Supply Chain Scanner - Week of October 28, 2024
Weekly blog by Emily Atkins
Canadians are willing to pay to decarbonize shipping, but it’s not enough
In a time of rising prices and serious cost-of-living pain for many Canadians, you might expect that people would be on the lookout for ways to save money, not spend more of it. And while people are curtailing spending on a wide variety of non-essential consumer goods (the recreational equipment market is an example of extreme contraction) it appears that many still have our future in mind.
A recent study released by Canadian non-profit Clear Seas and conducted by the Angus Reid Institute (ARI), found that a majority of Canadians actually would be willing to pay more to offset the emissions created by bringing goods here from overseas.
To be exact, 64% of 1,600 adults polled this summer by ARI said they are willing to pay a premium – up to five percent more – on imported goods to offset carbon emissions associated with marine shipping. Of those, 18% said they’d pay up to two percent more, while 45% said they would pay two percent or less. ARI says these figures are consistent with those seen in their 2022 survey, which the 2024 edition updates.
Men are much more likely to say they wouldn’t pay any amount extra to reduce or offset shipping emissions than women. Younger Canadians, especially 18- to 34-year-old women, are more likely to say they will pay more if it means emissions reductions in the shipping industry.
Interestingly, only 21% of those polled said that greenhouse gas emissions were the most significant hazard posed by marine shipping, the lowest on a list that also included (among others) potential oil spills (cited by 60%), ships dumping waste (55%), smuggling (47%) and human trafficking (43%). Returning to the topic of hydrogen fuel for transport, which I covered in an earlier blog, 67% of Canadians would prioritize the use of potential green or clean hydrogen to decarbonize domestic industries, including shipping. This figure leads me to believe that many Canadians who are in favour of decarbonizing don’t know that much about hydrogen and what its environmental impacts can be. Take a look at the previous blog to get a sense of some of hydrogen’s potential downsides.
Maritime shipping is at present responsible for about three percent of global greenhouse emissions. But forecasts have that number climbing to 10% by 2050 if significant effort is not made to clean up shipping’s act. And Canadians’ willingness to pay up to five percent is not going to cut it. According to a study co-produced by BCG and the Global Financial Markets Association (GFMA), a premium of 10% to 15% will be necessary to achieve complete decarbonization of the shipping sector by 2050. In the shorter term, the premium might need to be as high as 30% to 40% before the production of alternative fuels can be scaled up effectively.
If this is the route the shipping industry chooses, consumers will have to suck up much higher cost increases in the goods they buy, both those produced overseas and those made from remotely sourced raw materials. I think it’s pretty clear at the moment that these increased cost pressures would not be well received.
But what is the alternative? There are other options, including slowing down the need for speed that creates additional GHG emissions. If the shipping industry were to wholeheartedly adopt slow steaming as a decarbonization option, not only would costs drop as fuel requirements declined, but emissions could also be contained.
Slow steaming was initially adopted in response to overcapacity back during the global economic crisis around 2008. Maersk found that it is possible to decrease engine load by 35% with no adverse effects, and with fuel savings and reduced costs for maintenance and operational issues.
Reducing ship speed by 10% will lead to a 27% reduction of the ship’s emissions. But, if all ships were to slow-steam, available capacity would be reduced, meaning more ships would be needed to carry out the same transport work. If the additional emissions of building and operating these new ships were considered in the equation, then reducing the fleet’s speed by 10% would lead to an overall CO2 savings of 19%.
So, while it’s heartening to see that a majority of Canadians are committed enough to fighting climate change that they would pay more for goods, their willingness is not enough to get ahead of the problem.
But there are solutions, and as professionals working in transport and logistics, perhaps it’s on you to adjust expectations so that alternatives like slow steaming can be deployed as tools in the fight. What’s your take on this issue? Please join the conversation on LinkedIn!
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Emily Atkins
President
Emily Atkins Group
Emily Atkins is president of Emily Atkins Group and was editor of Inside Logistics from 2002 to 2024. She has lived and worked around the world as a journalist and writer for hire, with experience in several sectors besides supply chain, including automotive, insurance and waste management. Based in Southern Ontario, when she’s not researching or writing a story she can be found on her bike, in a kayak, singing in the band or at the wheel of her race car. LinkedIn: https://www.linkedin.com/in/emilyatkinsgroup/