The Year in Review

Reducing Shipping’s CO₂ Emissions

The challenge of reducing carbon emissions is undoubtedly a critical issue for the shipping industry; not only with regard to agreeing what level of reduction might be practical and feasible, but also in respect of the implications of possible solutions for shipping’s economic well being and its environmental image.  The performance of ships - impressive as it is - has literally become a front page story in many national newspapers.  ICS is at the centre of the global discussions on ships’ CO₂ emissions now being firmly led by IMO , which aims to develop proposals for maritime transport by early 2009.

In December 2007, ICS hosted what may prove to have been a milestone meeting of national associations and other shipowner bodies to explore technical, regulatory and commercial solutions for reducing ships’ emissions.  Various expert working groups have now been established to develop informed industry input on the net environmental benefits and - very importantly - the commercial implications of possible technical solutions. These include the possibility of reducing ship speeds (which in several trades is happening already), the use of alternative fuels, and new energy sources such as solar, wind and fuel cells.  For the foreseeable future, however, fossil fuels will probably continue to be the predominant source of power for the majority of the shipping industry, although nothing has been ruled in or out.

In parallel with these discussions, ICS and the Round Table organisations have had joint meetings with representatives of classification societies and shipbuilders to develop a strategy for reducing emissions from new ships, including improvements to hull design and the introduction of more fuel efficient propellers and engines, as well as an index against which the carbon efficiency of new ship designs can be measured.

ICS is also analysing the net environmental benefits and commercial implications of the various regulatory possibilities that are being actively considered by governments, including “cap and trade” Emission Trading Schemes (ETS) and carbon taxes, on the basis that it is vital to be engaged in discussions on these issues, no matter how controversial they might seem. However, whatever measures may ultimately be decided, they must be “flag neutral” in their effect in order to avoid market distortions.

Encouragingly, the European Commission has indicated that it would definitely prefer to see a global IMO response, rather than an outbreak of regional initiatives.  However, it has also made clear that in the absence of a “bankable” solution by 2009 it will feel compelled to develop regional controls in order to help meet the firm EU political target for reducing all EU CO₂ emissions by 20% by 2020 (from a 1990 base) or by 30% if the rest of the world agrees to follow, presumably through the post Kyoto framework for tackling climate change which is due to come into effect after 2012.

Significantly, the latest climate change package proposed by the European Commission in January 2008 did not include shipping in the revamped EU Emission Trading Scheme, on the understanding that IMO will deliver an acceptable solution for maritime CO₂.  The United States, both at the Federal and State level, is also expected to develop a more focused response on maritime CO₂ after the presidential elections.

While it may be possible to reduce CO₂ emitted per tonne/mile in a moderately significant way (perhaps by around 15% in the next 5-15 years, with new and bigger ships eventually bringing additional improvements), it appears impossible to guarantee any absolute reduction by shipping as a whole, due to the projected growth in demand for shipping worldwide arising from the growing world population and global economy.

Shipping companies, however, have a very strong incentive to reduce their fuel consumption and thus reduce their Green House Gas emissions: bunker costs represent an increasingly significant proportion of ships’ operational expenses, having increased by about 300% in the last 5 years.  Fuel costs are already having an impact on the competitiveness of certain maritime trades. For example, short sea and coastal shipping are often in direct competition with land transport modes, and regulators need to ensure that, as a result of efforts to reduce CO₂ emissions, there is not in fact a modal shift to other less carbon efficient forms of transport which would increase global CO_2.

In terms of CO₂ emissions per tonne of cargo transported one mile, shipping is recognised as the most efficient form of commercial transport (see figure 1).  Yet the enormous scale of the global shipping industry, which is responsible for the transportation of about 90% of world trade, means that it produces around 3% to 4% of global emissions.  However, regardless of the actual figure, ICS fully acknowledges that the industry must play its part in helping to reduce the world’s total CO₂ output.

The CO₂ debate is being addressed at various other levels, and a plan for the development of a post Kyoto regime was agreed at the United Nations summit in Bali, in December 2007, at which IMO was represented.  The post Kyoto regime will be developed further at a major UN Conference on climate change in Copenhagen in December 2009.

In the meantime, IMO remains the focal point for maritime discussions.  It will be vital for the industry and its regulators to ensure that IMO delivers, in 2009, an acceptable international framework for regulating maritime CO₂ emissions, so that the shipping industry can continue to remain ahead of the game with regard to addressing Green House Gases and providing the most carbon efficient form of transport.

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Possible Methods of Reducing CO₂

Although the shipping industry is already very energy efficient (see figure 2), additional improvements to hull, engine and propeller design are expected to produce some further reduction in fuel consumption.  There may also be possibilities for the better utilisation of waste heat.

While it is difficult to be precise, and work in these complex technical areas is ongoing, some of these improvements may possibly materialise on board new ships within the short to medium term (5-10 years).  However, it may prove very difficult to apply these new technologies (e.g. improved hull and engine designs) to existing ships, which have a design life of over 25 years and can have an individual capital cost of over a hundred million dollars each.  The solution for the existing fleet may therefore lie in improving the efficiency of the entire supply chain.

The increasing size of many ships is also expected to produce further fuel efficiency, and there may be operational measures (e.g. travelling at slower speeds) that will reduce emissions (although this may necessitate the need for more ships to transport the same quantity of cargo, and detailed studies of the net environmental benefits are still needed).  However, slower speeds would also require acceptance by customers and may well have implications for “just in time” delivery and the size of inventories of raw materials, components and products that it would become necessary for customers to stock pile.  Larger ships also have implications for port capacity which would need to increase to accommodate them, and which would need to be supported by expanded networks of “feeder services” using smaller ships where the accommodation of larger ships was not practical.

While it is very difficult to make predictions about the improved fuel efficiencies that might be achieved, and which will vary significantly between ship types and trades, it has been suggested that by 2020 a combination of regulatory, design and operational measures might possibly deliver a reduction of around 15% in the fuel consumed by ships per tonne-mile of cargo transported.  It is emphasised, however, that work on these complex issues is still continuing, and this figure cannot in any way be regarded as a firm commitment by the shipping industry.

Nevertheless, the escalating costs of the marine bunker fuel burned by ships (which are already expected to increase further due to imminent requirements for lower sulphur fuels) means that further improvements in efficiency are a matter of enlightened self-interest for shipowners.

Shipping, however, is the servant of world trade and the demand for shipping is directly related to growth in the world economy.  If, as predicted, the world’s population and economy continue to expand, the demand for shipping is expected to expand commensurately.  Notwithstanding the significant emission reductions per ship that the industry hopes to achieve, the growing demand for shipping services means that an absolute reduction in the total emissions of shipping may be very difficult, if not impossible, to deliver unless existing patterns of global trade were to be fundamentally transformed.

Alternative Fuel Sources  

The various parts of the shipping industry - shipowners, shipbuilders and classification societies - are already involved in examining a number of ways to reduce CO₂ emissions, both for new and existing ships, which are primarily linked to reducing fuel consumption.  In the longer term, however, the shipping industry is also exploring a number of alternative fuel sources to help reduce CO₂ emissions.

While renewable energy sources such as wind and solar power may have their place in helping to meet some ancillary requirements, such as lighting on board ships, they are not practical for providing sufficient power to operate ships’ main engines (the huge physical size of ships should not be underestimated).  Nevertheless, the industry is actively investigating the use of such alternative sources, but they are not, on their own, expected to deliver hugely significant CO₂ reductions for shipping.

Nothing has yet been ruled out: for example, fuel cells may be a possibility for new ships in the very long term, although they are currently too limited in range to offer a viable solution.  Even nuclear propulsion is technically possible, although support infrastructure costs would prove a serious drawback to its use in merchant ships.  

The current assumption, therefore, remains that ships will continue to burn fossil fuels for the foreseeable future, and that the most significant means of reducing CO₂ emissions will be achieved by further improvements in efficiency across the entire transport chain.

IMO Review of MARPOL Annex VI

The high profile IMO revision of MARPOL Annex VI (which regulates air emissions) has reached its final stage with unprecedented agreement on a package of measures at the IMO Marine Environmental Protection Committee (MEPC) in April 2008.  There is every reason to be confident that the agreed amendments will be adopted by IMO Member States before the end of 2008. The package of measures which achieved unanimous support should be more than adequate to satisfy those, such as the United States and the European Commission, who have threatened unilateral and/or regional rules if IMO does not agree to a regime that will adequately protect the health of their inhabitants in coastal areas.

Following the publication of the IMO Scientific Working Group’s report in January 2008, the Group’s analysis of the pros and cons of the various regulatory options was debated at the critical IMO MEPC meeting in April.  In accordance with the measures set out in the new text, very low sulphur emissions will be required in emission control areas designated by IMO , which for many ships could therefore require a switch in coastal waters to fuel with a sulphur content of just 0.1%.  Globally, the emission of SOx will be gradually reduced to the equivalent of 0.5% sulphur content in fuel, although compliance can be assured through the use of alternative fuels or abatement equipment.  Whilst the debate included general acceptance of the measures by representatives of the refining industry, they warned that fuel supply issues could present significant problems from around 2015.

In view of the costs to industry, it will also be important for governments to take steps to ensure that short sea shipping does not become less competitive in comparison with other transport modes which are less environmentally friendly, particularly in respect of carbon emissions.

Throughout the lengthy and intense debate about amendments to MARPOL Annex VI, ICS has advocated certain principles: the need for goal based compliance options, the requirement to take account of the inter-relationship between emission levels for different constituent gases, the importance of stimulating technical innovation, and the need for agreement on both short term and longer term goals for more stringent air emission standards.  Pleasingly, the draft amendments agreed by IMO are fully consistent with these objectives.

It is also crucial not to overlook the fact that other issues have been involved in the revision of Annex VI, such as agreement on more stringent controls on NOx and an acceptance of the fact that emission of particulate matter was bound together with the reduction in SOx.

Notwithstanding the difficulties the industry has faced when trying to develop a common position on Annex VI amongst different nationalities and trades, which will each be affected very differently by the new rules, the ICS approach of promoting principles for the development of amendments, rather than making detailed proposals with specific figures, has meant that the industry as a whole has been well positioned during these complex negotiations.

100% Container Scanning

In the summer of 2007, the United States Congress adopted a radical unilateral requirement for 100% security scanning, by 2012, of each and every in-bound maritime container, to be conducted at the port of loading overseas.  Industry and governments alike are extremely concerned about the practical implications of this draconian US measure, and its serious potential to disrupt the flow of world trade. 

Apart from the huge costs and logistics involved in x-ray scanning every box loaded on a ship, such a measure would almost inevitably exacerbate port congestion, which at several container terminals around the world is already near crisis point.  It would seemingly also require ports to expand in size, since boxes would need to be stored for longer periods as they wait to be scanned.  This comes at a time when several of the world’s major ports, particularly in Europe , are already operating at around 100% of their official capacity.

The US law was adopted by Congress for largely political ends, and without the support of large parts of the administration, both political parties seeking to demonstrate their tough line on security.  The Act is hugely short on detail about implementation, which will have to be undertaken, and presumably financed, by foreign nations if they wish to continue trading with the US .

Above all, the US law undermines the targeted or “risk based” approach to security, which is at the heart of the World Customs Organization (WCO) SAFE Framework of international customs standards, recently agreed by governments at WCO, following extensive negotiations in the wake of the 2001 terrorist attacks.  Many foreign governments are also expressing reservations about the fact that the US scanning requirements would cover US imports but not exports.

ICS, in co-operation with the US based World Shipping Council ( WSC ), has been encouraging international opposition to the US requirements at the highest political level, raising concerns with the Consultative Shipping Group ( CSG ) of governments as well as WCO, which have both subsequently protested to the United States .  The European Commission has also taken up the matter with the United States , with encouragement from ECSA.

Little immediate change to the United States ’ position is expected in the run up to the 2008 presidential elections.  In the spring of 2008, however, the US Department of Homeland Security (DHS) reported on the US scanning trials that are being conducted in several ports around the world, under the auspices of the US “Secure Freight Initiative”.  However, given the relatively small container volumes involved in the ports selected, the outcome of the pilot projects is inconclusive with regard to the success of 100% scanning, and there are hopes that the DHS report may provide a basis for the US to revisit the implementation of the requirements, particularly as there are already provisions in the law that provide for possible postponement beyond the initial 2012 implementation date.  This will require constant high level pressure by other governments, which ICS and national shipowners’ associations will continue to encourage.

STCW Training Review

In March 2008, IMO commenced in earnest a wide ranging review of its Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW).  It seems that most parts of the Convention could potentially be subject to revision.  However, although the work involved will be detailed and intensive, requiring a series of extra meetings in order to agree amendments before the 2010 target date, the scope of the revision is not expected to be as fundamental as when major amendments to STCW were last adopted in 1995.

STCW 95 appears to have succeeded in establishing the principle that all maritime administrations have responsibilities for the approval and maintenance of training standards.  In addition to labour supply countries, which must approve training institutes and course syllabuses, and ensure that STCW certificates are only issued to seafarers that truly comply with IMO standards, this principle also applies to flag states with regard to foreign seafarers who are permitted to serve on their ships.  This is a fundamental change from the days when flag states simply took the standards of other nations on trust.  It is also very important since the majority of the world’s seafarers now serve on ships of a different nationality from their own.  

The fact remains that anecdotal reports continue about inadequacies in levels of crew competence on the fringes of the industry, whilst the supply of high calibre seafarers sought by the majority of companies is getting much tighter as the demand for shipping services and the size of the world fleet expand. 

Employers have a moral, legal and commercial responsibility for ensuring that their multi-million dollar assets are operated by properly qualified seafarers.  However, governments also have a responsibility for enforcing the rules.  The reality is that in many training institutes, despite approval by certificate issuing administrations, seafarers are still emerging who do not meet STCW standards.  It is therefore timely that the provisions in the Convention concerning the monitoring and control of enforcement of training standards will be reviewed.

The last comprehensive STCW rewrite was subject to an unprecedented degree of input from the industry.  This time, however, with issues such as flag state responsibility and reporting requirements on quality standards no longer proving so controversial, governments are taking more of a lead.  Indeed, many innovations of STCW 95 - with their implications for national sovereignty - have been incorporated into and expanded by the Voluntary Member State Audit Scheme, which was adopted in 2006 and covers the enforcement of other IMO safety and environmental Conventions.

Nevertheless ISF, which represents maritime employers at IMO , has for the last two years been conducting its own “gap analysis” of those provisions in the Convention that might merit re-examination.  ISF has subsequently suggested to IMO the need for clarifications regarding the documentation required to be held by seafarers under the Convention, which will hopefully reduce the confusion sometimes experienced during port state control visits when inspectors try to seek additional evidence of basic training, such as fire fighting, that is meant to be covered by the main STCW certificates.

The IMO review will also be looking at strengthening the responsibilities of flag states with regard to standards of competence, as well as upgrading various requirements in the light of new developments, such as the more widespread use of Bridge Resource Management training, and the operation of ballast water management equipment.  ISF is also supporting calls for additional emphasis to be given to training in environmental responsibilities.

In late 2007, ISF published a new edition of its Guide to the STCW Convention which takes account of developments such as the updated IMO “white list” of governments (certificating states and flag states) that have continued to provide documentary evidence of compliance.  ISF also continues to produce training record books for officer and rating cadets studying in both the deck and engine departments, as well as ISF Personal Training Record Books for qualified crew, which are now used by tens of thousands of seafarers worldwide.

Keeping up the Pressure on Governments 

Shipping companies have primary responsibility for adhering to high standards of safety and environmental performance.  However, they require flag states and port states to meet their own obligations to ensure that international maritime instruments are properly enforced and implemented. 

In February 2008, as part of the ongoing campaign to promote the vital need for governments to ratify IMO and ILO maritime Conventions, ICS and ISF published a new brochure highlighting those international legal instruments which the shipping industry believes should be ratified as a matter of urgent priority.  The brochure also provides an update on developments since the campaign was first launched a year ago.

Encouragingly, the IMO Anti-Fouling Systems ( AFS ) Convention (prohibiting the use of TBT based anti-fouling paints) and the IMO Convention on liability for bunker spills will enter into force later this year.  However, there is still a pressing need for more governments to ratify the IMO Ballast Water Management Convention and the HNS Liability Convention, to ensure their entry into force.  More ratifications are also needed to enable the wider application of certain other Conventions, such as the Protocol to the Convention on Limitation of Liability for Maritime Claims (LLMC), in order to discourage regional regulation, and MARPOL Annex VI (atmospheric pollution), in order to ensure that the stricter standards expected to be adopted by IMO during 2008 will be applied on a global basis as soon as possible.  As reported elsewhere, ISF continues to promote ratification of the ILO Maritime Labour Convention (MLC) and the ILO Seafarers’ Identity Documents Convention, which should help to facilitate seafarers’ shore leave, as well as arrangements for seafarers joining or leaving ships.

The widespread and timely ratification of IMO and ILO Conventions is vital if unilateral and regional regulations that compromise the efficiency of maritime trade are to be avoided.  The new ICS/ISF brochure can be downloaded at www.marisec.org/ratification.

ICS/ISF, in co-operation with other members of the Round Table of international shipping associations (BIMCO, Intercargo and Intertanko) have also updated their annual “Shipping Industry Flag State Performance Table”, using information in the public domain, such as port state control inspection records, data on the ratification of IMO and ILO Conventions, and official reports about the use of non-IACS classification societies and national quality standards reports with regard to seafarer training.  The Table can be downloaded at www.marisec.org/flag-performance.

A new and intensive work stream has been created by the UK Marine Accident Investigation Branch’s investigations into the loss of and damage to boxes on board the containership “Annabella”, and the loss of the containership “ MSC  Napoli”, which came to grief off the South West coast of England in early 2007.  ICS, in co-operation with the World Shipping Council which represents containership operators, has established an expert group to investigate the need for further best practice guidelines to cover issues associated with stowage planning and the safe loading of container ships.  The project was progressed at a meeting of industry experts in Washington   DC in January 2008, and ICS will be reporting on this work to IMO at the earliest opportunity, with the completed Guidelines expected during 2008.

Another routine example of ICS and ISF safety work was the publication in March 2008, in co-operation with the International Maritime Pilots’ Association (IMPA) and with the support of other shipowner organisations, of a simple brochure to remind ships’ crews of the importance of rigging pilot ladders correctly - see www.marisec.org/pilotladders.