LIMANi Supply Group – 2023 has emerged as a remarkably eventful year for the shipping industry, as it continues to grapple with numerous to Reduce Carbon Regulations aimed at mitigating its environmental footprint.
The operational landscape as known to numerous shipowners, charterers, and managers will undergo a significant transformation with the enforcement of a legislative amendment on June 5, 2023, within the maritime industry.
The EU Emissions Trading Directive amendment extends the scope of the EU’s Emissions Trading Scheme (ETS) to include the maritime sector. The ETS, a carbon market established in 2005, aims to decrease greenhouse gas (GHG) emissions. This amendment aligns with the International Maritime Organisation’s (IMO) updated GHG strategy, which aims to achieve net-zero GHG emissions by 2050 and promote the use of zero and near-zero GHG fuels by 2030.
Following careful consideration, the introduction of the new regulations provides to Reduce Carbon Regulations a certain level of assurance to the industry. Nevertheless, companies are still confronted with a transformed regulatory environment and need to adjust accordingly. It is only by possessing a comprehensive comprehension of the carbon market they currently operate in, a well-functioning carbon strategy, and the necessary technology to implement it effectively, that they will be capable of navigating a more sustainable and lucrative path for the future.
The International Maritime Organization (IMO) has established precise objectives for the shipping industry to decrease its carbon emissions. By the year 2030, the aim is to achieve a minimum 40% Reduce Carbon Regulations (in comparison to 2008 levels). Furthermore, by 2050, the objective is to attain a minimum 50% reduction in total annual greenhouse gas emissions.
The implementation of the Energy Efficiency Existing Ship Index (EEXI) and carbon intensity indicator (CII) marked the beginning of efforts to assess the energy efficiency and Carbon Regulations emissions of vessels for ship supply.
In a more recent development, the International Maritime Organization (IMO) adopted a ship Carbon Regulations strategy at MEPC 80. This strategy commits to reducing greenhouse gas emissions (GHG) by 20 to 30% of 2008 levels by 2030, with a further reduction of 70-80% by 2040, ultimately aiming for net zero emissions around 2050. The strategy also emphasizes the need for zero or near-zero GHG emissions technologies to contribute 5-10% of international shipping’s energy by 2030, and highlights the importance of establishing a pricing mechanism for maritime GHG emissions.
Additionally, the European Union’s Emissions Trading System (EU ETS) is currently in its fourth phase. Ship Chandler owner and charters face significant challenges in reducing their Carbon Regulations and promoting sustainability.
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Navigating Reduce Carbon Regulations
It is unsurprising that many individuals are prioritizing the enhancement of vessel energy efficiency, considering the need to reduce Carbon Regulations emissions per ship by up to 60% by 2030 in order to meet the new targets set by the IMO. Owners and charters are broadly examining four approaches to achieve this goal.
Several industry endeavors have been established with the objective of aiding and empowering the maritime industry in to reduce carbon regulations efforts.
- The Poseidon Principles for Marine Insurance (PPMI) is an international framework that aims to assess and disclose the climate alignment of insurers’ hull and machinery (H&M) portfolios. Effective from April 2022, Gard is proud to be a founding member and Signatory to these principles.
- The Sea Cargo Charter (SCC) serves as an additional platform that facilitates the synchronization of shipowners, charterers, and cargo owners in advancing the eco-friendly transformation of the shipping industry. Just like the Poseidon Principles, those who endorse the SCC pledge to evaluate their climate compatibility, and the charter publishes a comprehensive report revealing the climate alignment ratings of its participants.
- The Getting to Zero Coalition comprises the Global Maritime Forum, the Friends of Ocean action, and the World Economic Forum. It unites influential individuals from various sectors of the shipping industry alongside important players from the energy sector and governments.
- The Green Shipping Corridors represents a significant endeavor within the Getting to Zero Coalition. Its primary aim is to ensure that all major deep-sea trade routes worldwide are serviced by zero-emission vessels. The ultimate objective is to establish the required net-zero bunkering facilities and supporting infrastructure by 2030. Furthermore, by 2045, it is envisioned that every ship operating on these routes will exclusively utilize zero-emission fuels to reduce carbon regulations.
Maritime Regulatory Complexity about Carbon Regulations
Every year, fresh maritime regulations are introduced, posing a constant challenge for maritime shipping stakeholders to adapt and comply with new regulatory requirements. The complexity of these carbon regulations is often cited as a major operational hurdle by professionals in the industry. However, without a reliable commercial platform, navigating the intricate regulatory landscape of maritime shipping becomes an insurmountable task.
The Veson IMOS Platform streamlines the intricacies of maritime emissions carbon regulations, geopolitical sanctions, and vessel safety requirements. It achieves this through its comprehensive decision support, integrated reporting, a compliant contract management workflow, and a range of supplementary solutions.
There are three primary classifications of maritime regulations to to reduce carbon regulations, all of which have an influence on commercial choices.
The Veson IMOS Platform, serving as a comprehensive solution for commercial maritime freight management, aids in seamlessly incorporating up-to-date carbon regulations into their contract management workflows. Now, let’s delve deeper into the three primary categories of maritime regulations.
The environmental aspect is undeniably the most rapidly changing sector in maritime shipping regulations. Notable instances include the International Maritime Organization’s adoption of Carbon Intensity Indicator (CII) ratings and the incorporation of maritime activities into the European Union Emissions Trading System (EU ETS). These developments have far-reaching consequences for voyage planning and exposure management. To effectively navigate the complexities of environmental regulations of carbon regulations, it is crucial to implement integrated reporting, incorporate emissions-related factors into decision support systems, expand risk management to encompass carbon exposure, and utilize a flexible platform that can adapt to the evolving nature of these regulations.
The effective management of sanctions and regulations is crucial in the ship provisions port ecosystem, given its global reach and the constantly evolving geopolitical landscape. Neglecting this aspect can have detrimental effects on counterparty relationships and profitability. To effectively address geopolitical regulations for carbon regulations, it is essential to handle crew information on a large scale and set up dynamic alerts that proactively consider sanctions in decision-making processes. Furthermore, geofencing can significantly enhance geopolitical oversight by accurately monitoring vessel movements within predetermined areas and promptly notifying relevant stakeholders.
The International Maritime Organization (IMO) is regulated and supervised by the Maritime Safety Committee (MSC) in matters concerning the safety of maritime vessels, vessel routes, hazardous cargoes, and other related requirements. Ensuring compliance with regulations in all these aspects necessitates their consideration at various stages of the voyage lifecycle, ranging from pre-fixture to ongoing operations and post-voyage analysis. Notable instances include the meticulous management of tanker certificate data, the inclusion of previous cargoes in chemical voyage planning, and the provision of easily accessible safety information throughout the platform so can reduce carbon regulations.
The Tips to Reduce Carbon Regulations Emissions
It is expected that Carbon Regulations per ship must be reduce the carbon regulations emissions by as much as 60% by 2030 in order to meet the new targets set by the IMO. Therefore, it is not surprising that the primary focus for many individuals is to enhance the energy efficiency of vessels. In general, owners and charters are investigating four different approaches to achieve this goal.
There are various methods that vessel owners can employ to reduce carbon regulations emissions, such as redesigning hulls, incorporating propeller boss cap fins and shaft power limitation systems, utilizing scrubbers, harnessing wind assistance, and upgrading engines to run on alternative energy sources. Nevertheless, it is important to acknowledge the drawbacks associated with these measures, including the significant capital investment required, the potential for vessels to remain idle during retrofitting, the difficulties in quantifying the return on investment, and the time-consuming nature of completing the retrofitting process.
New ships will have a crucial role in reducing carbon regulations emissions in the shipping industry, although they are not a quick fix. The current global shipyard capacity is at its peak, with reports indicating that shipyards will be 87.3% full in 2025 and 80% in 2026. This implies that there will be limited availability to meet the growing demand for new vessels by 2030, and this comes with a surge in costs. Recent research reveals that the prices for new ship constructions have risen by more than 6% this year.
In 2022, alternative-fueled tonnage accounted for 35% of the total orders placed. However, it is important to consider the safety concerns and energy density associated with energy sources such as LNG, LPG, ammonia, hydrogen, and methanol. For example, a gallon of LPG has an energy equivalent of 0.66 diesel gallons, whereas methanol only has 0.45 DGE. Additionally, the availability and infrastructure limitations restrict the routes and port calls for newly fueled vessels. Furthermore, it is worth noting that not all existing vessels can be retrofitted to accommodate these new energy sources so can reduce carbon regulations.
Implementing a 20% reduction carbon regulations in ship speed has been projected to result in a decrease of vessel GHG emissions by approximately 24-34%. However, although slow steaming is generally beneficial, it may not always be the most efficient approach. This strategy can restrict vessel utilization, negatively impact ships that are not specifically designed for slow steaming, and there are variations in the amount of fuel saved by individual ships when implementing this method across entire fleets.
The advancement in energy storage will facilitate the process of reducing carbon regulations, opening up opportunities for the emergence of all-electric ships. It is worth noting that Ampere, the inaugural all-electric ferry in Norway, significantly reduces shipping carbon regulations by 95% and slashes costs by 80%, making it a fascinating development.
Using renewable energy is well-known for its ability to greatly reduce carbon regulations emissions. In the shipping industry, one effective way to utilize renewable energy is by incorporating wind assist or wind power for propulsion.
Mostly short-term in nature, these measures have the potential to reduce carbon regulations emissions per vessel by up to 5%. Shipping companies have the opportunity to enhance the hull design, optimize propellers, and recover waste heat to achieve such outcomes. Additionally, ships can undergo upgrades to minimize friction with water. By equipping ship bows with bulbous extensions beneath the water line, shipping lines can effectively reduce drag. Another option is to apply low-friction coatings to the hulls.
In order to achieve the objectives of reducing carbon regulations, the shipping and transportation industry must embark on a transition towards new and alternative fuels. While certain fuels are already being utilized, others are currently in the experimental or testing phase. It is highly probable that there will not be a singular “fuel of the future,” but rather multiple options, which will present the industry with intricate and demanding choices in the forthcoming years.
Here is a summary of the key points to consider and industry guidelines for each alternative fuel.
Ammonia – Green/blue ammonia is anticipated to have a significant impact on reducing carbon regulations emissions in the shipping industry. Not only does it have the potential to be a zero-carbon fuel, but it is also more cost-effective than batteries and easier to store compared to hydrogen or LNG. Nevertheless, substantial investments will be required in renewable energy production and bunkering infrastructure to make it a feasible alternative to fossil fuels. Additionally, there are safety concerns associated with its toxicity and corrosive properties.
Hydrogen – If generated using renewable energy, it does not produce any carbon regulations emissions, thus positioning it as one of the most environmentally friendly alternative fuel choices. Although fuel cells are widely regarded as the primary technology for hydrogen utilization, researchers are also exploring other applications like internal combustion engines, particularly for marine purposes, which show great potential. The primary obstacles in this field encompass concerns related to explosiveness, expenses, and the absence of a well-established supply infrastructure.
Biofuels – While biofuels offer lower sulfur and carbon regulations emissions compared to fossil diesel oils, it is important to note that they may not be the ultimate zero-emission solution in the long run. However, it is worth mentioning that biofuels can result in higher NOx emissions. Additionally, the maritime industry has limited experience in utilizing and managing biofuels as part of their fuel supply. For more information on this topic, Gard provides comprehensive details in their article, which can be accessed here. It is also worth noting the regulatory hurdles associated with biofuels and the recent efforts made by the IMO to address these concerns.
Liquefied Natural Gas (LNG) – DNV’s projections indicate that LNG is widely acknowledged as the primary “bridge fuel” towards alternative fuel alternatives. According to their estimations, LNG is expected to account for over 40 percent of marine fuels by 2050. Nevertheless, it is important to acknowledge the drawbacks associated with LNG. As a carbon-based fuel, improper handling can lead to methane leakage, a potent greenhouse gas. Additionally, due to its high flammability, LNG poses an elevated safety risk to reducing carbon regulations.
Methanol – widely recognized as a feasible substitute fuel. It is currently derived from natural gas, which simplifies its storage and handling due to its temperature characteristics compared to other alternative fuels. Nevertheless, the presence of methane emissions during the production and combustion processes raises concerns about whether methanol can truly be a net-zero solution in the future.
Batteries – Electrically powered ships will also be included in the future’s “green technology mix”. The maritime industry’s carbon regulations efforts will heavily rely on batteries, as demonstrated by the world’s inaugural fully autonomous container vessel that operates solely on battery power.