There is a disparity between what the industry is saying and what they are doing
Richard Meade is the Editor-in-Chief of Lloyd’s List.
There is a disparity between what the industry is saying and what they are doing
Richard Meade is the Editor-in-Chief of Lloyd’s List.
There is a disparity between what the industry is saying and what they are doing. That’s the basic takeaway from this year’s Lloyd’s List decarbonisation special report.
The political risk is a messy transition that’s more expensive, fragmented and tilted in favour of developed countries than it needed to be if only the IMO could have got its act together sooner.
Commercially there’s an awful lot of fanfare around single pilot zero carbon projects where somebody has agreed to pay a high premium to test something that was never going to be scalable or repeatable.
Consider the rough universe of just over 300 companies currently touting their membership of net-zero aligned programmes or projects. Just 11 of them have actually committed solid science based targets to action those promises.
Green corridors are currently a paper exercise and dual fuel capability is essentially a hedge bet on the part of owners.
A vessel theoretically capable of burning a sustainable fuel will not generate any value — environmental or commercial — from that capability until those fuels are produced in a genuinely sustainable form and become widely available, with an acceptable mechanism to bridge the inevitable cost differential against conventional fossil fuels.
If all that sound overly cynical and too depressing for a sunny bank holiday weekend, I would add the caveat that I think genuine change is afoot. I just don’t think the industry has any agency in making those decisions.
Fundamentally my position hasn’t changed since I wrote previous decarbonisation reports – the industry is about to experience of rapid scaling and it will squeeze the fragmented middle of shipping and require newly scaled business models to survive.
I question how much agency the shipping industry really has in deciding this future.
Whichever way you look at it early new-fuel adopters will need to commit to long-term offtake agreements that allow producers to scale production. Others have already predicted that infrastructure funds will likely bundle long-term fuel offtake agreements with newbuilding contracts for green vessels. Maturity-matched long-term employment with strong counterparties will guarantee income from the ships. Ultimately, the goal is stability, predictability and scale of efficiency.
If that’s the way it goes, the current model of shipping ownership does not survive.
That’s all a way off yet, first we have a messy, expensive and politically charged transition to get through…
Lloyd's List subscribers can read the full report here: https://lnkd.in/eD4RPAPC
Richard Meade is the Editor-in-Chief of Lloyd’s List.
He is an award-winning journalist and has been writing and talking about all aspects of the maritime industry and global trade for the past twenty years.
As Editor he is responsible for navigating The List’s subscribers through the volatile politics, policy, deals and market movements that make up nearly 90% of global trade.
He is also the host of the popular Lloyd’s List Shipping Podcast and a regular industry speaker and media commentator on all things shipping.
He joined Lloyd’s List in 2006 as News Editor after jumping ship from the weekly maritime magazine Fairplay and prior to that started his career at the Financial Times.