Shippers rely on market-forces to cut CO2 emissions

Dive Brief:

AB InBev, AkzoNobel, DSM, FrieslandCampina and Huntsman — members of the Boosting Initiatives for Collaborative Emissions-reduction with the Power of Shippers (BICEPS) Network — created a new sustainability ranking system for freight carriers, which the companies say will act as a clear differentiator in their procurement process.
The ranking system scores carriers from A to F based on the actual emission scores and targets; quality and status of improvement projects; external collaboration on projects; transparency; and long-term sustainability ambitions. Only a select number of shippers will receive top scores each year in the relative ranking.
The BICEPS Network also seeks to encourage other chain partners to adopt sustainable practices, like incentive schemes by ports or waste-conscious end-of-life practices for ships.

Dive Insight:

The BICEPS Network seeks to leverage market forces to create a demand for sustainable solutions and drive supply chain innovation. The new rating system is the network's first major initiative that hopes to provide incentives for freight carriers to reduce their greenhouse gas emissions.

Yet regulation on shipping lines' carbon emissions is lacking and parties at this year's Paris climate conference, or COP21, failed to reach an agreement on capping emissions from the shipping and aviation industries.

Given the global nature of shipping, international regulation is necessarily consensus-based and consequently slow-moving. As a result, private initiatives or market-based forces often have a large impact on innovation before regulatory encouragement.

The BICEPS Network is not alone in this mission, the Sustainable Shipping Initiative is another collective of 19 maritime companies — including Maersk, Lloyd's Register and AkzoNobel again — promoting sustainable shipping practices. The initiative recently launched a roadmap to 2040, which includes market-based policies to push uptake of sustainable technology.

But some would say these initiatives are not enough.

A video on the BICEPS website claims shipping lines are currently responsible for 5% of the world's greenhouse gas emissions, more than all the cars on the planet. This number could reach 50% by 2050 in a 'business as usual' case study, according to Reuters.

Meanwhile, the head of the International Chamber of Shipping told Reuters the International Maritime Organization is working on developing a CO2 reduction plan, but could not say by when.