Global Maritime + Open Innovation

On May 25th with over 200 participants, we talked about an intersection of Offshore Wind, Alternative Fuels, and Maritime Decarbonization. We heard from thought-leading corporations and watched flash talks from seven startups innovating in the space. If you missed the event, you can watch here.  

According to the United Nations International Maritime Organization (UN IMO), marine vessels carry ~80% of world trade volume and 70% of its value. Despite its importance to the global economy, the sector has been largely ‘overlooked’ by external environmental and social pressures – but that is changing. The global maritime sector today is at a crossroads, summarized by three core drivers:1) increasing momentum for environmental regulations; 2) increasing public scrutiny; and 3) like in many other sectors, ‘digitization’ which can be an opportunity or threat to incumbents throughout the value chain. 

If we focus in on those first two drivers, environmental regulation and public scrutiny, we find an entangled mass of international pressures. In 2020, the UN IMO started to regulate sulfur emissions and is now seeking to reduce the sector’s carbon emissions by 50% by 2050. Environmental regulations are also simultaneously being implemented at the regional (EU), national (US EPA), provincial (CA CARB) and municipal (Port of LA/Long Beach) levels. So even if one or even a few regulatory regimes are delayed, there is no respite for this global sector.

To understand the basis for the pressure, we need to talk about fuel. Shipping moves our goods at scale, generating – according to the IMO – 2.9% of global carbon emissions. The fuel powering the deep sea vessels is called Bunker C, which has been labeled by some as ‘liquid coal’. Just by looking at the side-by-side picture of diesel and Bunker C fuel, you can understand how the fuel moving our global economy has a significantly higher amount of criteria emissions (NOx, SOx, PM, VOCs) per unit compared to other transportation sectors. 

In addition to the criteria emissions, the industry faces other challenges, from invasive species carried in ballast water to ship strikes on marine mammals, all of which are also in the process of being regulated.  

With recent high profile maritime mishaps during the pandemic, there is now even more of a groundswell emerging in the maritime sector’s flank – the arena of public opinion. As we worked from home, we accelerated our ‘point and click’ consumption with multiple packages per day arriving on our doorsteps, typically delivered in a diesel truck. Increasing awareness of our consumer carbon footprint is now starting to include the whole supply chain. And the global shipping sector, which is historically siloed, is not used to being in the public eye. 

There is also an environmental justice perspective. Ports act as a nexus of logistics nodes, concentrating trucking and shipping. The resulting local air pollution particularly negatively impact the health of neighboring communities, which are often of low income and of color.

On the corporate front, ESG continues to become more prevalent in the board room and is starting to manifest itself from efforts such as the Poseidon Principles –  a group of banks now following a carbon metric to determine vessel financing – to the BMW Group requiring that the vessels that move its cars are recycled sustainably.                 

To Meet the Challenge: New Paradigms and More Stakeholders are Needed….a Lot More

We have seen this movie before… 

In Utilities, the transition to renewable energy, in Automotive, the shift to electric, in Big Food, the move to less processed, local and organic. All three of these sectors saw disruption due to structural changes and technological advancement in their markets. Venture-based innovation and the resulting impacts of new entrants has helped shape or even define their transformation.

The specific industry challenges to maritime are analogous, which also leads to the question of the evolution of an industry culture that is used to looking inward. There are initiatives within the industry to try new methodologies. On May 25th, we heard Claus Graugaard from the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping Center speak about their new mandate as the center gathers new members. 

We also believe that a spatial, systems approach can speed commercialization by purposely blurring silos. Our May 25th event sought the intersection of Offshore Wind (OSW) + Alternative Fuels + Maritime. The OSW opportunity on the US East Coast is a once in a generation opportunity, with higher capacity factor, lower cost renewable energy pulling in $Billions of infrastructure investment along the coast. We heard key corporates and startups speak about how wind energy could make hydrogen as an alternative fuel for maritime or how the advances in automotive li-ion batteries are now starting to enable the ‘electrification’ of the working waterfront. In short, the Maritime sector does not have to invent or even re-invent everything on its own. 

To focus our expanding platform to help address the biggest challenges facing working waterfronts and global shipping, SeaAhead is forming a Maritime-OSW Vertical. The Vertical will be globally focused and include a roundtable consisting of a curated group of industry stakeholders with an emphasis on bringing Greater Boston’s STEM-based venture ecosystem ‘out-to-sea’. It will provide a forum for stakeholder discussions, as well as connect corporates to startups, with the overall goal of flattening new technology paths to market.           

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SeaAhead Catches up with Chris Sturgeon, Managing Director of Red Penguin Marine

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BlueSwell, partnership between New England Aquarium and SeaAhead, named Fast Company’s 2021 World Changing Idea