In the last year, China’s foreign trade and economic policies and regular epidemic prevention and control measures had an ongoing bearing on the shipping industry, which has long been concerning WBX. To update platform audience and exhibitors on the latest market news, provide quality industry services, and help breakbulk supply chain companies create new value, we invite thought leaders from the industry to our exclusive interviews, to navigate the development direction and set the trend for the industry, hopefully providing implications for industry professionals.

Interviewee Information

Peng Chuansheng, Chief Researcher at China Waterborne Transport Research Institute, responsible for the research of waterborne transport technology, formulation of standards and policies, and international exchanges and cooperation. He is also an expert of the Expert Group on International Marine Shipping Sulfur Emission Control, IAPH Working Group on Sustainable Ports and Sustainability Reporting for Ports, and PIANC Decarbonization Infrastructure Working Group for Inland Waterway Transport.

Interview Briefs
》 What can we learn from the report of the 20^th CPC National Congress on carbon neutrality, especially the impact on shipping industry? Could you get into details about this? Are there any phased goals and time schedule in the pipeline?

》 What changes will Chinese shipping industry undergo amid the sustainable energy transition mentioned in the G20?
》  How should shipping companies cope with the increased costs on their way to carbon neutrality?

Q: What can we learn from the report of the 20^th CPC National Congress on carbon neutrality, especially the impact on shipping industry? Could you go into details about this? Are there any phased goals and time schedule in the pipeline?

A: The 20^th CPC National Congress report notes that reaching peak carbon emissions and achieving carbon neutrality will mean a broad and profound systemic socio-economic transformation. For carbon neutrality, it is proposed to better control the amount and intensity of energy consumption, particularly of fossil fuels, and transition gradually towards controlling both the amount and intensity of carbon emissions; to promote clean, low-carbon, and high-efficiency energy use and push forward the clean and low-carbon transition in industry, construction, transportation, and other sectors; to thoroughly advance the energy revolution, use coals in a cleaner and more efficient way, to make greater efforts to explore and develop petroleum and natural gas, discover more untapped reserves and increase production, speed up the planning and development of a system for new energy sources, and properly balance hydropower development and ecological conservation, and develop nuclear power in an active, safe, and orderly manner, and strengthen the systems for energy production, supply, storage, and marketing to ensure energy security; to improve the statistics and accounting system and the cap-and-trade system for carbon emissions, and boost carbon absorption capacity of ecosystems; to get actively involved in global governance in response to climate change.

From the report, first of all, we learn that carbon neutrality is not made overnight, but requires strenuous efforts and costs. Second, clean and low-carbon energy transition is an inevitable way for major carbon emission sectors to achieve carbon neutrality. Third, we need to plan and build a new energy system while ensuring energy security. Fourth, carbon neutrality presents a call to boost the carbon absorption capacity of ecosystems. Fifth, Chinese government will push forward carbon neutrality by exercising better control over the quantity and intensity of carbon emissions, and improving the statistics and accounting system and the cap-and-trade system for carbon emissions. Sixth, China needs to get actively involved in global governance in response to climate change.

As a fundamental, pioneering and strategic industry in national economy, transport should better not be preceded over the societal endeavor for carbon neutrality. Given this, no phased goals and time schedule are proposed for the transport industry to realize carbon neutrality. Nevertheless, the industry players should not fall behind in this regard.

As a pivotal part of transport, marine shipping is taken as a green low-carbon means in the midst of pollutant and carbon emission reduction endeavors. Over a fairly long period of time, the gross amount of waterway transport will still keep rising year by year. This underlines the necessity to set the carbon emission intensity (amount of carbon emissions per unit of cargo turnover) and phased goals and time schedule. For this, the 14^th Five-Year Plans for Developing Green Transport released by MOT does not specify the allowable gross amount of carbon dioxide emissions for waterway transport, but set a target to lessen the amount of carbon dioxide emissions per unit of cargo turnover by 3.5% by 2025 compared to the 2020 level.

Q: What changes will Chinese shipping industry undergo amid the sustainable energy transition mentioned in the G20?

A: This presents the need to plan and build a new energy system on the premise of ensuring energy security. All sectors should opt for their decarbonization pathways in line with sustainable energy transition. China’s pathway toward carbon neutrality means clean and low carbonization of primary energy sources and high electrification of secondary energy sources, with the latter being a pressing task for the shipping industry. From a long-term view, hydrogen fuel cells can be an effective solution to fulfill environment protection, decarbonization and ecological needs. Ammonia, methanol and hydrogen fuel produced from green power will be the main fuel options for future shipping.

Q: How should shipping companies cope with the increased costs on their way to carbon neutrality? Could you share your insights?

A: Studies suggest that the cost of alternative fuels is 2-5 times higher than that of fuel oil in the shipping industry. Despite the increased costs, widespread use of green fuels may not seem to hamper the industry development. Moreover, the increased fuel costs can be transferred to the owner of cargo via freight charges and even the society at large, and they should bear the resulting costs as they benefit from green shipping.

With over 80% of internationally traded cargo transported by marine means, it may impact the product competitiveness of shipping and trade powerhouses when the increased freight costs are transferred to the whole society. For shipping companies, they may not be as competitive as each other due to different increase amplitude of freight costs. So shipping and trade powerhouses need to discuss and look for proper decarbonization pathways, in order to gain an edge in decarbonization by developing and applying alternative fuels.

China is the most important project logistics supply chain market globally, offering tremendous market opportunities for breakbulk transportation, and world-leading manufacturing bases supplying a large quantity of cargos to international infrastructure projects.

Despite the present gap with western rivals, China’s economic growth is also fundamental to the recovery of international breakbulk transportation industry. With supportive policies released by Chinese government, the market will return to a balance and industry players must adapt to this as well.

It is right such a structural reform that highlights the importance of WBX, which serves as a platform for EPCs, OEMs and the entire logistics supply chain, in a bid to establish necessary relationships for succeeding in the turbulent international environment.

According to the State Council’s latest General Plan for COVID-19 Management as Category B Infectious Disease, all China-bound travelers must take a nucleic acid test within 48 hours before departure, and can only travel to China when the test result is negative or after it turns from positive to negative. Inbound travelers will not be subject to PCR tests and centralized quarantine any more. We are waiting for you in Shanghai.