The future of shipping
Maritime industries in Norway and US face challenges—and opportunities
Lori Ann Reinhall
The Norwegian American
On Nov. 14, Ambassador Kåre R. Aas and the Royal Norwegian Embassy welcomed maritime industry leaders, experts, and politicians to the Dirksen Senate Office Building in Washington, D.C., for a breakfast seminar to provide an update on the developments in Norwegian-American cooperation in the clean tech industry. This ensuing dialogue highlighted how the shipping industry together with the Norwegian and American governments can work together to meet the challenges of today with an eye on future opportunity.
An underlying thread of the seminar across all speakers was the health of the environment and the need for the industry to develop in a climate-friendly manner, but also in a way that will sustain the industry and foster its growth. To achieve these goals, they must be realistically defined. Dedicated research and development is required, followed by an implementation of new technology that is commercially viable, coupled with government regulation. Finally, these are goals that cannot exist unilaterally: cooperation across borders is necessary to find a solution for a global problem. Here, Norway and the United States are major players—and the good news is that the two maritime nations are working together.
Keynote address: outlining the challenge
This message was first clearly articulated by the keynote speaker for the morning, Norwegian Minister of Trade and Industry Torbjørn Røe Isaksen. He opened by pointing out that the shipping industry is part of the problems of climate change and pollution, yet he was quick to underline that it is also a big part of the solution. For the Norwegian government, it is essential to combine growth and business opportunities by solving some of the major fundamental challenges Norway and the United States are facing when it comes to sustainable ocean economies.
Isaksen elaborated on the scope of theses challenges: clean energy, healthy food, good-paying jobs, and clean transport for a growing population. At the same time, we have witnessed slower economic growth globally, a lower demand for shipping services, and security risks in some parts of the world. These are daunting challenges for the industry, but it will have to step up to the plate. Isaksen pointed out that if the shipping industry were a country, it would be ranked between Germany and Japan as the sixth largest contributor to global carbon dioxide emissions.
On a side note: To understand the impact of the shipping industry as a major player in the global economic engine, consider the economic data. No less than 80% of all trade between the continents of the world is being carried by ships. According to IHS Global Insight, a recognized leader in economic and financial analysis and forecasting, already in 2009, the contribution to the world economy from liner shipping industry was estimated at $183.3 billion, and it creates 4.5 million direct jobs, while the full economic impact was $436.6 billion and 13.5 million jobs.
Much work is already underway to meet the challenges of the present and future. The International Maritime Organization has set a goal to reduce greenhouse gas emissions from international shipping by at least 50% by 2050, and in Norway, the aim is to cut emissions in Norwegian waters by 50% in 2030. To match these ambitions, the government has increased funding for the development of LNG (liquefied natural gas) batteries for hydrogen and smarter ship operations. Technological innovation is the order of the day, as regulations are being put in place.
Isaksen was proud to report Norwegian companies are at the forefront of this development. Optima Marine has come up with one of the most advanced systems for handling ballast water and became the first company to have their system approved according to U.S. regulations. And next year, Yara and Kongsberg’s autonomous fully electric container ship is scheduled to start sailing. Electric zero-emission car-passenger ferries are already sailing the fjords of Norway, and by 2022, more than 70 battery-powered vessels will be in operation.
Digitalization is a massive trend, as more autonomous systems are being developed. Some jobs may disappear with time, but new jobs will be created, as Norway positions itself at the forefront of green shipping and clean maritime technology.
The focus of the seminar, however, was not to solely highlight Norway’s accomplishments in the shipping industry and blue economy but rather to productively foster cooperation with the United States. “To solve the challenges that we have today concerning our common oceans, we need both knowledge and cooperation,” were Isaksen’s concluding remarks.
Panel discussion: finding solutions
Following the keynote, a distinguished panel of Norwegian and American industry experts was moderated by Helen Brohl, executive director of the U.S. Committee on the Marine Transportation System (CMTS), an organization that oversees a total of 25 federal agencies that deal with different parts of marine transportation system.
For Lars Almklov, director of Group Government and Public Affairs at DNV GL, opportunity was the buzzword of the day. He pointed to the various fuel alternatives: hydrogen, ammonia, ethanol, biofuels, batteries, wind, nuclear and even the possibility of nuclear fusion in the future. He was encouraged by the U.S. Coast Guard’s policy regarding batteries and safety on ships. And finally, Almklov pointed to the necessity to draft regulations in the smart way to incentivize the use of technology.
Egil Haugsdal, president of Kongsberg Maritime, spoke enthusiastically about U.S. cooperation with his company, which has been in existence for 205 years. Haugsdal emphasized the importance of the U.S. market for Norway. The executive also underlined that shipping is still the most environmentally friendly way to move goods around the world, and his company is firmly committed to identifying and implementing new solutions.
Helene Tofte, director of International Cooperation and Climate of the Norwegian Shipowners’ Association, was able offer more hard data. With 2-3% of global manmade CO2 emissions coming from shipping, she made it clear that reducing the carbon footprint is the industry’s No. 1 goal. To achieve the 50% CO2 reductions by 2050, Tofte stressed the necessity to develop new technologies—and to do it fast.
Above all, alternative fuels are required. Tofte pointed out that on the average, ships sail 20 years, meaning that low- and zero-emissions technologies need to be on the market as early as in 2030 to achieve the 2050 targets. Current technology already in place on the new electric ferries in western Norway needs to be scaled up and put on larger ships fast. That said, currently, the technology required is not yet ready, and more innovation is needed. But for Tofte and others, the good news is that those who find these solutions the fastest will be the winners of the future.
Collaboration in action: Innovation Norway & Washington state
And there is already ongoing cooperation and progress. Notably, in the spring of 2019, Innovation Norway and the Washington State Department of Commerce signed a memorandum of understanding as part of an effort to modernize the state’s ferry system with electric vessels.
This collaborative effort offers much promise, as the two regions, Washington and Norway, share much in common in terms of geography, industry, and history (the Pacific Northwest is an enclave of Norwegian immigration). As Joshua M. Berger of Washington Maritime Blue, a strategic alliance to accelerate innovation and sustainability across the maritime space led by Gov. Jay Inslee, pointed out, the state’s maritime industry is one of the largest and most diverse maritime sectors in the United States, a $37 billion economic driver, employing 190,000 residents.
With everything from paddleboards to container ships, Washington operates one of the most sustainable fisheries in the world, the North Pacific Fishery in the Gulf of Alaska and the Bering Strait. The cooperative ports of Seattle and Tacoma operate the fourth largest container terminal in the United States. The state is also home to the largest ferry system in the country.
In Washington state, the ferries are the single largest greenhouse gas emitters. For this reason, work is ongoing to convert the Jumbo Mark II class ferries to hybrid propulsion in the near future. It is estimated that this conversion will reduce carbon emissions by 25% and lessen vessel noise, the latter critical to the recovery of the endangered southern resident orcas in Puget Sound.
But the cooperation between Norway and Washington goes beyond electric ferries. There are efforts underway to identify opportunities for standards and new technologies throughout all sectors of the maritime industry, including research in hydrogen technology. Connections are being made between major research institutions, with a common goal to enhance the collaboration to reduce maritime emissions.
Rep. Rick Larsen arrived to offer further remarks on what is happening back in his home state of Washington. As a senior member of the House Committee on Transportation and Infrastructure, he emphasized the need for the federal government to do more to support the states’ individual efforts to meet carbon emission reduction targets. In Washington, the MOU with Norway directly supports these efforts to deploy cleaner fuel sources for vessels and to help modernize the fishing and seafood industries. Moreover, researchers are working together to make use of data analytics and digital technology to promote sustainable practices.
Key takeaways: optimism for the future
With so much work ongoing, there is still much to be done, and a major takeaway from the conference was that it is the role of policymakers to create incentives and inspiration to drive efforts forward, regulation that will support both the public side and private capital. As both Norway and the United States move forth in a blue economy, there are many stars scattered throughout the public and private sectors, both inside and outside maritime industries, stars which, to paraphrase the words of Sen. Sheldon Whitehouse of Rhode Island, must be aligned in a coherent constellation guided by an overall vision.
Most of all, to be successful in the global arena, change in the global shipping and maritime industries requires a culture of innovation that is sensitive to the financial and operational demands of the ship owners and other players. But the outlook is hopeful. In the words of keynote speaker Isaksen: “Clean maritime innovation is not only good for climate—it’s business-smart.” It is a challenge that can be met, and the November conference at the Norwegian Embassy in D.C. was part of the many initiatives that will enable a clear path forward for the future of shipping.
This article originally appeared in the January 10, 2020, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.