Stagnation in R&D investment creates risk for zero emissions future, says ICS

The International Chamber of Shipping (ICS) has warned that without decisive government signals, declining levels of maritime research and development could jeopardize industry’s ability to decarbonize.

According to the International Energy Agency (IEA), maritime’s research and development (R&D) spending between 2007-2019 remained stagnant, lagging far behind that of other sectors. Responding to strong political signaling from governments around the world, investment on R&D in the automotive sector has increased from US$67 billion in 2009 to a staggering $130 billion in 2019, compared to $1.6 billion in maritime. The total amount of Corporate R&D investment for maritime actually decreased, from $2.7 billion in 2017 to $1.6 billion in 2019 according to the IEA.

ICS, which represents 80% of the world’s merchant fleet, has highlighted that growing uncertainty is leading to a reduction in confidence about R&D investment. The lack of clarity, in part due to the increasing levels of political risk and resulting investment risk, is leading to limited R&D investment for ‘green’ fuels for ships, and the accompanying technologies they need to be safely used. 

There is also growing concern about the safety and toxic emission associated with the use of some proposed alternative fuels. Without government support for rapid research and development, this will add unacceptable levels of risk to investments made in shipping by both the public and private sector.

Guy Platten, secretary general of the ICS, commented: “We have welcomed recent announcements of plans to increase innovation and for zero emission pilot projects. However, all too often these announcements do not come with cash or a realistic investment strategy. This sends conflicting messages to the market and as a result investment in shipping is becoming riskier with each passing day. 

“We need governments to match their words on decarbonization with tangible action. Investment in research and development relies on certainty of the availability of long-term “patient capital”.

As technology development is traditionally uncertain and takes time, ICS is co-sponsoring, along with 10 governments and industry partners, a $5 billion R&D fund for shipping – the IMRF, which provides certainty through guaranteed 10-year funding to support the ‘de-risking of investments’ for advancing technology readiness levels.

Platten continued: “While pledges on reducing emissions are welcome, we desperately need action today in our unique internationalized industry. There are no silver bullets and while some try to suggest that we already have the technologies, the reality is far from the truth.

“Governments need to look beyond the sales brochures and wishful thinking of others to invest in technologies that are safe and sustainable and without negative side effects for other parts of the environment. We are committed to working with governments via the IMO and have proposed several solutions to increase the speed of our decarbonization journey.

“The $5 billion International Maritime Research and Development Board (IMRB) provides the ‘patient capital’ that is desperately needed. While this proposal would be funded entirely by industry, we urgently need the support of governments to enable this to happen.

“If we can’t get political consensus now on the urgent need for R&D, how are we going to reach the much-needed political consensus for a sustainable and equitable carbon price signal that will incentivize the market to decarbonize at the speed and scale needed?”

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