At the dynamic inaugural panel session of the Tradewinds Shipowners Forum at Posidonia 2024, Harry Conway, leading the Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO), delved into an extensive dialogue with prominent figures from the shipping sector regarding regulatory challenges spanning from shadow fleets to the adoption of alternative fuels.
“We should be concerned by dark fleet activity because of the safety of vessels and crew, as well as the protection of the marine environment. If elements within the industry circumvent the rules and regulations, we have a problem. Dark fleet vessels have no accountability because they operate under the radar; they don’t respect the rules, and the IMO is taking measures and actions to tackle the issue,” stated Harry Conway.
Michael Parker, global industry head of shipping & logistics at Citi, acknowledged the severity of the issue. He stated his concern but emphasized the need to confront it directly, describing the situation as a state of conflict. He pointed out that until this conflict is resolved, finding solutions will be challenging. Parker noted that the IMO lacks the power to enforce various measures to enhance transparency unless others are prepared to take more decisive actions. He remarked that sanctions are not proving effective but expressed optimism about entering an era of regulation and transparency, driven by climate change and data. He stressed that the key issue is enforcement and expressed hope that peace will lead to a return to more normal operations. He underscored the importance of preventing the re-emergence of shadow fleets.
“A new age of safety, commercial compliance, and government accountabilities is here. This is a shared responsibility; the onus should not be just on the commercial side. The shadow fleet is a matter of concern. It has a different perspective compared to the rest of us; they have old vessels, poor inspections, lack insurance, and are riddled with mechanical failures and oil spills, which they simply regard as collateral damage. But as we move forward, environmental regulations are going to be global shipping shapers, so as we move forward, environmental regulations will be a big part of commercial decision-making,” stated Christopher J. Wiernicki, chairman and CEO of ABS, that the industry is in the early innings of a decade of uncertainty.
In response to Parker’s remarks, Dr. Conway acknowledged a growing sense of a common mission, despite the ongoing polarization between proactive participants and those who are less engaged. On the topics of decarbonization and alternative fuels, the shipping industry appears to be unified regarding the primary challenges it faces and the critical need for effective and impactful incentivization policies to ensure a successful energy transition in maritime operations.
“If the carbon cost is passed onto the supply chain and then to consumers, we are not making any progress toward shipping decarbonisation; instead, we should be using proceeds from the EU ETS to subsidise the industry in our quest to decarbonise. Other incentives could include the reduction of waiting times at ports for vessels that are more energy-efficient,” said Charis Plakantonaki, Chief Strategy Officer, Star Bulk Carriers Corp.
“We need the IMO to provide more clarity on the measures they are planning and what the impact on our industry will be.”
Dr Conway concluded, “Clarity, pragmatism, uncertainty, shared responsibility – these are the key words of the industry, and these are the things we at the IMO strive to provide. The clarity the industry is craving is our priority as we study a lot of proposals on the table, each having its own implications for the transition, which is not going to be cheap. We have done a comprehensive impact assessments, and come September, we will be able to make informed decisions as we try to provide the certainty the industry needs to make the right investment decisions.”
In addition, the stage for the decarbonization discussion was set earlier in the opening session of the Tradewinds event by Stephen Gordon, managing director of Clarkson Research.
He emphasized that shipping accounts for about 2% of global emissions, while also being the most carbon-efficient mode of transportation. Gordon highlighted the need for significant fleet renewal and alternative fuels, along with retrofitting technology and slower speeds, advocating for a multi-layered approach.
The conference also addressed the future of energy shipping, which globally accounts for 38% of shipping volumes, and in Greece is even higher, reaching almost 50%. As peak oil remains at least a decade away, with other estimates projecting it much further into the future, Evangelos Marinakis, Chairman & Founder of Capital Maritime & Trading Corp., who controls a fleet of more than ten million deadweight tons, is optimistic about the future of energy shipping. This optimism is fuelled by continuous global population growth and the ongoing modernization of the developing world.
“We bet on what happened yesterday, what is happening today, and what is likely to happen tomorrow,” he commented. “We see that the world’s population is increasing, and as countries develop, electricity needs rise, driving up demand. We also see that Artificial Intelligence (AI) demands increasingly more power, which will further contribute to the sustainable demand for oil and gas. Of course, geopolitical tensions and developments always play their part. With current events in the Red Sea and the potential for conflict between the USA and China, anything could happen.”
