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ICS Leadership Insights Live: Next steps for shipping’s decarbonisation post-COP26 round-up

27 January 2022
From top left to right: Nick Brown, CEO, Lloyd’s Register, Katrin Harvey, COO, Ban Ki-moon Centre for Global Citizens, Christine Cabau Woehrel, CEO, CMA Ships, CMA CGM, Esben Poulsson, Chairman, ICS, Rolf Thore Roppestad, CEO, Gard AS

Shipping has taken important steps on its decarbonisation journey in recent years but concrete action, certainty over investments, political leadership, and importantly, collaboration, are needed to reach zero carbon emissions by 2050.

Speakers at the recent Leadership Insights Live event joined to discuss shipping’s next steps towards the green transition, convening for the first time since COP26.

Unsurprisingly, question marks still hang over the kinds of fuels and propulsion technologies that will be dominant for the shipping industry over the next few decades.

Both Nick Brown, CEO, Lloyd’s Register, and Christine Cabau Woehrel, CEO, CMA Ships, CMA CGM, both agreed, however, that there will be a “multi fuel” future.

What was clear from all speakers was that arguing over what will be the dominant fuel is unnecessary, it is more important that action is taken now.

Woehrel said that at CMA CGM there has been a “decision to embark on LNG propelled ships in 2017”. It currently has 24 LNG-fuelled ships and will have a total of 44 by 2024.

She stressed that LNG is only the “first stage of the story”, and it will be embarking on work looking at alternative gas, including biomethane, synthetic and e-methane “as we believe these are the next steps for zero emissions”.

Woehrel noted that solutions will also have to factor in new operating issues impacting shipping and its ability to operate at the right speeds at the right time.

“In 2021, [shipping was] badly hit with congestion and this new normal must be in consideration,” she said. “Access to ports is not always as easy and immediate and it is having an impact on how we operate our ships.”

Just transition

Ensuring the equitability of shipping’s green transition must not be forgot in the rush to push forward green technology, Katrin Harvey, COO, Ban Ki-moon Centre for Global Citizens, warned. An important element will be to “take out the fear factor by having very open, involved, honest conversations with everyone, starting now”.

This will involve addressing concerns over job security and impacts to local communities and ensuring all voices and inputs from marginalised groups are listened to and “match them to conversions happening at CEO level and in governments.

“We can take this pathway where the whole world is moving towards decarbonisation, to stop doing the bad things and pollution, and shift to positive change that benefits everyone, and brings value to people and the planet,” she said.

Shipping can utilise UN Sustainable Development Goals, which provides clear metrics and indictors to measure that any transition is just, Harvey explained. Other clear measures can be through tracking investments in training, reskilling, upskilling and education.

Safety is essential

Brown urged listeners that “we shouldn’t take safety for granted” while the shipping industry is focused on working out which decarbonisation pathway to take. “I’m conscious that it wouldn’t take more than one accident for society and industry to lose faith in one particular pathway”.

He added that there is a need to be “very careful” when moving forward with pilot and demonstrator projects.

He expressed hopes for opportunities for testing and mitigating risks in a “controlled manner” from the Clydebank Declaration for green shipping corridors, which should see large scale demonstrator ships put into service.

Regulation risks

Rolf Thore Roppestad, CEO , Gard AS,  said that the legal and regulatory landscape cannot be overlooked in the transition, and that “global solutions” are required. “We need good cooperation across industry, across segments, geography and between industry authorities,” he said.

He explained that while the shipping industry is “quite well aligned” that there are fragmented rules and regulations being implemented by governments around the world, and more “political alignment” is needed.

“It is a more challenging regulator landscape for owners, banks, insurers,” said Roppestad. “They are all becoming more regulated. Scandinavia has a different regulatory framework from Asia, and they have a different one from the US.”

Scalability solutions

Woehrel acknowledged there is a “long and challenging road” to decarbonisation ahead for shipping but that producing alternative fuels at the quantities required for our industry is the most pressing. “Scalability is going to be the biggest problem we face”, she said.

Concerns over the scalability of new propulsion technologies and alternative fuels is thwarting shipowner’s ability to make investment decisions, noted Brown. “Scalability is something that we must have greater certainty on and it comes with commercial readiness. It is the only topic shipowners, shipbuilders, and equipment manufactures want to discuss with me.”

For Brown one clear solution will be certainty around the cost of carbon. “Whether it is a levy or a trade scheme – hopefully a regional rather than a global scheme – that is the biggest benefit we could give to the industry and provide that scalability. Otherwise, it is really difficult to make billion dollar investment decisions.”

Woehrel demonstrated that the scalability challenge can begin to be tackled by creating strategic partnerships with energy firms. “We need to get started somewhere so CMA has joined forces with French energy group ENGIE.”

Power partnerships

“As a user and a buyer of energy” Woehrel said CMA CGM has sought to work with energy producers to “accelerate production and technical efficiency and production scalability of new energies”.

CMA CGMs fleet of LNG ships are “e-methane and biomethane ready” and Woehrel said the company is looking to promote and support biomethane production in Europe. She also noted support for biomethane produced from waste and liquified biomethane.

“It is clear there is a lot we [CMA CGM and Engie] have to do together,” said Woehrel. The partnership is expected to help go from demonstrator projects to “real industry production” and assist in R&D innovation on synthetic and e-methane production.

Brown added this kind of strategic partnership is growing between shipping and energy companies and are badly needed for “clarity on what fuel will be available, at what quantity and cost. And governments have a big role to play there”.

Partnerships will also be essential to tackle an area that Brown said he was “most nervous about”: coordinating land-based investments in infrastructure with investment in ships.

Collaboration and leadership

A clear message from all speakers was that collaboration within shipping and across multiple stakeholders will be the only way to achieve decarbonisation.

Meanwhile, Brown called on CEO’s to play their part and lead by example. “My message is for leadership to get involved, it doesn’t take much for you to offer some expertise from your organisation, we have amazing talent across all stakeholders and more that can dedicate time and expertise in this.”

Roppestad stressed that while everyone has a role to play in the decarbonisation of shipping not everyone can or should focus on innovation or new fuels. “Some of us in maritime do not have a direct role in those areas but can indeed contribute to others. We all must find our role and do what we are best at during the transition,” he said.