Foresight of shipbuilding until 2030 (science and technology forecast) National Research University – Higher School of Economics Institute of Statistical Studies and Economics of Knowledge Oleg Karasev Natalia Velikanova Anastasia Edelkina

Priority areas and critical technologies 2006 Priority areas and critical technologies 2011 Methodologies, results, and expert panels need to be coordinated Ministry of Education and Science of the Russian Federation: Russian S&T foresight (three cycles) A network of foresight centres Innovation-based development programmes for state-owned companies Roadmaps Development institutes: RVC, Rusnano, Skolkovo Technological platforms Socio-economic development forecast (Ministry of Economic Development of the Russian Federation), industry-specific strategies Regional foresight studies/Clusters Industrial foresight studies: aircraft construction, shipbuilding Last years in Russia there is a rapid development of forecast and Foresight studies 2

Development of technology foresight system: Approve… long-term forecast of socio-economic development in the Russian Federation until 2030 to ensure meeting relevant targets Presidential Decree of 7 May, 2012 #596 On long-term national economic policy Establishment of the Inter-Departmental Commission on Technology Foresight, comprising representatives of relevant ministries and agencies, major companies and leading expert organisations Russian S&T Foresight study covering the period until 2030 is nearing the end. Specific areas have been identified to promote development of traditional sectors, and to achieve breakthroughs on high technology markets… Presidential Address to the Federal Assembly of 12 December, 2012 Meeting of the Presidium of the Presidential Council for Economic Modernisation and Innovative Development of 17 May, 2013 The need for Foresight is declared by official documents 3

* In accordance with Methodological guidance on development and implementation of national programmes in the Russian Federation, approved by the RF Ministry for Economic Development Order #817 of 26 December, 2012 Foresight General description of the implementation of the national programme, including major problems encountered and a forecast of future developments Priorities for national policy, goals, objectives, and progress indicators, description of major expected end results, timeframes and implementation stages. Data on measurements and indicators General description of major measures to be taken under the programme, and departmental targeted programmes. A forecast of integrated indicators for government targets General description of major measures implemented by Russian regions Data on participation of state-owned corporations, joint-stock companies with public participation, public, research, and other organisations, and government non- budgetary foundations in implementation of the programme Justification for individual sub-programmes, and for inclusion federal targeted programmes currently being implemented into the national programme Estimates of required funding Estimates of additional resource allocations effect on the results of the national programme (sub-programmes) Risk analysis Methodology for evaluation of the national programme Role of Foresight in rationale of state programs provisions 4

UK Marine Industries Roadmap & Capability Study Alternative Future Scenarios for Marine Ecosystems Industry Transformation Report: Shipbuilding Industry Factors Affecting the Structure of the World Shipbuilding Industry Marine Industries Global Market Analysis Study on Competitiveness of the European Shipbuilding Industry Shipbuilding in Europe Global Shipbuilding Competition: Trends and Challenges for Europe Green Growth Opportunities in the EU Shipbuilding Sector Community of European Shipyards Associations (CESA). Annual report LeaderShip 2015 The Shipbuilding Industry in China Competition in the Shipbuilding Industry Study of the Vietnamese Shipbuilding/Maritime Sector The Shipbuilding Industry in Vietnam Report on Indian Maritime Industry The Shipbuilding Industry in Turkey Sea Change. A Marine Knowledge, Research & Innovation Strategy for Ireland Climate change Implications for Irelands Marine Environment and Resources Maritime Transport and the Climate Change Challenge Climate Change and the Maritime Industry Shipping and Climate Change: Scope for Unilateral Action Foresight of the South Baltic Maritime Labour Market 2017 More than 90 sources European Commission Research Programmes (FP6, FP7, Horizon 2020) Chinese National Technology Foresight Korea 2030 Japanese Technology Foresight French Technology Foresight Global Technological Revolution 2020 (USA) Russian S&T Foresight Study 2030 RF Critical Technologies National RF Programme Development of shipbuilding in Federal Targeted Programme Development of civilian marine technology in Development strategy for the shipbuilding industry until 2020 and for the subsequent period The RF Transport Strategy until Russian Energy Strategy until 2030 Passport of the OSK, Inc. Innovation-Based Development Programme. Countries: EU, UK, China, Korea, USA, Finland, Ireland, Vietnam, Turkey, India, etc. National-level technology foresight studies Official programmes and forecasts for the Russian shipbuilding industry Major international forecasts and foresight studies The Foresight is based on a study of best international practices 5

Energy Transport Food Environmental TechnologicalDemographic Depleted reserves of non- renewable energy resources Increased energy consumption outpacing its production Development and utilisation of alternative energy sources (including wind, solar, geothermal, tide, bioenergetics, etc.) Increased intensity and volume of cargo shipment and passenger traffic Increased demand for special cargos shipment Terrorist threats to transport New standards and requirements to manufacturing and exploitation of vehicles and vessels, etc. Shortage of food and drinking water Decreased food safety Threat of certain species extinction, etc. Global climate change (including warming, melting of Arctic glaciers, etc.) Environmental pollution Reduced biodiversity Anthropogenic disasters The worlds oceans turning into an area of industrial interests, etc. Depreciation of capital assets Increased research intensity of production Increasingly complex design solutions Increased demand for automated production processes, etc. Ageing population Shortage of skilled labour Global population growth Increased mobility of population Growing middle class, etc. Grand Challenges affecting the shipbuilding industry 6

Energy Transport Food Depleted reserves of non-renewable energy resources Increased energy consumption outpacing its production Development and utilisation of alternative energy sources (including wind, solar, geothermal, tide, bioenergetics, etc.). Increased intensity and volume of cargo shipping and passenger traffic Increased demand for special cargos shipment Terrorist threats to transport New standards and requirements to manufacturing and exploitation of vehicles and vessels, etc.. Shortage of food and drinking water Decreased food safety Threat of certain species extinction, etc. Development of Russian continental shelf Development of new types of power plants generating demand for new vessel types Development of wind-, bio-, etc. power generation technologies Development of navigation along the Northern Sea Route Increasing the scale and changing the structure of shipping services Upgrading internal and mixed (river-sea) water transport Upgrading fishing fleet Development of new ship types to harvest algae and other marine products The shipbuilding industry development as a response to Grand Challenges 7

Analysis of scenario factors: economic development and trade climate change and sustainable development geopolitics and world leadership limited supply of resources control over energy resources 3 development scenarios: 1.Rough Seas 2.Yellow River 3.Open Oceans Analysis of key factors affecting development of marine ecosystems: Hydrography Fisheries and aquaculture Water-based tourism and recreation Sea ports and navigation Oil and gas production Offshore power generation and construction Coastal geomorphology Defence 4 development strategies : 1.World Markets 2.Fortress Britain 3.Local Stewardship 4.Global Commons) 6 сценариев развития: «Emissions from international shipping over the last 50 years and future scenarios until 2050» (EU) 3 development scenarios : 1. Clean scenario Low sulphur oxide content in emissions Significantly reduced nitrogen oxide emissions 2. Moderate scenario Relatively low sulphur oxide content. Moderately reduced nitrogen oxide emissions 3. No change scenario Sufficiently high sulphur oxide content in emissions Nitrogen oxide emissions are reduced to meet requirements of the International Maritime Organisation «Industry Transformation Report: Shipbuilding Industry» (ЕU) «Global Scenarios of Shipping in 2030» (Finland) «Alternative Future Scenarios for Marine Ecosystems» (Ireland) Examples The future of shipbuilding is considered within the context of socio-economic system as a whole 8

StrengthsWeaknesses qualified workforce economies of scale development of extractive industries high confidence of customers advanced shipbuilding technology high labor productivity short production cycle inland waterways underdeveloped financial market increase in labor costs low business diversification lack of basic technologies in cruise ships and offshore installations OpportunitiesThreats low prices for raw materials depreciation of the Korean currency growth of China's economy Instability of the global shipbuilding market low demand for the products of the shipbuilding industry overcapacity StrengthsWeaknesses low labor costs large supply of steel powerful government support insufficient development of design and technology lack of production of key components within the country OpportunitiesThreats high demand for transportation of iron ore, coal, grain, construction materials and other bulk lack of qualified workforce fluctuation in exchange rates overcapacity low productivity Япония StrengthsWeaknesses qualified workforce high level of technology in shipbuilding government support and protectionism high production costs large number of domestic orders OpportunitiesThreats development of competitive advantages loss of market share collapse of world prices StrengthsWeaknesses high level of innovation stable relations between shipyards and manufacturers of marine equipment stable employment environment specialization in niche markets high production costs diversified structure of shipbuilding operation, inefficiency on the operation of shipyards problems in knowledge protection lack of qualified workforce OpportunitiesThreats continuous innovation environmentally safe development of the shipbuilding industry development of transport policy increase the requirements for standards in the transportation strengthening of maritime clusters loss of market share ageing workforce collapse of world prices South Korea Japan China European Union The success factors of the shipbuilding market key players 9

RussiaKoreaJapanChina Accent on production technologies Accent on ship design Accent on power generation and energy saving, engines and mechanisms Increased attention to environment National technology priorities (based on the materials of world Foresights) 10

USA China Japan UK South Korea Publication activity in shipbuilding sector Publication indexed by Web of Science, categories «Engineering, Marine» and «Engineering Ocean» 11

Government defence orders Military technology cooperation Civilian products for domestic market Export of civilian products Changes in Russian shipbuilding production 12

Share of Russian-registered merchant ships deadweight in the global fleet (%) Source: Transport and communications in Russia // Rosstat 2012 (in Russian) Source: UNCTADstat. Growth of Russian-registered merchant ships deadweight (% of the previous year) Dynamics of the Russian merchant fleet (number of ships) Russian-registered merchant ships deadweight dynamics (thousand deadweight tons) Potential to increase efficiency must be found, and long-term development priorities set Total fleet Tankers Bulkers All-purpose dry cargo ships Container ships Other Shipbuilding market development in Russia: negative trends 13

Low shipping costs of internal water transport. Partially preserved from the USSR period technological potential. National industry development programmes. Availability of technologies to develop continental shelf resources Insufficient funding Insufficiently advanced civil shipbuilding technologies Low production efficiency, productivity, and products competitiveness Slow upgrading of capital assets. Shortage of skilled personnel Low profitability of the Arctic deposits. Work conditions cant compete with other industries Deteriorated infrastructure of internal waterways Inability to meet current international requirements to certain environment-related ships characteristics High shipbuilding costs, lack of motivation for investors. Long periods of time required for ship repair and maintenance. Lack of domestic technological basis, insufficiently developed component base, low quality of Russian construction materials and expendables. High prototyping costs in the course of ship design. Insufficient production capacities to build ships with dead weight in excess of thousand tons (total displacement in excess of 100 thousand tons). Insufficient financial and tax incentives for shipbuilding companies. Growth of shipping by water transport. Prolonged navigation in autumn and spring. Solving low transport accessibility problems existing in certain Russian regions with the help of high-speed passenger fleet. Emergence of new market segments for shipbuilding products. Development of international transport corridors. Development of recreational areas in coastal cities. Development of tourism, increased demand for river cruises. Advancement of shelf deposits development technologies. Development of high-speed water transport. Growth of private investments in marine research and development of marine biotechnologies. Development of new resource-saving technologies, and technologies for processing water-based bio-resources. Development of new business areas and production objects. National and international targeted programmes and strategies to promote the industry development (including marine biotechnologies). Projects to improve production and processing of marine bio- resources. Expected financial crises and economic instability Sharp decrease of defence R&D in recent years Obsolete standards and rules for ship design Strengthening of the competitors market positions Weaknesses Opportunities Threats The main potential for market development is connected with design and manufacturing of ships and maritime equipment for operation in the Arctic region Strengths The reserves for increasing the Russian shipbuilding efficiency 14

Output (billion roubles) Global market share (%) Construction of internal waterways transport (% of the demand) Share of total national exports shipped by national transport (for seagoing ships) Construction of complex civilian vessels (% of the demand) Construction of large offshore platforms (% of the demand) By 2030 the industrys output may reach 700 billion roubles By 2030 Russia can control 3-5% of the global civilian shipbuilding products market Anticipatory development of internal waterways transport Active construction of offshore platforms equipped with cutting-edge processing and drilling technologies Significant growth of production of advanced civilian seagoing vessels 50% of total national exports shipped by national transport Pessimistic Optimistic Key indicators of shipbuilding industry development (innovative scenario) 15

Nuclear-power icebreakers Diesel icebreakers Nuclear-power icebreakers Diesel icebreakers Tugs Hydrofoil Ice class gas carriers Hydrofoil Ice class gas carriers Hydroskimmers Research vessels Hydroskimmers Research vessels River and mixed (river-sea) navigation tankers Dredgers, haulers Oil skimmers River and mixed (river-sea) navigation tankers Dredgers, haulers Oil skimmers Ships and technical facilities of special purpose Floating drilling rigs and jack-up platforms and ships Dry cargo ships of river and mixed (river-sea) navigation Ice class tankers Sealing vessel Crane-erecting vessels Sealing vessel Crane-erecting vessels Service ship for underwater engineering work Special vessels Ice-class container ships Universal ice-class dry cargo ships Ice class bulk carriers River sealers Floating systems of extraction, storage and roll- out of hydrocarbon Special vessels Ice-class container ships Universal ice-class dry cargo ships Ice class bulk carriers River sealers Floating systems of extraction, storage and roll- out of hydrocarbon Passenger ships Non ice-class tankers Non ice-class gas carriers Chemical carriers Non ice-class container ships Refrigerated vessels Non ice-class bulk carriers Dry cargo sea roll-on vessels Ice class combination carriers Non ice-class combination carriers Freight-passenger ship Passenger ships Non ice-class tankers Non ice-class gas carriers Chemical carriers Non ice-class container ships Refrigerated vessels Non ice-class bulk carriers Dry cargo sea roll-on vessels Ice class combination carriers Non ice-class combination carriers Freight-passenger ship Universal non ice-class dry cargo ships Floating LNG terminal Level of R&D (expert assessment) Level of manufacturing (expert assessment) Priorities of Russian shipbuilding sector 16

Lists of high-priority (critical) technologies Linking strategic R&D programmes with technological upgrading and modernisation programmes, and general economic objectives Organising specialised academic events Development of joint R&D programmes and strategies Environmental policies Financial regulation, government guaranties Legal regulation (including protection of intellectual property) Economic regulation (foreign trade, etc.) Provision of government services Harmonising policies Innovation clusters Technological platforms Promoting cooperation between the industrys companies Division of risks between the market participants Development of communication rules Promoting trans-border cooperation Joint utilisation of specialised maritime infrastructure Businesses orientation towards making efficient technological decisions Establishing new enterprises Recommendations on investment projects (including infrastructure) Retaining and developing human capital Attracting direct investments in maritime R&D Measuring technological level, benchmarking Recommendations on making use of competitive advantages Identifying new market niches Recommendations on technological upgrading programmes Recommendations on promoting foreign economic activities and establishing joint ventures Government decision-making Network cooperation Development of the real sector of the economy Future R&D Recommendations on industrial policy development 17

Thank you for your attention! Oleg Karasev, Natalia Velikanova, Anastasia Edelkina National Research University - Higher School of Economics Institute of Statistical Studies and Economics of Knowledge Russian Federation , Moscow, Myasnitskaya St.,