Disrupting the market, sustainably!

8 min read
28 Aug 2018
Lakshmi Sivadas

The lines between sci-fi and reality are blurring fast for the maritime industry. Ideas like battery-powered drone-tugs that help moor vessels, artificial intelligence for ship maintenance and even relying on the sharing economy to ensure that no cargo ships are vacant are getting a push from industry leaders looking to disrupt the market, albeit sustainably.

Wärtsilä’s innovation team comprising Maarten van der Klip, General Manager, Project Sales & Development, and Teus van Beek, General Manager, Ecosystem Innovation tell us how they envision this.

“Industry-wise, we see that we are moving towards a cleaner future and a cleaner society. We envision a smart marine ecosystem, with digitalisation at its heart, paving the way forward. This is what we think sustainability is all about – the same concept, the same function but in a greener way where we reduce emissions,” says van der Klip.

Stricter regulations set the bar high

The most recent event that has added impetus to this global movement is an International Maritime Organization (IMO) meeting in London. The meeting, in which 170 countries participated, saw a strong push towards decarbonisation. For the first time, the global shipping industry committed to reducing emissions by 50% by 2050 as compared to 2008 levels.

“The IMO has made it clear that the industry must address emissions of methane and volatile organic compounds (VOC) from vessels. More importantly, also mentioned is that we must look at new, innovative mechanisms to reduce emissions. While shipping is the cleanest way of transporting goods and people when compared to trucking or aviation, there’s still a lot that can be done to reduce emissions further,” adds van der Klip.

Marine industry leaders are already working on possible solutions.

For instance, Wärtsilä has developed various technologies from a shuttle tanker that practically eliminates emissions and uses recovered VOC as a fuel, to testing the first auto-docking system in the world.

Others, like Rightship have begun using Greenhouse Gas (GHG) ratings to measure the amount of emission let off by its vessels; all with a view to make shipping more efficient and sustainable.

“We foresee a not-so-distant future where open industry platforms will reign. Through a collaborative, joint approach with customers, financiers, and different stakeholders we need to develop these open platforms,” says van Beek.

“Battery technology will evolve and the energy capacity will be 10 to 20 times of what it is today. So, shorter sea expeditions can be run entirely on battery-powered vessels. Even blockchain will be in the picture. It can help us move towards a sharing economy where assets and information are shared between all players without middlemen. Last but not least, business models like pay per use or pay per hour will prevail and that’s where we’ll create lasting customer value,” he notes.

In addition to developing new technology, industry experts advocate going one step further to truly decarbonise and en­able sustainable innovation – by having an earning model on CO2 – specifically through the use of carbon credits.

Disrupting the market sustainably2

The new shuttle tanker concept creates both economic and environmental benefits for the owners.

Carbon credits to the rescue?

Since 2017, there have been over 40 countries and 25 sub-national jurisdictions that have introduced carbon pricing initiatives, either by way of taxation or through carbon credits, according to a World Bank report. Of these, 43 initiatives are based on the emission trading systems that involve trading using carbon credits as allowances.

Extending the formal emissions trading system to shipping is expected to further incentivise companies to invest in technologies that reduce emissions, by having an independent green verification.

“There exists an international voluntary CO2 market that is expected to be worth USD 5bn. This will comprise 10% of global emissions by 2020. CO2 reductions and pricing can be enablers for our customers and operations to become clean. While fuel reduction will remain the dominant business case driver, an additional financial incentive will be added if carbon credits are applied. Moreover, a certified carbon/fuel reduction gives high credibility and marketing value for producers who want to show that their goods are transported with low emissions,” says van Beek.

There are issues that plague the current system though. Apart from issues of double-counting of credits where the same credit is resold, these credits are also most often calculated, manually, by accountants and teams leaving room for error and a lack of transparency. Going forward, experts believe that technology such as blockchain will have a huge role to play in getting the entire ecosystem on board for carbon trading.

“We need to use an open structure to make things easier for all stakeholders. Not yet another labour intensive solution, but a simple one that can be supported by open ledger or blockchain solutions. This will increase transparency by making it easier to track emission reductions and it will also maintain a permanent record of transactions,” says van der Klip.

In fact, today, the chips seemed to be stacked in favour of carbon credits. Both technology as well as business leaders are coming together to create open ledger platforms to make the carbon trading process simpler across the board. With regulatory agencies like the EU also aiming to include the shipping industry under the mandate of its Emissions Trading System (ETS), it is only a matter of time before carbon credits become the new normal in tackling climate change.

Future Innovation workshop 

Wärtsilä invites you - the producers, ship owners, bankers and all parties with vested interests in safe-guarding profitability on the route to sustainability – to join us for the Future Innovation workshop on Maritime Carbon Credits in Hamburg on September 4th, during SMM. The workshop will focus on how carbon credits can incentivise businesses to transform the maritime industries and propel us toward a greener future. Sign-up to the event here.

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