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- Shipping industry faces costly green compliance amid economic downturn
- Operators favour energy efficiency measures for their cost-cutting benefit
Maritime shipping is already the most carbon-efficient transportation method available today, but it needs to do a lot better.
“No other transport mode can compete,” says Eirik Andreassen, managing director of DNV Petroleum Services. “But if you look at the pollution in shipping, you will see that most other industries have improved dramatically over the last few years while shipping has not really improved.”
According to a recent International Maritime Organisation (IMO) report, the typical
cost of transporting a 20-foot container carrying over 20 tonnes of
cargo from Asia to Europe is about the same as the economy airfare for a
single passenger on a similar journey. Thanks to globalisation,
however, the huge volume of commodities and products being shipped by
sea adds up to a lot despite the relative efficiency of maritime
transport.
Shipping
was responsible for 2.7% of the world’s carbon emissions or 870 million
tonnes of carbon dioxide in 2007. Experts suggest that by 2050, in the
absence of relevant policies, ship emissions could balloon to twice or
three times that figure as a result of the growth in world trade. A
leaked UN study seen by The Guardian in 2008 suggested that
annual emissions from the world’s merchant fleet are in fact much higher
than previously believed and have already reached 1.12 billion tonnes
or nearly 4.5% of global carbon dioxide emissions.
Development of world seaborne trade (selected years in millions of tonnes loaded)
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Source: UNCTAD Review of Maritime Transport 2011
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Costs
of shipping also go beyond carbon emissions to include biodiversity
issues such as the accidental transfer of invasive marine species into
new ecosystems via the indiscriminate release of ballast water and
fouled ship hulls.
Andreassen
and other members of the international maritime shipping industry
gathered in April for IBC’s Asia Green Shipping Summit in Singapore.
Aside from getting updates on recent regulatory initiatives by the IMO and other post-COP 17 issues, delegates swapped news on impending international regulations on green shipping and the technology developments necessary to make compliance possible.
Sentiments
were mixed at the conference. While there is no disputing the urgency
of taking environmental protection measures, particularly those with
international regulatory deadlines, there was a general frustration at
facing compliance costs during a time of economic recession.
Waiting game
Many
shipping companies and vessel owners are taking a wait-and-see approach
until the absolute deadlines for compliance kick in. There are at least
three reasons to do so.
• Cost: The price of implementation should continue to come down as markets grow past small groups of early adopters
• Time: The industry needs time to fine-tune and further innovate on technologies and systems
• Cashflow: Ship owners prefer to hold on to their money until the economy improves.
However, Andreas Chrysostomou, chairman of the UN’s Marine Environment Protection Committee (MEPC), recommends biting the bullet sooner rather than later.
“The longer we ignore the problem, the
more problematic it will become for us in the shipping industry to
manage and comply,” he says, urging decision-makers to participate in
conversations about regulations so that the targets and methods being negotiated and prescribed are relevant to and practicable for regional and industry-specific conditions.
Chrysostomou
recommends that the shipping industry place itself into a better
position to respond to future legislation by proactively undertaking the
following:
• Voluntary application of operational compliance measures
• Voluntary calculation of fleet carbon footprint
• Assessment of vessel efficiency.
Having a record of their fleet’s carbon footprint, for instance, will give shippers a better idea of how they can operate within market-based mechanisms (MBMs) for reducing greenhouse gas emissions (GHG), as and when such legislation takes effect.
Among the MBMs being considered are port state levies based on the amount of
fuel consumed by the vessel en route to that port; a global emissions
trading scheme and an international fund for GHG emissions from ships.
Among the
hot topics this year was ballast water management (BWM) and the IMO’s
impending requirements for ship owners to install BWM and treatment
systems on board their vessels to discourage the accidental transfer of
invasive marine species.
The
BWM convention comes into force 12 months after ratification by 30
states, representing 35% of world merchant shipping tonnage. Currently,
the total number of contracting parties has reached 35, but they
represent only 27.95% of the world’s tonnage.
Strategic stragglers
Khorshed Alam, vice-president of GL-FutureShip
for South Asia/Oceania, Germanischer Lloyd, says the enforcement of the
convention is likely to precede maturity of sophisticated BWM
technologies.
“With
[the IMO’s requirement to use] oily water separators, the technology
was there, but the convention kicked in at a later stage. In this case,
the technology is still being developed,” he says.
Alam suggests it could therefore be a good thing that the economic recession has caused many ship owners to
defer installing BWM systems. Tight budgets have forced them to
prioritise regulatory compliance in other areas, such as in ship energy
efficiency, where measures taken also help to cut costs by saving fuel.
The same cannot be said of BWM systems, which is a net expense in
shipping operations despite its benefits to the environment and fishery
industry.
“Let
the new technology develop more and more,” Alam tells industry peers.
“Be it energy consumption or [reducing the carbon] footprint, it’s
fantastic the improvements you will see, even from the same supplier.
The economy’s not so good right now and if you have to spend your money
on something, please do so where it can reduce your cost.”
Leading in risky waters
Fuel
efficiency regulations are another hot topic. Alisdair Pettigrew,
senior adviser at the Carbon War Room – Richard Branson’s non-profit organization for climate change solutions – explains that industry
willingness to invest in fuel efficiency often depends on who will pick
up the tab, or at least share it.
“I was talking to a mid-size tanker company the other day and they’re interested in fuel economy, naturally, but only if their charterers are too,” he says. Few ship owners will green their vessels unless it is partly defrayed through higher charter freight rates, for example.”
The decision-maker’s type of business operations also determines his appetite for green investment. Dr Jan Otto de Kat, senior director and senior technical adviser at Maersk Maritime Technology, points out: “There’s a big difference being owner and operator, versus just being an owner and having ships managed by another company.”
Owner-operators
have a ship’s relevant operational data at their disposal and are able
to make better-informed decisions on how to invest in sustainability.
They are also likelier to spend on green measures.
“We
look at ships from a life cycle perspective, and we’d like to be able
to operate our ships for a longer time period. So we have an interest in
looking at the total cost rather than the cheapest initial cost,” says
de Kat.
While
ship owners weigh options and bide their time, ports and technology
leaders are ploughing on to make investing in sustainability more
enticing. For instance, Rolls-Royce Marine, whose lean-burn LNG
engines can reduce the emission of nitrous oxides by up to 90%, is among
21 industry partners in a joint industry project with Singapore’s
Maritime and Port Authority (MPA) and Det Norske Veritas (DNV) to explore LNG bunkering in Singapore.
The
growing pool of environmentally-aware consumers and various businesses
that cater to their concerns is another factor spurring the growth of
sustainable shipping. Kevin Krick, director of environmental affairs at APL,
recalls: “Back in 2008 and 2009, a small group of strategic customers
came to us and said, ‘We want to know what your carbon footprint is, we
want to know how you’re performing in that area.’ So we started tracking
the queries we get and how many customers send us, as part of the
bidding process, an environmental questionnaire or carbon footprint
request.
“We found that that has steadily increased – in some areas, exponentially – year after year. Customers, like Nike,
are interested in what we’re doing, and their customers – the consumers
– are interested in how the products they buy are environmentally
friendly.”
Post to be found at:
http://www.greenprospectsasia.com/content/maritime-sustainability-deadlines-incoming-tide
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