The maritime subsidies must steer the sector towards carbon neutrality

The development of a carbon-neutral maritime business model requires the involvement of the entire industry, from shippers to ship technology. Maritime subsidies must also be reformed.

The International Maritime Organization (IMO) is tightening regulations on shipping companies’ CO2 emissions. CO2 emissions from shipping in relation to transport work will be reduced by 40% from 2008 levels by 2030 and by 70% by 2050. At the same time, the European Parliament is extending its emissions trading scheme to shipping.

Achieving the carbon neutrality targets will require a significant share of ships to be carbon-free before 2050. As ships have a long life cycle and 20-30 years in service, this means that ships that are already completed will be significantly lower in emissions than their predecessors.

Greenhouse gas emissions from ships can be reduced in three ways: through fuel solutions, ship design, and ship type selection and ship speed choices.

Fuel solutions are now the fastest-growing emission reduction measure. Finland has been a pioneer in the use of low-emission liquefied natural gas (LNG), especially in passenger ships. Research teams are currently actively working on new fuels, including hydrogen and ammonia, as well as battery technology and wind power. Ports have built onshore electricity capacity and are preparing for the distribution of new marine fuels.

Ship design is constantly evolving. Reducing the ship’s resistance, for example by designing the bottom, reduces emissions. New material technology enables light and thus increasingly low-emission ship structures – such as catamarans – that are even more competitive alongside heavier ships. The increasing use of artificial intelligence, automation and remote control optimizes fuel consumption, improves safety and reduces the work and manpower required on board and in ports.

It is estimated that hundreds of billions of euros will be invested in new technology in the sector worldwide over the next twenty years. This provides great opportunities for Finnish shipbuilding and marine technology exports.

Emissions can also be reduced through operational measures, the most important of which are reducing the speed of the ship, increasing the size of the ship or changing the type of cargo, ie transporting a larger amount of cargo at a time, for example by using containers instead of lorries. Other opportunities to reduce emissions throughout the transport chain include increasing intermodal traffic or diversifying cargo and passengers between slower, lower-emission and faster ships.

The growth of rail transport capacity in Europe, and in particular the Rail Baltica ending in Estonia, will make it possible to combine sea and rail transport in a new way.

The importance of shipping in Finland’s foreign trade is substantial and it cannot be replaced by other modes of transport. The state has traditionally supported shipping operations by, among other things, reimbursing labor costs and thus ensured the international cost competitiveness of Finnish-flagged fleet. Unfortunately, the forms of subsidies are built to support the current structure of maritime transport, ie existing ship types and transport chains. Subsidies during the coronary virus period have exacerbated the situation where special aid is targeted at only one type of shipping, passenger-car ferries.

The maritime support system must be reformed to encourage towards competitive carbon neutrality. In Sweden, fairway charges are already being staggered according to the environmental friendliness of ships, and many ports offer discounts for low-emission ships. Ship capacity can be viewed in terms of the volume of cargo transported and not in terms of the volume of the ship, making the aid more targeted at transport performance. Or one can look at actual fuel consumption instead of computed engine power. Finland’s special challenge in the reform work is to ensure a functioning winter shipping under ice conditions.

The development of a carbon-neutral maritime business model requires the involvement of the entire industry, from shippers to ship technology. Maritime subsidies must also be reformed.

This expert article is published in Finnish by Helsingin Sanomat 10.5.2021

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s