In our third Maritime Air Pollution Week webinar, panellists discussed methods to motivate industry investment in maritime emissions reduction, and industry attendees said they need action and clear direction from regulators before they spend
Part of our ongoing series of webinars, ’MAP: Opportunities and Incentivising Change’, delved into the subject of how to create change in a competitive market when the change required works against short-term profitability.
Two views emerged from the panellists: one, that all stakeholders must play a role, pay their part and that certainty of action can be found in cohesion and two, that IMO’s participatory, consensus-building model which aims to enact regulations backed by a majority is acting as a brake on industry action.
In short, the panellists’ discussion elicited two old rubs: that industry knows better than the regulators and that the market will not change unless forced. The combination means creative measures are needed, they agreed.
EGCSA director Don Gregory laid out one option, outlining an argument for emissions rationing and a basic framework for a cap and trade system.
"The principle is a rationing scheme," he said. "And it’s one where you have to pay for your part of the rationing. And the trick behind it is, in my belief, how you get that rationing to work in a way which creates all the right behaviours for all the parties."
So, how can a company holding a fleet of vessels operating on emissions-producing fossil fuels adapt now to reduce emissions and avoid having externally imposed regulations foisted upon them? And how can willing early movers incentivise those for whom historically low oil prices are a barrier to change?
"At the end of the day, there’s a price for everything and that’s what drives behaviours," Mr Gregory said. "At the moment, fuel is very cheap. Therefore, the attention to saving fuel... is just not there... There is no incentive to worry about that. So, we need to put a price on that."
Discussing who pays the price, Mr Gregory mentioned penalties for ports with backlogs, the need to update chronically outdated charterparty agreement templates and an emissions trading cap on total fossil fuel-derived CO2 combined with a roadmap showing how the cap would be reduced year-on-year.
"You would then have to allocate those CO2 emissions allowable to the shipping industry, and they would have to buy them," he said. "And that would then affect behaviours."
Behaviours might be slowing down to emit less CO2, Mr Gregory said or paying for privilege to emit when sailing faster was necessary and earnings merited the decision.
Marshall Islands Registry senior vice president of maritime administration and regulatory affairs Nicholas Makar agreed on the point that cost is the bottom-line driver.
"Getting back to the point about having regulatory certainty," he said, "obviously, to make the changes to adjust and adapt to the requirements, there are going to be adjustments and costs involved and these decisions need to be made at quite an early stage."
"It’s remembering and acknowledging the realities and the practicalities of the sector as a whole and how that all comes into play when discussing any type of measure with regard to whether it’s environmental performance, safety... it’s an overall theme with regard to a regulatory landscape in general," Mr Makar said.
Mr Makar said that, while shipping had made great strides to improve environmental performance "more must be done" and that "all stakeholders must be involved and a cohesive approach is absolutely necessary to provide certainty and change behaviours".
As results from a poll of webinar attendees indicated, the theme of progress within IMO toward regulatory certainty on emissions is a bugbear for much of the industry.
Asked their opinion of regulatory developments aimed at controlling maritime air pollution, more than 63% said IMO is moving too slowly for the shipping sector to meet future air emissions reduction targets. Just under one-third said the current rate of regulatory development is manageable and around 5% said regulations are being imposed too quickly.
Similarly, 71% of respondents said lack of regulatory certainty and clarity of future requirements is the most significant barrier to decarbonising the shipping sector, with only 25% citing cost of investment in new technologies as a barrier. Full results from the poll can be found by scrolling to the end of the article.
The combination of poll results indicated that most are willing to invest in emissions reduction measures so long as they are certain the investments will be in line with regulations.
One panellist backing quick industry action was Azurtane project manager Mark West who said that step-changes in CO2 emissions are "absolutely possible" with overnight results achievable but they would require the industry to operate differently, "and that’s not just the ship operators," he said.
Representing a monitoring system supplier, he said "monitoring technologies, the communications are there to facilitate that change and they’re readily available, but that’s going to require a fundamental change in the way the industry operates. As Nick said, that involves all stakeholders and that also means the shipping industry’s customers, the charterers."
Overall, Mr West called for the industry to be agents for change with a near-term focus on "marginal gains" such as slow steaming.
"My message would be don’t wait for regulation. The shipping industry should take the lead and drive this the way it wants it to go, to be financially and environmentally beneficial for everybody."
In broad agreement, exhaust gas cleaning system supplier Daphne Technology head of sales and marketing Neil Anderson called for more joined up thinking and processes from regulators.
"It appears not to be very joined up at this moment in time, in terms of the process," he said. "And I think that could become a possibility for the future."
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Panellists from left to right:
Nicholas Makar, Senior Vice President, Maritime Administration/Regulatory Affairs, IRI/ The Marshall Islands Registry
Mark West, Project Manager, Azurtane
Neil Anderson, Head of Sales & Marketing, Daphne Technology
Don Gregory, Director, EGCSA
Don’t know: 15%
Achieving absolute reductions in CO2 emissions requires an annual cap on fossil derived carbon emissions reduced annually over 20 years. Do you agree or disagree?
How should the allowances provided in market-based emissions trading schemes be allocated?
Secret bids from ship operators for allowances: 12%
Each country has an allowance based on its population to give to ships: 12%
IMO allocates allowances on the previous year’s EEOI of each ship: 62%
The International Ship Owners Association is given the allowance to share among members: 0%
Other yet to be defined: 14%
Which statement best captures the current opinion of regulatory developments aimed at controlling maritime air pollution?
Regulations are being imposed too quickly, burdening the shipping sector’s ability to realistically adapt: 5%
The IMO is moving too slowly for the shipping sector to meet future air emissions reduction targets: 63%
The current pace of regulatory development is adequate/manageable: 32%
Which approach has the greatest potential to deliver near-term reductions of GHG emissions?
Energy efficiency indexing for existing ships (EEXI): 17%
Enhanced SEEMP/mandatory audit: 18%
Carbon Intensity Indicators (CII)/rating mechanism: 46%
Mandatory speed reduction/optimisation: 4%
There are no measures that can realistically deliver near term GHG reductions: 0%
What, in your opinion, represents the most significant barrier to decarbonise the shipping sector?
High costs for investment in new technologies: 25%
Lack of regulatory certainty/clarity in future requirement: 71%
Adverse/disproportionate impacts on countries: 4%
Safety concerns with unproven technologies/alternative fuels: 0%