This report indicates that to reach the 2050 net-zero goal marine shipping would require more renewable energy than the world generates today.
The report was commissioned by the International Chamber of Shipping (ICS) and was authored by Dr Stefan Ulreich of Germany’s University of Applied Sciences.
It’s hard to believe that such an increase in renewable energy can happen by 2050.
It’s designed to increase investment in green economic activities, and discourage investment in environmentally sensitive ones. Essentially it codifies the Poseidon Principles into an EU policy.
The term ‘taxonomy’ comes from the intent to classify investments with regard to a number of criteria. In other words, you can’t call an investment ‘green’ unless it speaks to these issues, and meets established criteria.
According to the author, the taxonomy regulation has several main environmental points, as well as social ones:
climate change mitigation
climate change adaptation
sustainable use and protection of water and marine resources
transition to a circular economy
pollution prevention and control
protection and restoration of biodiversity and ecosystems.
The author is a bit concerned that the regulation will give non-European companies an advantage in pursuing shipping investments. And he’s worried about the effect on shipping finance, though he supports the idea of green investment. He just thinks there will be a time of disruption in the financing of maritime activities, with good long-term effects but some short-range dislocation.
That dislocation could affect supply chains in general. For instance, slower steaming will effectively reduce the capacity on main shipping lanes. And the fact that newbuild years are booked two or more years ahead will prevent faster turnover or augmentation of the fleet with cleaner ships.
Nonetheless, adoption will clarify what a green investment means, and will reduce greenwashing— publicizing efforts that are relatively small improvements as major contributions to environmental improvement. And, especially in Europe, it will put down a marker for firms and individuals to reach for.
Others are discovering that they can dump steel by making it into containers. While the Vietnamese steelmaker Hoa Phat mentioned in the article won’t be a large percentage of the demand, it’s significant.
And since more goods are now being exported from Vietnam compared to before the Chinese lockdowns, supplying new containers on the spot may be a better option than moving them from the US and other places.
This means there will be a glut of containers in importing countries. The only option may be to scrap them when they arrive. Ocean carriers and shippers will prefer to buy new containers at the exporting site rather than shift the old empty ones back for more cargo, at present fuel prices and increasing pollution and crew charges.
It’s a real waste to scrap the containers if they are used only once. While steel is recyclable, it’s a torturous road, and we aren’t set up to do it at scale. And a tremendous waste of effort.
All are examples of exogenous charges, as the economists say. They are not factored into the original price of shipping the goods, so they aren’t paid by the shipper. They also aren’t paid by the carrier. They instead erode the general welfare of the communities who have to deal with the empties. It’s a classic scenario in sustainability.
Supply Chain and Logistics 