Global Sustainability Agenda #39: How the Circular Economy can introduce new value to the maritime industry

Global Sustainability Reality

Firefighters continue battling massive wildfire in California ahead of thunderstorms, lightning (The Washignton Post)

Supercharged by Climate Change, Western Megafires Explode Simultaneously (Inside Climate News)

‘The Adriatic is becoming tropical’: Italian fishers struggle to adapt to warm sea (The Guardian)

Will global warming turn L.A. into San Bernardino? Map models climate change in 60 years (LA Times)

This Scientist Has a Risky Plan to Cool Earth. There’s Growing Interest. (New York Times)

These Three Overlooked Climate Challenges Are Key to a Net-Zero Future (BNN Bloomberg)

The next phase of energy transition: Five key trends to prepare for (WTW)

Racked by Extreme Heat, One Worker Died on the Job. His Story Is a Warning. (The Washington Post)

A critical system of Atlantic Ocean currents could collapse as early as the 2030s, new research suggests (CNN)

Study finds major Earth systems likely on track to collapse: 5 things to know (The Hill)

Antarctic temperatures rise 10C above average in near record heatwave (The Guardian)

Global Sustainability Business Impact

As first airline drops goal, are aviation’s 2030 targets achievable without carbon offsets? (Climate Change News)

China’s COSCO and Fortescue Look to Build Green Fuel Supply Chain (GCaptain)

85% of countries want a fast transition to clean energy – but how do we make it an equitable one too? (World Economic Forum)

White House Announces New Private Sector Investments in American Maritime Industries Due to Biden-Harris Administration Efforts (White House)

Port Calls prepare for the next wave of digitalization (Hellenic Shipping News)

DOE Announces $41 Million for Technologies to Expand the Use of Renewable Power (U.S. Department of Energy)

MPA Collaborates with Microsoft to Boost Innovation, Cybersecurity, Digital, and Green Transformation for Maritime Industry (Hellenic Shipping News)

How Effective Are Carbon Credits in Corporate Net Zero? SBTi Speaks (Carbon Credits)

Maersk Raises 2024 Outlook for Third Time Citing Demand and Uncertainty (Maritime Executive)

Carbon Credits Found to Be Mostly ‘Ineffective’ in Key Study (Bloomberg)

Trump has big plans for climate and energy policy, but can he implement them? (Brookings)

Here’s why ESG is crucial for insurers’ sustainability reporting (Gulf Business)

Is the dream of nuclear fusion dead? Why the international experimental reactor is in ‘big trouble’ (The Guardian)

The path forward

The Circular Economy (CE) concept promotes sharing, remanufacturing, repurposing, reusing, repairing, refurbishing, redesigning, recovering, and recycling materials and products to decouple economic activities from resource consumption. While prevalent in many industries, CE is still in its early stages within the maritime industry.

The CE is widely recognized as a crucial concept for sustainable growth and is steadily gaining global traction. CE is anticipated to profoundly impact products, markets, business models, and value chains, as well as infrastructure, with the maritime sector serving as a fundamental component. However, there has been minimal exploration of the maritime industry’s potential within the circular economy framework.

Over the next decade, we can expect the emergence of new business opportunities and concepts facilitated by the shift toward a more circular society. This transition will be significantly driven by digital technology, data, new platforms, and the introduction of new market players.

Circular Economy in the Maritime Industry

The maritime industry has incorporated some CE principles, such as shipbreaking for recycling, decarbonization, and industrial symbiosis.

CE transformation is driven by digital technology, data, new platforms, and market actors. Disruptive technologies like digital twins, 3D printing, virtual reality, augmented reality, 5G, and AI are enhancing maritime efficiency, encouraging decarbonization, and facilitating new ship designs, production, and operations.

Circular Economy in the Shipping Sector

The full adoption of CE principles in the shipping industry encounters challenges such as disparate information among suppliers, non-standard products, and varied ship component designs.

Over the past decade, the industry has also grappled with surplus capacity, low freight rates, and depreciating secondhand prices. Although new technologies are being incorporated into existing business models to reduce costs and enhance efficiency, individual players find it challenging to maintain a competitive edge when operational excellence depends on third-party algorithms or software available to all industry participants. Often, these technologies merely redefine the fundamental operational framework for shipowners.

To address these issues, there is a need to focus on ship design, production, operations, repairs, and end-of-life cycles. Emphasizing the creation of material passports to track every component’s lifecycle can enable remanufacturing and reuse, promoting sustainability.

Furthermore, the digitalization of the global supply chain facilitates the identification and commercialization of new markets. By leveraging their domain expertise, shipowners can redefine their role in developing global circular supply chains, transitioning from commoditization to offering value-added services and establishing new partnerships.

Opportunities for Circular Economy in the Shipping Sector

The shift towards circularity can create new business opportunities, such as reverse logistics, enhanced data services, and strategic partnerships.

Future of Vessel Ownership: The next-generation business model for vessel ownership is envisioned as digital, decarbonized, and circular, with standardized vessels designed for multiple lifetimes. This model would support circular ecosystems and enhance supply chain optimization.

Strategic Partnerships and Ecosystem Plays: Collaboration across value chains and industries is essential to harness the benefits of circularity. Shipowners must engage in ecosystem plays and co-develop circular supply chains with partners or risk obsolescence.

Circular Economy in Ports

The specific challenges posed by the Circular Economy (CE) for ports in areas such as material sourcing, land management, energy management, and waste management include:

• Understanding the environmental impact of specific economic activities, such as port services.
• Equipping the labor force with relevant skills.
• Raising awareness and building capacity among business entities involved.
• Transitioning from linear economic systems to circular models.
• Developing and investing in new business models.
• Changing behaviors and relationships between consumer and producer liability regimes.
• Pricing goods and services to reflect their full costs.
• Implementing policies that promote a circular economy.

From a strategic perspective, it is essential to recognize that achieving circularity in ports is a long-term transition characterized by path dependency mechanisms. This means that a successful circular transition is a gradual process where small-scale opportunities to close material flow cycles are identified and seized (e.g., linking waste streams between two companies in the port area). These initial efforts can pave the way for larger projects and initiatives.

It is also important to avoid inflating expectations about the potential of circularity. While port authorities and stakeholders may set ambitious long-term goals for circularity, practical progress often starts with isolated initiatives involving a few actors and gradually expands to more integrated, port-wide plans and projects.

Circularity in ports requires an entrepreneurial approach, leveraging existing technological, economic, and governance-related knowledge, as well as the relationships and interactions within the port community. This approach is expected to generate multiple “small wins” that can collectively lead to a significant circular transition. Thus, ports must undergo a transitional stage before fully evolving into truly circular ports in the long term.

Integrating circularity into seaport planning involves designing and operating seaports with sustainability and resource efficiency at the forefront. Circular Economy (CE) activities must develop at three distinct levels:

• Micro-level: Focus on enhancing the environmental performance of individual companies involved in port activities by reducing resource consumption and pollution discharges or designing more environmentally friendly services (e.g., Reusing waste streams within a single port or service provider).
• Meso-level: Focus on networks that improve regional systems and environmental protection through energy cascading, exchanging by-products, recycling waste, and, when possible, sharing infrastructures (e.g., Reusing waste streams within a single port or service provider).
• Macro-level: Focus on port-related communities (e.g., regions, cities, municipalities, or provinces) to facilitate the development of sustainable port services provision and use systems (e.g., Interregional port-industry networks for the exchange of secondary resources, such as the Bioport of Europe project at the Port of Rotterdam).

These initiatives vary from short-term demonstration projects (e.g., the Port of Antwerp Sustainability Strategy) to medium-term innovation and optimization-focused projects (e.g., the Biopark Terneuzen project at the Port of Zeeland) and long-term vision strategies.

Opportunities for Implementing the Circular Economy in Ports

Implementing circular economy principles in ports can be driven by the following approaches:

Circular Business Models: Encourage port-related businesses to adopt circular business models where products and materials are designed for reuse, refurbishment, or recycling.

Digitalization and Smart Technologies: Employ digital technologies and data analytics to optimize port operations, improve resource allocation, reduce energy consumption, provide transparency in material flows, and enhance overall circular efficiency.

Resource Efficiency: Plan, design, and operate port infrastructure and facilities to minimize resource consumption, such as energy, water, and raw materials. Examples include energy-efficient lighting, renewable energy sources, and water recycling systems.

Sustainable Transportation: Utilize low-emission and energy-efficient transportation methods, such as electric or hybrid vehicles, for cargo handling and transport. Promote a sustainable modal split in connections to the hinterland.

Research and Innovation: Support research and innovation initiatives to discover new circular solutions, technologies, and practices for seaports.

Public Awareness and Education: Educate port stakeholders and the general public about the importance of circularity in seaports to make the transition feasible and foster a sense of responsibility and sustainability within the community.

Financial Considerations: Carefully estimate and assess the upfront investments needed for circular projects and the associated return on investment. Consider sustainable finance options when engaging in circular projects in a port context.

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