Blue Economy is the sum of the economic activities of sea and ocean-based industries, together with the assets, goods and services provided by marine ecosystems. When it comes to sustainable Blue Economy the efforts are concentrated in maximizing the growth potential of our seas and oceans in a sustainable way.
Blue Economy is gradually gaining the focus it deserves. Policy makers, potential investors and the civil society could place more emphasis on blue sectors once they have a closer look to the figures below.
The annual gross value added of the Blue Economy to the global economy today is estimated at around €1.27 trillion and is expected at least to double by 2030. In addition to the above numbers which highlight the importance of our oceans, there are many other reasons that could justify our strong focus to the Blue Economy such as:
- If oceans were a separate economy, they would stand as the world’s seventh largest.
- Blue Economy is critical to the world’s transition to a sustainable future, and governments, businesses, and individuals must prioritize and invest in it.
- The oceans play an essential role in climate change, biodiversity, livelihoods, transport, and energy security, and protecting them is essential for a healthy future for people and the planet.
- Blue Economy has enormous potential for resource wealth, economic growth, employment and innovation, ocean is rightly considered to be the “next great economic frontier”.
Developments & Recommendations
Unlocking the investment potential of Blue Economy is strongly depended on four core parameters:
- Strengthening the Regulatory Framework
- Strengthening International Cooperation
- Fostering public and private investments
- Building a Blue Economy mindset culture
Strengthening the Regulatory Framework
Establishing an integrated and robust regulatory framework with the aim to promote sustainable practices is essential. At national level there is a need to establish a legal framework of marine spatial planning, develop relevant taxonomies and frameworks for investment and to invest in the oceans as part of National Determined Contributions (NDCs) and coastal resilience plans.
The Marine Spatial Plan is expected to ensure a comprehensive and integrated investment framework for the public and private sectors by dealing with upstream environmental and social issues and by giving certainty to investors to access areas and resources
At international level, governments should ratify the High Seas Treaty also known as the Agreement under the United Nations Convention on the Law of the Sea on the Conservation and Sustainable Use of Marine Biological Diversity of Areas beyond National Jurisdiction (BBNJ Agreement). The High Seas Treaty is a crucial milestone in countries’ efforts to meeting the goal to ensure 30% of the Earth’s land and sea are granted protected status by 2030. It provides for shared governance over approximately half of the Earth’s surface and 95% of the ocean’s volume and it gives to countries new legal powers to create and manage a network of “ecologically representative and well-connected” marine protected areas in international waters, with sustainable development permitted where scientific evidence allows.
The treaty is expected to allocate more funds to marine conservation, establish new rules for deep-sea mining, and to establish an ocean’s “Conference of the Parties” (COP), in the same vein as the Climate and Biodiversity COPs. It establishes a more formal and transparent process for permitting of commercial activity in the high seas. It also pledges that richer nations must support developing nations to protect international waters through “capacity building and the development and transfer of marine technology” thus ensuring truly global commercial opportunities. The Treaty gives a new role for business to support developing countries reap the economic benefits of protecting and sustainably developing waters that previously seemed extremely difficult. To become International Law at least 60 countries must sign and ratify the High Seas Treaty. So far 105 countries have signed and 14 countries have ratified the High Seas Treaty.
Strengthening International Cooperation
Countries should foster collaboration at bilateral and multilateral level, cooperate with international organizations including financial institutions, share best practices, exchange marine knowledge and promote sustainable management of shared marine resources.
Blue Economy requires Blue Diplomacy. Governments should aim to introduce provisions on Blue Economy cooperation in all the Agreements, MoUs placing Blue Economy high on the agenda of their external relations addressing its importance in high-level meetings at international level.
A concrete example of international cooperation is the EU-China Blue Partnership. China and the EU represent two of the largest ocean economies and they share common interests and commitments towards sustainable ocean management. Their ‘Blue Partnership’ which takes the form of a bilateral agreement to improve the international governance of the oceans could be further enhanced in areas such as (i) ocean data sharing to utilize effectively ocean data and knowledge exchange between scientists, engineers and policy advisors from Europe and China to build the framework of effective ocean governance ensuring sustainable economic activities that conserve and protect the environment; (ii) build strong partnerships and work closely on the effective implementation of the High Seas Treaty; (iii) exchange information and best practices on Marine Spatial Planning implementation and monitoring to effectively respond to problems and challenges; (iv) create the necessary framework conditions for global financial institutions to focus on sea-related environmentally sustainable investments providing clarity, transparency and certainty to potential investors.
Foster Private & Public Investments
Blue is the new Green… is not just a fancy slogan but a new way of thinking. The ESG-linked debt market suffered a downturn in 2023. But an emerging product type is attracting the interest of certain players in the sustainable debt space. Several debtors have entered the blue financing space in an effort to contribute to the protection of our seas and oceans demonstrating commitment to ESG programs!
A clear indication on the investment potential of the Blue Economy is presented below:
The green transition will have considerable impact on the Capital Expenditure of ocean industries. Offshore wind will grow from today’s small base to 50% of ocean-capex in 2050. Over the same timeframe, the oil and gas industry will shrink from 80% of total ocean-capex to just 25%.
Blue Finance is dedicated specifically to ocean-friendly projects and water supply resources. Blue finance can include blue funds, blue bonds, blue loans, and other water-focused investments. The last couple of years there are a number of initiatives in the form of guidelines and principles aiming to incentivize, support and provide clarity on blue investments, notably
- the Sustainability Blue Economy Finance Principles (the UN Principles) developed in March 2018 in collaboration with the European Commission, the World Wildlife Fund, the World Resources Institute and the European Investment Bank.
- the Blue Finance Guidelines issued by the International Finance Corporation (IFC) in January 2022
- the Voluntary Blue Bond Guidance issued in September 2023 by the International Capital Markets Association (ICMA)
- the High-level Green and Blue Bond Framework and the Ocean Finance Framework published by the Asian Development Bank (ADB) in September 2021 and 2022.
It is worth mentioning that Blue Bonds today are where Green Bonds were 10 years ago! The blue bond market could be set to ride an incredible wave in the coming years provided that all relevant actors become more familiar about the product and its importance and guidance from various industry institutions continues to be produced, refined and updated.
Attracting investors to blue sectors will be further enhanced if all actors involved work together in building a strong narrative. We should strive to promote the Blue Economy elements of a fund, a blue economy component to an existing portfolio, highlight that blue fund also serves towards reducing the impacts of climate change as well as the opportunity to become early players in a fast-growing segment of the new economy.
Building Blue Economy Mindset Culture
The benefits of the sustainable use of our seas and oceans must be communicated not only to the main actors but also to the civil society. We should therefore raise awareness and engage stakeholders by conducting campaigns, local communities, NGOs, and industry associations to understand and acknowledge the environmental awareness and the investment potential of the Blue Economy. Investing on the human element is an absolute must. It is of outmost importance to promote education and skills development for blue economy sectors to our workforce through educational programs and vocational training initiatives. This will ensure a blue upskilling that would facilitate innovation and sustainable growth. Research and Development initiatives should be also encouraged to enhance understanding of marine resources, current ecologic threats and preservation of ecosystems.
The EU Blue Economy
The investment landscape of EU Blue Economy is evolving attracting worldwide investments and is set to generate net positive returns. 50% of the investors on the EU Blue Economy deals come from non-EU countries demonstrating that EU companies can create substantial business opportunities that attract investors from other regions. During the last five years, the three most dynamic sectors in terms of deals activity are the Blue Renewable Energy, Blue Technology and Ocean Observation and Aquaculture.
The volume of disclosed investments in the Blue Economy is three times larger than it was 10 years ago, reaching more than €13 billion over the five-year period between 2018 to 2023. Since 2018, about 270 deals are closed every year in the Blue Economy. This trend indicates a positive outlook and a strong growth pattern for the sector.
Directive 2014/89/EU sets out the legal framework for the establishment of the Maritime Spatial Planning aiming to promote the sustainable growth of maritime economies, the sustainable development of EU marine areas and the sustainable use of marine resources. Currently, 20 out of the 22 coastal EU member states adopted maritime spatial plans.
Cyprus Maritime Spatial Plan
The Maritime Spatial Plan (MSP) of Cyprus covers the whole of the marine waters – territorial sea and Exclusive Economic Zone (EEZ) – of the Republic of Cyprus. Cyprus’ EEZ and continental shelf covers 98.240 km².
The MSP legal framework encourages investments in the marine waters of Cyprus by creating predictability, transparency and clearer licensing rules. The maritime spatial plan will facilitate the further development of the following sectors: Deep-sea Shipping; Coastal and Cruise tourism; Offshore Renewable Energy; Desalination; Marine Environment Protection; Marine Aquaculture.
The legal framework foresees fast and flexible licensing procedures. An operation license is granted within a reasonable period of time not exceeding six (6) months from the date when the application was deemed complete. The investor is granted with a Certificate of Compliance if the activity is already regulated under the existing legal framework or with a Certificate of Compatibility if the exercise or a certain action or activity is not regulated by the existing legal framework.
In conclusion, it is evident that the future of the Blue Economy will be marked by growth, thanks to contextual factors that act as driving forces, expected positive returns and key innovations. There is an ocean of investment opportunities from this fascinating sector which should be also approached as a tool for global cooperation and prosperity.
We are all connected to the Ocean! Without healthy oceans, no life, not even on land, can exist!
Words of wisdom by Jean-Michel Cousteau!
Oceans deserve our respect and care with concrete actions, but before delivering on them we must first learn and acknowledge the importance and great value of our blue planet!