Insights at UBC Sauder

UBC Sauder-led workshop on sustainable shipping calls for greater collaboration to cut carbon emissions by 50% by 2050

Posted 2019-05-15

A steady fleet of commercial ships shrink the geographic distance when transporting goods: they are the lifeline of the world's economy. Today, roughly 60,000 ships spread across the globe's waterways, contributing to over 80 per cent of the world's trade. But while they're recognized for fuelling commerce, they're also scrutinized for their environmental footprint.

The Centre for Transportation Studies at the UBC Sauder School of Business recently collaborated with Simon Fraser University and the Copenhagen Business School to organize a workshop and take stock of the industry's efforts to cut carbon emissions and become more sustainable.

The workshop —titled ''Governing Sustainability in the Maritime Supply Chain - Green Shipping Network” — was held at the Simon Fraser University's downtown campus in Vancouver and brought together policy experts, legal advisors, professors and researchers, as well as key members of the shipping industry and port authorities. David Gillen, Director of the Centre for Transportation Studies at UBC Sauder, moderated the first session at the workshop – “Decarbonization and Changing Trade” – that looked at industry, trade and environmental implications if the maritime industry slashed carbon emissions by half.

The event is part of an international collaborative research network spearheaded by the UBC Sauder School of Business to advance knowledge and contribute policy recommendations towards more sustainable maritime practices.


Fuel alternatives and adoption

Cutting carbon emissions by adopting alternative fuels has been a top priority for industry stakeholders looking to make shipping greener. The International Maritime Organization (IMO), a United Nations body that regulates global shipping, wants to cut greenhouse gas emissions by at least 50 per cent by the year 2050.

With an expanding world population and an increasing appetite amongst emerging markets to use raw materials and increase production, the need to shift to carbon-free alternative fuel is more pressing than ever.

Kaity Arsoniadis-Stein, Executive Director at the Vancouver International Maritime Centre presented the alternatives the industry is experimenting with, including LNG, carbon-neutral biofuels and electricity.

But adoption has been slow. Out of the 60,000 ships dotting global waters, only 600 currently run on alternative fuels. Most fleets are trying to rein in efficiency by a process called "slow-steaming," a method that's relatively fuel-efficient but doesn't harness new technology.

But there's reason to be optimistic. Some, like Gurmeet Ahuja, Regulation and Compliance Manager at Seaspan Container, believe the industry is making positive strides.

The industry will have to work together to make the technology that reduces carbon emissions more accessible across the value chain. "Synergy means that you work in tandem with all stakeholders," explained Mr. Ahuja. "In any industry, the technology should be made available and affordable at the consumer-level to see higher adoption. Shipping is no different."

Mr. Ahuja called for this synergy in regulations too. Though IMO regulates shipping internationally and creates some standards, its bureaucratic process can sometimes fall out of favour with individual countries.

"We have seen several countries bring in their own individual legislation, because IMO's regulations can be slow to implement. A ship-owner going to different ports has to ultimately comply because it's in their territorial waters, so it's very challenging."

Developing a business case for sustainability

Debbie Murray, director of policy and regulatory affairs at the Canadian Association of Port Authorities, believes this challenge to IMO's primacy is bringing maritime stakeholders together to protect it. She too sees positive developments in the industry. Stakeholders are more aware of the need to cut carbon footprint, and attitudes amongst ship-owners — who bear the cost of updating their machinery to fit environmental codes — are changing.

Moreover, she believes the next generation of researchers from institutions like UBC Sauder can work towards advancing knowledge of financial instruments to make a case for these cost-intensive technology upgrades to cut emissions.

"Ship-owners and ship-builders are asking - 'how do we pay for these new assets?'. That's a significant challenge," said Murray. "Those who have a financial background have significant opportunities to combine financial training with environment and sustainability to help the industry monetize these opportunities."

And this research cannot happen in silos, since maritime policy-making spans many areas: "Moving vessels requires a background in law and legislation, finance, engineering as well as material sciences for developing new materials that make ships energy-efficient. There has to be a partnership amongst these different disciplines," said Murray.

Sailing with collaboration

At the UBC Sauder School of Business, partnerships can be visible across various academic divisions and departments. David Gillen, Director at the school's Centre for Transportation Studies, explained that the Strategy and Business Economics division is looking at how the market structure changes in response to both imposition of taxes and offering incentives to reduce carbon emissions.

"Within the Operations and Logistics division, people are looking at scheduling and routing, and I'm particularly interested in the trade effects — if the aggregated amount of trade changes as a result of steps taken to reduce carbon emissions, what will be its impact on distribution?"

This partnership transcends UBC Sauder's own boundaries. Workshops like these — which brought UBC Sauder, Copenhagen Business School, Simon Fraser University and other key maritime stakeholders together — are a testament to a growing recognition of the importance of leveraging partnerships.

"The workshop raised some key questions. We learned that there is no single magic bullet solution in the supply chain to address carbon-emissions. There will have to be cooperation within the supply chain."

Gillen believes that millennials and the next generation of consumers will keep the industry on its toes, as they tend to be more sensitive of the environmental impact of their choices.

"It's come to the point where consumers are asking: 'What is the impact of me consuming this good? Is my product carbon-intensive?'" said Gillen. "We are good at putting labels on a product to indicate its nutritional values, but we're very bad at putting some kind of label that indicates how much CO2 the product generates. That kind of information needs to be made available."