Maritime Transport Needs All Hands on Deck to Sail Sustainably
By Zhi Li, CEO of CC Technology
In the wake of the 2015 Paris Climate Accords, the world has a renewed spirit and momentum in its united goal of eliminating greenhouse gas emissions. As commercial industries tackle new sustainability benchmarks to reduce global emissions, sustainable operations are now an obligation rather than a nice bonus for progressive companies. But are all polluting industries facing the same amount of scrutiny?
With humanity’s goal of reaching net-zero CO2 in 2050 still on the horizon, no stone can be left unturned in the fight against climate change. Maritime shipping is one such industry that is due for heightened attention in finding sustainable operational solutions.
For centuries, sailors and merchants took to the seas using wind power to journey across the world and chart new territories. Since then, technological and industrial advancements have opened up global trading routes and made maritime transport the backbone for countries with export-heavy economies. Now, it may be time for sea technology to look to the past in order to truly progress in a world battling climate change.
Bearing this in mind, how can historical sea transport show us new ways to shrink emissions? To understand potential solutions, it’s vital to understand the depth of the industry’s current problems.
Sea transport’s choppy waters
Maritime shipping accounts for 80 percent of global trade, making it a vital artery for almost any commercial industry to function. As such, the shipping industry contributes massively to global emissions, nearly 1 billion tons in 2018 alone, according to the International Maritime Organization (IMO). These numbers have only risen since, with emissions growing an estimated 4.9 percent in 2021, causing the industry to account for 3 percent of total global emissions.
But such huge numbers can be hard to quantify or visualize in real life, so it may be useful to consider other major polluting industries. The global commercial aviation industry, for example, accounted for 2.4 percent of global emissions in the same year. When comparing the shipping industry to the emissions of entire countries, it lands just shy of India and Japan in the top 10 list of greenhouse gas (GHG) emitters.
Of course, it’s not as if maritime shipping can pollute as it pleases. As the global regulator of maritime operations, the IMO implements sustainability plans and rules for fleets across the world. But actually enforcing these regulations is a different story.
For instance, 75 percent of the global bulk carrier fleet and tankers will not meet new IMO measures due to launch in January 2023. But sustainability regulations and their associated costs are a drop in the ocean of issues facing maritime transport. With ballooning shipping costs creating tightened budgets, retrofitting older ships to meet sustainability goals seems unfeasible for many companies. Sustainability cannot turn a blind eye to this industry, so what solution can be as impactful if upgrading older ships is too expensive?
Incentivizing a change in tides
In a sense, looking to the past could provide one of the answers to the woes of making green shipping a reality. Innovative solutions harnessing wind power, such as Michelin’s WISAMO and VLPL’s Oceanwings, embody technology pushing shipping forward by repurposing historical techniques. These types of forward-thinking solutions offer the best opportunity to reform the maritime shipping industry, but they won’t be easy to implement.
Introducing financial incentives like carbon credits to maritime shipping could expedite cooperation between companies and governments to embrace sustainable tech. But this would require broadening compliant carbon markets like the EU’s Emissions Trading System (ETS), which does not include maritime shipping industries within its purview. Opening the door to compliant markets creates a reciprocal way for a huge industry to work with governments in recalibrating and empowering sustainable operations.
But relying on government agencies to make amendments on what industries to include in compliant carbon markets will likely take a while to implement. Amidst discussions on compliant markets, voluntary carbon markets are another avenue for shrinking emissions. The greatest successes here are when carbon credits catalyze ground-level projects aiding in conservation and green development. Offering tailor-made incentives for investments into carbon removal technology can empower green innovation at the scale necessary for the shipping industry.
Maritime transport plays an irreplaceable role in the global economic system, which means that it cannot fall by the wayside in reducing its environmental impact. The innovation is there, and so is the motivation and political will from leaders to match when it comes to sustainable tech. Though it is understandable that such a massive industry cannot make such drastic changes overnight, taking concrete steps is necessary when its impacts are so vast.
About the author:
Zhi started his career in Goldman Sachs in London in 2008. He then worked for Bloomberg and Credit Suisse before joining Preon Capital in 2015 as a Partner. In 2021, he founded CC Technology, where he serves as CEO. Zhi holds a Bachelor degree in French literature from Beijing Language and Culture University and a Master degree in Management from Reims Management School. Zhi is currently pursuing his DBA at SDA Bocconi School of Management.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.