ICAO) into The UN’s climate agreements have also so far been unsuccessful but a new chapter appears to be on the horizon for the industry.

On the 6th October 2016 at the 39th Assembly of the ICAO within its headquarters in Montreal, the first deal to control carbon emissions within the aviation industry was agreed.  A pilot phase for a Carbon Offset Scheme will start in 2021 through 2023, with the first phase from 2024 and the second phase 2027 till 2035.  This second phase would see all states included with a few exceptions.  The carbon offset scheme outlines that any rise in emissions will be offset by such activities like tree planting or implementing clean energy technology within upcoming businesses.  Many argue that this is a weak commitment by ICAO who up until the beginning of the month had been promising a plan to align the aviation sectors emission agreement with The Paris Climate Agreement of keeping global warming below 2oC agreed last year.

The aviation sector is searching in other ways to reduce costs and environmental impact and has already started switching to a lighter fuel type.  It is advantageous, by means of reducing costs and travel time within the industry.   There have also been technological advances in recent years.  The release of the Boeing Dreamliner 787 is an example of this.  It is a lighter plane than its predecessor the Boeing 767 and as a result is proven to be 20% more fuel efficient.  All positive moves and is a step in the right direction.

The agreement on the 6th October and the advances within the aviation sector has put enormous pressure on IMO to make its own contribution to lowering emissions.  Ocean vessels can carry heavier low grade fuels than an aircraft and unlike the aviation sector there is no financial incentive to use greener fuels.  These low-grade fuels are cheap to use unlike the green fuels so why should the ocean industry change its practices and increase its costs in an already limited profit margin sector?  On the 28th October at the IMO London Headquarters an agreement was made to cap sulphur emission from ships but not greenhouse gases.   The sulphur cap will be at 0.5%, which as some levels of maritime fuels stand at 3.5% is a large reduction.  A seven-year plan was also drawn up starting with a strategy for addressing the carbon emissions being published in 2018 and then for large ship owners to confidentially provide the IMO with information relating to fuel consumption beginning in 2019.  However, the IMO has been criticized for the plan lacking in an end game and with no ship yards having plans to manufacturer greener vessels, there are now calls to the EU to include ships emissions in its climate target of 2030.

At this stage, there is reluctance from the customers for large price increases to accommodate the vessels using greener fuels and little is known what will be contained within the strategy being published in 2018, no one knows what steps the IMO will take next in this growing area of concern.   Many are hoping however that there will be a firm plan with targets being put into place by the IMO to start tackling this issue from 2023.