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January 6 2020

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72 The Journal of Commerce | Januar y 6 2020 www.joc.com Government 2020 ANNUAL REVIEW & OUTLOOK and the alcohol and heavy-gas pathway. Wiernicki said within each pathway are many variables related to energy content, the state of storage or con- tainment technology, and the overall maturity of the fuel's technology. As with any fuel, potential for emissions reduction is partially determined by how the fuel is produced and trans- ferred to the ship's tank. "ABS is watching for the unin- tended consequences that could arise, whatever pathway you take to decarbonization, because each will impact upon how vessels are built and operated," he said. A coalition supported by more than 70 public and private organiza- tions, including Maersk, Royal Dutch Shell, and Lloyd's Register, was cre- ated in September to drive commer- cial efforts in decarbonizing interna- tional shipping — another example of an industry beginning to grasp the Herculean effort that lies ahead. At its Sept. 23 unveiling, the Getting to Zero Coalition committed to the development of commercially viable zero-emission cargo ships by 2030. On the same day, 14 countries representing 30 percent of global coastlines and one-fifth of the world's shipping fleet called for decarboniz - ing ocean industries. And just three months prior, a group of investment banks that includes Citi, Societe Gen- erale, and DNB said they would adjust their lending procedures, equating to loans for one-fifth of the global shipping fleet, to incentivize the decarbonization of maritime vessels. Achieving the IMO goals and investing in the research and develop- ment necessary to find the fuel of the future comprise such a monumental task that Maersk and Lloyd's Register recently concluded in a joint study on shipping decarbonization that "the market will not drive the transition to zero carbon, and policy interventions, as well as a fundamental change to the incentive scheme for shipping, are required." Multiple motivators Calls for greater regulation are also being made by others in the container supply chain. John Kornerup Bang, Maersk's chief advisor on climate change, said increasing customer willingness to invest in carbon-neutral products is one of the key drivers for decarbonizing logistics. "However, we don't think the market alone can bridge the competi- tiveness gap between traditional and new carbon-neutral fuels," he told The Journal of Commerce. "Cost needs to come down through innovation, and in all likelihood we need policy interventions to help this enter the market by 2030." That is a view shared by Jens Bjorn Andersen, CEO of DSV Panalpina. When huge change is required within an industry, Andersen told The Journal of Commerce, regulation is often needed. "We are not afraid of regulations. If you really want to make giant leaps, you need regulation — as long as it is uniform across the industry and implemented in a controlled manner," he said. "If someone said you could not drive a diesel truck into the middle of Copenhagen, then we will find solutions. But if there are no such regulatory measures, compa - nies will continue to operate as they always do. So central regulation is good for the industry." While joining emissions reporting groups such as industry leader Clean Cargo is voluntary, emissions targets set by regulators are increasingly pressuring all parties in the container Sailing toward zero-emission container shipping The International Maritime Organization (IMO) has introduced rules aimed at reducing harmful sulfur oxide (SO 2 ), carbon dioxide (CO 2 ), and other greenhouse gas (GHG) emissions from ships. 2018 IMO adopts initial strategy to reduce GHG emissions Sets a series of GHG emissions reduction milestones through 2050. 2020 Low-sulfur fuel mandate Reduces the limit for sulfur content of fuel oil used in ships to 0.5 percent from 3.5 percent, effective Jan. 1, 2020. 2023 Short-term decarbonization deadline Requires finalized short-term measures to reduce CO 2 emissions by 2023. 2030 Mid-term decarbonization deadline Mandates an average 40 percent reduction in CO 2 emissions per transport work by 2030 compared with 2008 levels. 2050 Long-term annual GHG reduction deadline Requires a 50 percent reduction in total annual GHG emissions by 2050 and encourages efforts to phase out GHG emissions completely. Source: IHS Markit ©2019 IHS Markit | 256145 "The market will not drive the transition to zero carbon; policy interventions are required."

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