Cop26: decarbonising shipping sector 'not achievable' without investment boost

International Chamber of Shipping urges governments to back $5bn R&D fund to meet net zero challenge

A cargo ship is offloaded at Port Miami in Florida. Current policy frameworks will leave the industry short of its 2050 net-zero carbon targets, the ICS says. Getty Images

The global shipping industry sounded the alarm over the lack of government investment in developing green technologies at Cop26 on Saturday, describing the absence of adequate research and development as “the greatest blocker” to the sector’s decarbonisation bid.

Big shipping companies, industry leaders and ministers raised the alarm at a major shipping conference in Glasgow citing recent findings from the International Energy Agency that indicate that current policy frameworks will leave the industry short of its 2050 net-zero carbon targets.

Low and zero-carbon fuels will make up less than 3 per cent of shipping’s total energy consumption by 2030 and roughly one third by 2050, according to the IEA unless a unified increase in R&D spending happens fast.

“The industry has got the message that we are moving to net zero by 2050, but governments and other stakeholders really need to understand the enormous magnitude and scale of the challenge,” Simon Bennett, deputy secretary general of the International Chamber of Shipping, told The National on the sidelines of the Shaping the Future of Shipping conference at Strathclyde University in Glasgow.

“The net zero carbon pathway is not achievable without a rapid and unified increase in R&D spending. We know what needs to be done but we need a global solution for a global industry to ensure that developing economies are not left behind.”

In September, the ICS, which represents 80 per cent of the global shipping industry, committed to reducing carbon emissions to net zero by 2050, doubling the existing target set out by the industry regulator the International Maritime Organisation.

Lasse Kristoffersen, vice chairman of the ICS said "the years of business as usual are behind us".

"There is a climate crisis and we need to act quickly. We will take the decisions made here today to leaders and make sure words turn into action," he added.

The ICS also wants global governments to back a $5 billion research and development fund to develop zero-carbon technologies.

The IMO Maritime Research Fund (IMRF) - paid for by shipowners to accelerate investment in these net zero emissions technologies - aims to get ocean-going zero-emission ships in the water by 2030 and help the sector achieve net zero by 2050.

Mr Bennett said a key IMO meeting later this month will not only discuss the political message coming out of Cop26 but also the IMRF proposal, which is needed to accelerate the sector’s technology readiness levels.

“Originally developed and supported by the entire global industry, the proposal is now supported by a number of governments, including major maritime nations such as Japan, Singapore, Greece, Denmark, as well as important developing countries, such as in shipping Liberia, Panama, and Nigeria," Mr Bennett said.

“We're really concerned that if more governments do not approve the IMRF at this critical IMO meeting in two weeks time, that any talk of a 2050 target will start to look like an empty gesture. Governments have to ack their rhetoric with action. It's not just words.”

Simon Bennett, deputy secretary general at the International Chamber of Shipping, said a proposed $5bn R&D fund will act as a catalyst for more investment. Alice Haine / The National

While the UK has not officially endorsed the R&D fund yet, Mr Bennett said the country has now said it supports the development of the proposal.

The IMRF proposes a mandatory level of $2 per tonne of fuel, with this money paid directly to the fund so no money passes through governments.

“It’s not a tax, it’s an R&D contribution and although the industry is committed to providing this money, because of the global structure of the industry, we have to have it on a mandatory framework to ensure that everyone contributes on a fair and equitable basis,” he said.

While Mr Bennett said the proposed $5bn is not enough to fund the transition, it will act as a “spark” for more investment.

“There's increasing signs that there is lots of money out there and there's huge interest in the finance community, to help the shipping industry with the transition, the difficulty is that there still a lack of clarity about what the pathway is going to be,” he said.

While the fuels of the future are likely to be a combination of hydrogen, ammonia, or electrical power from renewable sources, Mr Bennett said “there are still so many unknown technical questions that haven't been resolved yet".

With ammonia an attractive zero-carbon solution, Mr Bennett said the question is whether green ammonia can actually be supplied in sufficient quantities in the places it will be needed in order to allow that transition to happen

“There's also enormous safety implications. Ammonia is incredibly toxic, and hydrogen has to be carried on board ships at extremely low load low temperatures, which creates all kinds of design complications, as well as safety issues. So all of these issues have to be resolved.”

At the Cop26 event, the trade body also called for a carbon levy for the sector in the form of a market-based measure as it looks to expedite the transition to more expensive zero-carbon fuels.

Mr Bennett said the biggest challenge is going to be for developing countries, as about 60 per cent of maritime trade actually serves those nations.

While the ICS’s comprehensive regulatory proposal sets out the architecture of how a carbon price should work, Mr Bennett said the organisation has not suggested what the quantum of the levy should be as "that should be decided at a political level".

The Marshall Islands and the Solomon Islands - two nations with large shipping fleets whose territories are severely threatened by climate change - have already suggested a carbon levy starting at $100 per tonne.

“That is roughly $300 tonne of fuel. That's a reasonable starting point for government-established negotiation,” Mr Bennett said.

At the conference in Glasgow, attendees examined ways to increase investment in R&D, and heard about a number of projects already under way to reduce the emissions from international shipping.

Esben Poulsson, chairman of ICS, who was unable to attend the event after testing positive for Covid-19 on Friday, said in a virtual address that Cop26 is all about results.

"Shipping is a pragmatic industry. Ultimately it is what happens after this event that determines whether it is a success."