Driving the sustainability agenda forward

by Ian Petty, General Manager, The Sustainable Shipping Initiative, first published on Lloyd's List Australia, 18th October 2016

A thriving shipping industry is vital for successful global trade and commerce. However, the future of the industry can’t be taken for granted given the current challenging financial conditions – illustrated by Hanjin’s recent collapse – and an imperative to respond to increasing demands for highly sustainable performance.

From switching to a more diverse mix of energy sources, becoming a more responsible partner in the communities it touches, developing a responsible framework for ocean governance, to developing financial solutions that reward sustainable performance there are many elements of sustainability for the industry to address.

The Sustainable Shipping Initiative (SSI), an independent charity, comprised of ambitious leaders spanning the whole shipping value chain, is dedicated to making sustainability mainstream; working with its members and other shipping stakeholders to create a more environmentally responsible, socially conscious, safer, accountable, and more economically profitable industry.  One that is truly sustainable by 2040, as outlined in its Vision.

In 2016, the SSI launched its Roadmap to 2040, illustrating where the industry is now, and what is required for it to become truly sustainable by 2040, and critically, the key milestones that must be delivered. These include changes to regulation, governance and infrastructure, as well as development of emerging energy sources and technology.

The SSI believes that the shipping industry must target an 80% reduction in CO2 emissions by 2050. When we consider that the IMO’s third greenhouse gas study predicted that CO2 emissions could increase by as much as 250% by 2050, based on business as usual, the need for urgent action is evident. Without action, the industry will account for 17 per cent of global emissions. The shipping industry must play its part in achieving the below 2-degrees warming target agreed in the Paris Agreement at the UNFCCC’s COP 21 meeting in December 2015.

The Marine Environment Protection Committee meeting (MEPC 70) later this month provides the industry with a clear opportunity to show its intent to tackle this challenge. The IMO needs to put in place a framework that outlines the process for defining its emissions reduction targets. This frame work must be both transparent and challenging in its ambitions, but it must also be equitable and affordable for the industry, as well as enforceable on a global basis.

Clear direction must be set for the industry at MEPC 70. Further delay will only result in the required cuts being much harsher if we assume a fixed carbon budget.

It is not just legislation driving the sustainability agenda forward. Market forces are playing a part. Increasingly, there are real demands being placed on ship owners and operators by their customers – the charterers and shippers – who want more sustainability within their supply chains. If ship owners wish to remain competitive within the market, they must do more to drive efficiencies in their operations.

There are many methods that can be used to improve efficiencies already on the market, whether for application to new builds or retrofit to existing ships; from fuel additives, new propeller and hull designs, wind propulsion technology and air lubrication systems, to advanced hull coatings. Our members, market leaders within the industry, have found that a 5 to 25 per cent reduction is achievable using such technologies.

There are also operational solutions that can be employed: optimising routes and speed, using virtual arrival, optimising cargo operations and cold-ironing in port can all make a significant difference.

The SSI welcomes the forces and technologies that make sustainability mainstream but is also mindful of the impact on ship owners and operators given the severe challenges they face, including low freight rates, increased competition, regulatory pressures and uncertainty over future fuel prices. Demanding investment in the retrofitting of new technologies does not always go down well with owners and operators who are seeing their business models, profitability and in some cases even their continuity under threat.

Sustainability needs to be considered in the correct context – alongside its commercial benefits. Clean technologies may help owners and operators reduce their emissions, but they must also be shown to drive significant operational efficiencies, reducing fuel consumption and the associated costs. There must be an increased level of transparency throughout the development and trialling of new technologies, reducing uncertainty and accelerating their uptake.

There are many challenges ahead that will influence how and when the industry becomes fully sustainable. It is encouraging to see more and more companies realising the commercial benefits of sustainability and driving to get ahead of regulation and it is more important than ever that we come together as an industry to face these challenges. In doing so, we can work together to create a vibrant, more efficient, more environmentally conscious and more profitable shipping industry that can meet the future demands of the global economy, as well as the needs of our planet now, and in the years to come.