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

Advertisements

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.

 

 

 

Carbon Neutral Transport webinar

The “Carbon Neutral Transport” webinar I ran recently for the Chartered Institute of Logistics & Transport Australia was well received and the discussion afterwards generated some ideas for the future.

For those who missed it, here’s a link to the recording, based on the following brief:

 

What advantages does going Carbon Neutral offer the Transport industry?

To be Carbon Neutral a transport operator must save fuel relentlessly, use clean fuels and offset their residual emissions.

Saving fuel means saving money, and our customers increasingly demand energy-efficient and low carbon transport.

So why isn’t every transport firm going Carbon Neutral?

In this webinar, you will:

–          Learn what Carbon Neutral means in the transport sector;

–          See what’s being done to break down the barriers; and

–          Find out how the Business Case for Carbon Neutral Transport really stacks up!

Carbon Neutral Transport

Australia has its first carbon neutral trucking company! Congratulations to Transforce Bulk Haulage in Dubbo who achieved this feat by saving fuel to reduce their carbon footprint then buying carbon credits to offset the remaining emissions.

So what’s stopping other transport firms from going carbon neutral?

Market Incentives & Barriers

Any emissions reductions need to be profitable to motivate action. According to Carbon War Room, heavy trucking can achieve huge emissions reductions using simple technologies with proven savings that are available today. Yet there are three formidable market barriers to get over:

  • access to capital for high upfront costs;
  • good information operators can trust;
  • principal-agent split incentive problem, where in a fragmented industry often those with incentive to save fuel don’t have the cash or the control. This can occur where prime movers and trailers have different owners, where fleets are leased, where freight companies hire sub-contractors, and where customers contract dedicated trucking services with operators paying for fuel.

Shipping also has cost-effective measures to reduce emissions available now. A DNV report points to 16 technical and 8 operational measures, as well as adopting alternative fuels such as biodiesel and LNG. Similar market barriers apply for Shipping as for Trucking. For both transport modes, shippers appear to be at the heart of environmental improvements, for freight owners are more likely to have the power as well as the appetite to pursue environmental improvements above basic regulatory compliance.

Cleaner fuels

There is no single solution to finding a cheap clean diesel alternative. Emissions regulations and oil price volatility will encourage the switch from diesel to a mix of cleaner fuels that need increasingly costly and complex equipment.

For the maritime industry the viability of LNG and biofuels has a longer time horizon than for Trucking, which has its challenges to overcome. As it is, Shipping will struggle with the low sulphur fuel mandate in 2015 due to insufficient refining capacity to make the cleaner grade. Biofuel refining capacity is far below what the shipping industry would need to make the switch.

Information Sharing

Sharing better information on fuel- and carbon-efficiency opportunities will help break down barriers, especially when this improves transparency at an organisational or even a vehicle level. Here are some current initiatives:

  • The Green Freight Europe program addresses the information barrier in Trucking through collaborative learning, reporting and comparative benchmarking
  • Carbon War Room has a shipping efficiency website which rates 60,000 existing ships on their specific fuel efficiency performance, enabling benchmarking against like vessels.
  • Three major shippers are choosing only to charter the most fuel efficient ships available in a demonstration to ship owners that the market will reward investments in sustainable fleets. Such environmental leadership is supported by a vessel fuel efficiency ratings system that uses reliable data from a respected technical specialist.

Measuring emissions to improve the bottom line, reduce risk and discover competitive advantage is a developing science. The ‘art’ of good information sharing may lie in real-time data by company – or by vessel, vehicle or aircraft – so that full supply chain awareness of Carbon Efficiency and Carbon Productivity become the mantra throughout all transport modes.

Accessing Funds to Invest

Trusting good information is important but the key to widespread adoption of fuel efficient technologies and clean fuels is funding the up-front costs.

How can we better link those with cash and the desire to save environmental resources, with those who want to save money but have little capital to invest in improvements? Carbon pricing on Transport helps the business case to finance fuel efficiency improvements, and incorporating carbon offsets helps even more, as Transforce Bulk Haulage has shown.

One maritime proposal wants a new bunker levy to contribute to an international fund so that ship emissions above set reduction targets can be offset by purchasing carbon credits. But who wants another fuel levy that may only be passed along the supply chain anyway?

New developments in California may point the way for Road Transport. Clean Mobility Centres embrace alternative fuels and enable drivers to offset the carbon emissions from their fuel purchases at the pump. Offset dollars go to the Carbon Fund Foundation to directly fund clean air projects.

What if we could offset Transport’s greenhouse gas emissions at the point of sale for all goods and services? Just like booking an airline seat where you choose to pay a little extra to offset your share of the flight’s emissions, imagine if you could offset the transport emissions of any delivery or purchase?

Imagine creating a clear transactional link between the consumer or organisation at the end of a supply chain and the transport operator needing funds to invest in fuel saving measures with economic as well as environmental benefits. It might work like this:

  • consumer chooses to offset the transport component of the emission profile of any goods purchase by paying a bit extra
  • that offset spend goes to a Transport-specific carbon finance fund
  • the fund is accessed by transport operators to finance precisely measured emission reduction projects with real financial paybacks
  • a strong transparent measurement methodology where integrity of data is key underpins emission reduction valuations for the consumer (investor) and transport operator
  • web, mobile and social media technologies enable ‘one click carbon offsetting’ as well as ‘real-time climate friendliness’ tracking of personal emissions savings to inform consumers

Yes – It’s Possible

Transport operators need better access to capital so they can make fuel- and carbon-saving investments, and operators, their customers and ultimately consumers must be able to have faith in the integrity of the emissions savings. Challenging, yes, but the unleashing of such incredible capital liquidity through ‘one click carbon offsetting at point of sale’ may generate huge Transport footprint reductions.

Look at what Transforce has achieved with its fleet of 11 trucks in regional NSW through fuel savings measures that save them money, supplemented with carbon offsets to neutralise their footprint. Yet it’s a question of immense scale to ask:

How can this approach be expanded throughout the mosaic of Australian supply chains?