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We often talk about the price of change. Sometimes we even call it the price of progress.
The problem is that this price, or cost, can spread unevenly. The gains are great, but they are an average and don’t always represent your personal experience.
Also, not every system or product has the same level of pain when it comes to switching.
Cutting out red meat doesn’t require installing a new kitchen or even going to a new store, it just requires a slight behavior change (despite how badly you may miss that hamburger).
Cutting out fossil fuels? Not unexpectedly, that’s proving to be more difficult, painful, and costly for some.
But the world is looking at it in a new light.
Switching Costs and Complex Systems
Costs of change come from switching to new technologies that have begun to grab market share from the incumbents.
However, these new systems require investment, infrastructure, and changes in consumer behavior, maybe even some government intervention - taxes, subsidies, costs.
The reason incumbents lose market share, despite these switching costs, is that the new technologies are generally cheaper, more efficient, and actually provide a better customer experience.
The Price Is Change
Energy systems need to change, and indeed are changing rapidly. The war in Ukraine has showed their fragility (once again).
While protecting the planet is actually not a huge motivation for change among large segments of the global population, price is.
Price removes ideology. Price doesn’t care what you actually think.
We should let price do its thing.
As commodity prices rise, governments around the world are under pressure to relieve the consumer of the additional cost.
However, rising prices are the perfect environment for instigating the systemic and behavioral changes these same governments are looking to encourage.
Gas too expensive? Drive less and get a smaller (maybe even electric) car. If that sounds like the 1970’s, well…
Nickel too expensive? Don’t turn it into a 3,000 lb battery for an electric Hummer.
Rising gas prices are the perfect mechanism to push consumers towards public transportation, bikes, smaller electric vehicles and away from SUVs.
Bridging to Future Fuels
Rising fossil fuel prices help close the price gap between the old fuels and the new.
Shipping companies are begging for higher prices on bunker fuel (through a carbon tax) in order to close the gap with higher green fuel solutions.
The transition away from fossil fuels accelerates when economics improve.
Is this already having an impact?
The Ocean Five
What does this have to do with the ocean economy? The ocean sits at the center of the energy transition.
Additionally, the pain that’s grabbing headlines in energy markets is also being felt in food systems where the ocean plays a critical, and growing, role.
The five key sectors that make up the ocean economy include shipping, ports, seafood (fisheries and aquaculture), ocean energy (ocean renewables and offshore oil and gas), and coastal and marine tourism.
Here are some stories in the ocean economy that caught my eye this week.
Shipping
When thinking about shipping, most people envision moving cargo.
However:
“The global ferry industry is similar in size to the commercial airline industry, transporting approximately 4.27 billion passengers per year, plus 373 million vehicles (including cars, buses and trailers).”
+Ferry Industry Facts - Interferry
Ferries make for an interesting market for electrification due to the fact that they actually touch shore regularly, unlike their ocean-going cousins.
Just imagine sitting on the back of a ferry and crossing a beautiful bay somewhere without the smoke and diesel fumes!
Dreamy.
Ports
Some good news.
Port congestion is easing somewhat. That is good for global commerce and even inflationary pressures.
“The backup is well under half the record,” highlights Captain Kip Louttit, Executive Director of the Marine Exchange of Southern California. “For comparison, the backup was last in the 40s in late August and early September 2021.”
Ocean Energy
The wind industry is often criticized for creating waste with its massive turbine blades. Critics love to post pictures of retired turbine blades stacked in landfill.
However, the industry has been hard at work on this problem and it seems is close to having it sorted out.
Recyclable turbine blades are starting to roll into production, and with the turbines themselves already recyclable, a green energy solution is getting greener.
Looking for something to listen to? Ya, there’s an Offshore Wind podcast.
Seafood
There’s a ton of hype in the seaweed space right now.
However, measuring the actual climate impact from a carbon perspective is still nascent.
While the benefits to the food system seem pretty straightforward, carbon credits and gaining access to green financing will require further study.
Additionally, the potential of the US seaweed market is just beginning to be explored.
“While worldwide seaweed production has soared to 80 billion pounds, 2019 U.S. farm harvests hovered under 1 million pounds, according to the latest available data from Sea Grant’s National Seaweed Hub, a third-party science-based resource for the domestic seaweed industry.”
+Can small seaweed farms help kelp scale up? - CivilEats
Another great report on the state of seaweed from Phyconomy:
Tourism
Tourism is a crucial industry for many countries. As the pandemic eases and summer travel ramps up, not everyone is happy about the return of cruise tourism in it’s current form.
What I’m Learning
Web3 and Carbon
I began listening to this Twitter Space while also doing some exercise.
It soon became clear that I was going to need to stop and take some (read: a lot) of notes.
The pace of change in in web3 is hard to keep track of.
Combine web3 with carbon markets and you get, as Winston Churchill famously quipped,
“It’s a riddle, wrapped in a mystery, inside an enigma.”
(Ironically, he was talking about Russia when he said this.)
One Cool Fish
Lots to learn, some challenges, and a bit of hope as well. That wraps it up for another busy week in the blue economy.
Thanks, as always, for reading. I hope you have a great weekend!
Doug
PS. This can’t be good.