Continuing shipping’s sustainability journey

2011 proved to be a milestone year in shipping’s quest for sustainability. The last 12 months have seen the greatest strides in CO₂ shipping emissions regulation since 1997, when the industry’s GHG ‘challenge’ first landed on the IMO’s agenda.

As the debate around market-based measures grew louder this year and sustainability issues gained greater traction, shipping companies increasingly flexed their CSR muscles in a bid to attract investment and gain a competitive advantage. However, the most significant announcement was undoubtedly the IMO’s Marine Environment Protection Committee (MEPC)’s vote in July to adopt the energy efficiency design index (EEDI) as part of MARPOL Annex VI, a landmark decision.

The EEDI is the first global measure for a global industry, and is a step in the right direction, although one that is notable more for what it represents than the specific index itself. The adoption of EEDI is a marker of progress, and whilst the regulation needs expanding to cover existing vessels, not just new builds, the psychological impact of introducing EEDI on the industry is tangible as naval architects and ship yards must act to combine engineering innovation with compliance for the first time.

The aim of EEDI is to achieve an improvement of 10% every five years from 2015 based on averages for each vessel category from 1999 – 2009, although these baselines are still being worked on and final figures are due from IMO in 2012. The current age profile of the global fleet and the large existing order book will mean that emissions reductions delivered by this regulation in particular may take time. However, no prudent ship owner would place an order for a vessel today without a compliant EEDI, and risk being burdened with ‘yesterday’s model.’

If we compare this progress to similar regulation within the automotive sector, manufacturers responded to tough environmental regulations by creating a competitive environment to develop the newest and most efficient models – this will happen with shipping as companies strive to be marketed as the most energy efficient. Within a decade it is very possible that EEDI’s 30% efficiency target will be overtaken and we will see ships become 40%-50% more efficient. The retrofit market will also be close to these figures.

In April 2011, research conducted by market intelligence company Fathom highlighted the growing adoption of clean technology, both for retrofit and newbuild vessels, publishing the first comprehensive guide to ship efficiency and technology measures. The study revealed that previous barriers to take up including a lack of proven performance, an apathetic mindset for change and lower fuel prices, are increasingly eroding in the face of the opportunities that innovative technologies present, especially those that can also be retrofitted with quick pay back periods.

Recent discussions between the IMO and the EU point to the IMO potentially extending EEDI regulation to cover the existing fleet: another development that will speed the take up of retrofit solutions. Indeed, although in 2007 the IMO stated that new vessels could be built up to 40% more efficiently, as EEDI will help to ensure, by 2025, in the same report, it states that at least 10% more efficiency is possible for the existing fleet. DNV claims as much as 15% more efficiency is possible, beyond the obvious benefits of slow steaming. So, although indexing measures such as EEDI currently only apply to newbuild vessels, they emphasise the opportunity that shipping has to significantly reduce emissions from the current fleet, using solutions that are proven, viable and available now.  

The IMO’s recent report for COP17 Durban states that shipping is ‘firmly committed to reducing its CO₂ emissions by 20% by 2020, with significant further reductions thereafter.’

This pressure is proving to be a catalyst for proactive shipowners that are increasingly choosing eco-efficiency technologies to stay ahead of the game. Many ship owners realise that aside from reducing CO₂ and other GHGs, becoming more efficient can significantly benefit the bottom line. Particularly as forthcoming sulphur regulations will serve to significantly increase the operational costs of powering vessels, as owners and operators are forced to use expensive distillates when operating in emission control areas (ECAs). As shipowners look to remain competitive during these tough times, retrofit technology is coming to the fore as a solution to free up the resource currently trapped in the industry and tick boxes for both EEDI and potential market-based measures. We expect this trend to continue into the year ahead.

Looking ahead to 2012, the link between sustainability and cost efficiencies is set to grow even stronger as shipping, along with the rest of the global economy, prepares for a challenging economic year. As fuel costs continue to rise and drain resources, the wealth of different eco-efficiency technologies and design innovations entering the market is rightly being embraced at a time when the potential to access significant cost savings is an attractive incentive. Current bunker fuel prices and impending sulphur regulation will significantly increase the cost of fuelling vessels for the foreseeable future. This makes the 10% cost savings that can be delivered by innovations such as air lubrication technology like the air cavity system (ACS) all the more relevant. Particularly when the payback is as little as 18 months to three years.

With MEPC63 around the corner in March 2012 and the expansion of EEDI and SEEMP guidelines on the agenda, measures that apply to both newbuilds and existing vessels will grow in importance. Stepwise increased efficiency, starting in 2015 with 10% and peaking at a target of 30% in 2025, will require shipowners to take action now so technologies that can tick all of these boxes will prove popular. Shipping is embarking on a new era of technological and regulatory developments and it will be innovative technologies that combine cost savings with reduced emissions that will ensure the industry continues to progress towards a sustainable future.