Shipping’s efficiency opportunity

In the wake of the first ever international regulation to reduce Greenhouse Gases in the shape of the EEDI, and the anticipation of more to come, some proactive ship owners are exploring the many options to become more energy efficient ahead of the regulatory curve. These owners are motivated by ‘future-proofing’ their fleet in anticipation of more IMO, or new EU regulations focusing on the positive reputational benefits or, as is the case in most instances, seeking to benefit from the significant cost savings that technologies and measures can bring.

EEDI, which comes into force for all newbuild vessels from 2013, will undoubtedly act as a spur for more investment in clean technologies and measures. However the potential for significant cost savings – buoyed by the simple fact that each tonne of fuel saved saves costs as well as reducing CO₂ simultaneously - perhaps provides the strongest incentive for becoming more sustainable. To access immediate fuel and cost savings from the current fleet, for example, clean technology that can be retrofitted is an attractive solution.

This is good news for shipowners’ and operators’ businesses for both short and long term, especially given current bunker prices. The sheer volume of new build vessels coming on-stream before EEDI is fully implemented means there is much to be done with all vessels that will pre-date the EEDI.

But reducing emissions is not just about design features. Tackling emissions generated by operational inefficiencies in line with SEEMP is crucial and a long list of efficiency technologies and measures are being developed. Advanced hull coatings, air lubrication systems, new propeller designs, just-in-time virtual arrival and waste heat recovery, and, of course, slow steaming provide just a few examples. These are becoming increasingly viable as costs fall, fuel prices rise and operational and technical experience grows. Of course, the efficacy of each of these measures will fluctuate dependent on freight markets and the cost of fuel, so assessmeny and analysis of solutions for individual fleets or vessels is where expert consultancy comes into its own.

For Carbon Positive and similar consultancies, the ultimate aim of all of these options is to reduce carbon emissions and enable ship owners to benefit from commercial savings as well as getting ahead of regulation. If emissions are reduced low enough, the door opens to offsetting, which increases the options for shipping companies investing in abatement technologies that work for their vessels. It motivates and encourages performance beyond compliance, so exceeding the regulation that is to come and providing tangible asset building beyond just fuel cost savings. The power of reputational enhancements that raising your environmental performance can bring is also significant as insurers, banks and potential customers are increasingly benchmarking sustainability and CSR initiatives.

These rewards require work however, and there is no short cut to sustainable shipping. Solid, in-depth analysis is crucial to ensuring that the right steps at this formative stage are taken, and accurately monitoring and assessing a vessel or a fleet’s emissions is the key to managing carbon footprint.

In response to industry demand for greater clarification, Carbon Positive has developed its Carbon Positive Programme for Ships, specifically for individual vessels that will enable ship owners to focus on core operations while Carbon Positive’s experts measure, reduce and eventually offset emissions. To ensure transparency, the programme will be verified and certified by a third party. All emission reductions are achieved in line with targets determined by Carbon Positive using multi criteria decision-making tools and the ship owner and are measured against your individual carbon baseline, confirmed by comprehensive analysis of data during the measurement phase.

The in-depth research carried out whilst developing the programme revealed that carbon management is still very much a new territory for the majority of ship owners and operators, with ‘unknowns’ surrounding both global and regional regulatory developments. Only one thing is for sure; shipping will have some form of carbon offsetting in place over the next few years, and the lack of understanding serves to highlight the importance of getting ahead of regulation.

Moreover, for those that can afford to invest in the vision and future proof their fleet, emissions reductions technologies and measures can deliver profits with a short payback period. Impending carbon offsetting provides a further incentive for investment. With fuel running at over 70% of all costs and prices still rising, stiff competition and a ‘flat’ market, shipping companies must increasingly look to streamline costs and reduce emissions in challenging commercial times to survive.

It is no coincidence; the better that ship owners manage emissions now, the greater competitive advantage they will achieve in the future, particularly by generating carbon ‘credits’ that can be used in offsetting. Shipping is not yet fulfilling its true potential in terms of the efficiencies and in line with this there are clear opportunities for ship owners to save money at a time when the industry needs it most.