The proposals relate to new efficiency demands for existing vessels built prior to the coming into force of the EEDI which previously were exempt from any CO2 reducing requirement. At a time when it has been difficult to operate many vessels profitably due to market condition and the additional costs incurred meeting requirements for ballast water treatment and adaptation to the 2020 sulphur cap, any further regulatory burdens could cause a crisis for the owners concerned.
It could be argued that even adopting new requirements for existing vessels is a betrayal by governments as shipping has so far been excluded from any global control frameworks such as Kyoto and the Paris Agreement. Fortunately for the owners concerned, there is a lead in time for any new requirements that may be adopted and there is also the strong possibility that as governments try to revive economies ravaged by COVID-19, climate related measures may be put on the back burner.
Until now, shipping’s contribution to global CO2 levels has steadfastly refused to increase as predicted. Looking back, it was once estimated that the level was around 3% but in recent years it has dropped a few points to between 2.5 and 2.7%. Even so the predictions have always been that it would increase rapidly due to world trade growth and reduction in emissions from land.
Read about the environmental regulations here.
In fact there has been no decrease in land-based emissions as the CO2 level has climbed from around 370ppm in mid-2000 at the time of the first IMO GHG study to around 410 when the 4th GHG was released this year. Since shipping’s share has gradually fallen it is clear that land-based emissions must have grown faster.
Today a new study was released by Swedish big-data firm Marine Benchmark apparently showing that CO2 emissions will continue to rise. The report says this is because most of the efficiency gains possible by the shipping industry to drive down its carbon footprint over the past decade have already been made; the proportion of eco-ship newbuildings entering the global fleet are projected to drop to historic lows; and the use of LNG as a transitory fuel remains relatively small.
According to Alastair Stevenson, Head of Digital Analysis at Marine Benchmark, the current lack of investment in modern tonnage and a potential economic rebound implies lower ship scrapping activity over the next couple of years.
The report also finds that although the shipping industry has reduced its carbon intensity by more than 30% since 2008, overall CO2 emissions from the sector have risen by an average annual rate of 2.1% to reach 800mt in 2019. The current pandemic has weakened this growth to 1.7% as emissions in the first nine months of 2020 have fallen by approximately 2% from 2019 levels. This is despite slower steaming speeds, the increased economies of scale of larger vessels, eco-vessel designs and the use of LNG as a fuel.
Another interesting finding was that while overall emissions grew for tankers, bulkers and container at 3%pa, 2%pa and 0%pa, respectively. Over the same period, capacity increased 4% pa in each of these sectors.
The fall in the growth rate for emissions from shipping this year mentioned in the report does need to be put even more in context. Cruise and ferry activity has decreased dramatically even if other trades have been less affected by the pandemic.
Emissions from air traffic must have fallen dramatically as only a fraction of normal activity is taking place. In addition, lockdowns, furlough schemes and a switch to working at home instead of in offices has reduced both emissions from road and rail transport as well as from energy usage.
On that basis it is very likely that even with a reduction in shipping activity, the final figures for emissions by shipping as a percentage of global emissions may very well show a considerable increase and reversal of the trend. Whether it will go above 3% remains to be seen but the industry must make sure that this is not used to portray shipping is going backwards in terms of efficiency and reduction measures as nothing could be further from the truth.
Going forward, there could be some major changes in trade patterns. At the beginning of the pandemic there were strong calls for a repatriation of manufacturing to the US and Europe as it became evident that there was too great a reliance on Asian output.
Those calls may have diminished in volume as more effort has been put into adjusting to a new normal but they are likely still there and could be translated into action as governments seek to recover economically.
It is too early to know what – if any – effect that will have on shipping but it is likely that the position will become clearer at around the same time that alternate fuels such as ammonia begin to reach a point where they become viable. Such a combination of events could potentially mean that in five to ten years’ time, shipping will be a smaller sector but one with a far less significant contribution to global CO2 levels.