The confluence of regulation and technology continues to occupy the shipping industry’s attention, for good reasons. But beyond the residual arguments around IMO2020 and its effects on the markets, a consensus is emerging that what comes next is going to make sulphur compliance look easy.

The challenge for the industry, as Arlie Sterling of consultancy Marsoft pointed out to the CMA conference this month is that it tends to see problems where it should see opportunities. As a result, it is a long way from the mindset of achieving the huge carbon emission cuts and it will need to be made by 2030 and 2050, let alone having the technical means to do so.

“What we tend to get asked is, what happens after the cycle and we usually say, just wait for the next one, but there’s more going on in the business that we need to think about,” he said.

Sterling looked at filings to the Securities and Exchange Commission of 10-K forms to understand how shipping compared in having a proactive strategy on climate change. He found that of the publicly-listed cargo owners and banks, 100% of them had a detailed strategy on tackling climate change, while of the listed shipowners it was mentioned by just 25%.

This is a problem, he said, because you can’t credibly talk about risk factor and then not do anything about it. Shipping needs to get on the same page as its lenders and customers. This is where the mindset comes in; one that looks at, say the share price of US energy company Cheniere and carmaker Tesla which have created massive value for shareholders in a short space of time in markets that arguably didn’t exist 10 years ago.

In the absence of carbon pricing, shipping should focus on creating wealth by saving lives, he suggested. “Fewer people die in a coal mine these days, you die because you breathe contaminated air. Cleaner energies save lives; China’s transition to clean energy will save a million lives a year and represents $16bn of investment in LNG carriers.”

What starts with sulphur emissions control ends at carbon and as Sterling conceded, the industry is at the early stages of understanding a complex problem, but progress will be fast. The IPCC has set a target of a net zero carbon global economy by 2050, but it has also stated that the previous aim of capping warming at 2oC will not be enough to present irreversible changes.

If net zero carbon by 2050 sounds a steep curve, then Sterling thinks it could be achievable and he has the data to support his thesis. In the past 45 years, carbon intensity in national terms (assuming a starting level of 100) has fallen on average to 20% or below. “The data tells us that the world can reduce carbon intensity and economies can still show growth. That trend is our friend and we need to do significantly more in finding technologies to extract carbon.

Challenges for shipping remain and the obvious one is that hydrocarbon transport is not a growth business, excluding ‘new fuels’ like LNG, biodiesel, methanol, hydrogen and possibly carbon itself. Until shipping embraces its climate change contribution, Sterling suggested, access to capital would be harder and more expensive, impacting the value of assets.

The result will be a more complex and demand engagement between owners and charterers, and it’s the owners that need to be educated and play a team game, he said.

Ever the consultant, Sterling suggested there were ‘three things’ that the industry could take away from his trot through the future of shipping. The first is ‘own the problem’ to thrive in the future, sustainability has to be embedded in corporate culture.

Second, companies should work to improve their green credit rating – there are plenty of agencies that can support that process.

The third is most difficult – differentiate and innovate – work out how to scale your ambitions. Opportunistic cyclical investment is what has characterised the shipping industry; that is still possible with access to cash and counterparties.

All of these are easier said than done. How can you own the problem if regulatory change moves faster than your adaptation strategy? The risk is not that shipping’s traditional regulators will accelerate their agenda, but that individual nations, states or cities implement in a range of un-coordinated strategies driven by political populism.

Despite these changes filtering up from local level rather than from the top down, the task is global in scope and scale and it demands a new approach.

“Wealth is not just money, we have to talk about it in human terms. A few years ago, conversations like this would have been called political correctness. I’m so happy that’s in the past. We will measure success not just in cycles and quarters but how we manage the footprint.”

So, what happens after the cycle? There’s another one. “But this one is an opportunity to win – or lose – it all.”