“Global trade is growing, and that means emissions will come up from transport,” said head of agricultural trading company Cargill Inc., Jan Dieleman. “Container fleet is speeding up, so emissions from that sector are going to be up, not down.”
Emissions in general are rising rapidly once again following the ever-increasing e-commerce orders brought about by the pandemic. With more people than ever heading online to buy their household items, clothing, and just about everything else, more and more fuel is burning with the heavy demand on container fleets.
Additionally, we’re in the midst of a natural gas shortage as these shipping emissions numbers meet new heights. Electricity production is turning toward further fuel oil and coal usage, even though the sector previously predicted emissions would be much lower this year than in 2020.
For Cargill, the company regularly brings in hundreds of vessels to meet the demand of the maritime industry, and while doing so, works to monitor fuel consumption and emissions numbers as accurately as possible. The shipping industry itself is a bigger source of carbon emissions than many realize–the American shipping industry releases more carbon than the United Kingdom and France combined.
The industry has pledged to cut this emissions in half by the year 2050, even while global trade continues to grow.
According to Dieleman, COVID-19 has caused further employee shortages that is leading to port congestion and heavily delaying container loading and unloading processes. Some freight trade companies have begun shipping their loads in bulk products instead of in regular containers, he added, noting that freight shipping activity is “back to the heydays.”
Additionally, although commodity shipments (including shipments of coal) are expected to remain steady into 2022 and coal trade will likely boom when China lifts import restrictions during the winter, energy prices are skyrocketing, and emissions will likely not become as bad as they were at the worst around 2008. This is due to so many industries currently being focused on efficiency and fuel-saving technology–especially within the supply chains.
The International Maritime Organization aims to reduce emissions pollution as quickly as it can, but is still working out the process of doing so as the organization only has oversight regarding shipments at sea and not the entire emissions life cycle. Some potential solutions include a carbon dioxide tax as well as a research and development fund of $5 billion. IMO also announced its intention to restart discussions surrounding potential market-based measures in a formal capacity–a carbon market-adjacent initiative.
Industry experts are also looking to a possible increase in tanker recovery sooner than later as the pandemic’s effects lessen, a likely change from the current dry freight boom that continues on–especially as people once again begin spending money on experiences, outings, and travel once again. As of now, the shipping industry hasn’t been ordering sufficient numbers of ships, and still needs clear emissions standards in order for new investments to come in.
“If you are a ship owner and you want to add capacity, what are you going to buy?” Dieleman asked. “What technology are you going to buy? Who is going to finance you and under what [kinds] of conditions? So, we’ve seen very little ordering the dry bulk.”
He explained that right now, the outlook of the industry’s short-term future is clear.
“If you take a little bit of growth in global trade going forward and the number of ships coming to the water, you have a pretty constrictive picture.”
Because IMO works globally and must take into account all intentions and interests from countries across the globe, the potential new carbon market has seen little progress. The United States’ industry often looks to that of the European Union, which has recently announced its goal in including shipping within its Emissions Trading Scheme.
“To some extent, it would be great if it’s all regulated globally, but I think the issue you’re going to have is that it’s not going to go fast enough,” Dieleman added. “It’s going to be probably the lowest denominator. And why would you not let certain jurisdictions go more aggressive?”