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Shipowners unite to cut emissions

The Norwegian Shipowners’ Association has supported a new set of energy efficiency measures adopted by the international shipping community last year to reduce CO2 emissions, paving the way for possibly the first mandatory global greenhouse gas reduction for an industry sector.

The new technical and operational measures agreed at International Maritime Organisation’s 62nd Session in July 2011 call for the prevention of air pollution of ships through a mandatory Energy Efficiency Design Index (EEDI) for new ships and a Ship Energy Efficiency Management Plan (SEEMP) for all vessels.

The measures are part of an offensive strategy by the international maritime industry to reduce shipping emissions by 10% from 2007 levels of 860 million tonnes by 2030 (down to approx 780 million tonnes) rather than face regional and national solutions and a possible CO2 tax.

Depending on the growth in world trade, the introduction of the EEDI for all new ships could remove between 45-50 million tonnes of CO2 annually by 2020 compared with business as usual, according to the IMO. The hope is that by 2020 the shipping industry’s common climate platform will reduce emissions by 20% in per tonne-kilometre of trade carried by sea.

“We accept that there is a threat with climate change and that we have to do something,” said Tor Christian Sletner, NSA head of section of environment. “This solution hits the target and is definitely what the UNFCCC (United Nations Framework Convention on Climate Change) has asked for.”

 

Rating Energy Efficiency

SEEMP would help bring down emissions through operational measures, such as weather routing, advanced navigation, and better logistics such as ones that reduce waiting times at ports. But the greater emissions savings, and larger investment costs, are expected to come from EEDI.

The EEDI requires a minimum energy efficiency level for new ships by stimulating continued technical development of all components influencing the fuel efficiency of a ship and by separating technical and design-based measures from operational and commercial ones. The EEDI regulations would apply to all ships of 400 gross tonnage and above, effective as of January 1, 2013, and help guide the industry on contracting the most cost-effective and environmentally friendly solution for a ship to comply with regulations.

The EEDI has been purposefully developed for the largest and most energy-intensive segments of the world merchant fleet, thus embracing 72% of emissions from new ships and covering the following ship types: oil and gas tankers, bulk carriers, general cargo ships, refrigerated cargo carriers and container ships. The EEDI specifies the ship’s energy efficiency based on the amount of CO2 emitted per tonne. The index uses existing technology, such as more efficient engines and propulsion systems, waste heat recovery, improved hull designs and larger ships, to reduce emissions.

An example is a car carrier transporting vehicles from Japan to the Netherlands. The new rules would fine the vessel for ballast tonnage if it returns home with no cargo. By converting a car carrier to a multi-purpose carrier, the vessel could transport other types of cargo and hence be more energy efficient.

“EEDI is very visible and tangible political solution,” said Sletner. “All ships are going to be constructed more energy efficient than before. EEDI will change a lot obviously because ships will have to be constructed after a certain formula.”

 

Challenging Discussions

Tor Christian Sletner, Norwegian Shipowner’s Association head of section of environment.Sletner was part of a Norwegian-led international group of shipping organisations promoting the international adoption of the environmental index EEDI. The negotiations have proven challenging, he says. A proposal for an EEDI was turned down earlier at a meeting in the Marine Environment Protection Committee in 2010.

Part of the problem is that some, especially developing countries, were awaiting further signals from the UNFCCC last December that could have precluded them from having to undertake these energy efficiency measures. Nations such as China, Brazil, India and South Africa are opposed to the EEDI because of fears it will hamper their ability to emerge from poverty and increase transportation costs. Proponents argue that there is a need for a level playing field that will not distort competition.

“We appreciate that some developing countries – in our view mistakenly – are concerned that a positive IMO decision on technical measures, that will apply to all ships equally, regardless of flag, might somehow prejudice their positions at the high level UN Climate Change negotiations,” said Peter Hinchliffe, International Chamber of Shipping secretary general, ahead of the vote at the IMO this July. “But any failure to agree at IMO will make discussions on the reduction of shipping’s emissions far more difficult.

 

Taxes Needed

In the end, 48 nations voted for Norway’s proposal at IMO’s vote in July, with five developing countries against. Erik Solheim, Norway’s minister of environment and development, called the decision “a historic breakthrough at a crucial time.”

But EEDI by themselves will not be enough, says Sletner.  The NSA estimates that a combination of higher bunker quality plus EEDI measures will only solve 25% of the estimated 60% in expected emission reductions per ship if the industry is to meet the CO2 emission reduction goal by 2030. The remainder will have to be solved through market-based measures, either in the form of a levy or an emission trading system.

Although the NSA is normally opposed to additional taxes for the industry, the organisation feels that a CO2 tax to supplement the EEDI measures would offer more predictability than an emission trading system,

“It is harder with an emission trading system if we want to expand our business because we don’t know the cost implications and the uncertainty related to the availability of quotas,” said Sletner.

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