In an interview with Maritime Fairtrade, Toby Stephens, Holman Fenwick Willan (HFW)’s Singapore head of shipping and APAC head of the global crisis management team, deconstructs the rising need to be prepared for environmental emergencies as the maritime industry shifted to greener technologies with all the associated risks.
HFW is one of the world’s leading global law firms in the shipping sector.
Toby Stephens, Singapore head of shipping, APAC head of global crisis management team, HFW. Photo credit: HFW
Why is the issue of preparedness for green emergencies pertinent?
In our view, the issue is pertinent because of a number of factors that are conflating right now. The green agenda causes new technologies in the maritime sector to be pushed through as swiftly as possible and with any new technology, there comes an increased risk. They are both in terms of the technology itself, but in the case of new propulsion systems and new fuels. In addition, training the crew how to deal with these new fuels and technologies is essential and necessary.
This is perhaps exacerbated given both the increasing number of extreme weather events and environmental disasters which have been occurring over the past few years. It is also important to recognize that such emergencies and disasters may occur as a result of the increasing prevalence of firstly, extreme weather events (external climate emergencies), and secondly, man-made climate disasters (man-made environmental emergencies).
The latter comes with the additional public pressure from an environmental standpoint which in part is due to the increased public awareness of environmental issues and recognition of the need for sustainability in shipping.
Additionally, as ships have already become much bigger and more complex, the maritime salvors have already had to develop new technology to deal with the scale of maritime disasters. The additional pressure of having to deal with alternative fuels and other new technology is a real concern.
In your expert opinion, what components of green progress have led to the most common emergencies?
The issue that has to date received the highest profile is the carriage of electric vehicles on car carriers. However, it is true that conventional vehicles have previously caused catastrophic fires on board car carriers, but the nature of the fire from a battery-powered vehicle renders the conventional fire-fighting technology on board car carriers as impotent.
Which green maritime risks are most dangerous to seafarers and why?
From our perspective when it comes to the discussion of the operational risks for seafarers, green maritime risks refer to the environmental and safety challenges associated with the transition to more sustainable shipping practices. However, in our view, either the adoption of alternative fuels or a lack of policy coordination would be the largest risk to seafarers at this early stage.
Firstly, the simultaneous introduction of a host of different fuel types, such as e-fuels, biofuels, and fossil fuels, is potentially challenging for seafarers at the present time where seafarers will be expected to understand the risks associated with the new fuels and the engines.
A report commissioned by the task force secretariat of the Maritime Just Transition Task Force highlighted that “a lack of clarity about viability and uptake of alternative fuel options, as well as uncertainty surrounding regulatory developments and financing, is making it difficult to plan effectively for the transition of the maritime workforce.
Additionally, it will also be difficult to attract investment towards new skills programs, compatible with the industry’s needs for a decarbonized future.”
Overall, this would require a substantial increase in the amount of training for seafarers in the handling of such fuels which the United Nations Global Compact noted could “represent a significant health and safety risk to seafarers, ships, communities and the environment”.
Secondly, the lack of a coherent global policy would also pose a threat to seafarers. This was a particular concern that was recognized by the combined report from the United Nations Global Compact.
Specifically, the report observed that “coherence between skills and environmental policies remains weak and fragmented in many countries”. In essence, poor cross-governmental coordination is hampering the effectiveness of governments. As noted by the committee, “poor cross-governmental coordination can pose a bottleneck in the green transition, hamper the effective planning of skills development, and ultimately put workers’ safety at risk”.
Simply put, a lack of governmental coordination, combined with the advent of numerous types of competing fuels, is a dangerous mix for seafarers that must be adequately addressed. In comparison, the aviation industry has a huge amount of consistency between the relatively few aircraft and engine manufacturers, which is making the industry functional.
What are the tangible and intangible costs of salvage and salvor’s liabilities?
The tangible and intangible costs of salvage and salvor liabilities typically come down to two main issues: the cost of performing the salvage operation; and the risks posed to those carrying out the salvage operation and to the equipment.
Firstly, the cost of performing the salvage operation is the key tangible cost in the process of salvaging. This ordinarily requires the development and maintenance of specialized equipment to which needs to be kept ready to be deployed at strategic locations throughout the globe. This of course includes the investment in developing equipment that will be required for future salvage services. This is undoubtedly more difficult to anticipate when considering emerging technologies and emerging risks.
Secondly, the intangible cost of salvage is the inherent expectation of danger in the process of carrying out such salvage operations. The salvors personnel and equipment are necessarily thrust into harm’s way and again, emergent risks increase the danger substantially.
There is also a reputational element if a salvor is engaged in a salvage operation. For example, if a salvor is engaged on a Lloyd’s open form contract (which imposes a duty on the salvor to exercise their best endeavors to save not only the property, but also the environment), but then fails to do so because of new technology or fuels, there is the potential for a reputational risk following that. It may make the salvor reluctant to offer their services until the new risks are better understood.
What is the 2025 outlook given the challenges face by the maritime industry?
We expect the maritime industry to continue to experience big changes in 2025.
Geopolitical tensions are set to continue and, by extension, continue to disrupt the global shipping industry in 2025. In particular, the Middle Eastern conflict and the Russo-Ukrainian war are likely to continue to disrupt shipping along the Suez Canal area and the Black Sea.
Taking the Middle East conflict, it is only more likely that an increasing number of ships will divert around the Cape of Good Hope, thereby leading to longer transit times, increased costs and also an increased focus on trying to reduce those costs where possible.
There is also the risk of increased tension between China and the West over Taiwan and the resulting risk to shipping and trade – either directly, or indirectly with the implementation of sanctions.
We do however believe there will be a continued focus on improving the sustainability of the shipping industry. For example, in 2025, the European Union Emissions Trading System (EU ETS) programs’ next stages begin to take effect which would directly impact the Emissions Trading Schemes of ships entering European waters. In this regard, sustainability and by extension regulatory compliance would be a significant player in 2025.
Photo credit: iStock/ Dilok Klaisataporn