Challenge 4

Green shipping

Context

Shipping is the life blood of the global economy as 90% of the world’s trade is carried by the sea being, by far, the most effective way to transport goods and materials throughout the world. Mostly due to the global economic recovery, seaborne trade continues to expand, generating benefits for people across the world through competitive costs. The world’s population is estimated to reach almost 10 billion people in 2050; developed and emerging economies will continue to increase the demand for the goods and raw materials that shipping transports. In 2017, world maritime trade was estimated at nearly 10.8 billion tons, with dry bulk commodities boosting almost half of the volume increase. World maritime trade has grown with volumes expanding at 4%, the highest growth in the last five years. The prospects for the industry's further growth continue to be strong. Furthermore, world seaborne trade is projected to expand at an annual growth rate of 3.8% between 2019 and 2023.

Figure 1 – World seaborne trade in 2017; Source: UNCTAD

There are more than 50000 merchant ships sailing, transporting every kind of cargo throughout the globe. It is estimated that over 1.2 million people are directly employed by the shipping industry as seafarers and port workers. If one extends this to include logistics and other shipping related businesses, the work force reaches the tens of millions. Shipping is one of the most heavily regulated industries in the globe. Regulated at a global level by the International Maritime Organization (IMO) - a United Nations agency responsible for the safety of life at sea and the protection of the marine environment. The shipping industry is one of the first adopters of worldwide implemented international safety standards. But … By using fossil fuels, vessels generate CO2 emissions that contribute to climate change and acidification. More than 3% of global CO2 emissions are accountable to oceanic ships emitting roughly 1 billion tonnes of CO2 and GHGs per year on average. Along with CO2, ships produce other global warming pollutants such as black carbon (BC), nitrogen oxides (NOx) and nitrous oxide (N2O) which contribute to climate change by trapping heat in the atmosphere or by intervening in the creation of other greenhouse gases. Black Carbon is made up of tiny particles produced through the incomplete combustion of fossil fuels such as coal and oil. Unless serious measures are taken, GHG emissions from ships will increase as the industry continues to grow. IMO has taken responsibility to regulate the world shipping sector, but still today the Energy Efficiency Design Index (EEDI) is the only IMO regulation imposing improvements in ship energy efficiency. EEDI was put into force in 2013 being applicable to large international ships. EEDI requires new constructions to emit less CO2 per unit of “transport work[1]”. Ships built between 2015 and 2019 were required to be 10% more efficient than a baseline of ships built between 1999 and 2009. Subsequently, ships to be built between 2020 and 2024 must be 20% more efficient, and those built in 2025 or later must be 30% more efficient than the baseline. Because EEDI only applies to new vessels, some experts defend that EEDI will not reduce significantly GHGs from the shipping sector in the short term. Even in the long-term, they say, the EEDI, as currently designed, is expected to reduce shipping’s cumulative CO2 emissions by only 3% over the period 2010 to 2050. On the other the fact that the EEDI applies only to new ships, will be particularly important to reduce emissions from the existing fleet. Limiting ship speeds may be a solution to reduce GHG emissions In the short term. It seems that unfortunately, the EEDI alone is not enough to reverse the trend of increasing CO2 and GHG emissions from ships. New marine propulsion technologies, as well as low-carbon or even zero carbon fuels will be needed to decarbonize the sector. At the moment, existing regulations provide little incentive to invest in research and development of new technologies and fuels. Regarding low emission fuels, LNG for instance, offers very interesting advantages. Even though conventional oil-based fuels will remain as the main fuel option for most vessels in the coming years the commercial opportunities of LNG are interesting for many projects. While different technologies can be used to comply with air emission limits, LNG technology is a smart way to meet existing and upcoming requirements for the main types of emissions (SOx, NOx, PM, CO2). LNG can be competitive pricewise with distillate fuels and, unlike other solutions, in many cases does not require the installation of additional process technology.

The Challenge

What set of measures could foster the reduction of the emissions generated by the shipping activity, thus promoting the sustainability of maritime transportation?

Given the trends in emissions for the global shipping fleet and the state of GHG emissions from ships in a time when IMO works to develop a GHG strategy, despite increases in operational efficiency for many ship classes, CO2 emissions and fuel consumption increased almost 3% in the last 3 years. Increasing emissions are being fostered by increasing demand for shipping triggering the consumption of fossil fuels. The biggest ships are travelling faster and thus polluting more. Speeding up generates inefficiency including in large container vessels and oil tankers. As more ships follow this trend efficiency will reduce emissions will keep increasing. Emissions are concentrated in a few ship classes and flag states. Just three ship classes (container ships, bulk carriers and oil tankers) account for 56% of CO2 emissions. Similarly, six flag states (China, Panama, Marshall Islands, Liberia, Malta and Singapore) account for half of CO2 emissions. Black Carbon (BC) is a major contributor to the pollution generated by the shipping industry. On the long run (20 years) BC accounts for 20% of CO2 equivalent emissions from ships. The purpose of this challenge is to put you in contact with high complexity thematic involving a large diversity of interests, under the umbrella of international regulatory policy which is usually not covered by your graduation courses. The challenge that your team faces is not directly related to an engineering problem or an environmental specificity, but rather to the environmental problematic of an entire sector (shipping), with global impact, great complexity, diversity of stakeholders and multiplicity of interests at global level. Regulated internationally, the implementation of measures to mitigate environmental impacts caused by sector activities, result from the negotiation between various stakeholders and the convergence of positions that can be achieved. The challenge that your team should address is to design i) a set of measures to be implemented at international level, envisaging the acceleration of the reduction of the emissions generated by the shipping activity promoting the sustainability of maritime transportation; or ii) an environmental compensation scheme for the pressures and impacts it causes, which would be then applied in marine environment sustainability projects and habitat restauration. Who would pay? Who would receive? How could the compensation system be outlined? Thus, the challenge asks you to identify the main stakeholders of the negotiation processes and the main tendencies of the sector to propose a set of measures aimed at reducing the GHG emissions caused by the maritime transportation industry. Imagine yourselves as a group of high level experts hired by the regulator (IMO or your own Government for instance) to provide advise to the bolded question above.

Objectives

  • Identify the main international stakeholders of the negotiation process related to the reduction of GHG emissions from shipping;
  • Identify the main trends of the shipping industry with direct or indirect impact on GHG emissions;
  • Propose a set of measures to be implemented at international level to accelerate the process of reducing the emissions generated by the shipping activity promoting the sustainability of maritime transportation;
  • Identify the main barriers that may prevent you to successfully implement your proposal.

Expected Results

The team can do some out-of-the-box creative thinking to tackle some of the above questions and has freedom to suggest other ways to achieve the same objective. The result of this exercise is to present a 10 minute-pitch of your proposal focusing on:
  • Main stakeholders
  • Main trends
  • Set of measures
  • Main barriers
  • Call for Action