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    A sustainable festive season means transport must change its ways

    A sustainable festive season means transport must change its ways

    The shelves and warehouses are emptying almost as fast as they are being restocked in the run-up to the holidays. Supply chains are working hard to remain supplied with toys, clothes, food and everything else associated with the festive season.

    This fresh pressure on shipping, road and air transport has resulted in renewed focus on the transport sector's environmental footprint. Transportation is a hard-to-abate industry, not typically known for contributing to a carbon-free world. But new solutions to reach net-zero targets are being created for air, road and sea transport.

    Considering the growth rate and the slow attempts to resolve the problem, it is estimated that shipping could account for 10% of global emissions by 2050

    Shipping

    International shipping is one of the most significant sources of greenhouse gas emissions on the planet. Some 80% of global trade is moved across oceans on cargo vessels that are powered by fossil fuels. This results in some 1,076 million tonnes of CO2 every year - around 3% of global GHG emissions, according to the European Union1. If the industry were a country, it would be the sixth biggest polluter on earth, ahead of Germany.

    However, these figures could become even worse if not tackled immediately. Considering the growth rate and the slow attempts to resolve the problem, it is estimated that shipping could account for 10% of global emissions by 20502.

    Pressure is on the shipping industry to decarbonise and in 2021, it called for a global carbon tax3. The International Chamber of Shipping (ICS) wants a global solution whereby governments tax its carbon emissions, forcing investment into new technology. Under the plan, worldwide carbon pricing would result in a fund that would be used to supply cleaner fuels such as hydrogen and ammonia. A separate initiative has also been launched to develop a USD 5 billion research and development fund to create zero-emission ships by 2030.

    Read also: Shipping's voyage to a net-zero future

    Consumers are also applying pressure. Some high-profile companies including Amazon, IKEA, Michelin, Patagonia and Frog Bikes, amongst others, committed to using zero-emission ships to transport their goods by 2040. Shipping and logistics company Maersk4 is decarbonising its fleet with eight vessels capable of running on both traditional fuels and carbon-neutral methanol.

    While electric vehicles are a useful option in cities, hydrogen is a potential solution for long-distance vehicles that require quick refuelling

    Road Transport

    Often dubbed the 'workhorse' of the domestic supply chain, the heavy goods vehicle (HGV) is vital in the distribution of goods to retailers, especially in the export of stock from one country to another. The prevalence of HGVs on the roads creates an unsurprisingly high amount of emissions. In the UK, they account for 18% of greenhouse gas emissions5 and 13% of nitrogen oxide ones on the roads.

    There are ambitious plans to reduce this environmental impact. The British government6 has committed to being the first country in the world to phase out new, non-zero emission HGVs under 36 tonnes by 2035 and to make all new HGVs zero emission by 2040.

    In 20207, an alliance of truck manufacturers committed to spend up to EUR 100 billion to phase out traditional engines in favour of clean fuel, hydrogen and battery technology.

    While electric vehicles are a useful option in cities, hydrogen is a potential solution for long-distance vehicles that require quick refuelling.

    Read also: Green hydrogen: the key to decarbonising heavy industry

    The heads of Daimler Truck and the Volvo Group8 have said that hydrogen-powered HGVs that can travel long distances are likely to take off towards the end of this decade.

    The aviation industry has committed to reaching net-zero carbon emissions by 2050 with airlines, airports and manufacturers having signed a declaration

    Air Transport

    The aviation industry has committed to reaching net-zero carbon emissions by 2050 with airlines, airports and manufacturers having signed a declaration in October 2021. Aviation accounts for around 2% of global emissions10 but the industry admits it will be a challenge to reduce this figure as there is no obvious solution in the near future.

    The majority of these reductions will come from the use of sustainable aviation fuel, as well as new technology such as electric and hydrogen-powered aircraft.

    Sustainable aviation fuel (SAF)11 is produced from feedstocks and emits up to 80% less carbon over its lifecycle compared to traditional jet fuel. It is currently more expensive, but is expected to become more cost efficient as technology develops. It has been used in the airline industry since 2008 and just weeks ago, the first commercial passenger plane to fly across the Atlantic only on SAF landed at New York's JFK airport12.

    Read also: Cleared for takeoff: How sustainable aviation fuels can put the industry on course for net zero

    Another part of the plan to decarbonise aviation is through the use of new types of aircraft. In collaboration with Airbus, the industry is exploring the use of hydrogen, stating that it expects to start building a hydrogen-powered airliner by 203013 and for one to enter service by 2035. Rolls-Royce, meanwhile, is testing an electric plane.

    The International Air Transport Association, which has committed to net zero by 2050, has said that the remaining emissions would be eliminated by carbon capture or offsetting.

    Read also: The long haul to zero emissions aviation

     

    Growing pressure

    The transport sector is under pressure: from retailers who want to see a reduction in their environmental footprints and from a consumer base which now sees sustainability as one of its main concerns when choosing where to shop. The deadline is one that looms for many sectors - 2050.

    ln order to meet those demands, action is needed quickly. Emissions from burning fossil fuels will need to be tackled at a time when demands on freight, as well as personal transport, are increasing14. Yet whatever those demands and pressures, the prospect of failure presents a far greater threat.


     

    1 https://ec.europa.eu/clima/eu-action/transport-emissions/reducing-emissions-shipping-sector_en
    2 Global shipping is a big emitter, the industry must commit to drastic action before it is too late | Casten Ned Nemra | The Guardian
    3 https://www.bbc.co.uk/news/business-56835352
    4 https://www.maersk.com/sustainability/all-the-way-to-net-zero
    5 https://brc.org.uk/climate-roadmap/section-6-pathway-3-moving-to-low-carbon-logistics/611-heavy-goods-vehicles-hgvs/
    https://www.gov.uk/government/news/uk-confirms-pledge-for-zero-emission-hgvs-by-2040-and-unveils-new-chargepoint-design
    7 https://www.ft.com/content/7d49589b-ff50-444d-8eef-b8abe5691f91
    8 https://www.ft.com/content/7d49589b-ff50-444d-8eef-b8abe5691f91
    9 https://www.gov.uk/government/news/uk-confirms-pledge-for-zero-emission-hgvs-by-2040-and-unveils-new-chargepoint-design
    10 https://www.atag.org/facts-figures.html
    11 https://www.bp.com/en/global/air-bp/news-and-views/views/what-is-sustainable-aviation-fuel-saf-and-why-is-it-important.html
    12 https://www.bbc.com/news/business-67548961
    13 https://www.ft.com/content/87941b8d-0460-4b54-a861-d6ebc6da29e8
    14 https://theicct.org/blog/staff/vision2050-explained-may2021

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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