Change is a massive business opportunity for those courageous enough to embrace it.
The post-Paris climate change agreement celebrations are over and now we must recognise that shipping is under pressure* to reconcile the opposing beliefs that there is a fundamental conflict between transitioning to a low carbon economy and economic growth. It is being amply demonstrated in land-based energy sectors that one leads to the other.
There’s no denying, of course, that it’s a huge challenge. The incumbent fossil fuel infrastructure has been established over many decades is multi-layered, complex and the beneficiary, according to the IMF, of subsidies to the value of $10m per minute. Decarbonisation requires a fundamental system change.
But post-Paris structural change is inevitable and shipping needs to decide if it is to become a hapless victim of the new future or if it will steer its own positive course towards becoming a stronger, more resilient, fit-for-purpose industry.
After all a ship built in 2016 will be required to function in a zero emission world before the end of its normal working life, according to ambitious and urgent aims agreed in Paris.
With the 2nd largest coal company in the US filing for bankruptcy yesterday its clear there’s a new reality emerging.
It’s going to be really valuable for shipping to learn from the rapid transition that is changing land-based energy industries, particularly as shipping leaders often liken ships to ‘mobile power plants’. Renewable energy accounted for 78% of Germany’s power requirement on July 25th 2015. It’s true this was a rare metrological combination of sun and wind that allowed this peak but Germany is securing, on average, a quarter of its power from renewables. Scotland got 41% of its power from wind energy in 2015, a 16% increase on the previous year. Scotland’s Energy Minister highlights renewables’ contribution to his country’s energy security as a key economic benefit.
Reducing dependency on volatile fossil fuels improves economic stability, energy security and increases prosperity. Shipping could use these commercial advantages right now.
To have any chance of reaching the 2o target agreed in Paris innovation needs to be accelerated in both energy efficiency and renewables. The good news is investment likes clean energy; the International Energy Agency predicts in its World Energy Outlook 2015 that clean energy will attract a cumulative total investment of $7.4trillion by 2040. $400billion was invested last year attracted by the ever-improving business case offered by clean energy.
The new secretary general of the IMO, Kim Litack, highlights in his inaugural address, the need to work together. He envisions strengthened partnerships between developed and developing countries, between governments and industries. I would add to that collaboration NGOs and smart new SMEs bringing learning from other dynamic sectors to bear on shipping’s problems.
It’s critical that we convene a ‘safe space’ where diverse parties can develop real solutions to transitioning to a low carbon economy, to galvanise ‘green growth’.
Setting an absolute CO2 emissions reduction target across the industry will create a clear goal, stimulate innovation and allow access to the new investment opportunities just when the industry badly needs it.
It always seems impossible until its done. Yesterday the German Foreign Office thanked David Bowie on twitter for “helping bring down the wall”. 2016 – now we all need to be Heroes*.
*the wisdom of David Bowie