September 22, 2015


Counting on a resolution to climate change confusion

The resounding success that was the second London International Shipping Week was a timely reminder that for all the apparent threats to London’s position as a shipping hub, its ability to attract the great and good is undiminished.

Despite the presence of the IMPA event, the organisers were adamant that this would be different, with no trade show to distract from the chatter. They also sought to bring new voices to the conversation, including economists and analysts not normally associated with the industry.

The result was mixed. While it was good to hear outsider opinions on prospects for global trade, their ignorance of shipping’s contribution to air pollution and CO2 emissions was at times surprising.

Despite the data being widely available through the IMO Greenhouse Gas Studies, shipping was more than once lumped in with land-based sources and even the complete transport supply chain, resulting in potentially huge emissions rises – even though predictions of trade lane growth were mostly downbeat.

At one event, air pollution from shipping was blithely accused of causing ‘thousands of premature deaths’ with no qualification of the basis for the statement or its contribution compared to land-based industries.

This is particularly frustrating because, as anyone with an interest in the subject will tell you, shipping emissions have fallen since the financial crisis as slow steaming and reduced demand have hit the industry.

This matters, because in late November the UNFCCC (United Nations Framework –Convention on Climate Change) process re-starts with the COP21 meeting, which some observers fear will see the industry unable to escape the demands of NGOs and governments that it be included in its emissions reduction mechanism.

During the International Chamber of Shipping’s conference, Vice-Chairman Esben Poulsen asked whether the results were because CO2 emissions had fallen between 2007 and 2012, shipping was in ‘a business as usual economic scenario which overstates the future growth of maritime trade and therefore also emissions’.

Chairman of the Chamber of Shipping of America Kathy Metcalf, while admitting to being a glass half-full optimist, agreed that she saw the disconnect. “There are two problems, first that there may be an over-prediction of trade growth rate, second that there may be an under-appreciation of what current and future IMO initiatives on energy efficiency can do”.

If third parties were able to more realistically appreciate the level of reductions possible through energy efficiency measures and new design criteria, then it would be clearer “that they absorb more than the growth we expect to happen,” she said.

CEO Stena Line Carl-Johan Hagman pointed to the complete change that the industry had undergone in the last 15 years, when a fully laden Suezmax tanker sailing at 14 knots consumed 50% more fuel than it does today. Add to this a vastly improved record on oil spills and lost time injury frequency statistics for crew that are ‘almost 10 times better’ than on land and he said “we have done a phenomenal job but are not being credited.”

While true that there is a need to present such achievements in a clear and transparent way, using the decrease in emissions as evidence that shipping is set for a pollution free future is pushing the point too far, said French Shipowners Director General Eric Banel.

“There are specific elements for that time period that explain the decrease, including slow steaming, that are not constructive elements. That lower path doesn’t mean we can achieve carbon neutral growth,” he said.

Which side of the fence you fall depends on whether you believe that the market will always find the best settlement. Hagman was in no doubt that the high oil price of the past 10 years was the driver for new technology investments that were not made for altruistic reasons. Despite the lower oil price he observed, slow steaming had not disappeared, suggesting market forces would always be the determinant.

If true, then shipping could have a problem. In one very specific example, an IMF study, while suggesting that the rapid expansion of global supply chains over the past 20 years has peaked, also said that shorter trade routes which are less efficient per tonne mile could actually generate more CO2.

If as has been suggested before, India manages the transition from semi-sleeping giant to global powerhouse, the equation changes again.

Hence without accurate and updated global data based on real bunker fuel consumption, there will be a risk of shipping getting caught in the crossfire. It was all very well for Hagman to describe shipping as ‘absolutely necessary for global prosperity’ but it fails to address the flipside, that carbon risks becoming a ‘pay to play’ business.

So will shipping get ambushed in Paris? Poulsen said he had heard the rumours of an NGO ambush but said that the industry was probably better prepared than usual in telling a positive story. ICS Secretary-General Peter Hinchliffe was more forthright, recognising that industry is under attack both by the politicians and NGOs. But he said, it is they who have to decide on their priorities.

“Is it to reduce CO2 emissions from ships, which is what we would like, or is it to generate funds from an industry they see as a cash cow? If so, that is not the right motivation.”

Hinchliffe said shipping should be prepared to accept a simple levy that placed a minimal burden on the industry and which reflected a realistic amount of money that can be generated from shipping’s actual contribution to the global emissions inventory.

And in case any general reader needs reminding, that is currently estimated at between 2.8-3% of total global CO2 emissions.


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