Navigating by decarbonization routes
How to ensure the sustainability and competitiveness of Brazilian foreign trade? International agreement for the reduction of carbon emissions consolidates the trend of efficiency and innovation in international maritime transport
By Juliana Lopes
Considered a new milestone for the industry, the agreement of the International Maritime Organization (IMO) defines targets for the reduction of emissions by at least 50% up to 2050 in relation to the levels of 2008. According to experts, it will result in measures of efficiency and innovation for the entire segment with reflexes in international trade. The agreement was the theme of the International Event on Climate Change and Maritime Transport held by the Institute for Climate and Society (iCS), in partnership with the German Embassy in Brazil, on November 14, 2018, in Rio de Janeiro.
This is the sixth edition of the Sustainable Future Dialogues series of periodic meetings. It brought together national and international experts in order to discuss the implications of the IMO agreement and the possible methods to ensure the sustainability and competitiveness of Brazilian foreign trade.
Maritime transport plays a key role in international trade because it is considered the most efficient modality in terms of emissions. Even so, it is responsible for 2.2% of global greenhouse gases - which corresponds to the total emissions of Germany.
Klaus Zilikens, the Consul General of Germany in Rio de Janeiro, recalled that both Germany and Brazil are exporting nations and have a common interest in international free trade, whose backbone is maritime transport. "It is possible to make the transport of goods by sea even more sustainable and to guarantee that there are no disadvantages to the economy and employment. The method for this involves the combination of measures to increase efficiency, electrification and renewable energy," he said.
According to the estimates from the IMO, if the current rate of growth is maintained, the sector could reach 17% of global emissions by 2050. Due to this trend, over 170 countries belonging to the international organization arrived at the consensus to cut the emissions of the sector by half in this century.
At the opening of the event, Ana Toni, the executive director of the Institute for Climate and Society (iCS), highlighted the importance of the participation of the maritime sector in the debate on climate change. "This makes the discussion qualified and rational. Technology will not resolve all our concerns. Therefore, it is important to debate this matter urgently. The economic and social effects of the reduction of emissions in maritime transport must be taken into consideration. We already have a target. We now need to discuss the best ways for Brazil to contribute to this target," she emphasized.
Understand the context
Brazil took part in the international negotiations for the agreement. As highlighted by Fernando Alberto Gomes da Costa, a Captain of Sea and War of the Brazilian Navy, the agreement is of utmost importance to act on climate change and to construct technical measures with a global repercussion. However, it is always also necessary to consider the specific nuances of Brazil. "The main Brazilian contribution was for the targets to be achievable. We took into account the context of the South American countries that transport cargo that do not have so much added value on long routes and also the developing and insular countries, which is a reality from which we cannot escape," he reported.
It is important to remember that this decision can also accelerate innovation in maritime transport. It represents a strong signal for the naval industry and fuel suppliers to increase their investment in new technology and its rapid implementation, including alternative fuels and propulsion systems.
In her presentation, Charlotte Inglis, head of the Maritime and Arctic Program of the European Climate Foundation, pointed out that, in order to achieve the target established by the IMO, the efficiency of maritime transport will have to increase by 80%. "The solution is to adopt measures such as a reduction of speed and low or zero carbon fuels, either in isolation or in combination. It is possible to reduce 40% of the emissions only with the already existing measures - such as the reduction of speed and with larger ships," she said.
Charlotte also highlighted that it is a great investment opportunity both in terms of naval technology and in fuel. She clarified that some regions, such as Latin America, have a great potential of becoming the future suppliers of renewable marine fuel. "Chile, for example, is competitive in solar energy. The current projects in Chile and Morocco of ships powered by solar panels have assured a competitive price for renewable marine fuel," she explained.
Furthermore, she cited several examples of innovation such as the Baird Maritime , which is powered by hydrogen and the Boskalis, which uses biofuel. Another example was the Peruvian ship, which was refitted using sail technology, whose return on investment was a period of five years. She also mentioned the first 100% electric ship in the world, which was launched by China. "The more decarbonization is postponed, the more disruptive will be the change for the shipping sector," she said.
The Paris Agreement, a great leap forward
In the IMO, the discussions involving the reduction targets of carbon began in the 1990s. The first resolution was signed in 1997, in the context of the Kyoto Protocol. For many years, the debate revolved around a mechanism based on the market, without arriving at a consensus. According to Isabelle Rojon, a consultant at University Maritime Advisory Services (U-MAS), the announcement, in 2015, of the Paris Agreement, in which 195 countries defined their climate objectives, created the momentum for the resumption of the discussion on a reduction target of carbon for international maritime transport.
"The IMO agreement for the reduction of emissions has as its principles the non-discrimination and the non-favoring of one country to the detriment of another, because ships operate with different flags that are not restricted to their countries of origin," explained Isabelle.
For her, the IMO agreement also defined that, primarily, the impacts of the reduction target of carbon emissions for maritime transport in countries would be evaluated before any measure is implemented. This impact evaluation must consider issues such as load value, dependency in relation to the mode of maritime transport, response to disasters and cost-effectiveness. A part of these impacts can be compensated by funds generated from carbon pricing mechanisms or the preferential access to loans through climate financing.
From the perspective of Ricardo César Fernandes, the executive director of the Brazilian Association of Norwegian Shipowners [Associação Brasileira dos Armadores Noruegueses] (ABRAN), the Paris Agreement represents an ambitious step. "The advance is in place and there is no turning back. On the horizon up to 2020, efficiency measures will enable the reduction of emissions from maritime transport. In order to comply with the 2050 requirements, there will need to be a disruption in terms of technology," he argued.
The director contextualized that Norway is stimulating green maritime transport, where the issue of autonomy of ships is well developed. "In the country, this is a government policy, which is a signal to the industry that it is a priority. Applications for government grants to obtain funds are based on technologies that are aligned with this policy. Public-private partnerships also have this orientation," he explained. As one of the results of this research and development effort, Norway launched the YARA Birkeland, which is a completely electric and autonomous ship with a 9MWh battery.
Impacts for the Brazilian economy
In order to better understand the impacts of the measures within the IMO for the Brazilian economy, researchers analyzed Brazilian exports and surveyed the emissions from the maritime transport associated with Brazilian foreign trade.
Andrea Luchesi, a professor and researcher at the School of Arts, Sciences and Humanities of the University of São Paulo (EACH/USP), is part of a research group that developed a methodology to estimate the contribution of the Brazilian cargo on each ship to establish the inventory of the country. In this way, it is possible to measure the impact on the Gross Domestic Product (GDP), the competitiveness of the Brazilian exports, and the balance of payments and also which are the most cost-effective measures to contribute to the global target. "Brazil wants to contribute to the compliance with the targets. This is not being questioned. We can do this more efficiently. The USP study seeks to contribute to this and to guarantee other aspects such as food safety, for example," he said.
In another study on the characterization of Brazilian foreign trade, performed with the support of the iCS, researchers from the Post-Graduation and Research in Engineering at the Federal University of Rio de Janeiro (COPPE/UFRJ) analyzed the impacts on the four largest products that form the majority of Brazilian exports. Commodities such as soya, iron ore, oil and biofuels were evaluated in the survey. "In terms of the intensity of emissions and efficiency, Brazil is second to none. The problem is the distance in relation to the consumer markets. Among the possible measures that are easier to implement, we recommend reducing the speed of the ships, which brings efficiency gains; the recuperation of heat; the cleaning of propellers and the use of biofuel. Vegetable oil is the most viable alternative due to its greater compatibility with the engines," highlighted André Lucena, a professor and researcher at COPPE/UFRJ.
The COPPE/UFRJ study indicated that the impact of the transfer of the costs of maritime transport on the Brazilian economy would be in the order of 1% to 3% of Brazilian GDP. However, there is more opportunity to transfer costs in relation to some Brazilian commodities that have a superior quality when compared to competitors. This is the case of the iron ore mined in Carajás, which is sold at a premium price on the international market due to its high mineral content. Brazilian oil is also highlighted for its superior quality when compared to competing products from the Middle East, with a higher concentration of sulfur.
Mário Bastos Ferraz de Mendonça, an advisor from the National Union of Maritime Shipping Companies [Sindicato Nacional das Empresas de Navegação Marítima] spoke of the importance of cabotage, which involves coastal shipping. This modality plays an important role in the transport of cargo in Brazil, which has 8,500 km of navigable coastline, reaching 10,000 km when the Amazon River is included. "Cabotage is five times more efficient than road transport and three times more efficient than rail. By way of comparison, a large ship carries a quantity of cargo that is equivalent to 22,000 trucks. Placed in a line, these trucks would occupy the entire Dutra highway from Rio to São Paulo, i.e., about 450 km," he explained.
However, because they are smaller ships, the reductions of emissions are more difficult. According to Mario, maritime fuel is 30% more expensive than road fuel, which is also subsidized . "If the cost is simply transferred, there is the risk of part of the cargo transport migrating to the road modality, thereby impacting cities and generating even more pollution," he added.
“Emissions need to be considered in the broader context. If cabotage reduces emissions, this should be accounted for in terms of the mitigation of the greenhouse gases," concluded Alfredo Sirkis, the executive secretary of the Brazilian Forum for Climate Change [Fórum Brasileiro de Mudanças Climáticas] (FBMC),
At the time of the interaction with the audience after the presentations, Lucena also emphasized that intensity targets would favor Brazil. A good example of this is the large ship belonging to Vale, named Valemax. This transports a larger volume of cargo per kilometer, which results in a lower carbon intensity. "Accordingly, in a scenario of a hybrid pricing mechanism, Brazil would benefit," he said.
"Incorporating less carbon as a plus, with this certainly applying to shipping, is a very important element to make all this work. This is the proposal of the positive carbon pricing, which is recognized in the preamble of the Paris Agreement, as a method of recognizing a value that is less carbon," said Sirkis at the conclusion of the event.
We have recorded a summary of the last event of 2018 in the Future Sustainable Dialogues series. Soon, you will be able to watch exclusive interviews held with the key speakers at the international meeting. Follow the networks and channels of the Institute for Climate and Society to see the updated content about the universe of climate change and the agenda for next year.