Sustainable shipping is making progress

Shipping is by far the world’s most efficient form of transport but, because more than 90% of the world’s traded goods travel by sea, it still has a major environmental impact.

The shipping industry is responsible for 3% of greenhouse gas emissions and has traditionally used cheap, polluting fuel, but new standards in the industry are forcing it to clean up its act

“Shipping is a big sector. There are 100,000 ships that account for 3% of greenhouse gas emissions. In GDP terms, shipping would be the sixth largest country in the world,” says Peter Boyd, chief operating officer of Carbon War Room, an organisation that encourages businesses to reduce their carbon emissions.

And because ship engines are powered by heavy fuel oil, the most polluting form of the fuel, their contribution to global pollution is considerable. “One ship emits the equivalent of 50m cars’ worth of sulphur dioxide (SO2) emissions and just 15 ships emit the equivalent SO2 emissions of every car in the world,” Boyd says.

Pressures to get ship shape

As a result, the shipping industry is increasingly aware of the need to act. “There have been a lot of changes in the industry over the past eight to 10 years, particularly in relation to regulations,” says Alastair Fischbacher, director of the Sustainable Shipping Initiative (SSI).

Most pressing, says Jim Brown, marketing development manager, marine, for AkzoNobel, which makes coatings for ship hulls, is the International Maritime Organisation’s Marpol Annex VI regulation, which will reduce sulphur emissions in key Emission Control Areas (ECAs): the North Sea, Baltic Sea, most of the US and Canadian coastline, and the US Caribbean. “From 1 January 2015, ships transiting ECAs will have to burn fuel oil with a sulphur content of no more that 0.1%.”

Ships will either have to use cleaner distillate fuels, which are at least $300 (£177) per tonne more expensive than heavy fuel oil, or install expensive scrubbers to remove the sulphur dioxide from the emissions. Brown points out: “Clearly, either of those options will have a significant financial impact. For a shipping company or cruise line that spends nearly 100% of its time in an ECA and burns 10,000 tonnes of fuel a year, switching to distillates could cost an additional $3m – $4m a year.”

The industry is therefore heavily focused on reducing the amount of fuel ships burn. However, says Fischbacher, “that is just part of the puzzle. People are recognising opportunities for leadership, to set new standards and live up to them.”

On top of this, ship owners are facing increasing pressure from charterers who are looking to make their supply chains greener.

There are huge opportunities for savings, says Boyd, but there is a lack of information. The Carbon War Room is addressing this issue with an A-G energy rating scheme for ships similar to that for household appliances. There are also more specialised indices, such as the Environmental Ship Index, the World Ports Climate Initiative, and the Clean Cargo Working Group, which focuses on container vessels.

Another problem is split incentives. The cargo owner, rather than the ship owner, pays about 70% of the fuel costs, cutting the incentive for owners to implement efficiency measures, Boyd adds.

The Carbon War Room is addressing this by “encouraging the demand side to care”, says Boyd. Companies such as Cargill, Huntsman and Chinese oil trader Unipec – some of the world’s biggest charterers – have said they do not want their goods shipped on F- and G-rated ships.

Technological innovations

Moves like this encourage owners to implement technological solutions. These range from a return to the power of the wind through companies such as Skysails, to the increased use of telemetry to track ships. Other practical steps include greater communications between ship and shore, and changes in routes or speed to take account of factors such as weather patterns and queuing times at ports – there’s no point steaming at full speed to a port where there is a week’s wait to unload cargoes, for example.

Yet since the financial crisis, the industry’s traditional sources of finance have become more risk-averse and the funds to make changes have become harder to find. To accelerate the adoption of new technologies – and get over the split incentives issue – the SSI is developing a Save As You Sail initiative.

Under Save As You Sail, “capital providers looking to make a return will pay to retrofit a ship, the ship owner gets a free piece of fuel-saving kit, the charterer gets lower fuel bills from day one and once the financier has got his money back, the savings are even higher,” says Boyd.

One of the most effective and widely used technologies is also one of the simplest: a coat of paint. Biocide-free paint, which keeps hulls free of marine organisms, can improve the hydrodynamics of the ship. The impacts are spectacular, according to Boyd. “The best paints in the world are five times as expensive as normal anti-fouling paint, but they pay back their investment in 10 months,” he says.

This is because they improve fuel efficiency by 9%. However, 95% of the industry still uses biocidal paints. If the tanker and bulk cargo industry switched to biocide-free paint, it could cut fuel use by 16m tons and save up to $8.8bn per year, Brown says.