The role of the blue economy in a sustainable future
Darian McBain
Visiting Professor in Practice
Commentary on 6 March, 2023 LSE
Many of the conversations about a zero carbon transition hinge on energy and activities on land – the green part of our planet. This is to miss a vital understanding of the world. Darian McBain explains why we cannot transition to net zero nor achieve any semblance of a stable planet for people and nature if we do not start to think, dream and act on blue – the oceans.
Colours can be very evocative. We refer to someone making us green with envy, or something sad making us feel blue. Activities that are carbon intensive or unsustainable are often labelled as brown, while renewable energy and sustainable solutions are labelled green. If we truly understood the role that oceans play in climate change, biodiversity, livelihoods, transport and energy security, we would use blue as the colour of hope for the future.
In December 1972, a photo taken by the Apollo 17 Space Mission on the way to the moon showed planet Earth from space. This photograph, one of the most recognisable images ever taken, is called The Blue Marble for a reason – Earth is mainly covered by water (around 71% of its surface, to be precise). The oceans help to regulate the Earth’s temperature, form an important part of the water cycle and support more biodiversity than the land does. For decades, the oceans have been absorbing 20–30% of anthropomorphic CO2 emissions and 90% of excess heat. But as we reach various tipping points within the Earth’s planetary boundaries, there are no guarantees that this system can continue to operate as it has been. The ocean economy is estimated to contribute more than US$1.5 trillion to the global economy, providing food and employment for hundreds of millions of people. A healthy future is dependent on a healthy ocean: we continue to ignore it at our peril.
Strengthening ocean governance
For centuries, the oceans were thought to be too big to fail. The ‘high seas’, which cover around 50% of the planet, are a prime example of the Tragedy of the Commons – used by so many countries but controlled and protected by none. The intensification and expansion of human activities has had an impact and we are starting to see that the oceans can indeed fail. Climate change, which is raising the ocean’s temperature and causing acidification, fishing, mining, shipping, tourism, plastics and other pollution are all taking their toll.
At the weekend, an historic High Seas Treaty was agreed at the United Nations in New York after more than a decade of negotiations. It places 30% of the world’s oceans into ‘Marine Protected Areas’ (MPAs), to protect wildlife and share out marine genetic resources (MGRs). It also allocates more funds to marine conservation and will mean new rules for deep-sea mining. And it will establish an oceans ‘Conference of the Parties’ (COP), in the same vein as the Climate and Biodiversity COPs.
The High Level Panel for a Sustainable Ocean Economy has been calling for 30% coverage of MPAs for some time, as well as other practical solutions such as more renewable energy production from the ocean (e.g. offshore wind and wave power), increasing the production of sustainable ocean foods, and greater investment in sustainable coastal and marine ecosystems through innovative financing mechanisms to support conservation and restoration.
The High Seas Treaty is, of course, very welcome. There is still an urgent need to assess and prioritise maritime activities and investment in a balanced approach across jurisdictions and still ungoverned marine areas. For example, the need for transition-critical minerals to produce the infrastructure required for renewable energy will demand new activity and deep-sea mining. Deep-sea mining may be directly in conflict with biodiversity protection and activities reliant on a healthy ecosystem, such as fishing and tourism.
Formal recognition of the role of the blue economy
Most governments have in place policies and plans to transition away from fossil fuels to play their role in meeting the Paris Agreement targets. But far fewer have a coherent strategy for supporting the blue economy, despite many countries relying heavily on the oceans for food, energy, transport and livelihoods. For example, an estimated 90%-plus of goods are transported by sea, creating a dependence on the oceans for both producing and consuming markets.
Tools are required not only to help value the blue economy and develop relevant taxonomies and frameworks for investment, but also to develop and implement strategies to protect and enhance marine ecosystems and balance competing priorities. States need to invest in the oceans as part of their Nationally Determined Contributions (NDCs) and coastal resilience plans. Countries need to work collaboratively to protect areas of globally important biodiversity, to enable sustainable and equitable access to resources whether through sustainable fishing, transport, tourism or other. In particular, we need a Trans Pacific Partnership for ocean trade for the Asia-Pacific region.
What’s the true colour of money? Blue finance and investment
Of the 17 UN Sustainable Development Goals (SDGs), SDG 14 on ‘Life below water’ remains one of the least funded. The risks and ecosystem interdependencies in the ocean economy remain poorly understood, which can lead to further underinvestment in ocean-based activities. Many tools of green finance can be applied to blue finance, such as blue bonds or blue sustainability-linked loans. Even markets for blue carbon are growing. However, capacity needs to be developed within the financial sector on basic ocean economy literacy and risk assessment to ensure that finance will flow from green to blue.
The shipping industry is one of the few ocean industries that has a global governance system – through the International Maritime Organization (IMO). In 2018, the IMO set the ambition to reduce greenhouse gas emissions from shipping by 50% by 2050, measured against a 2008 baseline. In collaboration with the financial industry, the Poseidon Principles were established to enable access to finance the decarbonisation journey. This process of bringing together the financial sector with the real economy using blue finance as a tool for change could be replicated in a number of underbanked, underinsured and underfunded industries in the ocean economy. This could include activities such as fishing (a sector whose vessels are not, by and large, currently aligned with a net zero pathway), aquaculture and mariculture (which are highly vulnerable to coastal inundation and extreme weather events), and coastal insurance. Tools such as the Sustainable Blue Economy Finance Principles from the UN Environment Programme Finance Initiative can also help to accelerate investment in the oceans.
Investment is needed, too, in coastal ecosystems that provide natural coastal defences – which are ever more important as climate change impacts intensify – to ensure their long-term survival. These ecosystems include mangroves (which also can store up to 10 times more carbon than trees on land), seagrass beds, coral reefs, kelp forests, tidal mud flats and salt marshes. Changes in land use, run-off and pollution from the land and coastal clearing can all pose significant threats to the survival of these vital habitats even before we consider the impact of climate change.
In terms of a role for philanthropy and impact investors, their interest in the ocean economy continues to grow. Several significant US-based philanthropic organisations have had a long-running interest in the ocean. Family offices, impact investors and specific funds focused on oceans and the ocean economy are starting to emerge. The opportunity for impact and coordinating across some of these projects with governments and business to scale-up and coordinate outcomes remains significant and yet relatively untapped.
Concluding thoughts
The health of the oceans and the health of our planet are intricately linked. We need to start thinking proactively about the ocean economy to help build resilience and adapt to some of the worst impacts of climate change and disruptions to ecosystems. There is a major opportunity to bring innovation to blue finance and it must be seized.
The views in this commentary are those of the author and do not necessarily represent those of the Grantham Research Institute.
NASA's image 'blue marble', photographed from Apollo 17 in 1972. Photo: NASA
Darian McBain
Visiting Professor in Practice
