That’s a Wrap: COP 28 Marine & Energy Outcomes

Another COP has drawn to a close, and this was potentially the most controversial of all. However, regardless of its controversies, there are reasons for cautious optimism from a shipping perspective, and the industry can certainly build on some of the key outcomes to continue progressing towards decarbonisation.

COP 28’s headline takeaway was the agreement to move away from the use of fossil fuels. While the final agreement stopped short of demanding that fossil fuels be phased out (and think of that what you will) it is still a significant shift in perspective on fossil fuels.

From a shipping point of view, a major story was MSC, Maersk, CMA CGM, Hapag-Lloyd and Wallenius Wilhelmsen issuing a joint declaration calling for an end date for fossil-only powered newbuilds and urging the International Maritime Organization (IMO) to create the regulatory framework to expedite the green fuel transition.

This sentiment was echoed by major charterers; Mondelēz International, Flexport, Meta, Nestle, Royal Coffee, Standing CT and Trek Bikes who joined the Cargo Owners for Zero Emission Vessels (CoZEV) initiative. There are now 35 cargo owners pledging to only use zero-emission shipping by 2040 as part of that alliance.

Amazon also ‘requested’ zero-emissions fuelled shipping services for 600,000 20ft TEU containers for three years starting in 2025. Amazon is a member of the Zero-Emissions Maritime Buyers Alliance, which seeks to start the use, supply and infrastructure of zero-emissions technologies.

As identified in Houlder’s Decarbonisation Survey at the start of 2023, proactive collaboration is a key barrier to shipping’s decarbonisation, and so it is encouraging to see so many major – and competing – players cooperating around COP. It will be important that the industry builds on these ambitions and pledges to deliver tangible and enforceable rules and standards at next year’s MEPC 81 meeting.

From our perspective as an independent design and engineering consultancy, with increasing pressure from industry leaders and customers to decarbonise, alongside the phase out of fossil fuels, it is clear that we must not forget the vessel and operational efficiency improvements needed today for newbuilds and the existing fleet.

There are a multitude of effective energy efficiency adaptations with proven energy savings that can be deployed right now to reduce fuel consumption and emissions. However, it is important to analyse and understand the vessel’s design, service and operation to ensure any retrofits or newbuild installations are effective, are implemented efficiently, and deliver the anticipated results.

The importance of these clean technologies, and of technologies such as onboard carbon capture, are further highlighted by shipping’s green fuel supply shortage and astronomical production costs – which was another key topic of conversation at COP. CEO of the Global Centre for Maritime Decarbonisation Lynn Loo posted some interesting calculations on green fuel costs.

The bottom line is, we need to be realistic and recognise that there is a need to build a huge amount of green electricity generating capacity to replace the energy currently derived from fossil fuels. It’s going to be a long time before that supply catches up with demand, and shipping also will not be first in the queue when competing with other larger and land-based energy users. That means that the efforts to clean up the existing fleet needs to continue in earnest and that shipping must increase its ambition to do this by progressing emerging solutions such as onboard carbon capture.

What COP does make clear each year is that shipping is one part of a much larger system. We must not view shipping’s decarbonisation in isolation, but rather as a part of the global energy transition. As highlighted by the green fuels supply conundrum, cross-industry collaboration and across entire supply chains is needed. This means shipping must get out of its comfort zone to embrace new paradigms and ways of operating, rather than the gradual evolution it has been used to. Read more of Team Houlder’s news and insights here.

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Rupert Hare, Chief Executive Officer

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