Waiting until 2028, and then following the lead of others, is a very high-risk decarbonisation strategy. No single fuel and energy conversion technology is going to satisfy the requirements of every shipowner, so each must develop their own decarbonisation strategy and use 2030 targets to evaluate the solutions that could then take them through to 2050.
The regulatory landscape
The International Maritime Organisation (IMO), the main regulatory body of the industry, committed to reducing total annual greenhouse gas (GHG) emissions from international shipping by at least 50% by 2050 compared to 2008 levels. To achieve this, the IMO has adopted short-term measures such as the creation of the Energy Efficiency Existing Ship Index (EEXI) as well as an operational Carbon Intensity Indicator (CII) – both building on the already existing Energy Efficiency Design Index (EEDI) and the Energy Efficiency Operational Index (EEOI).
In June 2021, the IMO’s Marine Environment Protection Committee (MEPC) adopted the proposed amendments to MARPOL Annex VI to make the new Energy Efficiency Existing Ship Index (EEXI) a mandatory requirement for all vessels over 400GT. This measure, which mandates a minimum technical efficiency in terms of carbon emissions per capacity tonne mile, added to the government policy, pressure from lenders, and customer demand that are all driving vessel owners and operators to find ways to reduce greenhouse gas (GHG) emissions from their fleets. The revised Annex VI requires ships to calculate their EEXI and establish an annual CII rating. These amendments entered into force on 1 November 2022, with the requirements for EEXI and CII certification coming into effect from 1 January 2023.
Routes to compliance – retrofitting efficient technologies
There remains huge uncertainty around which low-carbon fuels will emerge as viable for our net-zero future. In addition, fundamental land-based infrastructure must also evolve to provide future fuel services, and this is a significant undertaking for the sector. Yet waiting for change to occur is risky. Efficiency technologies are proven, available now and investors, charterers, and other key influencers are showing the colour of their money – and it’s green.
Carbon reduction opportunities can be applied to individual vessels as well as on a fleet-wide basis. It is important to look at the individual vessels and their routes first. There’s a multitude of effective energy efficiency modifications that can be deployed today, with no single best solution. A non-exhaustive list includes propeller modifications such as mewis ducts, propulsion improvements, such as air lubrication systems, and propulsion augmentation with offshore wind. Then there are hi-tech anti fouling coatings, cold ironing, waste heat recovery, automated docking systems, and electrical considerations such as the benefit of using a variable frequency drive. The key point is that there are a huge range of proven opportunities to improve efficiency, minimise fuel consumption, and reduce emissions considerably.
Shipowners should start with a proper analysis of the problem rather than an evaluation of the solution being offered. It is about how to package certain technologies together for the greatest efficiency gains and how to achieve the best return on any investment. However, this requires expert and independent advice.
Routes to compliance – alternative fuels
Alternative fuels in the maritime industry can be with and without carbon. Alternative fuels with carbon are most often referred to as transition fuels and include Liquified Natural Gas (LNG), Methanol, and biofuels. Alternative fuels without carbon, or zero-carbon fuels, include Hydrogen and Ammonia.
Today’s ships benefit from the high energy density of fossil fuels. Often, they can bunker for convenience rather than necessity. Eventually, alternative fuels may also allow this luxury, but until they do, a primary consideration for shipowners is to understand how to manage the space and mass requirements of new fuels. The answer is not just a matter of making an economic decision to reduce cargo capacity. Fundamentally, it means recognising that new fuels will be significantly more expensive than fossil fuels, so fuel efficiency will only increase in importance in the future.
Often today, ships do not sail at their optimal design speed. This is inefficient for the engines themselves, for associated equipment such as pumps and air systems and for the ship’s hull form. To optimise ship energy efficiency, shipowners will need to ask themselves: How do I want to operate my ship? Where do I want it to be able to sail? How much flexibility do I want? Rather than taking standard ship designs from shipyards, how am I going to negotiate a more optimal solution? There’s no doubt there will be a cost penalty, so what is my appetite for risk?
That appetite will certainly be fed by upcoming regulations, but the demands of customers and charterers are already being felt too as they look to decarbonise their own supply chains. It is important to consider their ambitions as they could focus on the full lifecycle of emissions of a new fuel earlier than regulators such as the IMO.
The availability of new fuels will not just be driven by smart shipping. Other forms of transport and other industries are undergoing the same decarbonisation transition. Each new fuel option will likely become available at different times in different places. So, this is another key line of questioning for shipowners: will my new fuel choices be available when I need them?
Environmental regulations in the maritime industry are increasingly strict, and it can be difficult for shipowners to navigate the myriad of solutions available to reduce their fleet’s emissions. Alternative fuels for ships are great solutions for newbuilds; however, shipowners should not wait for those to become technology ready – there are already ready-to-use energy efficiency technologies that can help complying with upcoming regulations. Industry collaboration and expert advice is key to enabling these solutions.
Houlder can calculate an individual vessel’s EEXI based on the proposed guidelines and perform a detailed assessment of the various improvement measures that can both help to solve any compliance issues while also improving the ship’s fuel efficiency. Assessing the costs and benefits of these measures early on allows shipowners to plan a route to compliance for their fleet as well as achieve actual reductions in fuel consumption.
Houlder has recently worked with Foreland Shipping to conduct a vessel efficiency study for their fleet of Ro-Ros. The study examined the current fleet performance in terms of total annual emissions and attained EEXI as well as comparison with a selection of similar vessels. Focussing on the operational profiles of the vessels – including typical operating speeds, loading conditions and time spent at sea – allowed for a more accurate efficacy estimate for each improvement option, both on the vessels’ theoretical technical efficiency but also on their actual annual fuel savings and emissions.