Act Now to Achieve IMO Carbon Targets – ITF

The International Maritime Organization (IMO) target of reducing greenhouse gas emissions by “at least 50% by 2050 compared to 2008” aligns the shipping sector with the Paris Agreement temperature goals. Strong actions are needed. The IMO strategy relies on technological innovation and alternative energy sources for global shipping, and support of governments and shipping customers will be essential to realise this new level of ambition.

With intuitive timing, a tremendous amount of guidance has just been made available by the International Transport Forum, releasing a series of reports over the last month that provide comprehensive analysis of the options and actions needed by a host of players in the global maritime industry. They suggest a path forward based on assessments of advancing technologies and best practices in operational management and government policy being used around the world to tackle the issue.

Decarbonising Maritime Transport – Pathways to zero-carbon shipping by 2035

This report explores the full range measures to effectively reduce shipping emissions, which represent 2.6% of total global emissions, and offers recommendations on policies to incentivise decarbonisation. The business-as-usual scenario projects 23% growth in carbon emissions from international shipping by 2035, yet with maximum deployment of currently known technologies it’s possible to reach almost complete decarbonisation in that time.

Alternative fuels and renewable energy can deliver much of required reductions, combined with technological and operational measures to improve energy efficiency. Clear guidance and interventions from governments will be essential to accelerate commercial viability, technical feasibility and investment in sustainable technologies and fuels.

The associated Case of Sweden report analyses why the Swedish shipping industry are pioneers of low-carbon shipping and how other countries can learn from their success. Their remarkable progress in LNG, electric and methanol-powered vessels can be explained by stakeholder cooperation between shipping companies and large Swedish shippers dedicated to green supply chains, along with financial support and regulation from government.

ship CO2 visual

Visualisation of CO2e emission across global shipping routes in 2015. Source: ITF

Reducing Shipping Greenhouse Gas Emissions – Lessons from Port-Based Incentives

Ports have a crucial role to play in facilitating the reduction of shipping emissions. This report identifies port-based incentives currently in place, examining their features and impacts. Most common is the environmentally-differentiated port fee, applied in 28 of the 100 largest ports, yet impacts on global shipping emissions are only marginal. It argues for wider, harmonised application of green port fees, green berth-allocation policies, green procurement and carbon pricing schemes to help enforce the “polluter pays” principle.

Fuelling Maritime Shipping with Liquefied Natural Gas – The Case of Japan

Japan is positioning itself to become the Asian hub for bunkering LNG-fuelled ships on the main East-West trade lanes. Still a marginal share of the world’s fleet, 118 LNG-fuelled vessels currently operating globally will double by 2020 and CMA CGM’s order of nine LNG-enabled mega-container ships is expected to be followed by competitors. Other Asian ports are developing similar bunkering facilities, with Singapore and Japan collaborating on an Asian bunkering network.

LNG’s growth is driven by regulations to reduce SOx and NOx emissions from maritime transport. Its advantages over conventional fuels can reduce ship carbon emissions by 20% but “methane slip” releases fugitive emissions that can negate its greenhouse gas impact. Further technological development is needed to enhance LNG as a greenhouse-friendly transition fuel in shipping.

ship LNG heatmap

 Heatmap of LNG-fuelled ship positions. Source: DNV GL

Important themes for Australia

Two red spots on the above graphic represent the two dual-fuel LNG/diesel powered vessels now operating in Australia – the Siem Thiima platform support vessel services Woodside oil & gas fields on the North West Shelf, and the SeaRoad Mersey II Ro-Ro carries passengers, vehicles and freight across Bass Strait. Several vessels plying Bass Strait are due for replacement, with operators considering LNG-enabled vessels to be covered for the IMO sulphur rules coming in 2020.

Japan is the world’s biggest importer of LNG, much sourced from Australia. Woodside, Australia’s biggest LNG producer, is leading a ‘green corridor’ initiative to develop LNG as a marine fuel for iron ore carriers operating from north-west Australia to China and north Asia. The project aims to build LNG infrastructure and bunkering facilities in the Pilbara, and Woodside has partnered with key mining and shipping players to design vessels and bunkering facilities for a grand vision with a range of benefits beyond emissions reduction, including energy security, regional development and upskilling workforce capability. Yet Australia’s climate policy focus on renewable energy means there’s little government support available. The irony of Japan fuelling LNG ships coming to the Pilbara with Australia’s own gas is wasteful not just in a ‘food miles’ sense, but also the lack of value-add to our plentiful raw resources.

The ITF reports highlight the role of leading ‘green ship index’ RightShip in actions that shippers, charterers, banks and ports can take to decarbonise shipping. Their GHG Emissions Rating covers 76,000 ships, and RightShip recently announced Australia’s major ship charterer Incitec Pivot as the first customer for its new carbon neutral shipping solution built on its carbon accounting tool that measures the ship-sourced scope 3 emissions of shipping customers. While some shipping lines and freight forwarders offer a carbon offset service for containerised freight movements, the size of the environmental benefit of offsetting 73,000 tonnes of CO2e each year from 200 bulk ship charters is a game-changer for supply chain emissions reduction.

Global Shippers Forum

It’s timely also then that next week Australia hosts the world’s most senior gathering of shippers, trade logistics providers and government representatives at the Global Shippers Forum in Melbourne. There’s keen interest in the Global Reform session tackling the issue of carbon emissions in the international supply chain, touching on the work of the Global Logistics Emissions Council who’ve developed a universal method for calculating logistics emissions from road, rail, air, sea and transhipment centres to help control greenhouse gas emissions across whole logistics supply chains.

As part of the global multi-modal supply chain that will keep growing with international trade, shipping’s carbon reduction target fills another piece of the puzzle in a world now aiming for net zero emissions, and we must act now.

#GLECFramework

@smartfreightctr

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Extra money to buy new trucks

Announcing a new service that unlocks government funding to buy new efficient trucks.

We can now help mid-to-large trucking companies access government incentives to invest in more efficient transport vehicles by reducing finance costs and paying cash from carbon credits.

Unique Opportunity

With no up-front costs, we can qualify fleet renewals for:

–             a 0.7% finance rate discount monthly

–             cash payments from carbon credits annually

Funded by the Clean Energy Finance Corporation, the finance discount lowers lease payments for the life of the lease and comes off your market interest rate.

The more fuel efficient your new vehicles are compared to those they replace, the greater the carbon credit cash bonus becomes, paid from an established Emissions Reduction Fund project annually for up to seven years.

Easy, Low Risk & No Fees

It’s an easy, low risk process with no up-front or ongoing charges that gives truck buyers extra cash on top of the fuel savings and other benefits that new trucks provide.

And it shows customers you are achieving real, measurable, government-backed environmental improvements as an innovator in your industry.

Why leave money on the table?

Don’t miss out! Contact me today to see how much funding is available for your new truck purchases in 2017 and beyond.

David Coleman

davidcoleman@westnet.com.au

0455 777 551

Clean road transport game plan

Enjoyed reading Prime Mover magazine’s recent sustainability report series. Signing the COP21 Paris accord certainly does accelerate the need for a commercial road transport industry game plan to lead Australian business and government policy responses or we’ll be left wondering what happened post-2020. The language has changed: “low carbon” ambitions of last century are obsolete; specific, measurable “zero carbon” goals are in.

With an old truck fleet averaging 14+ years of age, half our technology is last century too. Fuel is such a critical and volatile cost; why the lack of fleet renewal in Australia? Especially when new fuel-efficient trucks promise substantial operating cost savings and liquid capital markets offer the cheapest interest rates in memory. Perhaps it’s the difficulty accessing capital when thin profit margins produce long paybacks on capital intensive equipment?

To help operators buy new trucks, government funds are available from the Clean Energy Finance Corporation and the Emissions Reduction Fund, but there’s been little take-up. If these programs don’t suit the industry, we need to understand what policies will work and advocate accordingly. Without effective government assistance we’ll continue falling further behind the rest of the world. Reducing fuel tax credits for trucks over 13 years old and using the money saved to help operators buy new trucks is a great idea.  

The US SuperTruck program shows the critical role government can play, not only in R&D but also supporting market adoption of new technologies at scale. The USA has many policies that may work here: fuel efficiency standards; standards for renewable and low carbon fuels; vouchers to help buy efficient trucks; co-investment in alternative fuel infrastructure and vehicle technology; and a Smartway partnership between government and industry that tests, benchmarks and informs operators on green transport technologies, so successful there’s now similar programs in Europe, Asia and Brazil. Meanwhile the enormous carbon reductions possible through biodiesel use in Australia have previously been constrained by perverse government policies. While Scania and Volvo show biofuel blends all the way up to B100 are technically viable, fuel tax credits only apply up to a B20 blend limit.

The commercial road transport industry needs targets. Aviation is the first transport sector to set a global goal, aiming for carbon-neutral growth after 2020. Key to this is a target of 1.5% fuel efficiency improvement each year, currently being over-achieved at 2.9% p.a. While emerging technologies featured in Prime Mover’s report may help a clean energy transition in the future, fuel efficiency remains the best action we can take now using current technologies. Key to this will be using the growing daily flood of data coming from each modern truck.

Transport is Australia’s largest energy user, so action in the road freight sector will be critical to achieving the Paris COP21 zero carbon goals. Doubling energy productivity, using clean fuels and offsetting residual emissions is the way forward. Carbon neutral engine oil is a brilliant start; zero carbon transport is the new goal. Making it happen, to use Prime Mover’s June editorial theme, is now the challenge. Creating a game plan with the industry’s green and clean solutions for input to the 2017 Australian climate policy review, rather than taking the policies we’re given, will take collaboration and leadership, and the time to start is now.

What does a COP21 goal of net zero emissions mean for Freight Transport?

Business leaders are calling for a goal of net zero emissions to be set at the UN Climate Change Conference COP21 in Paris this week. With 7% of global emissions coming from international freight transport, and growth in globalisation expected to increase such emissions nearly fourfold by 2050, the response from the logistics industry will be fundamental to meeting that goal. Yet for Freight Transport to achieve zero carbon, a key constraint is having good information all supply chain players can trust.

The Volkswagen saga shows how gaps in emission measurement standards or their application can shatter our faith in claims regarding emissions or fuel performance. Transport operators make a variety of statements about their environmental credentials, but how can freight buyers compare options with confidence?

A new non-profit, the Smart Freight Centre, is leading a collaboration of the world’s biggest shippers and transport companies to create a transparent, universal method of calculating logistics emissions along supply chains so people can make better decisions on how to move freight in the greenest way.

Data Drives Emissions Down

Transporters act in various ways to reduce energy use and emissions intensity across all logistics sectors to save money, reduce risk and meet growing customer demands for green transport services.

Good information is crucial for transporters to understand the real costs and benefits of potential emissions savings opportunities. It can be difficult to isolate gains produced by a single initiative given the amount of variables that affect fuel economy. Uncertainty about the environmental performance of alternative fuels and engine technologies is compounded by the lack of reliable case study information on their effectiveness for each transport mode. The integrity of external information sources relies on what exactly was measured, how and by who, and how the data applies to a specific task, the equipment configurations and local conditions.

In response, a growing number of collaborative groups are assessing technologies and practices that enable low carbon transport and share information on what works and what doesn’t.

Measuring the Whole Supply Chain

At a broader level we must consider a supply chain’s end-to-end profile. Measuring emissions from a train, truck, plane or ship is one thing, but allocating shares of those emissions to each freight item carried gets complicated across all legs of multi-modal freight movements criss-crossing the globe.

Online retail is creating exponential growth in single-item deliveries direct to homes and workplaces from worldwide sources. Growing consumer demand takes priority over the efficiencies of traditional logistics models, where bulk shipments via distribution centres to retail stores provide economies of scale for more energy- and emissions-efficient freight. Light commercial vans are the fastest growing traffic category in many countries, yet vans are second only to aircraft in energy consumed per tonne kilometre and generate over four times more CO2 per tonne-km than the average 44 tonne truck. This restructuring of supply chains affects the environmental footprint differently across geographies and logistics sectors.

Increasingly, freight buyers need to better understand the sources of logistics emissions along their supply chains, where freight can account for 25% or more of a product’s lifecycle emissions.

One Common Standard

The Smart Freight Centre hosts a collaboration of business and associated stakeholders creating a global framework for logistics emissions accounting. In 2014 they established the Global Logistics Emissions Council (GLEC) to develop a universal and transparent way of calculating logistics emissions across global multi-modal supply chains so that shippers and logistics providers can include carbon footprints in business decisions, alongside costs, time and reliability when selecting modes, routes and carriers.

GLEC will harmonise existing methods and address gaps to devise an assurance standard in freight logistics emissions that enables more accurate and reliable benchmarking and realistic emission reduction strategies. Its’ framework builds on:

To better understand how it will operate for both shippers and logistics service providers in real world supply chains, a series of case studies is underway to gauge the practical availability of data and how it can be used to optimise low carbon freight movements. By simplifying a complex business with a common standard everyone can use to compare green logistics options, people can confidently use good information to reduce both environmental impact and cost.

Towards Zero Carbon Transport

Achieving net zero transport emissions requires using less fuel in tonne-kilometre terms (a key energy productivity metric) and using the cleanest fuels that suit particular freight tasks. The unavoidable residual emissions can then be neutralised by purchasing carbon offsets based on precise and trustworthy emissions measurement.

As global freight emissions rise, a harmonised method for emissions accounting becomes increasingly necessary. Supply chain players large and small must have good emissions information to maintain competitiveness and prepare for the complexity of a carbon-constrained world.

Consultation workshops in the USA, Latin America, Europe and Asia are inviting public comment on the GLEC Framework, so download it to learn more. If you think about how this tool can improve your freight decision-making, you can help develop a logistics emissions methodology that assists Freight Transport to realise the net zero emissions goal.