Industry participants are playing a waiting game to decarbonise shipping, with most reluctant or unable to act first.
Participants at this week's London International Shipping Week (LISW) laid out a multitude of solutions to decarbonise shipping — but most continue to wait for other firms to act first.
A range of feasible and affordable solutions were promoted at the LISW, with solutions as numerous and multi-faceted as the problem.
But the overarching theme was international cross-industry collaboration. Participants praised the upcoming IMO fuel standard and pricing mechanism and the EU's carbon and fuel levies, as enforcing collective, global change.
Momentum in the shipping industry has typically come from financial incentives. Maritime Economics author Martin Stopford described the industry as "commoditised" where participants are guided by the highest profits and disconnected from each other.
Participants see the transition to alternative fuels from conventional bunkers as inevitable once the former start pricing more competitively against the latter, prices for which would be lifted by carbon and fuel levies. The switch will be spurred by market economics — shipowners will want to bunker with the cheapest fuel.
Prioritising short-term financial gain over decarbonisation has recently led to European scrubber spreads inverting as HSFO demand rose in Europe, as shipowners sought to lower bunkering costs until alternative fuels became more widely available and affordable and until regulation makes HSFO less economical.
Much of the new technology discussed at LISW — maritime carbon capture, nuclear-propulsion, alternative fuels, AI — is currently immature and unaffordable, with no return on investment or technological success guaranteed. There is little financial momentum in decarbonisation currently.
Majors in the shipping industry — such as container-line shipper Maersk, fuel supplier TotalEnergies, technology company Wartsila — are investing in alternative fuels and new technology to prepare the way. But there are too many projects for any company to invest in at once, and most smaller shipowners or suppliers do not have the funds to invest in any.
For most participants, decarbonisation is a waiting game and none make the first move — until governments subsidise alternative fuel uptake and production, until a supply chain and infrastructure is in place, until demand for new fuels and technology supports the cost of their production, or until regulation creates an equal playing field.
But this paralysis is born out of the isolation of a "commoditised" market where participants coexist but do not collaborate. Collaboration between suppliers and buyers would ensure demand and supply and reduce risk in investments. Collaboration between ports through green corridors could demand the uptake of new fuels and technologies. International co-operation could set an equal playing field for all participants.
Collaboration of this kind is not new in the shipping industry. In 2017, TotalEnergies signed a strategic agreement to supply fuels to shipping and logistics company CMA-CGM in 2020-30. Two years into this collaboration, one of CMA-CGM's vessels bunkered in Singapore with Total's B24 marine biofuel blend.
Participants at the LISW also pointed to emerging "green financing" as alleviating risk in the energy transition. Green bonds could lower interest rates to invest in lower-emissions fuels or technologies. Government subsidies could help companies begin their energy transition.
