Presenting Poseidon
President Emmanuel Macron took the fight for maritime decarbonisation to the G7 Summit in Biarritz on August 24-26 after an audience at the Elysee Palace with senior members of the maritime industry.
President Emmanuel Macron took the fight for maritime decarbonisation to the G7 Summit in Biarritz on August 24-26 after an audience at the Elysee Palace with senior members of the maritime industry. President Macron promised to hold another meeting, after the G7, where he would invite people back, specifically to further discuss Maritime.
The Principles, which are designed to align the shipping industry in reducing a 50% absolute emission reduction by 2050 implemented by the International Maritime Organisation, were launched two months ago: 11 banks signed up, representing US$100 billion of the world’s $400 billion of ship financing portfolios. The signatories are the first wave of banks targeted as international lenders to shipping, with Asian banks and lessors expected to follow a second wave.
Ninety percent of the market has been extremely positive, with a natural resistance from owners of older, less-efficient ships, according to Paul Taylor, Global Head of Shipping at Societe Generale. “As far as business, we are doing the right thing here,” said Mr Taylor. “There is little option other than to follow the IMO rules, and it is better to lead and participate.” Aligning with the CSR policies of clients and banks improves the chances of hitting the IMO target. There is also a distinct business angle, as the bank is better placed to introduce innovative solutions across its financing and advisory platform.
“The reaction has been phenomenal and, off the back of that, we were invited to present the Poseidon Principles to Brune Poirson, Secretary of State to the Minister for the Ecological and Inclusive Transition,” said Mr Taylor. “The presentation was well-received and, on the back of that and lobbying from the Global Maritime Forum, President Emmanuel Macron invited me to the Palace for his pre-G7 meeting on Friday 23 August.”
Shipping decarbonisation has been recognised by President Macron, who was asked by shipowners in the room to lobby for slow steaming - bring down sailing speeds – and cold ironing, whereby ships in ports can be plugged into electricity grids powered by renewable energy. President Macron committed to mentioning both at the G7. The two techniques are essential for the reduction of carbon emissions in the existing fleet.
LNG and the alternatives
To reach the 50% reduction in emissions by 2050, it is generally accepted in the shipping sector that zero-carbon fuels have to be commercially viable for new builds by 2030: these include hydrogen, methanol, ammonia, electric, battery-powered, skysail and bio or synthetic forms of LNG, according to Mr Taylor. LNG is in commercial supply, the others are not in the volume required.
Around 11% of the world’s new ship orders are LNG-fuelled, compared to only 2% of ships currently on the water. The drawback here is that LNG still emits greenhouse gases, although the use of LNG is a material improvement and the best environmental option available today. LNG hybrids are considered the most likely fuels for reaching the emission target, according to some academics.
Responsible banking
A leading role in the creation of the Principles generated an invitation to the United Nations Climate Summit on September 22. On the same day, Diony Lebot, Deputy Chief Executive of Societe Generale, signed the UN’s Principles for Responsible Banking. A day later, Mr Taylor was invited to join a panel and present the Poseidon Principles as an example of target setting in Responsible Banking.
At the UN Summit, members of the Getting to Zero Coalition – an alliance representing senior leaders within the maritime, energy, infrastructure and finance sectors (and including Societe Generale) supported by decision-makers from government and IGOs - announced, that they will lead the push for international shipping’s decarbonisation. “We already support the development of greener maritime transport through various initiatives, such as the Poseidon Principles, and have logically decided to join the Getting to Zero Coalition to contribute further to the shipping’s decarbonisation,” said Mr Taylor.
Further invitations stemming from the Principles included presentations at a Climate Summit in Hamburg on September 4, and in Yokohama, Japan in October. The UK Ministry of Transport has also asked Mr Taylor to sit on a panel in International Shipping Week to discuss the Principles and has invited him to attend a dinner at Whitehall the same week.
The degree of government engagement reflects the need for all parties to collaborate as well as act in line with what are ambitious targets laid down by the IMO. “But at least we have a sound beginning,” said Mr Taylor.