Power to the Project People

COP26 Sets Path for Sector’s Decarbonization BY CARLY FIELDS

UK Prime Minister Boris

Johnson put the climate challenge plainly in his opening statement, welcoming the world to Glasgow, Scotland for the 26th UN Climate Change Conference of the Parties (COP26).

“Humanity has long since run down the clock on climate change,” Johnson said at the COP26 World Leaders Summit Opening Ceremony in November. “It’s one minute to midnight on that doomsday clock and we need to act now.”

His words were necessarily inflammatory – and may not have inspired immediate action among those servicing the breakbulk and project cargo

industries. But there were plenty of outcomes from that seminal Climate Conference that will set a path for the green evolution of the sector.

The ultimate outcome of the Conference – the Glasgow Climate Pact – ticked off the major hot-button topics of emissions, peak coal, financing to help developing countries cope with and mitigate the effects of climate change, and the phase-out of fossil fuel subsidies. Those macro topics will certainly have a bearing on the breakbulk and project cargo world.

For example, the Global Methane Pledge, led by the U.S. and the European Union, seeks to curb methane emissions by 30 percent by 2030, and

has been signed by more than 100 countries. Methane ‘slip’ – where methane is emitted unburned from an engine, contributing to damaging emissions – has been a divisive factor in whether to use liquefied natural gas as a fuel in the sector. The pledge puts the onus on engine developers to resolve that issue or else find that their technology is cut out of the selection loop.

But while the macro level impacts such as that will be part of longer-term solutions, it’s the micro level agreements and initiatives agreed at COP26 that will have the greatest impact on the breakbulk and project cargo industry in the short term.

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8 BREAKBULK MAGAZINE www.breakbulk.com JANUARY-FEBRUARY 2022

SIDE ANNOUNCEMENTS

Bud Darr, executive vice president, maritime policy and government affairs at project cargo mover MSC Group and COP26 attendee, said in a Watson Farley Williams webinar considering the COP26 takeaways for the transportation section that the conference was about as he expected on the macro perspective.

“Looking at the big picture there wasn’t a great deal said about shipping. But there were several side announcements for shipping that were important,” Darr said. Those “side announcements” included shipowner community support of market-based measures, a commitment to net zero for 2050, and a renewed push for the IMO to back the industry-led US$2-per-tonne bunker levy to fund a US$5 billion International Maritime Research and Development proposal.

Michael Parker, global industry head for the shipping, logistics and offshore industries at Citigroup, noted that the conversation for shipping is moving away from decarbonization and on to global warning. CO 2 isn’t the only concern now.

For him, the Clydebank Declaration – another of the sector-specific announcements – holds great promise. More than 20 countries, including the U.S., Japan, Australia and Canada, have signed the Clydebank Declaration to develop at least six green shipping corridors between two or more ports by 2025 and “many more” by 2030, according to the UK COP26 presidency. “The Clydebank Declaration’s green corridors initiative is very important because we need to see large-scale projects and large-scale financial commitments in order to accelerate the process,” Parker said. “The Clydebank Declaration is important because it’s well to wake. The declaration could become a very important and significant step. We the industry will hold governments to account.”

Another key initiative is the Cargo Owners for Zero Emission Vessels, or coZEV: “The coZEV alliance is more important in a way,” Parker said. “This puts the issue in a way that the shipping industry has never seen: the consumer is watching. This represents engagement for the ultimate payer for all this: the consumer.” coZEV is described as a “first-of-its-kind cargo owner-led platform” to enable maritime freight customers to come together to accelerate maritime shipping decarbonization.

Darr also highlighted the Sustainable Freight Buyers Alliance, an alliance of shippers looking to reach net-zero freight logistics carbon emissions by no later than 2050 in line with a 1.5°C maximum global temperature increase.

“It’s not only irresponsible, but also flat-out wrong to not look at this from a lifecycle perspective,” he said.

SUSTAINABLE FUEL PROJECTS

Freight forwarders engaged in the breakbulk and project cargo industry recognize the challenge and are not shirking their responsibilities. Speaking to Breakbulk, Daniel Wieland, senior vice president global projects and industry solutions at DB Schenker, said that an initiative pioneering sustainable aviation fuel with Lufthansa is also available to project cargoes that can fit in a normal freighter. The CO 2-neutral flight connects Frankfurt to Shanghai on a weekly basis. The fuel is produced mainly from biomass waste, such as used vegetable and cooking oils. When burned in the engine, the same amount of carbon dioxide is released which was previously removed from the atmosphere during the original growth of the plants.

“Everybody is talking about sustainability. It’s a very relevant topic,” Wieland said. “The Sustainable Aviation Fuel flights are an important first step, and as an industry we will become better faster.” He confirmed that similar decarbonization projects are being discussed with container carrier partners for the ocean segment, however sustainable fuel for MPV operators is only being considered in singular pilot projects so far. “Has it been a vital element in the dialogue with project customers up until now? No. But we are running fast in that direction; you can clearly see a mind-change,” he said.

Looking at the general cargo segment, discussions are taking place, nominally because almost every project has an element of standard freight that can be containerized. “It’s all about the ship and how you move the ship at the

Bud Darr, MSC Group

Daniel Wieland, DB Schenker

end of the day.” While DB Schenker as a company has a project cargo segment, in discussions with a carrier the type of cargo is often irrelevant, Wieland added. “At the end of the day the industry needs a solution.”

‘BOOK & CLAIM’

GEODIS, meanwhile, offers sustainable fuel solutions for all transport modes, wherever they are globally. Using the ‘book & claim’ approach, customers can opt for as high a level of contribution as they want, up to 100 percent of transport CO 2 emissions.

Eric Martin-Neuville, executive vice president freight forwarding at GEODIS, explained to Breakbulk that while the initiative targets standard air freight and containerized ocean freight cargoes, it still applies to the project cargo industry. “In the project logistics world, we need to recognize that we do carry a lot of air freight and containers and therefore it is directly applicable.” The option of sustainable marine fuels is also available in the same manner for breakbulk and project cargoes, the only difference being how emissions and cost

Eric Martin- Neuville

GEODIS

GEODIS offers sustainable fuel solutions for all transport modes.

GEODIS

are calculated. This process is automated for standard cargoes, but GEODIS offers a specific tailored solution for breakbulk and heavy-lift.

“CO 2 emission calculations and CO 2 reduction calculations are complex,” Martin-Neuville said. “We are making a lot of efforts to fine-tune them and the more we fine-tune them the more complex they become.”

In the complicated world of project cargo, specific calculations are necessary. “For every non-standard shipment, we need to have someone who will study the movement, the vessel, the route and so on and make the calculation. Once we have set the calculation, the rest of the process is the same,” he said.

GEODIS reported good demand for the service from the general cargo sector, while on the project cargo side, customers are asking the question “how can we take advantage of this?”

Like DB Schenker, GEODIS has opted to focus on biofuels originating from waste. “We have made the choice not to support agriculturally based biofuels because they have side impacts,” Martin-Neuville said. However, this presents its own challenge: the volume of biofuels being produced globally is stunted by a lack of financing. “With the solution that we are pushing forwards, we hope that we will be able to create financial flows to encourage investment into refineries to increase production and make it more easily available and make it cheaper,” Martin-Neuville said. “If we can promote usage, we are quite sure we will enable a decrease in cost. We have committed ourselves to buying specific quantities of sustainable marine fuels. We hope to be able to significantly increase those amounts over time.”

GEODIS sees this initiative as its “duty” as a freight forwarder to help reduce emissions. While the newer service adopts an insetting approach – when a company offsets its emissions through a carbon offset project within its own value chain – it already offers offsetting solutions to customers as well.

As well as focusing on biofuels and continuous improvement to its calculation methodology, GEODIS is also looking to help optimize its customers’ transportation volumes. “A big part of the CO 2 emission waste is related to empty voyages. So, we are trying to help our customers optimize the way cartons and pallets are being used.”

GREATER AWARENESS A BOON

Engagement with customers on green issues is certainly more important than it used to be. Wieland gives the example of an upcoming annual review with a client where separate agenda items are dedicated to sustainability and decarbonization. “It’s not only about ‘when can we expect the next tender’ as a supplier. The whole sustainability and decarbonization topic is very high on the agenda.” However, not every customer is so green-minded yet: “Discussing green solutions is easiest with those customers who are industry leaders in their sectors and show leadership asking for more sustainable transport solutions. They are the ones on this journey with us,” Wieland said.

Martin-Neuville added that attitudes to both sustainability and decarbonization changed dramatically during the pandemic. “Pre-crisis, the amount of focus from our suppliers and our customers was somewhat limited; postcrisis, we are now seeing a lot more interest in how to drive and finance these initiatives.”

While he views regulation as the next obvious step, that is just one route to achieving the industry’s net zero ambitions. “We need to help ourselves,” he concluded. “Let’s not wait for COP26, let’s not wait for regulation, let’s help ourselves as a community to do what we have to do.” BB