Decarbonising Shipping Week – webinar series explores segment-specific strategies for EEXI and CII compliance

5 min read

30 Sep 2021

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Ian Hamilton

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DAM

5 min read

30 Sep 2021

Text:

Ian Hamilton

Photo:

DAM

Zero-carbon shipping is the ultimate goal and although it’s going to take years to achieve, there are milestones that are fast approaching. It’s well known that EEXI and CII regulations come into force in 2023, but what to do about them is still an unanswered question for many. Wärtsilä’s recent Decarbonising Shipping Week – a series of five webinars in which panels of experts shared their thoughts on strategies for container vessels, passenger vessels, bulk carriers and offshore vessels – aimed to make things clearer.

 

The Energy Efficiency Existing Ship Index (EEXI) defines a minimum energy efficiency level for existing vessels, and the Carbon Intensity Indicator (CII) rating scheme gives vessels an annual rating on a scale of A to E, with A being the least carbon intensive. While these two initiatives are the most urgent regulatory challenges on the horizon, they are only part of the wider pressures affecting shipping. As the webinars revealed, in addition to regulators, pressure is also coming from banks, customers and society as a whole.

 

Pressure from all sides

Elisabeth Munck Af Rosenschold, Head of Sustainable Shipping at Ikea, highlights the fact that many global brands have their own ambitious targets. In Ikea’s case this means reducing the average carbon footprint of their transportation operations by 70%, compared to 2017, by 2030 and with a milestone in 2025 to be halfway there. Regardless of regulations, pressure from big cargo owners is also contributing to the necessity of low-carbon fleets.

Banks are also finding ways to incentivise decarbonisation efforts. Pierre Carassus, Head of LNG Shipping and Offshore Finance at Societe Generale, notes that his bank already offers sustainability-linked loans, where the margin is linked to Annual Efficiency Ratio (AER) or Energy Efficiency Operational Indicator (EEOI) scores. The margin is reassessed each year when the new scores are available, with better scores resulting in cheaper loans. “There is a natural trend for banks to support owners who are transparent about their operations and their carbon footprint, and who also have an ambitious and realistic strategy,” he explains.

Finally, as Bud Darr, Executive Vice President, Maritime Policy and Government Affairs at MSC Group, points out, pressure comes from a society at large, and this pressure is only set to increase. “The people making the decisions today are not going to be the same people making the decisions ten or twenty years from now,” he highlights. Rather it will be people who have grown up with sustainability as an inherent and deeply held value.

 

Retrofitting is a must

“All the panellists were in agreement that meeting the ultimate goal would require intense collaboration between all stakeholders: charterers, owners, banks, onboard technology providers and fuel suppliers. 

There was also consensus that there is not enough time to wait for a rejuvenated fleet and that retrofitting the existing fleet – especially vessels with a substantial service life left – was essential.

Giulio Tirelli, Director, Business Development at Wärtsilä, has seen a huge interest in investing in the current fleet. “The rules and regulations are relatively new and I see a lot of uncertainty from owners, at least in understanding how the rules will apply to their current fleet and we are now experiencing a huge amount of requests for evaluations,” he shares. 

“Owners want to understand how they are positioned against EEXI and CII and the correct set of choices to make in order to build their specific path to sustainability. The technological choice today is extremely wide and owners need to understand what applies on a fleet-wide and individual vessel level. 

These choices include air lubrication systems, GATE RUDDER™ by Wärtsilä, EnergoProFin, EnergoFlow and Rotor Sails. What applies will vary from segment to segment; the concrete solutions for container vessels, passenger vessels, bulk carriers and offshore vessels were discussed in four dedicated webinars.

 

Solutions for container vessels

The challenge facing container ships was neatly summed up by Jan Otto de Kat, Director, Global Sustainability Center, at American Bureau of Shipping (ABS) when he noted that in one of their recent studies looking at almost 5,000 container ships close to 90% were not deemed complaint with EEXI. 

“In terms of CII, ABS looked at about 700 container vessels and determined that if they were to continue with their current operational profiles around 80% would not be compliant (grades A–C) by 2030. 

It was stressed that engine conversions to enable ships to take advantage of zero carbon fuels didn’t mean running only on green fuels, but that the ability to mix fuels – fuel flexibility – will be critical, especially as container ships are deployed over a wide geographical area where the availability of different fuels may vary greatly. It was stressed that there is no one-size-fits-all solution and each vessel needed to be assessed on an individual basis.

Engine Power Limitation (EPL), for example, can be a solution for some vessels but it is best combined with other energy saving technology and need not be seen as a standalone solution. Wärtsilä’s approach of offering a holistic package of integrated solutions from propellers, rudders, and air lubrications systems to wind assist and solar panels was appreciated by the audience, over 50% of whom said they are considering four of the five solutions presented. Collective risk taking and agreement across the whole maritime sector, from fuel providers to shipyards and owners, was also seen as essential for success.

 

Solutions for passenger vessels

Johan Roos, Director Regulatory Affairs, Interferry ran through the already decided and proposed requirements from both the IMO and EU. He sees the biggest impact coming from the European Emission Trading System, which could be introduced for ships calling at European ports along with EEXI and CII in 2023. 

“By 2026 the current prognosis is you need to add €200 for every tonne of fuel you purchase for your ship, roughly a 40% price hike compared to today. 

In order to comply with these regulations, owners in the passenger sector face critical decisions. To implement solutions that decarbonise the existing fleet as well as new vessels, there needs to be an understanding of each vessel and how it operates. For example, ferries can begin by implementing hybrid operations with a battery on board for backup power and during docking while ultimately transitioning to fully electric operation, something that for some is already a reality. The cruise sector can also look to hybrid operation before transitioning to low or zero-carbon fuels to reduce emissions.

Per Wimby, Project Manager at Stena​, shared his company’s experience of successfully operating the ferry Stena Germanica on methanol for the last six years. In addition to fuel conversions and hybrid systems, shore power is seen as one of the quickest ways to remove carbon from operations and is already a popular choice for cruise operators.

Participants in the webinar rated fuel conversions to low or zero-carbon fuels as the most feasible way to meet the IMO’s 2030 target. This was followed by implementation of hybrid systems and vessel electrification. Participants also see room for energy saving devices, hull efficiency solutions and digital solutions.

 

Solutions for bulk carriers

The panel discussed the complexity of the decarbonisation challenge for bulker owners and operators, who are facing increasing demands from customers. A good example of this is in the iron ore mining logistics value chain, where, as Paolo Tonon, Technical Director at Berge Bulk explained, bulkers play a significant role. It was also stressed that any decarbonisation technologies adopted must first and foremost be safe and reliable.

Sanjay Verma, General Manager, Market Innovation Merchant at Wärtsilä Marine Power reminded us that there is no one-size-fits-all decarbonisation strategy – every vessel and every trade is different. 

“Giulio Tirelli highlights that EPL is just one ingredient in an increasingly complex recipe and is best combined with other energy-saving technology and solutions, such as conversion to low or zero-carbon fuels and hull efficiency and optimisation measures. 

Eirik Nyhus, Director, Environment at DNV Maritime stressed the role of technology as an enabler of compliance in terms of retrofits for existing vessels and solutions for newbuilds, and all the panellists concurred that the time to act is now, that technologies are already available and that the key to moving forward is close collaboration between regulators, technology providers and owners and operators.

 

Solutions for offshore vessels

Owners of offshore assets are also facing critical decisions when it comes to decarbonisation strategies, and it will be essential to work together across the industry to extend the life of existing fleet and to future proof new builds. But as Alexis Lintot, Senior Marine Operations Engineer at Aker Offshore Wind pointed out

“there are lots of investors who are willing to be part of the journey and invest in planet-positive projects 

which is a promising situation for owners. Banks and insurance companies are also getting involved, ranking vessels based on their emissions and offering competitive rates to the most efficient.

Cato Espero, Head of Sales Norway at Wärtsilä, described how ship owners have been used to IMO regulations, but going forward will need to consider many other regulatory factors, such as the Poseidon Principles as well as differing regional, national and even city or, in Norway’s case, fjord-specific regulations. Having to manage all these different regulations is driving decarbonisation in the industry.

As in other sectors, upgrading existing vessels with retrofits to reduce emissions is an essential piece of the puzzle. Participants in the webinar indicated that they were considering a variety of upgrade solutions, including hybrid, electrification with shore connection, future fuel conversion, propulsion energy-saving devices or new mission equipment.

Watch the webinars for more details: Decarbonising Shipping Week - Preparing for Tomorrow Today


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