Monday, July 15, 2024

Sentiment & Science: Public Perception of Alternative Fuels

LNG bunkering — File image courtesy CMA CGM

The idea that 2050 is a remote date has to be one of the biggest obstacles facing the maritime industry.

There is no denying we are already on the countdown. We currently only have some 305 months until we are committed to achieving net zero. This is a daunting realization and despite our common goal and common challenges, the industry is struggling to find common ground.

Theoretical, unproven solutions have shifted focus away from practical alternatives that the industry needs to seriously consider for long-term adaptation. Today, a lack of understanding of alternative fuels appears to overshadow action. Technology is often difficult to grasp, and the magnitude of the financial reality maritime faces is vast.

The gap between what we hear and what we see is vast.

The Maritime Alternative Fuels Barometer quantifies this gap. The Barometer, commissioned by SEA-LNG and conducted by maritime tech research consultancy, Thetius compares current perceptions of future fuels against reality.

With insights from key industry stakeholders, the report looks at availability, supply, technological readiness and impact on emissions. The objective is to help bridge the gap. To provide a comprehensive outlook and to aid the industry in making informed decisions.

Vast potential, fraught with complexities

The 2050 deadline may be firmly on the horizon, but the current roadmap to net zero is marked with interim targets from the IMO. A ~20% cut in GHG emissions by 2030. A ~70% cut in GHG emissions by 2040. This does not account for other regional regulations, or competitive, commercial objectives.

Asking where we currently stand is a tough question. On the one hand, the industry has a wealth of practical solutions at its fingertips and innovation continues.

But we must stop waiting.

As the Barometer rightly points out there are no silver bullets. And looking ahead to 2050, all potential solutions require the industry to overcome daunting challenges.

The right solutions to create the right solutions

Given the time frames, if a fuel is going to be a future fuel we need an obvious pathway forward.

This is a repeated finding from the Barometer. Most obstacles to achieving net zero are commercial viability, availability and technical capabilities.

Investment is among the most critical factors. Not only in the fuel production itself, but across supply chain infrastructure. Availability requires coordination across the whole supply chain with all its complexities and costs.

Where alternative fuels are concerned, the Thetius report indicates that LNG, ammonia and methanol are perceived favorably for 2030 and 2050 goals. Stakeholders acknowledged this was a complex, nuanced situation that is likely headed to a multi-fuel destination.

Gaining clarity: perceptions vs. reality

To properly understand viability, the industry needs to understand the reality of well-to-wake emissions.

Take methanol. According to findings in the Barometer, methanol has a strong backing in the industry as a future fuel. But it’s unclear whether this takes into consideration the different types of methanol that are produced.

If one uses renewable energy sources to produce “green” methanol, CO2 emissions could be cut by up to 95% compared to conventional fuels. But when produced with fossil fuel feedstocks (“gray” methanol) it could increase net GHG emissions to more than current conventional fuels.

To benefit from green methanol, we need to significantly scale production capabilities which means significant growth in renewables. This is not an insurmountable issue, but the future investment profile is huge. And it will likely be the mid-2030s before sufficient capacity is available for green methanol and other synthetic fuel production.

The Barometer found that public sentiment for ammonia as a future fuel is also strong, but infrastructure is a major focus. The fuel is highly toxic, and there are no current bunkering regulations to mitigate risk. Additional training and safety measures are a must-have if we are to protect seafarers, longshoremen and others in proximity to maritime facilities.

As for LNG, demand and sentiment were found to be extremely strong. In its current form, the fuel offers an immediate reduction in GHG emissions of up to 23%. Some LNG engine technologies suffer from the issue of methane slip, however, technologies to address this are rapidly evolving. The consensus is that slip will be a non-issue after 2030.

LNG is also the only fossil-derived fuel which cuts GHG emissions compared with traditional fuel oils. Importantly it also dramatically reduces SOx, NOx and Particulate Matter. These are all pollutants the industry has worked for decades to reduce.

The LNG pathway = immediate and long-term impact

With LNG, bio-LNG and e-LNG, we have a low risk, incremental pathway to a net zero by 2050. Owners and operators can utilize existing funded LNG bunkering infrastructure, and proven, safe shipboard technologies.

Over 1,000 vessels have chosen LNG (excluding LNG carriers) and LNG bunkers are now available in 185 ports, with an additional 50 being made available by 2025.

With bio-LNG, adoption can result in GHG reductions of typically 80% or more, depending upon the source of the biomass. It is already in use and compatible with existing infrastructure. Plus, bio-LNG bunkers are available in ~70 ports in Asia, Europe & North America.

Synthetic (or e-LNG) marks the ultimate phase in the pathway. Renewable hydrogen is needed to produce electro fuels, like e-LNG. Given the need to first produce renewable hydrogen, these fuels are likely to become available in sustainable quantities from the mid-2030s onwards. These hydrogen-based fuels are compatible with current LNG-fueled vessels and supply infrastructure. No need for newbuilds or vast investment.

Conclusion

As with all major change, collaboration is imperative. Shipowners and operators must work alongside investors, financiers and regulators to continue to establish reasonable, realistic and practical goals. Information sharing must become the norm, and be predicated upon real science and facts.

As the Barometer clearly notes there is not silver bullet to achieving net zero by 2050. The basket of fuels needed will be determined by technological developments, commercial viability and fuel availability.

The Maritime Alternative Fuels Barometer demonstrates why we need to focus on real data and scientific facts, not theoretical and selective analysis. It will take financial commitment and science - supported by practical and realistic analyses - to reach informed decisions that generate action. Today and tomorrow.

[1033 words]

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

ATSB: Pilot Error, Lack of Procedure Caused Bulker's Grounding

World Diana grounding — ATSB / Port of Bunbury

Ineffective pilotage and port deficiencies caused the grounding of a bulk carrier last year, the Australian Transport Safety Bureau (ATSB) has determined.

In its final report on the grounding of the World Diana at the Port of Bunbury in April 2023, ATSB contends that ineffective bridge resource management was largely to blame for the incident. The port authority also came in for criticism: at the time, it had not developed adequate procedures for arrival and departure plans for larger ships, ATSB said.

On the morning of April 22, 2023, World Diana was scheduled to depart the Port of Bunbury with the assistance of a harbor pilot. The ship was berthed starboard side to at the number three berth, and needed to be maneuvered into the inner harbor turning basin and then turned to port towards the harbor entrance. It was nearly fully laden with a cargo of grain, destined for the Port of Kosichang in Thailand via the Singapore Strait.

The 81,200 dwt, 229-meter ship had a crew of 19. The pilot had completed about 4,000 pilotage movements at the port of Bunbury, including about 35 vessels of over 200 meters.

Beginning at 0542 local time, the pilot conducted a master-pilot exchange on the bridge. The departure plan called for two tugs to help the ship turn around and sail out of the harbor. At 0632, when all the mooring lines had been cast off, the pilot instructed both tug masters to ‘lift off’ using quarter power and, shortly after, asked them to increase to half power. Four minutes later the ship had developed slight headway with its main engine running dead slow ahead.

As the 2020-build Panamax bulker turned, its headway increased. By 0641, the ship’s bow was closing on the shallow water on the eastern side of the harbor. Two minutes later the bulker’s bow grounded on the bank and its speed rapidly reduced to zero. The pilot then maneuvered the ship astern using its propulsion and the tugs. Once the ship was established in the center of the turning basin, the turn was completed.

“This turn was started earlier than planned, reducing the amount of room available. The ship’s speed was then allowed to increase until there was no room to safely turn, and the bow of the ship grounded on a shallow bank to the east of the harbor entrance,” said Angus Mitchell, ATSB Chief Commissioner.

The investigation established that at the time of the incident, a pilot transfer vessel inspected the shallow area but did not identify any evidence of a grounding therefore it was believed to have been a near miss. There was no inspection of the ship’s hull carried out prior to departing Australia. The pilot and ship’s master continued the departure and the pilot disembarked the ship outside the outer harbor.

But two days later the pilot reported the incident as a near miss with a subsequent review of incident data indicating a grounding. A survey of the seabed in the incident location also identified an indentation in the soft seabed where World Diana’s bow had grounded.

The ship’s managers were made aware of the grounding, with an underwater hull inspection that was conducted on May 1 identifying minor contact damage of the shell plating of the fore peak tank. The ship was cleared to continue trading with the damage to be attended at its next scheduled dry docking in 2025.

In its findings, the ATSB determined that World Diana's turn to port to depart the inner harbor was started earlier than planned, reducing available room to complete the turn. Once the turn began, the ship’s speed was allowed to increase until there was no space left, and the ship ran aground.

Courtesy ATSB

The investigators also determined that the Port of Bunbury had not developed adequate arrival and departure plan procedures for larger ships that were berthed starboard side alongside berth number three. In effect, this increased the risk of grounding.

The Southern Port Authority has since updated its marine pilotage standards and procedures for Bunbury with standard procedures for departing all berths. A maximum rate of turn for turning ships in the harbor has also been specified.

Report: NZ Ferry Ran Aground Because Autopilot Was Turned On Too Early

Aratere refloat — An infrared image of Aratere's successful refloat (Marlborough District Council)

The ferry Aratere may have gone aground because the crew accidentally engaged the autopilot, according to an internal safety memo, written by the ferry operator after the casualty and leaked to New Zealand media outlets.

The 18,000 GT ferry Aratere departed the port of Picton on the evening of June 21 for its fourth and final transit of the day. At about 2145 hours, about half an hour after leaving her berth, Aratere went hard aground at a position about 1.5 nautical miles to the north of Picton in Titoko Bay. No flooding or pollution were reported, and the 39 crewmembers and a team of eight professional divers on board were unharmed. They spent the night aboard the ship, and the vessel was refloated with local tug assistance the following evening.

According to the internal bulletin, which was distributed other mariners in the operator's fleet to alert them to a potential safety risk, an early investigation shows that a string of errors related to steering control led to the grounding. Aratere was passing Mabel Island, just a mile from her point of departure, when a watchstander switched over from hand steering to autopilot and then "inadvertently pressed" the "execute" button on the starboard multipilot console. This automatic steering control system had been recently installed.

The accidental engagement of autopilot initiated a turn about one nautical mile too "early" and resulted in an unplanned deviation from course, according to the bulletin. The crew identified the error but were unable to recover in time to prevent a grounding on the shores of Titoki Bay.

Investigators are still looking into why the crew could not recover hand steering in time to avert a grounding, but it took approximately one minute for the autopilot to be disengaged, according to the leaked memo.

The reason for the "inadvertent" engagement has not been formally determined, but political party New Zealand First alleged this week that a crewmember turned the autopilot on and then "went for a cup of coffee." NZ Acting Deputy Prime Minister Winston Peters has called on operator KiwiRail to immediately confirm details of the casualty, without waiting for the outcome of an ongoing investigation. "You can say I'm asking KiwiRail [to] front up - right here right now," he told NZ outlet Stuff. "We don't need a month-long inquiry or three or four months while they try and do PR and damage control."

KiwiRail subsidiary Interislander has vigorously denied New Zealand First's claims, saying that the bridge was properly attended at all times and that there were no attempts to minimize publicity after the casualty.

TEXAS

One Dead, One Missing in Collision Between Tanker and Passenger Boat

Port of Corpus Christi (upper left) and Aransas Pass (center right) (NASA)

On Saturday morning, a tanker struck a small charter boat in a shipping channel in Port Aransas, Texas, killing one person and leaving one missing.

At about 0530 hours on Saturday, a good Samaritan called Sector Corpus Christi on Channel 16 to report a collision between a passenger boat and a commercial vessel in Port Aransas Pass. There were four people aboard the boat, and the small vessel partially sank.

A good Samaritan vessel and the pilot boat for Port Aransas pulled two survivors from the water and recovered the body of one victim.

Over the course of Saturday and Sunday, the Coast Guard searched about 125 square miles of area using both air and surface assets. State and local first responders aided in the search, including Texas Parks & Wildlife, Aransas Pass Police, Texas Department of Public Safety and the Port of Corpus Christi's police department. Local boaters also assisted, and the ship channel was temporarily closed so that the search could be conducted safely.

On Sunday afternoon, after 44 hours of searching, the U.S. Coast Guard called off its SAR operation for the missing passenger. The names of the vessels involved, the survivors and the victims were not released. An investigation into the cause of the collision is under way.

"The Port remains committed to ensuring the safety of our waterways and will continue . . . to evaluate any additional actions that could be taken to increase safety and security," Port of Corpus Christi told local media in a statement. "Our thoughts and prayers are with all those affected by this tragic accident."

Environmental Group Sues BOEM to Tighten Up Offshore Decommissioning

Inspection offshore platform — File image courtesy BSEE

On Thursday, an environmental NGO sued the U.S. Department of the Interior over the unexamined risks of overdue decommissioning for thousands of inactive offshore oil and gas wells in the Gulf of Mexico, the overwhelming majority found in shallower waters off Louisiana.

According to the Government Accountability Office (GAO), as of last year there were about 2,700 disused wells and 500 offshore platforms in the Gulf that were past due for decommissioning, representing about 75 percent of all end-of-lease and idle infrastructure in the region. About 800 of these wells are "idle" and have not been used in a decade or more; about 600 have never been temporarily plugged, according to CBD.ds

The red triangles are the locations of pipelines decommissioned in place, the gray boxes are platforms overdue for decommissioning, and the orange circles are wells overdue for decommissioning. Bright green area: Rice’s whale habitat, light green: sperm whale core habitat, purple: logger head critical habitat. (CBD)

In a report issued earlier this year, GAO concluded that Interior's Bureau of Safety and Environmental Enforcement (BSEE) was "ineffective" in enforcing the rules for cleaning up old offshore oil and gas sites.

"BSEE’s administrative enforcement tools and its use of them are ineffective at incentivizing noncompliant operators—for example, citations for regulatory violations and orders to comply are essentially warnings," wrote GAO. "BSEE rarely takes more punitive actions such as issuing civil penalty fines, which can take years, or disqualifying operators, which has unclear trigger criteria."

GAO also criticized Interior's Bureau of Ocean Energy Management (BOEM) - its offshore leasing and regulation arm - for failing to make sure that offshore operators set aside enough money to pay for decommissioning. BOEM holds about $3.5 billion in bonds to cover potential cleanup liabilities of $40-70 billion, and the taxpayer could be on the hook for site remediation if the operator cannot pay.

"Interior could better enforce decommissioning deadlines and mitigate the safety, environmental, and financial risks that unmet decommissioning obligations pose by ensuring BSEE and BOEM prioritize completing planned actions," concluded GAO in its report.

BSEE also allows operators to use "decommissioning in place" for the massive web of disused oil and gas pipelines on the Gulf's seabed, and GAO has concluded that the agency has not adequately studied the impact of these abandoned lines. About 97 percent of all decommissioned pipeline mileage in the Gulf oil patch remains in place, according to GAO - without monitoring or inspection to assure that the phased-out pipelines are cleaned up.

In its new lawsuit, the Center for Biological Diversity claims that the Department of the Interior is skipping over a requirement of the National Environmental Policy Act: the need to study the impact of proposed decisions on the environment, like the decisions BSEE and BOEM make in regulating offshore decommissioning.

"Interior needs to take a hard look at how old leaky wells, rusty platforms and corroding pipelines put the ocean ecosystem at constant risk of spills and other harms. Private companies shouldn’t be allowed to make huge amounts of money drilling in public waters and then leave a wasteland for taxpayers," said Kristen Monsell, oceans legal director at the Center for Biological Diversity.

According to the NGO, Interior last studied the impact of Gulf oil and gas decommissioning in 2005, and did not consider whether the legal deadlines for cleanup would be met. The agency's analysis - now 20 years old - does not address delayed decommissioning and any associated risks to endangered species, nor the risk of methane leaks, which are a potent source of greenhouse gas emissions.

The lawsuit seeks to compel Interior to re-do its analysis of the impacts of oil and gas decommissioning and to pay for CBD's attorneys' fees.

Separately, Interior faces a related lawsuit brought by the states of Texas, Louisiana and Mississippi over the agency's efforts to require more financial assurance for decommissioning and cleanup liabilities, particularly from smaller independent operators with limited resources. If implemented, the new rule would require industry players to put down another $7 billion in guarantees to assure that offshore infrastructure is properly decommissioned. These three states object to the requirement for more financial guarantees, and have sued in federal court to block it. In an interview with Reuters, Louisiana Attorney General Liz Murrill called Interior's new rule "a really egregious direct assault on intermediate level producers of oil and gas."

IMB: Violence Against Crew on the Rise Amidst Drop in Piracy

The safety of crews on merchant ships is increasingly becoming a major concern owing to the rise in violent attacks despite a notable decrease in maritime piracy incidents, according to the latest update from the International Maritime Bureau’s Piracy Reporting Center. Much of the increase stems from Somalia while in other parts of the world, the overall decline continues.

The reports show that during the first half of this year, 60 incidents of piracy and armed robbery against ships were recorded, representing a decrease from 65 incidents recorded last year. Cases of boarding were reported in 46 out of the 60 incidents with eight attempted attacks, four being hijacked and two being fired upon.

Of great concern is that violence against crew is on an unprecedented rise. During the period, 85 crew members were taken hostage compared to 36 in 2023 while 11 were kidnapped and two threatened. Guns and knives were reported in 34 of the 59 incidents, a worrying increase from the same period last year.

“While we are reassured to see a fall in the number of overall reported acts of piracy, the concerning rise in incidents of a violent nature underscores the need for continued vigilance from the international community to ensure the safety of all seafarers, especially at this time of heightened uncertainty for maritime transport,” said John W.H. Denton AO, ICC Secretary General.

IMB highlights that after close to 10 years of calmness in the Somali waters, piracy incidents are back in full swing with eight reported incidents in the first half of 2024, including three hijackings. A notable departure from the past is that recent incidents demonstrate the capability of the Somali pirates to target vessels up to 1,000 nautical miles off the Somali coast.

Among the cases reported this year in the Somali waters was the hijacking of Abdullah, a Bangladesh-flagged bulk carrier, in March as it was heading from Mozambique to the United Arab Emirates. The Somali pirates only released the ship and its crew of 23 after a $5 million ransom was paid.

“We continue to urge caution around Somali piracy incidents and call on all vessel owners and masters to harden their vessels and follow all recommended guidelines in the latest best management practices reports while transiting Somali waters,” noted Michael Howlett, IMB Director.

While the Somali pirates have reawakened, incidents in the once hotspot Gulf of Guinea continue to be on a decline although threats to crew safety and wellbeing remain a cause of concern. In the first half of the year, incidents dropped from 14 to 10. The region accounts for the 11 crew kidnapped globally in two separate incidents and 21 of the crew taken hostage in one incident.

The Singapore Straits also recorded a decline in incidents to 13 compared to 20 in the same period last year although the targeting and boarding of large vessels transiting through the Strait remains a concern. The report highlights that 10 crew were taken hostage in six separate incidents with guns and knives reported in 11 of the incidents.

During the period, IMB also recorded 12 incidents in the Indonesian archipelago, the highest since the first half of 2021 when 15 incidents were reported. In Bangladesh, low-level incidents increased to 10 compared to just one in 2023. This was the highest since 2015.

Canada Sets Up its Largest Marine Protected Area

The government of Canada and First Nations along the coast of British Columbia have designated the country’s largest marine protected area (MPA). The MPA is located 93 miles off the west coast of Vancouver Island and around 50 miles southwest of Haida Gwaii. Covering approximately 133,019 square kilometers, the MPA is home to nearly 50 seamounts and hydrothermal vents, with unique deep-water species that only exist there.

These deep-sea features are rare and regionally unique, and acts as biological hotspots in the ocean ecosystem. Canada was the first country to protect the globally rare hydrothermal vents, with the creation of Endevour Hydrothermal Vents MPA back in 2003. It is found 160 miles southwest of Vancouver Island.

Courtesy DFO Canada

The newly designated MPA site was first identified in 2017 and a marine refuge was subsequently created with prohibitions on select fishing activities. Later last year, the First Nations and the Canadian government signed a memorandum of understanding (MoU) outlining how the parties will collaboratively manage the MPA. The first nations include the Haida nation, Nuu-chah-nulth, Pacheedaht and Quatsino.

“The designation of this MPA brings us closer to our goal of conserving 30 percent of our oceans by 2030. It also signifies our joint commitment with the First Nations to preserve ecologically and culturally important marine areas,” said Diane Lebouthilier, Minister of Fisheries and Oceans.

With this new MPA, the current protection of Canada’s oceans rises to 15.5 percent.

Acidification Will Put 10% of Seabed Off-Limits for Creatures With Shells

Deep sea coral (NOAA file image). The zone where carbonate-containing life forms like these dissolve in deep water is set to expand by about 14 million square miles. — Deep sea coral (NOAA file image). The zone where carbonate-containing life forms like these dissolve is set to expand by about 14 million square miles.

[By Mark John Costello and Peter Townsend Harris]

In the deepest parts of the ocean, below 4,000 meters, the combination of high pressure and low temperature creates conditions that dissolve calcium carbonate, the material marine animals use to make their shells.

This zone is known as the carbonate compensation depth – and it is expanding.

This contrasts with the widely discussed ocean acidification of surface waters due to the ocean absorbing carbon dioxide from the burning of fossil fuels.

But the two are linked: because of rising concentrations of carbon dioxide in the ocean, its pH is decreasing (becoming more acidic), and the deep-sea area in which calcium carbonate dissolves is growing, from the seafloor up.

The transition zone within which calcium carbonate increasingly becomes chemically unstable and begins to dissolve is called the lysocline. Because the ocean seabed is relatively flat, even a rise of the lysocline by a few meters can rapidly lead to large under-saturated (acidic) areas.

Our research showed this zone has already risen by nearly 100 meters since pre-industrial times and will likely rise further by several hundreds of meters this century.

Millions of square kilometers of ocean floor will potentially undergo a rapid transition whereby calcareous sediment will become chemically unstable and dissolve.

Expanding boundaries

The upper limit of the lysocline transition zone is known as the calcite saturation depth, above which seabed sediments are rich in calcium carbonate and ocean water is supersaturated with it. The calcite compensation depth is its lower limit, below which seabed sediments contain little or no carbonate minerals.

The carbonate content of seafloor sediments decreases within the lysocline, reaching zero below the carbonate compensation depth (CCD). Above the lysocline is the calcite saturation depth (CSD), with seabed sediments rich in calcium carbonate. Author provided, CC BY-SA

The area below the calcite compensation depth varies greatly between different sectors of the oceans. It already occupies about 41% of the global ocean. Since the industrial revolution, this zone has risen for all parts of the ocean, varying from almost no rise in the western Indian Ocean to more than 300 meters in the northwest Atlantic.

If the calcite compensation depth rises by a further 300 meters, the area of seafloor below it will increase by 10% to occupy 51% of the global ocean.

These maps show the changes in area of ocean exposed to corrosive bottom waters in 17 different regions. The pre-industrial CCD is dark blue and areas above the lysocline are light blue. Map A shows the present day and map B shows a lysocline rise of 300 meters. Author provided, CC BY-SA

Distinct habitats

For the first time, a recent study showed the calcite compensation depth is a biological boundary with distinct habitats above and below it. In the northeast Pacific, the most abundant seabed organisms above the calcite compensation depth are soft corals, brittle stars, mussels, sea snails, chitons and bryozoans, all of which have calcified shells or skeletons.

However, below the calcite compensation depth, sea anemones, sea cucumbers and octopus are more abundant. This under-saturated (more acidic) habitat already limits life in 141 million square kilometers of the ocean and could expand by another 35 million square kilometers (13.5 million square miles) if the calcite compensation depth were to rise by 300 meters.

In addition to the expansion of the calcite compensation depth, parts of the ocean in low latitudes are losing species because the water is getting too warm and oxygen levels are declining, both also due to climate change.

Thus, the most liveable habitat space for marine species is shrinking from the bottom (rising calcite compensation depth) and the top (warming).

Island nations most affected

The exclusive economic zones of some countries will be more affected than others. Generally, oceanic and island nations lose more, while countries with large continental shelves lose proportionately less.

Bermuda’s EEZ is predicted to be the most affected by a 300-meter rise of the calcite compensation depth above the present level, with 68% of that country’s seabed becoming submerged below the lysocline. In contrast, only 6% of the US EEZ and 0.39% of the Russian EEZ are predicted to be impacted.

From a global perspective, it is remarkable that already 41% of the deep sea is effectively acidic, that half may be by the end of the century, and that the first study showing its effects of marine life was only published in the past year.

Mark John Costello is a Professor in Marine Biology, Nord University.

Peter Townsend Harris is a Adjunct Professor in Marine Geology, University of Tasmania.

This article appears courtesy of The Conversation and may be found in its original form here.

https://images.theconversation.com/files/574763/original/file-20240210-16-8shcrc.png?ixlib=rb-4.1.0&q=45&auto=format&w=754&h=730&fit=crop&dpr=1

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

Investments in hospital infrastructure reduced mortality in the US South

VOXEU

Alex Hollingsworth
Krzysztof Karbownik
Melissa A. Thomasson
Anthony Wray
/ 15 Jul 2024

Both Black and white infant mortality rates in the US have fallen in the past century, but racial inequality in infant mortality is worse. This column studies the impact of a large-scale hospital modernisation programme in the 20th century on healthcare capacity and mortality outcomes, with a focus on racial inequality. Upgrading healthcare reduced infant mortality rates and narrowed the Black-white infant mortality gap by one-quarter. The cost-effective investments in healthcare infrastructure disproportionately benefited historically marginalised groups, had long-run benefits, and complemented, rather than substituted, medical innovation.

Article 25 of the Universal Declaration of Human Rights states that “[e]veryone has the right to a standard of living adequate for the health and well-being of himself and of his family, including … medical care and necessary social services” (United Nations 1948). Despite this, much of the world’s population lacks access to physician and hospital care. In 2017, North America had 2.7 hospital beds per 1,000 people, while South Asia had only 0.6 (WHO 2017).

Access also varies within high-income countries. The US and Switzerland have the largest per capita health expenditures in the world, but the US has 60% the hospital beds and doctors per 1,000 people when compared to Switzerland (Papanicolas et al. 2018, WHO 2020). The COVID-19 pandemic (Propper and Kunz 2020) along with trends in healthcare centralisation, physician shortages, and insufficient funding, could further limit access, creating health deserts, especially in socioeconomically and racially disadvantaged areas. Research on the impact of reducing hospital capacity is mixed. Kozhimannil et al. (2018), Germack et al. (2019), and Gujral (2020) report adverse effects of hospital closures, while Fischer et al. (2024) do not find the same results.

In the US, these challenges persist despite dramatic changes in healthcare spending and population health over the last century (Cutler et al. 2019). In the last century, healthcare spending has increased tenfold, infant mortality has declined 95%, and life expectancy has risen by 45% (Costa 2015). However, these impressive gains have not been equal across racial groups (Muller et al. 2019). In 1916, the infant mortality rate per 1,000 live births was 184.9 for Black infants and 99.0 for White infants, yielding a ratio of 1.9 (Singh and Yu 2019). By 2021, Black and White infant mortality rates had fallen to 10.6 and 4.4, respectively, but the gap had widened to a ratio of 2.4 (Ely and Driscoll 2023). Thus, despite the massive overall declines, racial inequality in infant mortality is worse now than it was at the beginning of the 20th century.

Given these two realities – unequal access to healthcare and racial inequality in health outcomes – it is imperative to understand if investments in healthcare infrastructure can reduce these deficiencies, especially since healthcare now plays a central role in contemporary society, accounting for nearly 20% of the US economic activity.
The Duke Endowment modernisation campaign and its effects on the hospital sector

In a new paper (Hollingsworth et al. 2024), we study how funding for healthcare infrastructure affects healthcare capacity and mortality outcomes, with a particular focus on racial inequality. Our work is based on a unique quasi-experiment: a large-scale hospital modernisation programme supported by the Duke Endowment in North Carolina during the first half of the 20th century. The charity assisted hospitals in expanding and improving existing facilities, obtaining state-of-the-art medical technology, and elevating their management practices. In select communities, it also helped to build new hospitals or to convert existing facilities to non-profits. Although the funding only started in 1927, by the end of 1942 the Endowment had appropriated over $53 million (in 2017 dollars) to the state.

The funding increased the number of not-for-profit hospitals per 1,000 births that were eligible for funding, while causing a decline in ineligible for-profit hospitals (Figure 1). This substitution effect was mirrored in hospital beds: not-for-profit beds increased by 70.1% while for-profit beds declined by 61.4%. This led to overall increases in both institutions and beds. Furthermore, supported communities saw a 60.2% increase in high-quality physicians per 1,000 births and a 5.5% decrease in poorly trained physicians, advancing the average state of medical knowledge in Endowment supported locations (Figure 1). These effects persisted for more than 30 years, suggesting a lasting increase in capacity.

Figure 1

Effects on infant and long-run morality

Changes in healthcare infrastructure help explain our core finding that Duke financial support improved health outcomes in these communities, causing a 7.5% reduction in the infant mortality rate (Figure 2). The gains were about three times larger for Black infants (13.6%) compared to White infants (4.7%), narrowing the Black-White infant mortality gap by one-quarter. Furthermore, those exposed to the support around the time of birth also enjoyed lasting health effects, with long-run mortality rates (between the ages 56 and 64) declining by 9.0% – a benefit that accrued similarly for both races. These investments were cost-effective. One life was saved for every $17,092 (in 2017 dollars) paid to hospitals, a cost significantly lower than any reasonable estimate for the value of statistical life.

Figure 2

Complementarity between capital investments and medical innovation

Finally, we document that Duke-supported hospitals used new medical advancements more effectively, suggesting a complementarity between high-quality hospitals and new medical interventions (Figure 2). We explore this by estimating the interaction between Duke support and the 1937 discovery of sulfa drugs, which effectively treated pneumonia. We observe no effects of Duke funding in locations with low baseline pneumonia mortality. On the other hand, in places with high baseline pneumonia mortality, the gains are present both before and after the medical discovery, but the effects are almost three times larger in the post-antibiotic era. This reflects the complementary nature of hospital modernisation with medical innovation, which in this case may be explained by the fact that the Endowment attracted more-qualified physicians to the area who were better able to leverage the new technology.
Conclusions

We conclude that investments in healthcare infrastructure: (1) lead to permanent improvements in the supply and quality of healthcare available to the affected residents; (2) provide short- and long-run mortality benefits; (3) disproportionately benefit historically marginalised groups; (4) complement rather than substitute medical innovation; and (5) are cost-effective – at least in a setting where initial levels of healthcare supply are low, as is still the case in many low-income countries today.
References

Costa, D (2015), “Health and the economy in the US from 1750 to the present”, Journal of Economic Literature 53(3): 503–70.

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Italy, Germany, France: The EU countries way off track from meeting 2030 emissions targets

By Rosie Frost

Published on 15/07/2024

Only six of the 27 EU member states have submitted national climate plans that are up to scratch.

12 EU countries are set to miss their national climate targets under the Effort Sharing Regulation (ESR), according to a study analysing national climate plans. Another seven are at risk of not meeting their goals.

If they don’t meet their required emissions reductions, they may have to pay financial penalties.

The ESR is a policy framework - part of the EU’s climate and energy package - that sets binding national greenhouse gas targets for the 27 member states. It requires them to collectively cut emissions by 40 per cent (compared to 2005) by 2030.

Member states have to meet climate targets for five key sectors: road transport, buildings, small industry, waste and agriculture. Each goal is adjusted based on a country’s GDP with richer nations having stricter requirements.

Under current EU countries’ plans, emissions would only fall by 35.5 per cent by 2030 - 4.5 per cent less than the 40 per cent target. And some countries are performing much worse than others.

Which EU countries are on track to miss emissions targets?

The report from Transport & Environment (T&E) found that the two worst-performing countries are Germany and Italy. Germany is projected to miss its climate targets by 10 per cent and Italy by 7.7 per cent.

France is only projected to meet its targets by a very close margin and any backtracking on policies or even a cold winter pushing up energy consumption could spell failure.

Plans submitted by the Netherlands also put the country on track to only just meet its goals.

Under the ESR, countries that don’t meet their climate targets can purchase carbon credits from those that do meet them. The price of these credits is decided by the two countries doing the deal. Expert projections say that each one could be traded at an average cost of €129.

The member states likely to accumulate the highest amount of these surplus credits are Spain, Greece and Poland. Spain is predicted to overachieve by 7 per cent and could receive an estimated €10 billion from countries that are not on track.

Germany alone could eat up 70 per cent of those available credits, however, according to the study. It could leave the country facing a €16.2 billion bill. Italy could face costs equivalent to €15.5 billion.

But, the T&E report warns, with so many countries set to miss their goals, there’s likely to be a scarcity of credits. This would push prices up as it could lead to a bidding war in 2030.

The penalties countries could face are ‘mind blowing’

There is still time to rectify government policies to meet these 2030 targets, according to T&E.

“The sheer amount of penalties countries might need to pay in 2030 is mind blowing,” Sofie Defour, climate director at T&E said when the report was released in June.

“Countries face a clear choice: pay billions to their neighbours for their carbon debt, or implement new policies that improve the life of their own citizens, such as insulating houses.”

Germany and Italy, for example, could implement new measures to increase the uptake of electric vehicles, insulate buildings and more.

Countries were expected to submit new National Energy and Climate Plans (NECPs) on 30 June but just four met the deadline - Netherlands, Denmark, Finland and Sweden. The ESR is a key measure in these plans but just a few countries anticipated that they would meet their targets in their draft texts.

Only six - Croatia, Czechia, Hungary, Luxembourg, Slovenia and Spain - got a clear pass mark from the Commission which assesses the plans. Denmark made some tweaks to its draft documents including in areas related to the ESR which it says now put it on track to meet its targets.

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