Staying afloat

Can the global shipping industry increase its efficiency and reduce its contribution to global warming? Arthur Bowring explores the issues.

International shipping is the servant of international trade; ships carry an estimated 90% of world trade. Admiral EE Mitropoulos, secretary-general of the International Maritime Organisation (IMO), has said that without ships, half the world would freeze and the other half would starve.

The demand for ships and shipping capacity is therefore highly dependent on the amount of cargo that must be moved to satisfy the requirements of global trade. Trade has increased rapidly over the last few years – and with it the demand for ships – but its unprecedented contraction in the past year has reduced shipping demand and resulted in a massive oversupply of capacity.

The global economy, however, is widely expected to recover at some stage and, barring any longer term protectionist measures, world trade will once again be on the rise, bringing with it an increase in the demand for the ships to carry that trade.

International shipping is already the most efficient method of moving goods.

The IEA estimated international shipping’s carbon dioxide (CO2) emissions for 2005 at 2.7% of global CO2 emissions, which is small relative to the benefits brought by global trade, but large when compared to individual country emissions, being roughly equal to emissions from Germany.

The shipping industry has and continues actively to seek practical solutions to reduce greenhouse-gas emissions from shipping. CO2 is the most important greenhouse-gas emission from shipping, and the benefits from reducing emissions of the other greenhouse gases are small in comparison. Since engine exhaust gas is the dominating source of emissions, the industry’s work has mainly been in reducing exhaust gas emissions by increasing ship efficiency.

International shipping is a highly competitive industry, and shipowners constantly seek ways to make their operations more efficient and therefore more competitive. Interestingly, higher fuel prices do not necessarily produce an economic incentive to increase efficiency, since they affect all ships and do not introduce inter-industry competitive distortion. They might have a negative effect in some areas, by encouraging a modal shift to a more polluting form of transport, such as a movement from coastal shipping to trucks. But higher fuel prices do make equipment to increase efficiency more cost effective, which generates more interest in research-and-development and increases the availability of the equipment.

International shipping is a global business and needs global regulation. Myriad regional or local regulations would make the smooth operation of international shipping almost impossible. The shipping industry is regulated by legislation produced by the IMO, a United Nations body situated in London with 168 member states and three associate members, along with many observer organisations. The IMO has a successful track record of development of the global regulations that govern shipping’s environmental performance, produced under the principle of “no more favourable treatment”. This principle ensures that IMO standards apply equally to all ships throughout the world, so as to obtain maximum environmental effectiveness.

The IMO is now working on several initiatives to reduce international shipping’s CO2 emissions.

The Energy Efficiency Design Index (EEDI) is a verifiable index that is calculated from the ship’s design parameters. It is intended to offer the shipowner a means of comparing the efficiency of designs from different shipyards for the same type and size of ship. The EEDI has now been developed for voluntary use for ships with standard propulsion layouts, so that experience can be gained in the use and validity of the index. Work is now also being done to formulate “baselines” for different ship types, so that mandatory limits on the EEDI can be brought in at a later stage.

Methods exist already to increase the efficiency of ship designs, and research-and-development is accelerating, although not all measures may be used on all ships, as indicated by the wide range of potential reductions shown in the table below.

Speed reductions to increase efficiency, for example, might not be effective in all situations. The incentives for speed management vary depending on the commercial market, the types of emissions, the scheduling of the ship and cargo, as well as the engine itself, which might not be able to be operated safely and at optimum efficiency in lower power ranges.

But efficiencies in design are not the total solution. While efficiencies will reduce an individual ship’s emissions, they also lower costs, which could lead to increased demand, translating, in turn, into an increased number of ships and an increase in emissions from shipping.

The Ship Energy Efficiency Management Plan (SEEMP) is a guide for those on board ships and ashore to explore and implement ways to make the operation of the ship more efficient. As part of the plan, an Energy Efficiency Operational Indicator (EEOI) has been developed as a management tool to compare the energy efficiency of similar ships in a fleet over a period of time.

The efficiency of a ship in service depends not only on the operation of the ship, but also on the operation of the port, the amount of cargo being carried and the specific load and discharge ports. The cargo to be carried and the ports are obviously not always under the owner’s control, and so the EEOI will vary even between ships of similar size on similar voyages under the same management. But the EEOI is expected to become widely used in a company’s environmental reporting; some shipowners are already incorporating an earlier version of the indicator in their annual reports, and some charterers and port authorities are asking for owners to monitor and report the energy efficiency of their ships.

In addition, the IMO is deeply engaged in the development of an economic or market-based instrument (MBI). The debate in the IMO is taking longer than some observers and regional groups feel that it should, but it is important that the IMO does not act on the pressure exerted by interest groups but by listening, appreciating and taking account of the various interests of the IMO member states to find a consensus acceptable to all.

In this regard, some see the Kyoto Protocol principle of “common but differentiated responsibilities and respective capabilities” as contrary to the IMO’s mandate for global regulation. Some developing countries feel that the regulations that the IMO develops should take this principle into account, and see a danger that their interest in maintaining global trade without artificial or protectionist barriers could be overwhelmed by the stridency of some developed countries.

Despite these differences, good progress has been made and a road map agreed for the development of suitable MBI, and the ongoing debate has encouraged a good understanding of the various issues by IMO member states.

The reduction of greenhouse-gas emissions by the international shipping industry is very complex, but the industry itself is constructively engaged in debating the options for a practical and administratively simple solution.

We are well aware that our industry  is massively dependent on hydrocarbon fuel to power its ships and, mindful that peak oil has probably already passed, we are keen to develop alternative methods of powering our ships – alternative methods that will reduce both greenhouse-gas emissions and emissions of the toxic air contaminants that harm the health of people in coastal states and close to port areas. An approximation of ship traffic distribution produced by the International Comprehensive Ocean-Atmosphere Data Set (ICOADS) shows that 70% of ships operate within 200 nautical miles of shore, 44% within 50 nautical miles and 36% within 25 nautical miles.

The IMO recently introduced stringent regulations for the reduction of toxic air emissions, and we fully expect that the regulations developed for the reduction of greenhouse-gas emissions will further reduce toxic air emissions.

Arthur Bowring is managing director of the Hong Kong Shipowners’ Association

All figures are taken from the “Second IMO GHG Study 2009”

Homepage image by D G Butcher