Wednesday, 28 May 2014

LOGICAL LOGISTICS




Information just released by the US Energy Information Administration reports the export of wood pellets, known as ‘biomass’, from US to EU nearly doubled in 2013 from 1.6m tons to 3.2mt. Mostly feedstock arose in SE and Mid Atlantic regions of USA and the greatest proportion of the exports headed to the UK where total demand for pellets has been accelerating dramatically from a near zero import in 2009 to 3.5mt in 2013.

Increase in demand for biomass is set to continue to satisfy demand for low carbon heat and power generation in the EU to facilitate meeting EU 20-20-20 targets. That is a 20% reduction in CO2 emissions (from 1990 levels), a 20% increase in use of renewable energy and a 20% improvement in energy efficiency across the region by 2020.

Biomass is deemed to be ‘carbon neutral’ as the absorption of CO2 by the trees/plants as they grow is equal to that emitted on combustion and so biomass is much in demand as a base fuel to meet carbon reduction targets. It can be co-fired, with coal, in existing power facilities and coal plants can be (relatively) straightforward to convert to biomass only generation plants.

Transport is something of the weak link, with the cost of transport accounting for about a quarter of overall cost of pellets. Further, shifting renewable fuels with fossil fuelled ships presents an open door to the environmental protesters already concerned about the overall sustainability of the supply chain.

‘Logical logistics’ would see renewable fuels used in the transport of renewable feedstocks. Reducing fuel cost and emissions by deploying renewables at sea to shift biomass would be beneficial to operators and cargo owners alike. Not only would greater price stability over the longer term emerge but the collaboration could point to a joint shipping-energy commitment to using technology solutions to address opposition concerns and so smooth the path for a faster expansion of the biomass market. Which, in turn, enables swifter achievement of targets.

Wednesday, 21 May 2014

HARNESSING THE WINDS OF CHANGE



A Chinese proverb: “When the winds of change blow some people build walls and others build windmills.”

On Sunday May 11 2014 over 75% of Germany’s electricity supply came from wind. In Q1 27% of that country’s total energy demand was provided by renewable power. Germany aims to provide nearly all of the nation’s power supply from renewable energy by 2050. 

Energiewende - Germany’s energy transition programme - is founded on the knowledge that a fossil-fuel based system is unsustainable. This policy is underpinned by the consumer paying for ambitious government policy. In 2014 there are no technical or commercial obstacles to providing a highly sophisticated nation with renewable energy. The consequence of a significant proportion of electricity generated by renewables is a fall in wholesale energy prices that will eventually lead to a reduction in prices to the consumer. It’s a long game but the rewards are beginning to show.

In shipping, it seems, we are less ambitious. By believing that the efficiency of shipping alone can address the challenges the industry will face in a fossil fuel constrained future is naive. It is, in the proverb’s terms, a wall building exercise. We may not like the consequences of change but there is huge opportunity in embracing possibilities.

Just as a 21st century wind turbine successfully evolved from a last century windmill so shipping can evolve renewable solutions for the global fleet. Maersk has adopted giganticism as a solution but that’s not necessarily an option for smaller organisations. Bulk ships are responsible for moving the more fundamental building blocks of a modern global economic system - feedstocks, fuels, raw materials. Short sea solutions may be much needed to provide low carbon on-shipping support for the gigantic box carriers. Smart 21st century, renewable energy solutions for ships of all shapes and sizes are out there, the challenge is for the sector to embrace the opportunity for ambitious change.

Tuesday, 13 May 2014

Shipping underpins shopping


Last week, May 6th 2014, one of the world’s largest retailers, Tesco, announced it was making greater use of sea transport to reduce emissions. Tesco calculates that bringing goods directly from Gdnyia to Teesport by sea and reducing its road transport by 80% had saved the company €418 000.

So, was it “emissions reduction” that prompted Tesco to shift modalities, or de-congesting Europe’s roads, or the impact to its financial bottom line. I suspect the latter. Because no matter how hard we wish for environmental solutions to take hold they only do so when there is irresistible imperative and money is king among reasons to effect radical change.

We know shipping is the most carbon efficient mode of commercial transport but we also know that growth in world trade will lead to shipping’s contribution to emissions increasing disproportionately with other industry sectors, like retail, where high profile commitment to emission reduction is a part of an overarching long-term strategy. 


Emission reduction commitments are made not for ‘greenwash’ purposes but to reduce corporate exposure to risk. Carbon emission comes from burning fossil fuels which are subject to increasing price / availability uncertainties. No matter how hard we wish they weren’t. 

Reducing dependency on fossil fuels, by switching to low carbon options, like shipping, makes sense. Switching from fossil fuels to locally sourced secure supply of renewable fuels makes double sense. BA announced last week it was trialling waste-derived fuels for its aircraft fleet. Were it to be successful air freight would topple sea freight from its “most carbon efficient” pedestal in the flash of a wing. The shipping sector needs to look beyond efficiency savings, where particularly on short-sea routes, savings can be marginal at best and begin a realistic analysis of the potential of renewable fuels.