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Editorial: The high cost of low-carbon transportation

Are consumers ready to put their money where their mouths are on the road to low-carbon transportation? Ready or not, more of that money will be on the line this year, because, as of Jan.
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Are consumers ready to put their money where their mouths are on the road to low-carbon transportation?

Ready or not, more of that money will be on the line this year, because, as of Jan. 1, the owners of container ships and other deep-water cargo carriers will be on the hook to comply with new International Maritime Organization (IMO) regulations targeting the shipping sector’s greenhouse gas emissions.

One of those regulations is the requirement for ships to measure and report their ranking on a carbon intensity indicator (CII) index that grades a ship’s energy efficiency.

As the United Nations notes in its Review of Maritime Transport 2022, an estimated 30 to 40 per cent of container ships and dry bulk carriers did not comply with CII requirements in 2021.

Ships will be required to report their 2023 CII data no later than March 31, 2024, and thresholds to meet the CII ratings will become tighter each year until 2030.

That is going to require a lot of ships and ship owners to come up with a compliance plan. And that is going to require a lot of global shipping sector manoeuvring, and shipping sector manoeuvring is rarely quick and never cheap.

Slow steaming, which reduces fuel consumption, is one quick fix. But it reduces overall shipping capacity and drives up freight rates.

Switching to low-to-no-carbon fuels is the long-term answer. But the required investment in new ship technology, ship refuelling infrastructure and crew retraining is a huge logistic and investment proposition that will increase costs and complicate insurance coverage for ocean carriers.

The magnitude of those costs means that they will not be confined to ship owners, terminal operators, fuel suppliers and freight forwarders.

Beneficiaries of the 21st century’s online shopping efficiency and convenience will be required to help fund shipping’s journey to a low-carbon future.

That will be the real test of zero-carbon transportation viability.