Rhetoric Versus Reality: Can We Handle the Truth? - LISW 2023

If shipping is to meet its climate goals, and become a reformed industry, its needs to focus less on the rhetoric and more on reality.

In communications, we love to cite a famous quote, a line from a film, or a lyric from a song to help make a point. And to summarise the output from this year’s LISW, for me it must be Jack Nicholson’s famous line from A Few Good Men: “you can’t handle the truth!” (cannily repeated following reference to it by Alisdair Pettigrew during BLUE’s panel discussion on Monday afternoon!)

Why? Because BLUE’s event focused on exploring the inconvenient truths of shipping’s decarbonisation. And the most inconvenient truth of all, it seems, is that I am not sure that anyone wants to decarbonise! There… I know I won’t be popular and I might be generalising, but I’ve said it now!

Whatever your opinion of what came out of IMO MEPC80 in July (some, like Lloyd’s List editor-in-chief and panellist at BLUE’s event, Richard Meade, see it as “light years ahead of what even the most optimistic people were expecting”; others don’t believe it’s anywhere strong enough to reach 1.5°C Paris Agreement-aligned targets), the inconvenient truth is that regardless of what was expected and what’s now happened, there’s a lot of people in shipping who are not ready, able, or willing to move.

So, they’re not going to!

“Show me the money!”

Tom Cruise playing Jerry Maguire, in the film of the same name, and shouting: “Show me the money” at the top of his voice is essentially how I visualise the response of shipowners to the decarbonisation challenge. One inconvenient truth, as cited by BLUE panel member James Hookham from the Global Shippers Forum, is that the appetite for change and willingness to commit disappear when people realise it will cost them.

This mindset isn’t confined to shipping companies either. The reality is that most cruise passengers do not care how green the cruise ship is, they care how cheap the holiday is. Most consumers do not scrutinise the green credentials of the t-shirt they’re buying. And most consumers buy more T-shirts than they really need. Let’s not kid ourselves about the strength of pressure coming from the world’s consumers right now. Indeed, it does not look like they are going to drive change at the speed it’s required for some time to come.

Rather than being honest and, like Clarke Gable in Gone with the Wind, confessing “Frankly my dear, I don’t give a damn,” the virtue signalling from companies and consumers alike is spiralling out of control. As consumers, we lap up the greenwashing like kittens, as it makes us feel better about our convenience-led lifestyles and the short life, disposable items we’ve become addicted to. Make no mistake: this is a modern-day addiction with ramifications far more damning for society and the planet than other, more familiar vices.

Shipping is simply delivering what global consumers – speaking through shippers and charterers - are asking of it. What’s becoming increasingly clear is that until we, as consumers, in our billions, start taking action, we can berate shipping as much as we want to. We can pass the blame onto them all day long if it makes us feel better about ourselves and the way we live our lives. Yes, shipping can and should improve the way it operates. However, when it comes to decarbonisation, we all need to start walking the walk instead of just talking the talk, on both a personal and professional level.

“You’ll have bad times, but it’ll always wake you up to the good stuff you weren’t paying attention to.”

Amen to that from Robin Williams in Good Will Hunting. It’s an inconvenient truth that 2050 feels quite a long way off (especially if you’re less than a decade from retirement, which for some encourages apathy and inaction). While it’s widely believed that alternative fuels are essential to meeting shipping’s long term decarbonisation targets, BLUE’s Alisdair Pettigrew reminded us that we need to remember that shipping is competing with other industries such as cement, steel, and agriculture. And where are we in the queue for alternative fuels? It’s not near the front, that’s for certain. Because these other sectors competing for renewable energy are invariably less fragmented, seek greater volumes as a bloc, and are prepared to pay higher prices.

On the topic of fuels, Richard Meade also reminded anyone that had forgotten their A-level chemistry that methanol is also known as CH3OH. Note the ‘C’ for ‘carbon’. Methanol is not a green fuel. It has a pathway from fossil to e-fuel like the other alternative fuels, and grey methanol has a carbon footprint worse than VLSFO. Like all the zero carbon fuels - green methanol, green hydrogen, green LNG and green ammonia (although ammonia seems to be increasingly falling out of favour as a marine fuel) - they’re called future fuels for a reason. As Maersk has been discovering, there are so few low carbon fuels available at scale right now, the Danish shipowner has had to become its own supplier, launching a green fuels company of its own last week and signing a myriad of MOUs to try and nail down supply.

It seems that the industry is waking up to the fact that, for those that genuinely want to act now and make progress (and assuming you don’t have the scale to start your own green fuels supply company) we need to use the tools we have available. The technology exists and is ready to reduce shipping emissions right now through saving fuel. As Alisdair pointed out, there’s a latent opportunity that we’re not pursuing aggressively enough.

Insight from the Global Maritime Forum suggests that maximising vessel and fleet performance through operational efficiency can reduce annual fuel costs by $50bn at today’s bunker fuel prices, reducing annual emissions by more than 20%, or 200m tonnes of CO2 per annum.

Lucy Gilliam from Seas at Risk agrees and referenced the CE Delft analysis which shows that ships can achieve a 36-47% emissions reduction by 2030 compared to 2008 levels by deploying 5-10% zero or near-zero emission fuels, wind-assist technologies, and by ‘climate optimising’ the speed of ships. It’s possible, but why aren’t we doing it? Even by factoring in mitigating circumstances, such as size, route, and age of the vessel, for example, these are significant figures.

The science is crystal clear: emissions from shipping must halve by 2030 if we are to stand any chance of keeping warming below the Paris Agreement’s 1.5°C temperature limit. To achieve this, change can’t be all from the top down. It needs to come from the bottom up too. And pronto!

Which raises the question…why are we only focusing on the harder-to-abate 85% of global shipping emissions when we could address the ‘low hanging fruit 15%’? Vessels under 5,000 GT are responsible for 15% of GHG emissions from international shipping and excluding them from IMO and EU regulations is a missed opportunity. With 2030 not that far away, we need to focus on where we can reduce emissions right now. Madadh MacLaine and the Zero Emissions Ship Technology Association (ZESTAs) has been banging this drum for some time; the ability to deliver this 15% reduction already exists by deploying batteries, wind propulsion technology and hydrogen fuel cells on smaller, ‘return to base’ vessels.

I say it again: the technology to deliver this 15% already exists. And from what we heard this week, perhaps shipping is finally started to acknowledge the sense in this.

Richard Meade cited Blue Visby as an example of factors that are in our control. NAPA research indicates that the Blue Visby solution, which unlocks the majority of the benefits of “just-in-time” arrival without most of the problems, can reduce shipping emissions from voyages by around 15% alone for some vessels on certain routes.

“May the force be with you.”

I’ve never seen Star Wars (watch the engagement for this blog skyrocket responding to that point alone!) but the famous words “May the force be with you” spoken by Jedi Master Obi-Wan Kenobi to Luke Skywalker seem fitting for the challenge that faces us.

The consensus is that the major force to drive the fastest change is political will. If the policy changes, then the capital will follow, and action will be taken.

Our panel agreed that localised legislation from the EU and the US will force accelerated change, for example the impact of the EU’s Emissions Trading Scheme from January 2024 will create an interesting and powerful new dynamic. It may also mean that trading patterns change. The reality of this is that not everyone’s going to come out of the transition positively. Indeed, Richard Meade believes that fundamental business models – especially among small and mid-sized shipowners and operators - will be jettisoned out of the industry, and a lot of companies will go under having misread the urgency.

In addition, we need solutions, not problems; action, not excuses for inaction. This requires a change of mindset and for us to consider things from a different angle. Shipping does not operate in a silo, which may be a surprise to some traditionalists in the industry. It’s part of a global supply chain and everyone agreed that there are big picture system changes that need to take place. All of this requires us to work more collaboratively.

Lucy Gilliam summed it nicely when she said: “Collaboration is the fuel of the future and communication is the grease.” Effective collaboration requires transparency and impactful communications must be grounded in the truth. We all have the power to wield our moral lightsabers and take responsibility for defending and delivering the sector we want to see.

If we want a happy ending, then we need to focus less on the rhetoric and more on reality.