Decarbonization in Maritime

The IMO which has been taking effective steps towards environmental protection has recently set ambitious targets for carbon emissions. According to the regulations published after MEPC 80 [1] the net carbon target for 2050 has been set at 0. The year 2030 appears to be the first milestone. In 2030 maritime-related carbon emissions are targeted to be reduced by 20% compared to the baseline set in 2008. This issue stands out as one of the key topics in the maritime industry. In this article I would like to provide a general overview of the subject by addressing some key points.

Introduction

Global warming and climate change have long been areas of concern reported in the media and subject to work by legislators, international organizations and civil society groups. Especially the Paris Agreement [3] and the efforts of the European Union [4] in this regard have laid the foundation for international sanctions that will also extend to the maritime sector. Despite areas that remain in the shadow as seen in IMO's MEPC80 [1] meeting the broad outlines of actions that the maritime industry which is a major source of emissions will take to reduce emissions have become clear. Particularly ambitious targets have been set to reduce carbon emissions to zero. The emission values for the year 2008 serve as the baseline for emission reductions. It's evident that the maritime world is awaiting an agenda focused on reducing carbon emissions until 2050 based on the regulations that have been implemented.

CII

With the recent regulations two important indicators come into play. One of them is the CII (Carbon Intensity Indicator). CII is an indicator related to a ship's energy efficiency. It shows the amount of CO2 emissions per unit of cargo carrying capacity and nautical mile [5]. The CII value determines a ship's operational carbon intensity. This value should be determined and documented for every ship with a gross tonnage of 5,000 GT and above [6]. Based on the calculated CII, carbon intensity ratings will vary from A to E (where A is the most efficient). The rating specifies the performance level and will be recorded in a "Statement of Compliance" under the Ship Energy Efficiency Management Plan (SEEMP) for the ship's future emission plan [6].

A ship that holds a D rating for three consecutive years or reaches an E rating in just one year will have to present a corrective action plan highlighting how they will achieve the mandatory C rating or higher. Other official actors such as port authorities and various administrative bodies are also encouraged to offer incentives and other preferential plans for better-rated ships (A or B) [6].

Simplified attained annual CII formula - DNV [5]


Required CII - DNV [5]

EEXI

Another indicator is the EEXI (Energy Efficiency Existing Ship Index). The EEXI is related to a ship's energy efficiency. It's calculated and then compared to a reference value. The target EEXI is determined based on the EEDI (Energy Efficiency Design Index) baseline. This value is required for all ships of 400 GT and above and it must not exceed the required EEXI value to ensure compliance with energy efficiency threshold standards [6]. In summary the EEXI is compared to a reference EEXI for specific ship types and it must be below the reference value.

Maritime Practices After Regulations

After these regulations Maritime companies have prepared Ship Energy Efficiency Management Plans (SEEMP) in addition EEXI and CII rates have been calculated for each ship in the fleet resulting in current fleet CII ratings. Some measures need to be taken for cases of non-compliance. For ships that do not meet the current criteria there are several recommendations [8, 9]. These include slow steaming, retrofitting with clean technologies, the use of engine load limiters etc. Careful voyage planning can also contribute positively to reducing carbon dioxide emissions. Personnel training is also emerging as an important issue. With the calculations being relatively complex we are seeing the effective use of AI and Big Data in the maritime industry [10]. Many applications are now available for monitoring fleet performance.

Forecast to 2050 DNV Projections

DNV has published a report on maritime projections for 2050 [9]. They also held a conference to introduce the report in-depth [11]. During the conference there was an insightful discussion with participants from prominent companies in the industry including Knut Ørbeck-Nilssen, CEO of Maritime DNV; Laure Baratgin, Head of Commercial Operations at Rio Tinto; Bing Chen, Chairman, President, CEO of Seaspan Corporation; Christoph E. Toepfer, CEO of Borealis Maritime; Jan Dieleman, President of Cargill’s Ocean Transportation; Paul Taylor, Managing Director, Global Head of Shipping and Offshore at Societe Generale. I recommend checking out the relevant report [9] and video [11].

The starting point for IMO 2050 targets is emphasized with 2030 being the first significant milestone. Even achieving a 20% reduction in CO2 emissions presents challenging problems. The supply of "green fuels" is a major issue among these challenges. DNV's research indicates that fuel producers have not yet made any investment decisions. While the topic is on suppliers' agendas, there is no concrete project in place. This uncertainty also affects fuel producers because despite hydrogen, ammonia, methanol and other fuels being considered as green fuels the demand for green fuels compared to fossil fuels may not yet be at the level to stimulate the required investment appetite. During this transition period various issues related to fuel supply are emerging. Similar to the transition to low sulfur fuel there could be problems arising from differences in fuel properties obtained from different suppliers in this context as well.

In the assessment of green fuels there can be differences in the method used for emissions calculation. These differences can lead to distinctions in the potential fuels based on whether emissions are calculated after the fuel enters the ship's tank and is burned - known as tank to wake - or throughout the entire lifecycle of the fuel - known as well-to-wake. In the calculation of emissions, according to the document published after the IMO MEPC80 meeting [1] it appears that emissions will be calculated by including both well-to-wake and well-to-tank emission factors, in addition to tank-to-wake emissions, thus considering emissions produced throughout the entire lifecycle of the fuel.

There are also discussions about alternative solutions to green fuels. Some of these solutions include slow steaming, taking various measures to increase energy efficiency (such as wind-assisted propulsion systems, air lubrication, etc.), and the construction of nuclear-powered ships. We can see that the emission reduction, which is 20% by 2030, will increase to 70% by 2040 compared to the baseline year of 2008. We can anticipate that many ships that cannot be retrofitted will be scrapped, which could necessitate fleet restructuring. It can be said that the next 20 years will require serious planning.

We know that many of the existing fleets currently use fossil fuels. If it's possible to reconfigure these ships a retrofit era could begin in ship repair yards. Especially new technology related to carbon capture could present a significant entrepreneurial opportunity. Creative minds are needed to overcome these challenges that the maritime industry is trying to address. It can be said that there is an opportunity for young talented individuals who can develop these solutions and make significant contributions to the environment and the industry.

The maritime industry considers the 2020s as a defining period for the industry. DNV provides recommendations for industry players, highlighting the need for fuel suppliers to accelerate their plans and for buyers to commit to purchasing these fuels. From a ship operation perspective, it emphasizes the importance of implementing energy efficiency as soon as possible and reducing energy consumption to navigate this transition period smoothly, especially considering rising energy prices. Additionally, it suggests that personnel training should be planned for the use of new fuels and/or technologies, and workforce development is crucial during this transitional period. Clear and comprehensive regulations from regulators are expected in this regard.

Based on the speeches of industry participants it's possible to say that many have optimistic expectations for reducing carbon emissions by 2050. However it's important to note that this process is more like a journey with ups and downs rather than a straight path. Some key points mentioned include the scrapping of ships in fleets, the importance of retrofitting, ongoing efforts related to alternative green fuels, and the use of Big Data and AI-supported projects for tracking fleet performance in terms of energy efficiency. It's also worth noting that with the increased costs associated with these regulations, bankers and capital providers may have reduced appetite for investing in the maritime industry.

These sanctions that place responsibility on all players in the entire supply chain make it impossible to predict with certainty what the outcomes will be. However closely monitoring the situation is highly beneficial. It's clear that this is a time that requires collaboration among many different stakeholders, including financial support, the willingness of capital to invest in this area, incentivizing shipowners to reduce emissions, and the establishment of necessary laws or regulations. I would like to conclude my writing with a quote from speaker Bing Chen, "As an industry participant, we all should do what we can do in the current situation to contribute to the reduction."

Thank you for your valuable time