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Uncertainty hinders green transition


Uncertainty hinders green transition

21 November 2024

Shipowners worldwide view uncertainty as a major obstacle to the maritime sector’s decarbonisation. This stems from a mix of vague political guidelines and tightening environmental regulations, according to a recent survey by the UK-based design and engineering consultancy Houlder.

Houlder’s Navigator Survey reveals that many shipowners face a so-called "uncertainty dilemma." While lacking a solid foundation for decision-making, inaction is not an option. Despite unclear political directives and technological uncertainties, tightening environmental regulations compel shipowners to choose a path for their transition efforts. They must, however, remain prepared to adjust course if necessary.

The survey highlights that 2024 has been a politically turbulent year and a busy election season, with votes taking place in at least 64 countries, including the UK, the US, and others. Several shipowners noted that they are closely monitoring political developments, particularly how the incoming US president, Donald Trump, may impact their sustainability strategies before committing to further transition steps. Many participants also pointed to unclear guidance from their respective national transport authorities, which is delaying progress.

While governmental uncertainty loomed large, regulatory stability was perceived to have improved compared to two years ago, when Houlder conducted its last Navigator Survey with the same group of shipowners from the container, tanker, bulk, cruise, and ferry sectors. Within the EU, for example, significant progress has been made since then. Shipping has been incorporated into the EU Emissions Trading System (EU ETS), and next year, FuelEU Maritime will come into force, putting pressure on shipowners to reduce the carbon footprint of their fleets.

Views on the EU ETS varied among shipowners. Smaller players saw the system as having a significant impact on their operations, while larger operators reported that the ETS was already factored into their plans, serving as a useful reference point for carbon pricing in daily operations and business strategies.

Although shipowners were reluctant to share specific details about their strategies for FuelEU Maritime, there was broad consensus that the regulation is being taken very seriously. Failure to comply could lead to fines significantly higher than those under the ETS.

"ETS isn’t too problematic. The fines are small compared to FuelEU. FuelEU has shocked shipowners into realizing how expensive it will be to neglect energy efficiency. From an R&D perspective, that’s undoubtedly a good thing. It has helped secure both support and funding," one participant said.

According to Houlder’s CEO, Rupert Hare, the maritime sector cannot allow uncertainty to become an excuse for inaction in the transition process.
“We undertook this research to understand better how the wider industry can support shipowners in rising to the challenge. Based on recent conversations and developments it’s clear to us that, in shipping and the energy transition, uncertainty is certain and the industry has to find a coping mechanism."

“Hardly headline news, but with incoming regulations such as FuelEU Maritime, owners are running out of time. They need to accurately simulate scenarios on vessels with information available today to enable informed decision making now – while you can’t be absolutely certain of what’s ahead, you can take useful action to alleviate the anxiety. Surrounded by fog, you’d slow to a crawl without aids to navigation.”


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