Three lessons international shipping could draw from the UK’s decarbonisation efforts
Today the UK announces the launch of its Clean Maritime Council – an expert body of which we are pleased to be a member - that will tackle questions on how the UK can address maritime carbon emissions, while promoting the growth of its clean maritime technology sector. The Council’s launch coincides with an environmental meeting of the International Maritime Organisation (IMO – the UN body responsible for shipping) that will start to lay the path towards reducing greenhouse gases from the sector. Shipping is a global industry and global policy will be needed for the UK to truly capitalise on clean maritime innovation and investment domestically. The UK, and especially Scotland, is now home to a burgeoning industry based on large-scale renewable energy. Investments in offshore and on-shore wind have seen costs of producing renewable electricity tumble and are now opening up opportunities to convert excess clean power into fuels. This hasn’t happened by accident. In our latest research note, we detail the lessons learned by the UK and other governments during their decarbonisation journey and look at how they can inform international shipping’s developing greenhouse gas strategy. Shipping is responsible for around 3% of greenhouse gases worldwide, double the UK’s total contribution. In April 2018, the sector agreed to reduce emissions by at least 50% by 2050, compared to 2008. The UK has managed to decouple its emissions from its gross domestic product (GDP) growth faster than any other G20 nation. There are three key lessons that the shipping industry could draw from the UK’s decarbonisation journey, these are:
1. Governance is Important
Solving the climate crisis is difficult. It requires multiple actors to change course and come together with a vision of a sustainable future. The UK recognized this in 2008 when it set the Climate Change Act into law. The Act sets out a governance framework under which the entire decarbonisation of the UK economy can be achieved. There was a long-term 2050 emission-reduction goal set into law, the establishment of the Climate Change Committee that can guide the transition and budgets set of five years length to ensure the UK stays on course. UK Ministers, both then and now, recognize that investors need long-term policy guidance to switch to powering clean growth. The IMO now has the chance to use the lessons from 10 years of the UK Climate Change Act to design such a long-term governance structure for its own transition.
2. Alternative Energy Sources are Key
Energy efficiency is incredibly important, but ultimately the industry will need new sources of energy if the transition is to be successful. The UK government recognized this and brought in multiple interacting policies to drive the growth in various zero carbon and renewable energy sources across the UK. We’re seeing these policies transferred over into shipping, with battery and solar panel technology from the electric car and renewable energy sectors already being applied to both short-distance ferries in Norway and cargo ships in China. This opens up huge opportunities for the UK to capitalize on its growth in renewables. For example, Scotland has such an abundance of wind energy that there are times when the wind turbines produce more electricity than the grid can absorb. One island community has started to store that excess wind energy in fuel form as hydrogen specifically tied to providing power for specially adapted ferries. Hydrogen derived from renewable energy has been identified as one of the best options for shipping to use as it moves away from fossil fuels.
3. One Policy Won’t Fix Everything
The IMO has already agreed design standards for ships and a measure to monitor emissions. However, the UK experience shows that a mixture of mechanisms are required to drive emission reductions. The UK government has used at least four different policies to incentivise the electric power generation sector to decarbonise. These include obligations to invest in zero emission technologies, contracts for difference to underwrite investments, and emissions trading and carbon pricing policies to help new, cleaner technologies compete. The IMO will also need multiple measures to get to its stated goal.
The shipping sector can adapt these tried and tested policies to meet its own environmental challenges. For example, international shipping’s ambitious emissions target, paired with a price on carbon, together with targeted recycling of revenues could spur innovative zero and low-carbon technologies toward commercialisation. A clear policy framework introduced now will give investors the confidence they need to get low carbon ships sailing the seas. The UK especially has a role to play in sharing the lessons it has gained on its decarbonisation journey.