Stagnation in R&D investment creating unacceptable risk for industry zero emissions future
The International Chamber of Shipping (ICS) has warned that without decisive government signals declining levels of Maritime research and development could jeopardise industry’s ability to decarbonise.
According to the International Energy Agency (IEA), Maritime’s research and development (R&D) spending between 2007-2019 remained stagnant, lagging far behind that of other sectors. Responding to strong political signalling from governments around the world investment on R&D in the automotive sector has increased from 67 billion USD in 2009 to a staggering 130 billion USD in 2019, compared to 1.6 billion USD in maritime. The total amount of Corporate R&D investment for maritime actually decreased, from 2.7 billion USD in 2017 to 1.6 billion USD in 2019 according to the IEA.
Ahead of a key meeting of IMO member states in London this week, ICS, which represents 80% of the world’s merchant fleet, has highlighted that growing uncertainty is leading to a reduction in confidence about R&D investment. The lack of clarity, in part due to the increasing levels of political risk and resulting investment risk, is leading to limited R&D investment for ‘green’ fuels for ships, and the accompanying technologies they need to be safely used. There is also growing concern about the safety and toxic emission associated with the use of some proposed alternative fuels. Without government support for rapid research and development, this will add unacceptable levels of risk to investments made in shipping by both the public and private sector.
Guy Platten, secretary general of the ICS, commented:
“We have welcomed recent announcements of plans to increase innovation and for zero emission pilot projects. However, all too often these announcements do not come with cash or a realistic investment strategy. This sends conflicting messages to the market and as a result investment in shipping is becoming riskier with each passing day. We need governments to match their words on decarbonisation with tangible action. Investment in research and development relies on certainty of the availability of long-term “patient capital”.
As technology development is traditionally uncertain and takes time, ICS is co-sponsoring, along with 10 governments and industry partners, a 5 billion USD R&D fund for shipping – the IMRF, which provides certainty through guaranteed 10-year funding to support the ‘de-risking of investments’ for advancing technology readiness levels.
“While pledges on reducing emissions are welcome, we desperately need action today in our unique internationalised industry. There are no silver bullets and while some try to suggest that we already have the technologies, the reality is far from the truth.
“Governments need to look beyond the sales brochures and wishful thinking of others to invest in technologies that are safe and sustainable and without negative side effects for other parts of the environment. We are committed to working with governments via the IMO and have proposed several solutions to increase the speed of our decarbonisation journey.
“The $5 billion USD International Maritime Research and Development Board (IMRB) provides the ‘patient capital’ that is desperately needed. While this proposal would be funded entirely by industry, we urgently need the support of governments to enable this to happen.
“IMO member states can use the MEPC meeting to clearly signpost to industry that international consensus can be found to effect environmental change and reduce political risk. All we are asking for is for governments to put our money where their mouth is.
ICS is calling for a clear political signal now so that investment can be brought forward to create the technologies needed to decarbonise the industry. The evidence is clear from other sectors that this is what is needed. Like other industrial sectors we also need governments to send a clear political signal that they are serious about the development of a global market-based measure to create the business models that will incentivise the adoption of these new fuels and technologies.
Platten concluded: “If we can’t get political consensus now on the urgent need for R&D how are we going to reach the much-needed political consensus for a sustainable and equitable carbon price signal that will incentivise the market to decarbonise at the speed and scale needed.”
ICS along with other shipping bodies have already called on world leaders to bring forward discussions on global market-based measures.