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10 Dec 2021
5 min read
70% of the planet is covered in water, so it makes sense that over 11 billion tons of goods are shipped by water each year. Every year, more and more cargo is shipped globally, and more and more vessels are added to shipping fleets. Over the last ten years, the number of container ships, for example, in the global fleet grew from 4,966 in 2011, to 5,371 in 20201. Goods need shipping around the world, and with the increase in manufacturing hubs in Asia and India the need for shipping goods around the world by sea will only increase in the future
Cargo ships are powered by diesel engines, and the increase in tonnage being shipped, along with the number of ships needed to transport the cargo has seen a big increase in carbon emissions, too. In the most recent International Maritime Organisation study they have shown that emissions of total shipping have increased from 977 million tonnes in 2012 to 1,076 million tonnes in 2018 (9.6% increase) mostly due to the continuous increase of global maritime trade.2
Marine transport is considered the ‘greener’ option in transportation because of the overall emissions per ton per mile, but in absolute terms it is one of the dirtiest when total emissions are considered. This is only predicted to rise by as much as 250% between now and 2050.
The International Maritime Organisation, (IMO)is the specialised agency of the United Nations, which is responsible for measures to improve the safety and security of international shipping and to prevent pollution from ships. They set the standards for emissions on ships of all types,(including container and general cargo vessels).The IMO has adopted measures to reduce air pollution from ships as well as energy efficiency measures including the Energy Efficiency Design Index, which is mandatory for new ships, and the requirement for a Ship Energy Efficiency Management Plan, for all ships. From their latest report:
The initial GHG [Greenhouse Gas]strategy envisages, in particular, a reduction in carbon intensity of international shipping (to reduceCO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030,pursuing efforts towards 70% by2050, compared to 2008); and that total annual GHG emissions from international shipping should be reduced by at least 50% by 2050compared to 2008.3
The prime path for the industry to meet these goals is initially an overall reduction in fuel consumption (combustion is the largest CO2producer), and in the long term by utilising new fuels with zero or reduced carbon footprints. The IMO has set out to achieve these goals with three programs:
The EEXI will be applied to all vessels from January 1, 2023 and it specifically targets vessels above 400 GT that fall under MARPOL Annex VI which describes allowable emissions standards from ships. Carbon emissions are described per cargo ton and mile; they determine standard CO2 emissions related to installed engine power, transport capacity and ship speed. The standard emissions are a function of fuel oil consumption, the main engine’s and auxiliaries’ installed power, and a conversion factor between fuel and the corresponding CO2 mass. Every registered vessel needs to be listed in the index and it is a once time only certification.
The SEEMP is an operational measure that establishes a mechanism to improve the overall energy efficiency of a ship in a cost-effective manner. The SEEMP provides guidelines for owners and operators to manage ships energy and performance over time. The SEEMP also encourages owners and operators to invest in new technology to ensure their ships meet the IMO standards.
The CCI is a rating scheme for the overall efficiency of ships. The CII measures how efficiently a ship transports goods or passengers and is given in grams of CO2 emitted per cargo carrying capacity and nautical mile. The ship is then given an annual rating ranging from A to E, and the rating thresholds will become increasingly stringent towards 2030.Each of these three programs seek to contribute to the IMO’s goals of total annual emissions from international shipping should be reduced by at least 50% by 2050.
The consequences of the IMO’s regulations are that both a valid EEXI certificate and a plan under the SEEMP, specifically with an annual CCI rating, will be required beyond 2023. As of publication of this paper, 132 countries have signed up to the regulations, so if a ship owner wants to stay in the global trade, they will have no choice to upgrade and monitor their vessel’s emissions.
Compliance with these targets means that ship owners will need to modify their vessels to become more fuel-efficient. This applies to all registered vessels relating to the EEXI one-time certification, regardless of their age, or to the specific group of vessels of > 5000DWT, cargo, RoxPax and cruise vessels currently, with the increasingly demanding annual CII rating to adhere to. Non-compliance isn’t an option – if they want to continue to operate, they will need to become more efficient
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