Never waste a good crisis

Both the pandemic and the Russian invasion in Ukraine are turning our economy and society upside down, without precedent. 

But these crises have also uncovered some realities that one might have overseen during the last decades. The perfect storm we are going through has put the finger on the essential and critical role seaports are playing and will have to play in the future. And here we must maybe recall Churchill’s “Never let a good crisis go to waste”. 

During the pandemic ports have deployed all possible means and efforts to remain open and keep on moving. As mission driven entities, ports have often been punching above their weight to make this happen. Sometimes at a high price, since strengthening its resilience does not come for free. And port charges did not go up, on the contrary. 

Since the Russian invasion in Ukraine on 24 February, ports have been again in the frontline to find solutions. Sudden changes in the supply of energy, the Ukraine solidarity lanes to help exporting the Ukrainian grain, the impact of the different sanction packages have again put the ports’ agility and adaptability to the test. Ports play again an essential role in getting through this energy crisis. And this often comes with short term, non-expected investments which will not help in achieving the long-term challenge to decarbonise Europe, more on the contrary.  

Green goals

And to reach this long term decarbonisation goal, we have the Fit for 55 plan. While the final negotiations on this package are starting, the Commission has put a new REPower EU plan on the table.  It aims at enhancing Europe’s energy independence. Stepping up renewable energy deployment seems to be the recipe to both becoming independent from Russia and speed up decarbonising. A new renewable energy target of 45%, a solar rooftop initiative for big commercial and public buildings, a more ambitious target for the production and import of hydrogen and a proposal to define “go to areas” for renewable energy projects which would come with a planning and permitting ease are some of the main proposals of importance for ports. 

The policy intentions are very good. Europe becoming a carbon neutral continent must remain the main goal and objective. But allow me in this context to express some concerns.  

Ports are heavy infrastructure, port investments have long lead times, because of the time needed to get around the financing and the needed authorisations. At the same time uncertainty is all around: technological uncertainty (what will be the fuel of the future), price uncertainty (energy prices are fluctuating as never before, inflation is pushing prices of raw material at never seen heights), economic uncertainty (are we at the start of a deep and long recession?). In this context it is impossible for ports to make long term plans, it is extremely tricky to make the right choices.  

Moreover, in the current context with a inflation rate we did not have seen since the 70’s, it will become even more difficult to find the necessary funding for the needed investments. The budget plans developed last year have become completely worthless.  

Space issues

Another challenge in preparing for a carbon fee economy and society is space. Cleaner and renewable energies require more space than fossil energies. Their energy density is lower, safety perimeters are to be respected and there is a need for more storage capacity.  ESPO commissioned a study in beginning of 2022 on the impact of the energy transition on port infrastructure and investments. The study explains that LNG require two times the space of fossil energy, hydrogen up to five times. And space is scarce in Europe, not at least in and around Europe’ ports. Ports are often in competition with the nearby city in their demand for more space.  

So how to solve that? What is needed to progress and pursue our decarbonisation goals in the current challenging environment? 

Realising the green transition is a first priority and ports want to a partner in making this happen. The questions is not “if” but “how”. 

Legislation should be as much as possible goal oriented, giving flexibility to allow ports to make the best and most efficient choices, to remain agile. Moreover, policymakers, at European, national and local level, must recognise the critical and strategic role ports have both as nodes in the supply chain and as hubs of sustainable energy and must be ready to support Europe’s ports both politically as financially. Finally, European citizens will have to understand that decarbonising Europe, deploying renewable energy, also implies building infrastructure to produce, connect and store energy. If renewable energy projects and –  more in general  – greening investments cannot get the needed permits, decarbonisation will not happen.