Retrofitting vessels and slow steaming are two short-term options to reduce emissions while more transformative technologies are developed, a new study says.
The world’s largest shipping lines are not investing in the right technologies to reduce their carbon footprints and the sector risks not meeting the International Maritime Organization’s targets of reducing greenhouse gas emissions by 50% by 2050, according to a study released Tuesday by environmental nonprofit and investment research provider CDP.
“A Sea of Change,” which ranked 18 of the largest publicly listed shipping companies representing $62 billion of market capitalization, found Nippon Yusen Kaisha as the most ready for the low-carbon transition. A.P. Møller – Maersk and Mistui O.S.K. Lines (MOL) ranked second and third, with COSCO Shipping Energy Transportation ranking last and NS United ranking just ahead of it.
CDP said Maersk, Hyundai Merchant Marine (fifth) and Norden (sixth) were the “most ambitious in setting long-term targets to reduce carbon emissions” consistent with IMO’s strategy, but “there is a gap between the cutting-edge carbon-neutral technologies available to companies and the forms of innovation they are developing.”
Only three companies are developing technology that could have a transformative impact on the industry, CDP said.
“The level of transformative innovation is extremely low,” the study reads. “With the exclusion of NYK Line, which is collaborating on the development of zero-emission vessels, and Norden and Maersk, which are pioneering biofuel-based carbon-neutral voyages, no other companies are investing in technologies that are considered to be transformative.”
Retrofitting existing fleets could be a capital-efficient short-term strategy before more transformative technologies become viable, CDP said. Fourteen companies showed evidence of retrofitting activity and were led by Maersk’s spending of “$1 billion over a four-year period retrofitting 150 vessels with measures that can deliver emission reductions up to 20%,” the study reads.
Slow steaming is another short-term solution that companies can use to reduce emissions by up to 30%, CDP said. A speed reduction of 10% to 15% can reduce fuel consumption by 30% to 40% for bulk fleets, with potentially higher reductions for container vessels, according to the study.
Thirteen of the 18 companies have developed slow steaming strategies. Among them, “K” Line, HMM, Euronav and COSCO Shipping Holdings have adopted super slow steaming strategies.
“Although slow steaming is positive in the short term, it could result in more voyages to meet growing demand, eroding the emission reductions made by slowing down ships,” CDP said.
The shipping sector accounts for between 2% and 3% of global emissions and about 10% of global transport missions, making it one of the least emissions-intensive modes of freight transport based on current technology, CDP said. Container transport is the most emissions-intensive shipping subsector but has achieved the highest emissions reductions across the subsectors, with average reductions of 5.3% between 2012 and 2017. Bulk and tanker emissions have stagnated with emissions from both sectors growing 1% and 0.5% over the same time period, according to CDP.
Carole Ferguson, CDP’s head of investor research, said the shipping industry could account for 17% of global emissions by 2050 if nothing is done due to economic growth. The demand for freight services is expected to increase 3% to 4% annually, CDP said.
“Against the backdrop of the IMO’s targets, the industry needs to drive collaboration with the manufacturers of vessels and shipping technologies to develop the step change innovations needed to have any chance of meeting these goals,” she said.
The study also found only four companies are official supporters of Mark Carney’s Task Force on Climate-Related Financial Disclosures and just three companies had a formal climate committee at the board level.