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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Transport Emissions Policy: Kicking the Big, Growing Can down the Road

Transport has Australia’s biggest emission reduction task – and little government support.

The 2017 Review of Climate Change Policies released over Christmas presents a re-hash of current policies and policy reviews, deferring new progress to after the 2019 federal election. Transport emissions will continue growing at record levels in the meantime, begging the question:

How long can we keep kicking the transport emissions Can down the road?

Australia’s Fast-Growing Transport Emissions

trend target 2

Transport is the main culprit in Australia’s rising greenhouse gas emissions story, it’s emissions now at record highs driven by ever-growing demand for freight and passenger movement. The sector contributes 18% of Australia’s emissions and has the largest abatement task ahead to help meet Australia’s reduction targets – one third of Australia’s total task to 2030. With Australia’s Paris commitment effectively a ‘floor’, our reduction targets will increase in ambition. To meet science-based targets that will slow down climate change below 2 degrees warming, Australia’s abatement task should be doubled.

Either way, there’s much work ahead for the Transport sector.

This without considering emissions from the long shipping and air routes we depend so heavily on for trade. Shipping remains the only industry without global legislation to limit or offset greenhouse gas emissions.

can small      Global policy challenge

“Of all the myriad ways that energy is produced and used,

transportation has the greatest promise to change our lives for the better,

and yet it is languishing under business as usual.” – Rocky Mountain Institute

Neglecting Transport in climate policy is a global problem starting to get some attention. The Bonn COP23 climate negotiations in November introduced several transport initiatives to achieve the Paris 2050 goal of a net zero emission world economy, noting “without rapid and ambitious mitigation action, transport emissions could more than double by 2050”.

Far from its climate policy leadership a decade ago, Australia is stuck with growing transport emissions, relying on voluntary action with no strategic goals or policy to reverse the trend.

Change will come with China’s emissions trading scheme, where scope 3 emissions from transporting bulk minerals to market may be counted in Chinese carbon footprints, applying a carbon price that exposes our policy vulnerability and drastically reduce competitiveness.

can medium      Weak current policy

black spot

Transport is trapped in a carbon policy Black Spot nation-wide, often specifically excluded from energy policies at federal and state levels, while energy and emissions are a side show in transport policies. Vague notions of improving productivity and supporting low emission technologies instead of clear emission reduction targets and integrated supporting actions.

How much decarbonising of transport is evident in the policies identified by the 2017 climate policy review?

POLICY REVIEW TABLEThe industrial sector needs huge amounts of carbon offsets for Australia to meet its 26% emission reduction target by 2030, but with large volumes of low-cost offsets available from the land sector, Reputex expects no Transport abatement in its ACCU supply curve outlook.

Business-as-usual won’t accelerate take-up of new technologies, practices, or – critically – management focus; a bold strategic vision is needed.

can big jpg      2018 opportunity & risk

Several current policy reviews can together help address the task effectively at least cost:

POLICY REVIEW TABLEThey offer hope that 2018 could instead be a year for strong policy action, integrating suites of co-ordinated measures at all levels of government to guide and provide certainty for business investment in low carbon transport.

With the fastest growing emissions of any sector, Transport has the biggest decarbonisation task of them all. When the Can gets so big we can’t kick it any further, we may look back to 2018 and ask why we didn’t address it sooner, when action was less difficult and expensive than when we’re further down the road.

 

 

 

“Run on Less” proves more is possible, now

The “Run on Less” truck fuel efficiency experiment achieved outstanding results over 10 miles per gallon, crediting its’ success to conscientious drivers taking advantage of the best fuel-saving technologies available today.

Trucks from 6 fleets and an owner-operator traversed a range of cross-country USA routes, duty cycles and truck profiles over 17 days in the experiment backed by the US EPA Smartway program.

Despite enduring two major hurricanes and their operational consequences, the vehicles carrying real customer loads smashed the US national average of 6.4 mpg to show transport operators around the world what’s possible in fuel-efficient trucking.

Interestingly for Australian operators, aerodynamic technologies played a big role in lowering fuel consumption, especially trailer tails which aren’t legal in this country. Solar technology is also becoming viable, with 3 trailers using solar power for hotel loads, charging batteries or assisting auxiliary systems.

A collection of learnings about fuel-saving technologies and practices are available at the Run On Less website, where a webinar on the experiment will soon be available. Find detailed Confidence Reports on particular technologies with indicative paybacks at www.truckingefficiency.org, where operators can assess the pro’s and con’s of a range of fuel-saving techniques to suit their business needs.

Fuel is a linehaul truck’s biggest variable cost, so what would a 50% improvement do for your competitive position and bottom line?

How to lift energy productivity in Freight Transport

A Roadmap to double energy productivity in Freight Transport by 2030” is now released for comment, and yours will be most welcome.

Urgent action is needed to generate more economic value from the energy used to move freight in Australia, as congested cities increasingly constrain productivity across the economy. Decisions made today can lock-in energy-intensive freight transport activities for decades.

Published by the Australian Alliance for Energy Productivity using extensive consultation with leading transport businesses, industry associations and government stakeholders, the roadmap aims to agree actions and priorities for both industry and government under the National Energy Productivity Plan (NEPP).

Transport is now Australia’s largest energy user, and with the freight task to grow 25% over the next decade, it will have ever-greater influence on congestion, climate change, air pollution and economic productivity across all sectors. The transport sector has some of the most cost-effective opportunities for energy and emissions savings, yet as the NEPP 2016 annual report notes, raising energy productivity in freight and commercial transport relies largely on voluntary action, and little progress is being made.

The Roadmap considers trends that will shape future energy use in the sector, including increasing urbanisation, a shift to renewable energy, vehicle electrification, connectivity and intelligent transport systems, automation and business model transformation. It gauges the extent of improvements possible via known technologies; it highlights the uncertainty expected from various levels of disruption that is coming; and it identifies measures to help the transition to a much more energy-productive freight sector.

Key suggestions will be incorporated into its final version, so please check it out and contribute your ideas.

 

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

Are you ready for Intelligent Transport Systems?

Melbourne’s ITS World Congress 2016 was a mind-blowing experience for someone getting up-to-speed with the latest in a fast-changing field.

With 12,000 delegates from 73 countries, this annual event tracks the rapid progression in Intelligent Transport Systems (ITS), where leading players show how new transport technologies are disrupting business models across the globe.

No longer science fiction or 5-10 years away, ITS is already here, and not just in big cities like London, Singapore and San Francisco. Smaller places like Milwaukee, Ohio and Estonia are showing that Intelligent Transport Systems can be applied anywhere for those willing to collaborate and share value in new ways.

Visions of Transport’s Future:

ITS offers a vision of seamless transport of people and goods by connecting all elements of multimodal transport – passengers, freight, vehicles, information and communications technologies and infrastructures – in a digitally integrated system.

The National Transport Commission believes five disruptive technologies will change transport systems over the next 25 years:

  • Automation
  • Connectivity
  • Big Data analytics
  • The sharing economy
  • Zero emission vehicles

They see fleets of driverless vehicles providing on-demand shared passenger and freight transport services with a dramatic reduction in private vehicle ownership and the number of vehicles on our roads. Government reliance on fossil-fuel-based revenues to fund transport infrastructure is in jeopardy from relentless fuel-efficiency gains even before electrified vehicles (EVs) emerge, inevitably needing ‘user pays’ road pricing based on when, where and how people use roads.

Then there’s Gartner’s three key emerging digital technology trends for the next 5-10 years:

  • Transparently immersive experiences, such as brain-computer interfaces, augmented and virtual reality;
  • Perceptual smart machines, where radical computational power enables machine learning, artificial intelligence, autonomous vehicles/drones and smart robots;
  • The platform revolution, allowing organisations to connect with new business eco-systems that exploit internal and external algorithms to generate value, including quantum computing, Blockchain and Internet of Things (IoT) platforms.

Add to this picture a series of global Megatrends: urbanisation; online retail with free, fast shipping globally; decarbonisation and green finance; mobile connectedness; and social media, to name a few, and you get an explosion of new business models enabled by technology and collaboration that change the very nature of how people and freight move today.

What will this mean for Freight?

How will freight movement be transformed, and how will transport operators need to change their traditional thinking? Some opportunities include:

Smart GIS:           Geographic Information System (GIS) mapping provides content and context about everything, where everything that moves or changes is measured and reported real-time to networks in geospatial frameworks. Advanced space/time analytics enable Big Data visualisation for supply chain design using simulations, enabling new types of collaboration across networks of individuals and organisations using shared-information services. Daimler, BMW and Audi now jointly own the HERE map technology business whose map data is used by four out of every five cars in world today.  Daimler has made it an open platform to encourage innovation to optimise use of infrastructure, with interesting possibilities for its truck brands.

Automated & connected vehicles:            Supervised autonomous driver assistance systems; truck platooning; restricted-access route choice systems using infrastructure sensors to manage and monitor compliance; Truck drivers become Operators that are advised what to do, where to go and how fast to drive by voice-guided navigation and live sight augmented reality, which may help attract drivers to the industry. That’s if the vehicle isn’t driverless, as many road, rail, water, air, port, terminal and warehouse vehicles and equipment will be, always in the most fuel-efficient driving mode. Uber Freight’s self-driving truck acquisition, Otto, recently partnered with Volvo to complete its first shipment of Budweiser beer.

Freight matching:             Uber has released its freight platform that matches trucks with the right load wherever they are, aiming ultimately for a self-driving freight system. Both uShip and Australia’s yojee run online freight marketplaces, while Convoy has contracted 10,000+ regular scheduled shipments per year for Unilever in addition to on-demand deliveries.

Urban freight:    Better use of infrastructure capacity will take serious private-public collaboration. Technology helps negate barriers: EVs are quiet and safe to help extend off-peak deliveries; vehicle routing systems provide real-time congestion and cargo updates to combine with loading dock/zone scheduling to optimise flows; consolidating loads via matchmaker systems maximises equipment utilisation for fewer empty or under-utilised trips; and what about last-mile deliveries with e-trikes or robots?

Container optimisation platforms:            Melbourne start-up Opturion routes containers between wharf, container yards and transport yards using multi-source data sets to maximise efficiency within vehicle, cargo, site and route constraints.

Clean energy:  Rapid advancements in light and heavy electric truck technology combined with battery energy storage and renewable power present a ‘chicken & egg’ dilemma for developing charging infrastructure networks. Nikola isn’t waiting for public investment in refuelling networks for its zero-emissions heavy duty hydrogen electric truck, planning instead to build a network of hydrogen refuelling stations fed by its own solar farms that produce hydrogen from water using electrolysis.

Insurance:           Revolutionised to reduce costs, both through significantly safer vehicle operation and Telematics providing location, time and driver behaviour data to enable precise estimation of underwriting risk for lower insurance costs;

Then there’s some that don’t fit simple categories: Hyperloop One/DP World high-speed electric container transit system (possibly underwater); Blockchain crypto-technology to track financial payments, cross-border trade and freight flows; and the physical internet intended to replace current logistics models entirely with an open system routing freight using the principles of the Digital Internet.

Together, these technology-enabled business model advances offer greater asset utilisation, cheaper freight movement and happier, better-served customers.

Technologies need Collaboration

The key lesson for me is these technologies rely on collaboration to design, develop and apply into the community. Sharing knowledge and proprietary data via open access platforms is fundamental to a term used widely at the ITS World Congress – Collaborative-ITS.

Freight transport is a fragmented, diverse sector, with four modes of road, rail, sea and air transport connecting networks of transport yards, sea ports, airports, intermodal terminals, warehouses and customer distribution systems. Austroads found generating interest from industry for its urban freight improvement project very challenging, because individual freight operators believe there’s little they can do to make a difference, while for their customers freight is only a small business cost.

Yet there’s plenty of examples around the world that may inspire action here.

  • Singapore is leading the way with Big Data networks. To optimise every mile of road on their small heavily populated island, the Land Transport Authority has smart sensors installed everywhere to collect transactional real-time movement information which is shared at a rate of 400 million downloads per month. They aim to enable mobility on demand services via driverless vehicles, sharing and electrification services while doubling its rail network to reduce reliance on privately-owned vehicles. What impact on collaborative freight management will this open source information sharing platform have?
  • With no room to expand, Hamburg Port optimises its infrastructure by connecting IoT sensors to collect and share data with all port stakeholders via mobile devices. Real-time delay updates prevent more widespread disruption within and outside the port. Smart sensors communicate truck parking availability; connect multimodal interfaces between ship, road, rail and movable bridges; and connect truck drivers to traffic lights to prioritise cargo movements.
  • The US state of Iowa’s Department of Transport conducted a supply chain design model for all products moving in the State at a zip code level using bill of lading data in a massive public and private sector data gathering and analysis exercise. Finding a clear need to better consolidate freight, with a private partner it’s developing the Cedar Rapids Logistics Park with intermodal cross-dock rail/river/highway access which will return a benefit of US$26.53 for every dollar invested.

Disruptors are coming from outside the transport industry, blindsiding traditional players. Partnerships with and between outsiders such as Google, UBER and Tesla abound, moving smart/shared concepts forward using technology. Amazon is building its own logistics business, buying branded truck trailers, leasing freight aircraft and building warehouses (opening 23 globally in Q3 2016 alone) to “control its own destiny” as well as serve other retailers and consumers. Even within the traditional players, disruption is underway. Deutsche Post DHL now makes its own electric vehicles enabled by open automotive standards, bypassing auto-makers to deal directly with their suppliers to build new tailor-made delivery EVs that they may even sell to other logistics providers.

Freight’s intelligent future

Future freight transport is automated, connected, shared, safe and clean. It’s all about data. Epic advances in volume and speed to generate, process and store data will fundamentally change goods movement.

Data overload and digital fatigue already hold back many from embracing new analytical capabilities that can create value for customers. Yet it’s riskier to do nothing or use Digital simply to protect existing business models.

We can continue to work around inefficiencies we see in the freight transport system every day, or join with progressive people to embrace an ITS future. To solve systemic challenges, we can do more together than we can alone.

 

#cleantransport

Emissions Reduction Fund – A Transport Opportunity worth Taking?

I stand corrected. Last year I described the Direct Action replacement of the previous government’s carbon pricing mechanism as offering transport companies nothing, yet in the first Emission Reduction Fund (ERF) auction in April, transport group AHG was awarded a $2 million contract to reduce its emissions.

For the $1.89 billion (75%) of ERF funding remaining, Reputex predicts almost $100 million could go to transport projects.

Can you benefit from the ERF or will your competitors?

Opportunity for Transporters:

The Emission Reduction Fund uses approved ‘methodologies’ for calculating emission reductions that get compensated by contracted ERF cash payments over an agreed term. Two methods apply for the Transport sector – an Aviation method and a Land and Sea Transport method, which provides for crediting emissions reductions from road, rail and sea transport, and mobile equipment such as mining and agricultural vehicles.

The Land and Sea Transport method allows for one or more of the following activities in an emissions reduction project: replace or modify existing vehicles for better fuel efficiency; use cleaner fuels; swap freight to lower-emitting transport modes; and changing operational practices to reduce the intensity of vehicle emissions.

The ERF also allows for aggregation of projects under one umbrella, so that multiple sources of carbon abatement can be brought together under one contract to introduce economies of scale, reduce transaction costs and help manage performance risk. Aggregating may be particularly useful in the Transport sector to help thousands of small and medium size operators be part of the ERF action.

The next auction date is not yet set but you can be sure that AHG-inspired Transport bids are likely to come from industry giants such as Toll, Linfox, Asciano and Qantas. In July so far the number of new project registrations across all sectors has surged with more and more companies getting ready to bid.

Challenges:

There are however some challenging aspects of the ERF program to be met. Projects must deliver new abatement that has not begun to be implemented. So if you’ve just signed that purchase order for new vehicles, it’s too late to access ERF funds. If you are considering buying some new fleet your timing could be right. You need to show how ERF funds help get that decision over the line.

For example, the smallest allowable bid size is removing 2,000 tonnes of carbon per annum, which in transport fuel efficiency terms means saving 740,000 litres of diesel. When you consider this week’s national average retail diesel price of $1.35 cents per litre, the efficiency gain will be worth $1 million in reduced fuel costs. Using the average carbon price paid in the first auction of $13.95 per tonne, a successful ERF bid would provide an additional $27,900 to assist the project.

Measurement of vehicle fuel use is key to supporting any bid. Three years of good data on your existing vehicles’ fuel use and service history is needed to provide a baseline used to assess future emission reductions and contract payments.

Competition from other sectors may provide the greatest challenge for Transport companies interested in the ERF. More methodologies are being developed all the time to expand the scope beyond existing carbon farming projects that made up 98% of the successful first auction bids, as the government aims to increase competition from high emitting industrial sectors that may supply lower cost abatement at reduced prices per tonne. This goes back to my premise last year: most ‘low hanging fruit’ emission reduction projects in Transport are gone and remaining opportunities have long financial paybacks. The sector’s early action on emissions reduction over the past two decades and consequent current high marginal cost of abatement puts it at a competitive disadvantage against large players in high emitting sectors.

What to do now?

If you want to secure funding in the next auction:

  • Consider any capital expenditure or continuous improvement projects that reduce emissions which may fit the Transport method criteria
  • Talk to a specialist carbon advisor, especially an auditor and potentially an aggregator
  • Decide strategy for your structuring your projects and how to bid at auction
  • Apply to register your project

Applications take up to 90 days to be approved by the regulator, and only approved applications can bid at auction. There’s likely to be one more auction in 2015, with as little as 6 weeks’ notice from announcement.

So if you want some government funds to improve your carbon footprint, which can bring cost savings and green marketing opportunities as well, the time to act is now.