Shipowners urged to up digitalization game for GHG cuts by 2030

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Shipowners can achieve decarbonization at scale within this decade with speed optimization and energy-saving equipment, according to maritime professionals — but the industry might need to digitalize data collection first.

Currently, shipping companies rely on the so-called noon reporting, in which a ship’s chief engineer manually compiles information on sailing speed, vessel location, bunker inventories and weather conditions daily to gauge operational conditions.

Speaking with S&P Global Commodity Insights, Nautilus Labs CEO Matt Heider suggested the standard practice could not help vessel operators accurately measure marine fuel consumption and associated greenhouse gas emissions and adjust sailings to minimize bunker usage in real time.

“What our industry needs more than anything right now is that reliable, transparent custody chain of data … that comes from sensors,” said Heider, adding that an upfront investment of “a few billion dollars” would be required for the global fleet on high-frequency data collection.

The International Maritime Organization, shipping’s global regulator body, has set targets to reduce emissions from international shipping by 20%-30% against 2008 levels and have 5%-10% of global bunker consumption from low-emission energy by 2030. This would pave the way for a 70%-80% reduction by 2040 and net-zero emissions close to 2050.

The industry could cut emissions by 28%-47% by the end of this decade via optimal operational measures including speed reductions, energy-saving investments in technical devices like supplementary wind-powered propulsion, and a low-emission transition in the fuel mix as the IMO targets, according to CE Delft.

About half of the emission cuts would result from optimized operations, 25% from energy-saving equipment and 25% from low-emission fuels, the consultancy estimated.

With accelerated decarbonization efforts by governments and businesses, S&P Global Commodity Insights expects low-emission marine energy demand would rise to around 12.5 million mt on an oil-equivalent basis in 2030 from 7.2 million mt in its reference case.

Immediate digitalization

Heider, whose company is a marine technology provider, said capital investment in improving voyage and fuel data collection should be “the biggest change that has to happen immediately” if the industry is to achieve a 30% GHG cut by 2030.

The global shipping fleet can eliminate 15%-20% of emissions theoretically simply by optimizing shipping speeds for just-in-time port arrival, as the measure would reduce fuel consumption during port congestion, Nautilus Labs estimates.

Moreover, high-frequency, high-quality data can help shipping companies improve GHG reporting and better understand the actual impact from energy-saving investments, Heider said.

“Our fastest path to getting towards emissions reduction targets is by starting with focusing on the data that we’re using to assess them,” he added.

Investment in fuel-saving devices often comes with a wide range of costs and climate claims, and some industry participants suggested better verification would be needed to promote more spending. For example, consultancy Ricardo’s research has found wind assistance could reduce fuel consumption and associated emissions by 1%-30%, with costs ranging between $280,000 and $3 million.

Better data would assist shipowners in modeling fuel savings more accurately, having better evaluation of their investment cases, and negotiating better commercial terms in sharing the monetary returns from lower fuel consumption with charterers, according to Heider.

Rates in time charters for ships are generally determined by supply-demand fundamentals. While charterers are responsible for fuel costs in this type of contracts, they are often not incentivized to invest in fuel-saving technologies as most charters last for no more than a year, Heider said.

On the other hand, shipowners do not have direct investment returns when spending on fuel savings. “Truly reliable data flowing” from vessels would allow shipowners to calculate reduction in bunker consumption and ask charterers to share profits from fuel savings in future time charters, thus facilitating larger-scale energy-saving investments, Heider added.

Contentious topic

There have been ongoing debates within the shipping industry over whether shipowners or charterers should shoulder the main responsibility for decarbonization.

Last year BIMCO — the largest shipowner organization by direct membership — introduced a clause in time charters that put the onus on charterers to comply with the Carbon Intensity Index rules, central to the IMO’s current GHG regulations. This prompted backlashes from over 20 major charterers including Vitol and Trafigura.

In an online poll during a webinar held by classification society DNV this month, only 3% of the participants reckoned commercial improvements like charter terms would help the industry achieve the IMO’s 2030 GHG target.

Eirik Nyhus, director for environment at DNV, said “in an ideal world, you would hope charter parties would drive the energy-efficiency improvement” together.

But the poll results told “something about the relationship” between shipowners and charterers and suggested “there is a disconnection,” Nyhus added.

Source:  Platts

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