Is shipping coming clean?

Greenhouse gas emissions (GHG) from global shipping

Dr Tristan Smith, Director of University College London’s ‘Shipping in Changing Climates’ project, considers how honest the industry is being in meeting its commitments

In 2015, international shipping is the key enabler of globalisation and the standard of living to which we’ve become accustomed. It carries the food and goods we personally consume, the energy commodities to heat our homes, fuel our cars and provide our electricity, the raw materials and manufactured goods that drive our economies. It is hard to imagine a future where these roles don’t continue, which is maybe why so many in the shipping industry find it hard to think of much other than a long-term trend of ‘business as usual’ – albeit superimposed on the usual market cycles of good and bad times.

There are many different ‘things’ that could disrupt the literal and metaphorical behemoth that is international shipping: 3D printing, melting ice in the arctic, long-distance railways, nuclear Armageddon … For some of these it is worth speculating about their timescale and potential impact, and many do. One ‘thing’ that we have now spent a few years thinking about with reference to the shipping industry is climate change. In the Shipping in Changing Climates project which started in 2013, we are looking at three overlapping areas – impacts on transport supply (the ships and their operation), impacts on transport demand (global trade), impacts on supply/demand dynamics (the evolution of the industry, the shipping markets and the regulation of shipping).

The backdrop to our thinking is the climate science that informs us about what futures we can expect if we follow various paths. From a climate perspective, the science can be distilled pretty succinctly: we have a known-known that if the global economy emits more than approximately 1,428 Gigatonnes (Gt), we expose ourselves to dangerous climate change. That is change that will cause massive damage to society globally, and, if continued unchecked, bring about the extinction of the human race. This backdrop explains the initiative of the United Nations Framework – Convention on Climate Change (UNFCCC) to commit to a 2-degree stabilisation by 2100. The initiative has built gradually: through the Kyoto Protocol and the Copenhagen Accord, and hopefully the strongest commitment yet will be within the Paris Climate Agreement to be finalised this December. We already have firm commitments from a number of Annex I and non-Annex I countries, not least UK’s leadership with the Climate Change Act, strong EU leadership and US and China pledges. There is a direction of travel and its clearly towards firmer absolute emission reduction commitments. But at present it is still not strong enough to meet the 2-degree objective. So there is a known-unknown about how the discussions will play out. We can deduce some bounding scenarios to further consider what this will all mean for shipping:

  1. Global efforts to control GHG fail and shipping will operate in a new era of dangerous climate change
  2. Global efforts succeed, and other sectors of the economy decarbonise faster than shipping, enabling shipping to grow its share of emissions
  3. Global efforts succeed, and all sectors decarbonise at a similar speed, sharing the burden approximately equally.

Knowns and unknowns

In our research activity, we consider all three of these scenarios. We build evidence about how they might each influence the future of trade, the future of commodity prices (including pricing of marine fuels), the future regulatory mechanisms and their stringency, and the probable response of the shipping industry to these drivers. There remain many known-unknowns, but by assembling detail and using this detail to produce estimates of the range of foreseeable outcomes, we can minimise the unknowns and maximise the knowns. The work is still ongoing, but indications are that all three are technologically and commercially foreseeable, but result in very different pathways for the industry over the next few decades.

Scenario 1 involves little change to the current system, at least until the effects of dangerous climate change hit, but at that point the health of the international shipping industry will be the least of anyone’s worries. Scenario 2 would certainly require international shipping to define an absolute emission cap, and the level of that cap and the transition it implies could vary considerably. GHG emissions would need to stabilise and then reduce, which would lead the industry to move away from its current dependence on fossil fuels, a process that could take place over several decades. Scenario 3 is perhaps the easiest to quantify and define: we know the total CO2 budget for all sectors, and we know that for the last decade or so, shipping’s GHG represent approximately 2–3 per cent of anthropogenic emissions. If shipping is to remain on average a 2–3 per cent share, the total emissions that can be emitted are 33 Gt and the emissions pathway would need to look something like Figure 2. We also know that there are expectations for growth in world trade and transport demand. If GHG emissions reduce and transport demand grows, then shipping’s GHG intensity (e.g. the g CO2/t. nm) would, across the whole sector, need to reduce by about 85 per cent by 2050.

Besides building up analysis and evidence on this topic, we have also been collecting data and perspectives from stakeholders from across the shipping industry, freight supply chains, governments and NGOs, as well as following the coverage in the shipping and maritime media on the subject of GHG. What is becoming obvious is that there is minimal awareness of Scenario 3, let alone engagement in it. Many organisations actively call for Scenario 1, or at best a variant of Scenario 2 which involves the bare minimum: token reduction commitments. The dialogue in the media and policy fora is often structured like a PR campaign, promoting the efficiency credentials of international shipping in relative terms and highlighting the steps and progress already taken. The recent results of the Third GHG study by the International Maritime Organisation (IMO) were celebrated for precisely the wrong reasons – using recent market-driven reductions in GHG as a sign of progress in the industry, and ignoring the risk of the reversal of this trend, or the dissonance between the same study’s forecast rising emissions from shipping, and the rest of the world’s intention to achieve absolute emission reductions.

A bubble of naïvety

These stances are understandable. The shipping industry has had a tough time recently and has shown a remarkable ability to reduce its carbon intensity, which does deserve congratulation (and analysis) – besides, no one likes a doom-monger or purveyor of criticism. However, they are naïve stances, and imply that shipping is living in a bubble unaware of the wider global momentum building on the topic of GHG (China, the USA, and Shell’s CEO have all made commitments and statements about absolute emission reductions). Worse still, these stances have a significant risk of damaging the very industry they are trying to support.

The reason this is likely to cause damage is that, unlike almost any other regulatory issue, GHG is a zero sum game. Furthermore, the societal and therefore political pressure to implement changes will only increase as the effects of climate change start to bite. Climate change and temperature rise are the consequence of cumulative emissions of CO2 – hence the concept of carbon budgets. It will still take some time for the UNFCCC to formulate a framework, and the IMO is following a three-step process on further technical and operational measures, starting with trying to measure fuel and emissions. In the meantime, every tonne of GHG emitted only makes the eventual required rate of emission reduction steeper, and any impacts/consequences on the industry more severe.

Given the approximately 30-year lifetime of a ship and the difficulty and cost of technology change, a steep reduction in emissions will be extremely painful for all those involved. Rapid emission reduction could lead to widespread premature obsolescence and scrappage, losses for the well-prepared and bankruptcy/ foreclosure for the least prepared. An industry experiencing high rate of change is unlikely to be conducive to growth in world trade, whereas an industry undergoing a gradual well-managed transition has better potential to keep its customers happy and sustain the demand for its services.

Transparency and evidence

To summarise, one of the biggest risks to the future of global trade is a regressive shipping industry that refuses to engage in meaningful GHG emissions discussions and commitments and which consequently undergoes a late, steep and harsh transition away from its dependence on fossil fuels. International shipping needs desperately to have a more honest, open and transparent debate about these issues. It also needs a strong evidence base to inform the strategy that will help it negotiate the transition with the minimum of unintended consequences and the maximum stability, profitability and equity. There are potential starring roles there for both academia and the shipping and wider media, and the sooner we get started the better.

Dr Tristan Smith, who qualified as a naval architect and mechanical engineer, led the Third IMO GHG Emissions Study, and is the lead author of Ships and Marine Technology. The UCL ‘Shipping in Changing Climates’ project is jointly funded by the UK Research Council and industry.