Op-Ed: 2024 must be a year of implementation

Paul Delouche of Bureau Veritas

By Paul Delouche, strategy, acquisitions and advanced services director, Bureau Veritas Marine & Offshore

As the pieces of shipping’s decarbonization puzzle begin to align, 2024 has emerged as a pivotal year. Not one necessarily marked by groundbreaking technological advances, but by the practical implementation of existing solutions with proven results, the cumulative impact of which may prove far more impactful in the long run.

It can be misleading to talk about the decarbonization of shipping as if the industry were a single entity moving in a single direction at the same pace. Instead, we must account for several transitions occurring simultaneously over different segments, taking different shapes and happening at different speeds across the industry. Each shipping segment is unique in its operational patterns, making some technologies more adapted than others, and levels of pressure from their stakeholders, creating differences in their ability to decarbonize. At a more granular level, we also need to consider that the level of financial risk and technical capabilities required to address the decarbonization challenge may vary greatly depending on the size, business model and financial situation of each company.

To ensure the success of shipping’s decarbonization efforts, tailored approaches are necessary, adapted to the diverse realities and needs of different vessel sizes, types, routes, and operational patterns. Owners of smaller fleets in particular face specific challenges due to more limited resources and technical capabilities. For instance, small to medium size companies, which typically own a handful of ships, usually have more modestly sized technical departments and their business model is often intrinsically tied to spot markets. Additionally, they may not keep their vessels for the full duration of their service life, which further complicates investment decisions involving higher upfront costs related to new technologies and puts a greater focus on the vessel’s potential resale value.

All operators must run their business efficiently according to market rules and economic conditions. The decarbonization of the industry should be examined through the lens of the real-world conditions that these companies face in their daily business. Practical, proven solutions that are adapted to their specific operations are crucial for smaller players to contribute effectively to shipping’s climate goals.

2024 marks a crucial phase in the maritime industry’s drive towards decarbonization. With ambitions set for emissions reductions of “at least 20%, striving for 30%” by 2030 by MEPC 80 combined with the knock-on effect of the effective implementation of the EU ETS for shipping companies trading on European routes, the focus is shifting towards operational efficiency measures and integrating existing solutions, rather than relying on a silver-bullet solution that would come at a later stage. This pragmatic approach reflects a growing urgency for action and implementation of market-based measures.

The good news is that all players, regardless of size, can be both pragmatic and ambitious in their decarbonization journeys. By basing decisions on data and evidence relevant to their vessels’ size, type, route and operational patterns, they can confidently implement practical measures suited to their operations in the short term.

The groundwork laid in previous years has set the stage for substantial progress in 2024. Voyage optimization and weather routing systems are immediately actionable levers allowing further speed reductions that can be deployed today to boost efficiency and significantly reduce GHG emissions.

One should not forget that even a relatively small reduction in average speed will significantly reduce the energy consumed by a ship, and therefore its emissions.

As thrown in sharp relief in our recently published Decarbonization Trajectories report, all levers will need to be actioned at different points in time if the shipping industry is to keep within its “GHG budget” for this decade and the following two. Our findings highlight the potential hefty cumulative impact on total GHG emissions to 2050 that shipping can achieve through the immediate adoption of available solutions such as reducing speed and waiting times, early on, while the emissions of the sector are at their highest. As well as the benefits of operational measures and energy-saving technologies, our study helps us better understand the potential and urgent need for solutions like energy insetting to bridge the cost gap and provide pathways for the earliest possible adoption of new fuels. This will require buy-in throughout the industry in a lasting way that reaches across value and supply chains.

The shift to an implementation mindset also requires mature and informed discussions about the challenge of sourcing renewable energy to produce fuels like green hydrogen, ammonia, and methanol. Making these fuels globally accessible, not just for shipping but for other sectors aiming to decarbonize, requires significant changes to the entire fuel supply chain. This highlights the need for a cross-sectoral approach to sharing resources such as wind and solar power among maritime and other industries – but also, more starkly, the competition between sectors for finite renewable energy resources. This calls for greater collaboration, not only between companies but across sectors. The transition will look and feel differently across supply chains, but it doesn’t mean that we should work in silos.