What Ships Can Teach Us About Energy Transitions | Renata de Marsillac, MBA ’26

Key Concepts:

• Energy Transition: A global-scale shift from one dominant energy system to another.
• IMO (International Maritime Organization): A UN agency regulating international shipping, comprised of 176 countries.
• Decarbonization: Reducing carbon emissions, particularly in the context of shipping.
• Sustainable Marine Fuels: Alternative fuels to oil, such as ammonia, ethanol, methanol, and biodiesel.
• Co-evolution: The simultaneous evolution of technology, infrastructure, policy, and business models.
• Niche Innovations: Small-scale innovations that can potentially link up and disrupt the current regime.
• Cost Gap: The difference in cost between fossil fuels and green alternatives.

1. Introduction: The Evolution of Ships and Energy Transitions

• The speaker uses the Pictionary example of drawing a "ship" to illustrate different eras of shipping: sail ships (Pirates of the Caribbean), steam ships (Titanic), and modern cargo ships.
• The core argument is that the evolution of ships is directly linked to energy transitions.
• Shipping moves 90% of the world's goods, highlighting its importance.
• Modern ships are engineering marvels, comparable in size to the Eiffel Tower.

2. Energy Transitions in Shipping: A Historical Perspective

• First Transition: From wood, animal power, manpower, and wind (sail ships) to coal and steam engines (steam ships) in the 18th-19th century, powering the Industrial Revolution.
• Second Transition: From coal to oil in the last century, leading to modern cargo ships.
• Current Transition: From oil to sustainable fuels and energy, driven by the need to decarbonize.

3. The Role of the IMO and Economic Penalties

• Shipping is regulated by the IMO, not individual countries.
• The IMO is set to decide on economic penalties for carbon emissions, potentially serving as a blueprint for other hard-to-abate sectors.
• The speaker presented research on the cost-effectiveness of different candidate policies to the IMO member countries in September 2023.
• The speaker is starting a business in sustainable marine fuels in South America with her mother.

4. Addressing Skepticism: Cost and Scale

• Skepticism 1: Prohibitive Cost:
  • Counterargument: Subsidies and regulations can effectively close the cost gap between fossil and green alternatives and promote innovation.
  • Example: 19th-century mail subsidies in England spurred innovation in steam ships.
  • Since the IMO started introducing regulations to decarbonize shipping, the pace of innovation in the industry has picked up dramatically and is now on track to reach 20% decarbonization before the end of the decade.
• Skepticism 2: Insufficient Scale and Slow Progress:
  • Counterargument: Energy transitions are not revolutionary overnight disruptions.
  • Technology must co-evolve with infrastructure, policy, and business models.
  • The process involves a series of niche innovations that eventually converge.

5. The Process of Energy Transition: Co-evolution and Niche Innovations

• Energy transitions are not linear; they involve a series of niche innovations.
• Example: Steam ships started as a niche innovation for docking in ports and canals.
• The transition required developing screw propulsion, changing materials from wood to steel, and deepening ports.
• The transition from sail to steam took a century.

6. The Future of Shipping: Multiple Fuels and Systemic Changes

• The future of shipping involves multiple fuels like ammonia, ethanol, methanol, and biodiesel.
• Changes are needed in engines, hull design, ports, and decision-making processes.
• The industry is currently in a moment of high density of innovations that have not yet converged.

7. Call to Action: Urgency and Collective Problem Solving

• The speaker emphasizes the urgency of the current energy transition, as delays can cause irreversible damage to the Earth.
• She calls for investors to bet on the energy transition, policymakers to create regulations, and innovators to join the problem-solving exercise.
• She invites the audience to step out of their "garage" and help draw the future of shipping together.

8. Notable Quotes:

• "We won't invest in anything that relies on subsidies or regulations to work." (Skeptic)
• "Subsidies and regulations can be an extremely effective way forward to close the cost gap between fossil and green alternatives before they are cost competitive and promote innovation." (Speaker's response)

9. Synthesis/Conclusion:

The energy transition in shipping is a complex, multi-faceted challenge that requires a systemic approach. It involves not only technological innovation but also changes in policy, infrastructure, and business models. While there are skeptics, historical precedents show that energy transitions are possible with the right incentives and collaborative efforts. The urgency of the current climate crisis demands immediate action and the involvement of investors, policymakers, and innovators to create a sustainable future for shipping.