Finding the real heat in the decarbonisation debate

Paul Gunton

Paul Gunton · 20 January 2020

ShipInsight


I went to a conference earlier this month (9 January) about decarbonising shipping and ports, organised jointly by the UK Chamber of Shipping and the British Ports Association (BPA). It was a well attended event and I am sure many, like me, had a better understanding of the technical challenges involved in meeting IMO and other long-term carbon targets.

But that’s not my focus here, because politics and regulation play at least as big a role as technology and ambition in achieving those goals, and not always in a helpful manner.

Ukchamber
Shipping and port managers combined at this month’s decarbonisation conference (image: BPA)

Dr Edmund Hughes, head of air pollution and energy efficiency in IMO’s Marine Environment Division, underlined the point in an early contribution to the day. “This is a political issue, and I wouldn’t want you to go away from this meeting underestimating the political challenge,” he said. That is because it is driven by worries about climate change, which is “like no other thing … in terms of policy” he went on. And if you think getting the IMO 2020 sulphur cap into force has been hard work, “that pales into insignificance compared to climate change and the challenges that we face.”

I’ll come back to his remarks later, but someone who knows the frustrations that regulation can throw up is Fran Collins, CEO of the UK ferry operator Red Funnel. Hers are small ferries that operate on short routes across the Solent – a narrow stretch of water between the Isle of Wight off the UK’s south coast and the mainland – where they provide what she called a ‘lifeline service’.

Fran Collins CEO Red Funnel at UKCS seminar Jan 2020 GPG PIC
Fran Collins, CEO of Red Funnel, was prevented from using biofuel because of UK legislation (image: ShipInsight)

In 2018, she launched the ‘Red goes Green’ environmental strategy, one element of which was to trial one of its vessels on biofuel. There were some technical issues around securing a suitable fuel supply but on top of that, she told conference delegates last week, “we were coming up against government legislation that meant we weren’t actually allowed to burn it.”

This is a consequence – and I hope it is an unintended one – of the UK’s Renewable Transport Fuel Obligation (RTFO) that was amended in 2017 to pave the way “for future growth of the UK biofuels industry”. Despite that ambition, “we got a letter from the DfT [Department for Transport] suggesting we might like to stop,” she told me.

The problem seems to stem from terminology in the RTFO that sets specific rules for using biofuel for ‘non-road mobile machinery’ (NRMM), a category that includes “inland waterway vessels when not at sea”. And the Solent is not considered to be ‘sea’ under the UK’s Merchant Shipping Act so Red Funnel’s ships were in some way contravening the RTFO.

Red Funnel ferry
Red Funnel’s biofuel plans were scuppered by regulations (image: Red Funnel)


Fran told me she is “in discussion” with the DfT about this and she is particularly well placed to have that discussion: she is a member of the UK’s ‘Clean Maritime Council’ that was convened in October 2018 – just as Red Funnel’s biofuel trial began – specifically to “improve air quality on and around our waterways, ports and shipping lanes.”

Morna Cannon, deputy divisional manager, maritime environment and financial incentives, at the DfT had taken part in an earlier conference session and acknowledged then that “we need to shift to alternative fuels in order to meet [the UK’s emissions] target.”

She went on: “We know that these fuels are more expensive than the incumbents so my team is very interested in this idea of economic incentives,” announcing that there will be some consultation about this later this year. I have contacted her for clarification about the department’s specific stance on biofuels for ferries and will update this item as appropriate.

It’s worth looking at the UK’s target for shipping emissions, which is ambitious. UK shipping minister Nusrat Ghani had opened the conference by asserting that “decarbonisation is an issue that is close to my heart and is a top priority for this new government,” which came into power after a general election on 12 December 2019.

I have heard her speak a few times now and I believe she does have a genuine interest in the industry, which is a good thing. She mentioned among other things the government’s Clean Maritime Plan, which she launched last July and which sets a goal of achieving “zero-emission shipping in UK waters” by 2050. The UK is the first country to set such a target, she said.

That is remarkable, not least because – as Ms Cannon observed at the conference – “the UK can only go so far itself; the majority of the UK’s shipping emissions come from international voyages.” How those will be brought into line with the government’s plan is not yet clear.

Ms Ghani reeled off a list of other government initiatives aimed at supporting green shipping, including a competition for funding launched in July by a new industry body, Maritime Research and Innovation –UK (MarRI-UK). It offered state support for innovative technologies to support zero-emission shipping. £1.5M is up for grabs, she said, and it was oversubscribed by six times. The winners will be announced in April.

As far as ports are concerned, they are “a key part of the zero-emission future and … the government is committed to helping the sector thrive,” she said.

But it’s not just the ports that need to be involved: they share that key role with a host of other land-based players. Dr Hughes said that we underestimate how much effort will be needed ashore to make decarbonisation happen. “We’ve heard figures of 93% of all the cost that will be needed [to decarbonise] will be needed on the land” for the infrastructure to produce and supply the new fuels that will be needed.

From his point of view, the challenge will require engagement with a host of stakeholder groups that provide services to shipping, “because the shipping sector on its own will not be able to do it.”

The Port of Oslo provides a good example of how collaboration can help. Its port director and CEO Ingvar Mathisen told us that the city is aiming to cut emissions of CO2, CH4 and N2O by 95% by 2030 and that the port itself has a target of 85% CO2 reductions by the same time. In all, it has set 17 “measures and instruments” to hit that target, which is itself part of a city-wide action plan that is reviewed three times a year.

“The whole idea of this action plan is to put the money towards where you can get the biggest [emission] cuts for the least amount of money,” he said. But who provides this money? Not the port’s managers. For example, when asked whether local ferry customers would pay more to cover the cost of providing a greener service in the port, he said that “it’s the municipality that pays the cost so the passenger doesn’t have to pay.” More generally, “the majority of the investments so far have been paid by others, not the customers.”

Nusrat Ghani at the UKCS decarbonisation conf
Decarbonisation “is a top priority for this new government” says UK shipping minister Nusrat Ghani (image: BPA)

UK ports are not so fortunate, as a discussion about providing shore power illustrated. Peter Selway is segment marketing manager for Schneider Electric, which has been involved in a number of shore power projects, but none in the UK. In practically every other installation he has been involved in there has been some form of state support, he told the conference. In the UK, however, “one of the frustrations we have with the government is that they are not providing much leadership with this.”

For example, a lot of ports he speaks to are wary of investing in shore power now in case a grant becomes available in the future. So he would like to see guidance as to where investment money might come from. For a start, he suggested, they could make port electricity tax-free, to match the tax status of fuel.

Chris Bain, external relations director for Aberdeen Harbour, remarked on the difference between the UK’s and Norway’s approach, which she said provide an integrated approach between the port, the electricity supplier and the local authorities to providing shore power “and I think that’s what’s missing for us. … Ports are having to go it alone” and the projected costs are generally “hugely prohibitive.”

There is, she said, a lack of support and asked “how do we solve that big problem when there are such fantastic gains to me made?” In response, I asked from the floor whether, since the lack of shore power was linked to a lack of public funding, would it make sense to nationalise UK ports?

Despite her frustrations, Ms Bain defended Aberdeen’s ownership structure, which is a ‘trust port’ run by an independent board and governed by its own legislation preventing ‘leakage’ to shareholders or to serve as a cash cow for a local authority if it were publicly owned. All port ownership models have their advantages and disadvantages, she said, and “this is about policy and support from government [to provide] that integrated approach,” not about direct funding.

I asked Fran Collins whether she wished UK ports had similar support to that available to Oslo and she applauded the city’s holistic approach. Red Funnel is working with UK port operator ABP with a view to installing charging points at its terminals “but we don’t have the actual power supply there to be able to do so.” To stimulate such an investment “we need a trigger,” she said, with some form of public funding, at least for R&D, to fire the starting gun.

But with such a variety of port ownership structures and relationships between ports and operators, “there’s such a big difference in requirements, how that’s brought together is the biggest challenge,” she said. Ms Ghani has promised that the UK government will help the port sector thrive. Against this background, I look forward to seeing that promise fulfilled.

• How do you think decarbonisation at sea and ashore should be funded and managed? What are the biggest challenges? Email me now with your views.

• All presentations from the conference are available here.

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