Finding a Company Pathway Towards Decarbonization

While the 2018 targets represented a broad IMO consensus of what was achievable and an effective way to lessen the industry’s collective environmental footprint, how to achieve them was left up to individual owners, who are now faced with the extraordinarily complex task of decarbonizing their fleets, one ship at a time.

The present pathways towards the 2030 targets and beyond include operational measures, new technologies designed to improve energy efficiency, or alternative fuels. With so many combinations of options on the table — and more certain to emerge in the next few years — devising a sustainable fleet-wide decarbonization strategy that meets company goals is complex; more so, when each ship requires a bespoke solution that fits its age and operating profile, etc.

As with most efforts to improve technical and operational processes, it is important to establish a performance baseline for each specific ship and to benchmark that against the targets. Benchmarking is no longer seen by leading shipping companies as an optional management tool; it as an essential way to monitor competitiveness and evaluate progress in a dynamic environment.

As the deadlines for compliance with the IMO’s emissions targets draw nearer, a key focus for benchmarking efforts will be carbon-intensity, the volume of CO 2 emissions per unit of transport work. Once the company ship/fleet benchmark is established, its trajectory under various scenarios can be compared to the trajectory established for the Poseidon Principles, a set of goals created to help financial institutions align their ship portfolios with responsible environmental behavior, and which are consistent with the policies and ambitions of the IMO.

The chart in the outlook shows how the projected performance of a theoretical fleet of 10 panamax bulk carriers built in 2010 (prior to agreement of the IMO’s Energy Efficiency Design Index (EEDI)) and can be tracked against the IMO’s 2030 GHG goal, as adopted by the Poseidon Principles. The effect of the fleet’s dynamic operating conditions in the next decade on carbon intensity (taken as an average of the fleet, based on vessels' deadweight) is shown in terms of percentage to the baseline (2019) and is compared to the Poseidon Principles. The operating profile of these vessels has been considered constant, 50 percent at laden condition, 35 percent at ballast condition and 15 percent idle.

The table in the outlook shows a combination of elements a shipowner may want to consider when benchmarking the carbon-intensity performance of their fleet against IMO targets, including past and future performance of the vessels, and forecasts for any newbuilds in the next decade.

The baseline year is 2019, prior to the 2020 sulfur cap, so the vessels are assumed to burn heavy fuel oil (HFO) for the main engine and marine diesel oils (MDO) for the auxiliaries. The assumption for 2020 is that the vessels switch to MDO, so the carbon intensity slightly increases by two percent.

In 2021, the vessel speed is decreased from 13 to 12 knots, and the carbon intensity is decreased by 27 percent compared to the baseline year. In 2025, three of the vessels are replaced by LNG fueled vessels of similar size (complying with EEDI phase III requirements). The fleet’s speed remains at 12 knots, and the carbon intensity is reduced by 36 percent. In 2030, two other vessels are replaced, with the new units burning biofuels. All new vessels are assumed to have optimized design and negligible fouling, while existing vessels retain a fouling allowance.

The underlying calculations based on these parameters reflect that with the introduction of operational measures (e.g. speed reduction), new energy-efficiency technologies (including optimized hull designs) and LNG as fuel, the average energy-intensity of the fleet can result in compliance with the 2030 GHG targets, based on the Poseidon Principles trajectory.

However, achieving the IMO’s 2050 goals will be considerably more challenging without the introduction of zero-carbon fuels.