The global shipping landscape is changing. Decarbonizing shipping is a huge challenge. Cyprus as a quality shipping centre is determined to contribute effectively to this challenge whilst maintaining its competitiveness.
Viewing and analysing the problems and obstacles that shipping industry is experiencing with decarbonizing I am suggesting some steps and actions should be taken from the Regulators (the Government) to strike a balance, ensuring that both the Cyprus shipping competitiveness and the decarbonisation path are on track.
- Address Ship Financing
Given the lack of clear regulations, the lack of consensus on which fuel will power shipping in the future and given that different fuels require different technologies and vessels, investors become wary of funding early-stage technologies or backing zero-carbon fuels as significant risks arise. Shipowners cannot take any risks which go beyond any commercial consideration. Ship financing opportunities should be enhanced through a diversity of financing and funding tools involving capital markets and private investors to enable better risk sharing of innovative and green transitional projects. Definitions of sustainable projects based on ESG should be designed to enhance the financing of the energy transition and climate ambition, and to that end, any technical screening criteria under Taxonomy should be reviewed so as to become fit for purpose.
- Secure priority access to low- and zero-emission fuels for the maritime industry.
Given that the international shipping industry is responsible for the carriage of around 90% of world trade, priority must be given to the sector. Governments through their policies can affect the greater availability and effect cost reductions of alternative fuels.
The Shipping Chamber welcomes the strong commitment of the European Commission to address "barriers to the deployment of low- and zero-emissions fuels including e-fuels and advanced biofuels" in Shipping and to give the sector "priority access to these fuels over sectors that have access to other decarbonisation solutions." This is an important step forward to ensure European Shipping operates on a level playing field and more importantly, this positive development adds to the need for Europe to become more attractive for private investments through a fit-for-purpose framework for banking finance, which is especially key for shipping SMEs.
- Introduce more clarity in climate targets.
It has become evident that full decarbonisation of the maritime sector can only be achieved if all stakeholders are motivated to play their part in a massive scale-up for the production of clean fuels, which in turn will require significant new investments in renewable energy resources. The pathway towards 'zero emissions' in shipping therefore needs 'all hands-on deck'. Even with all the goodwill in the world, the shipping industry on its own cannot deliver decarbonised shipping. It is looking increasingly likely that alternative fuels will be the first solution available to ship owners, without of course excluding the possibility for other technologies that may emerge along the way, such as carbon capture. Well-to-wake green fuels will require at least a doubling of current global renewable energy resources, and that is just for shipping. The scale of the challenge ahead of us is huge and we require action from both Government and private enterprise in order to get anywhere near our targets.
Regional regulations impact the shipping industry negatively and generate unnecessary administrative burdens and economic uncertainties for businesses. Shipping is an international industry and decarbonisation is an extremely complex challenge to be tackled on a regional basis, thus rendering global regulation a necessity.
- Address Shipping's global training standard
Cyprus should continue to enhance and promote reskilling and upskilling of seafarers, particularly in view of the ongoing review and revision of the STCW Convention, fundamental in the success of Shipping's green and digital transformation. Developing skills for new vessel technologies, fuel types, and safety regulations should remain a priority.
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