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Can shipping be relied upon?

Demand signals have not been sufficient, investment decisions are being delayed. Prevaricating politicians should take heed, but shipping can’t wait for risk to be eliminated

There is a growing realisation in shipping that nebulous net zero pledges are starting to require action and investment, and will be harder to achieve than first thought. The divide between those who can and can’t be relied upon is widening

“WE count on you; we know we can rely on you.” That was European Commission President Ursula von der Leyen’s clarion call to the maritime sector as she launched Maersk’s methanol pioneer, Laura Maersk (IMO: 9944546).

But can we be relied upon?

Shipping is too often mistaken for a singular industry by politicians. 

It is a deeply fragmented series of loosely connected sectors, each with its own competing interests, driven by a disparate band of leaders and laggards where the latter too often outnumber the former.

Not all green fuels are particularly green, not all companies are Maersk, but not all politicians are quite so optimistic about the reality of Europe’s Green Deal. 

Reaching net zero will be costlier and more disruptive than many politicians admit. 

The unedifying sight of UK prime minister Rishi Sunak reaching for the doubt, delay and distraction playbook bequeathed to him by his consultancy chums this week, is unlikely to be the last example of political leaders putting the brakes on policy in search of their own security.

But it’s not just the politicians starting to panic about past promises that looks increasingly unachievable.

Even as the growing orderbook of dual-fuelled ships set sail to the sound of political plaudits and applause, it is well understood that supplies of the sustainable fuels they need will fall well short of demand.

It is by now almost inevitable that a generation of low-carbon capable ships will be sailing for years without seeing a single molecule of low-carbon fuel.

Some of the hemming and hawing from fuel producers yet to commit investment could generously be cast as negotiation tactics, but they also have a point.

Demand signals have not been sufficient, investment decisions are being delayed. And yes, without clear government policies to support a zero-carbon transition, investment and progress will falter. But the blame cannot be pinned solely on prevaricating politicians.

There is a growing concern among industry leaders that the 2030 decarbonisation targets set down by the International Maritime Organization, and then almost immediately written off as insufficient, are now not achievable.

At least not by everyone. 

The availability of green fuels is indeed a problem to be overcome, but the difficult and expensive process of efficiency savings, innovation and quality operations will be the nearest dividing line between those that can be relied on and those who can’t. 

What the IMO, and to some extent the European Union, have done in advancing emissions targets is effectively move what shipping companies need to do into the 2030s. That dawning realisation is starting to cause panic among those who have made only green promises, not tangible investments.

By 2030 almost every ship working today will have to be retrofitted if it is to exist by 2040. 

Those waiting for the details of a carbon price and sufficient government subsidies to eradicate all risk from investment are either delusional or using such arguments as a pretext to extend the status quo. Either way they are not the figures Von der Leyen should be relying on. 

The real demand signals, certainly for those in the container trades, will be from the likes of Amazon and the cargo owners who are driving this process faster than most in shipping appreciate. 

The regulatory clarity will come, eventually, but the transparency created by the mechanisms already put in place from CII to the EU ETS will have a material impact on the industry’s access to capital and cargo. 

Not every company can be relied upon to take up Von der Leyen’s challenge to “pioneer the fight against climate change”. 

In her mind shipping is “turning a noble generational task into a new growth strategy”.  

That may yet be true of some, but sadly it is certainly not true of all.

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