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Shipping’s progress on the greener road to 2050

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The shipping community has to bare the blame for the situation it now finds itself in as it faces the challenges of climate change. According to three prominent Greek shipowners the shipowning community is so fragmented its voice is no longer being heard either inside the Imo or outside it.
Shipping needs one voice and it is up to shipowners to give it that voice, the Greener Shipping Summit held in Athens November 9 was repeatedly told. Meeting the United Nations sustainable development goals is becoming ever more challenging for the shipping industry despite the great advances being made in technology in today’s world.
“The shipowner is taking the blame for what is being produced by the engine builder, the shipbuilder and the fuel suppliers,” George Tsavliris, principal Tsavliris Salvage Group, told the Summit panel discussing shipping and the Imo in the next decades.
He said the shipowner buys what’s available and has become the scapegoat and an unfair balance has developed on environmental issues and it’s up to the shipping community to stand behind the Imo and win back control of the industry while remembering the Imo is not a lobbyist but is a regulator.
Harry Vafias declared the Imo is not the “actual power in shipping” with the “US, European Union and China having their own power and have unfortunately pushed Imo aside. The president and ceo of StealthGas, also stressed the importance of the industry lobbying saying the industry has 10 or 15 different organisations “which divides our power and limits our ability to influence decisions” unlike the automotive industry and airlines which have joined forces to push their requests.
Stamatis Tsantanis, chairman and ceo of Seanergy Maritime, agreed “100% the industry is too fragmented with various groups having conflicting interests” declaring “shipping needs one voice”. He said the underlying goal is to improve the environment and the “goal should be what is of benefit to the environment, not who is going to pay the bill”.
Vafias and Tsavliris advocated shipping call a conference of major shipping bodies and seek a united voice to put pressure on the industry’s designers and builders, “even if the decisions had to come down to a vote”. Tsavliris said shipping needs to meet directly with politicians and present its case as “most politicians are ignorant about our industry”. It was agreed this lobbying should begin at the European level for if Europe can be convinced others will follow.
The three owners were concerned about the efforts being made to protect the environment rather than protecting lives and felt more should be done for seafarers.
Panos Zachariadis, of Atlantic Bulk Carriers, raised the issue of Greece’s loss of clout at Imo. A Greek representative at Imo for the past 16 years, Zachariadis said Greece not longer has the voice within Imo that it once did. “Now Imo does not hear what Greece has to say, and it’s Greece’s fault”, adding, “Japan rules at Imo now, and it wants to build ships”.
It was agreed all want cleaner and greener ships but it has not been decided how to get there.
Dimitrios Fafalios, chairman of Intercargo in his keynote address said that over the last few years the world’s merchant fleet has become the focus of the general public only to prove the 29,000 large commercial vessels manned by qualified, brave seafarers really do make the world go round.
He noted the world fleet relies on the tramp bulk model of pure competition to improve fleet efficiency and utilisation. “The most efficient ship usually gets the business and both technology and global regulations have ensured the world bulk fleet is the most greenhouse gas efficient mode of transport on earth,” said Fafalios.
Despite this “we must continue to improve and decarbonise and move fast on the road to 2050”. “We can not do this alone or in isolation,” he said. Shipping relies on so many entities, shipyards, engine designers and builders, classification societies, fuel suppliers and distributors, chemical and gas providers, ports and terminals, and the list goes on.
“We have relationships with some of these entities but not all of them and we must strive to improve these relationships. Yet on this long road to decarbonistaion it is the shipowner or operator that is being directly regulated,” said Fafalios.
Technology and innovations together will provide solutions but what about regulations. The speaker emphasised that “as a global industry global regulations are needed”.
He said that ultimately it is the shipowner who will have to make the decisions. “They will be responsible for transforming an aspiration or a concept into a reality on the road to 2050.”
As the summit chairman, Stamatis Bourboulis, gm Euronav Ship Management (Hellas) pointed out early on, reality has shown the industry is becoming greener and there is no doubt this year is a particularly important one for shipping and its efforts to cut GHG emissions.
Bourboulis noted there are many instances where shipping is moving faster and more ambitiously than regulators with a lot of initiatives from the private sector to encourage governments and the Imo to accelerate decarbonisation strategies.
In was quickly established that progress along the decarbonisation road will come at a cost.
Indeed, the Summit’s first speaker, George Laios, deputy ceo, Intermodal Shipbrokers, said “every lender around the globe prior to providing its funds needs to ensure it has completed its due diligence on the person/company it’s lending to, the quality of the asset to be financed and of course the profitability of the project throughout its term”.
Laios explained that in ship financing, traditionally, the easier part has been to check on the quality of the vessel its builder and level of maintenance; then came the standing of the prospective borrower and last, and most difficult, the profitability/feasibility of the project itself – given the high volatility of the shipping market.
“To make matters worse, the whole value chain of shipping is now being asked to comply with a series of environmental regulations that makes the whole decision process a really difficult task,” said Laios. He continued: “Imo 2020, Ballast Water Treatment regulations, Green Recycling, GHG emissions, EEXI, CII, ETS, Fit for 55, Carbon price/levy, the Poseidon Principles are just some of the new regulations already or soon to be put in place which inevitably affect the variables that matter for financiers the most; asset cover and profitability.”
He said banks are afraid of being left with portfolios that in 3-4 years’ time might have a minimum value being non-green assets. “They are also concerned a two-tier assets market might develop when the new regulations kick in. That would place another risk factor for them.”
Laios asked: Does the shipping market have the luxury of running only on modern/eco-friendly ships? Do we actually have the luxury of a fleet supply squeeze? He answered: “Given about 23% of the dry/wet/container fleet is already above 15 years old, the answer is more than obvious. Banks need to put all their tangible support for a smooth transition to a greener and safer shipping.”
Efficiency is not only about compliance there is an increasing external stakeholder pressure beyond the developments in Imo. “There are various initiatives and ratings schemes based on emissions and probably this is just the beginning,” said Emmanuel Vergetis, LR’s South Europe senior consultant, Marine & Offshore, when discussing how data can improve operational efficiency and environmental performance.
However, he warned that In order to achieve better business performance and operational efficiency one needs to take into account many sources of information. “Combine them and analyse them effectively is the first thing we need to break down silo’s between people, departments, geographical locations, combine and predict possible scenarios that can only be achieved through digital technologies,” he said.
Besides, he said “emission reduction is also very close connected to digital technologies provided the human uses these technologies and not the opposite,” when trying to connect the efficiency of the ship and ship operations with the digital technologies and solutions.
Bill Stamatopoulos, business development manager, BV VeriFuel, noted the use of bio-derived fuels and blends is nothing new, the first successful diesel engine test was carried out in 1897 by Rudolph Diesel on straight peanut oil.
However, their marine use is not yet optimised. We see different components and recipes, limited bunkering network availability, and very importantly unsettled regulatory framework by the Imo yet in terms of environmental performance and sustainability.
“Their key advantages are that they are already compatible with modern ship engines and require no Capex,” said Stamatopoulos.
“It is unclear when the shipping industry will turn to biofuels en masse; still, biofuels will have a key, upcoming role to play in the energy transition for the global fleet, as a stepping stone to the path for decarbonisation. For maritime stakeholders who are uncertain about committing to biofuels as a fuel solution, mixed fuels are also possible,” noted Stamatopoulos.
Discussing ports, Theodosia Digalaki, senior electrical design engineer at ERMA First, outlined the valuable solution offered by cold ironing for cleaner ports. She said the most important impact of offshore power supply (OPS) is the environmental benefits. The fact that electricity is used as “alternative fuel” instead of diesel oil, causes significant reduction of SOx, NOx and PM. On the other hand, OPS installations demand high investment cost. “Investment cost is determined by the size of the vessel, vessel’s type, voltage level, and operation at berth. High investment cost in combination with the uncertainty of Opex cost factors such as fuel cost, local electricity prices and tax emissions cost, makes it very difficult to answer the hot question: “Is cold ironing profitable for owners?” she said.

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