As the industry sails into 2016, Fathom Maritime Intelligence reviews the key regulatory milestones around ship efficiency and environmental protection that were passed in 2015 and also reflects upon the progression of the industry’s initiatives for cleaner and greener shipping.
So Long Sulphur!
2016 Welcomes Lower Sulphur Limits In ECAs
2015 Welcomed Tighter Sulphur Limits within Emission Control Areas (ECAs). As of 1 January 2015 the sulphur content in marine fuel used within designated ECAs was limited to 0.10%. In order to ensure compliance within ECA’s, ship operators this year either had to switch to low-sulphur fuel or other fuel alternatives such as liquefied natural gas (LNG), or invest in exhaust gas cleaning technology, commonly known in the industry as “scrubbers”. The sulphur limit for marine fuel outside of ECAs remains at 3.50%, however that may fall to 0.50% in 2020 or 2025.
Hong Kong Low-Sulphur Rules Entered Into Force On July 1, 2015
The Hong Kong government confirmed that new sulphur regulations were to enter into effect July 1, 2015, with violators facing fines or even jail time. Shipmasters and ship owners are now required to record the date and time of fuel switching and keep the relevant records for three years. The rules are expected to reduce sulphur dioxide emissions by 12 percent and respirable suspended particulates by 6 percent.
2017 To Be Year Of The ECA for China
The Chinese Government announced that the Pearl River Delta, Yangtze River Delta, and the Bohai Bay waters will become Asia’s first Emission Control Area (ECA) force from 2017. The designation of the first of its kind ECA outside of Europe and North America, will require ships calling at the core ports within the ECA zones to use bunker fuel containing no more than 0.5% sulphur while at berth. As of 1 January 2019 the regulation will cover all ships operating within 20 nautical miles off the Chinese coastline.
Regulatory Movers And Shakers
The EU MRV Was Rubber Stamped
On 28 April 2015, the European Council approved a new shipping regulation to ensure ships monitor, report and verify (MRV) their CO2 emissions. With several exceptions, concerning for instance fishing vessels, it will apply to all ships (regardless of their flag) above 5,000 GT calling at EU ports, and cover their incoming and outgoing as well as intra-Union voyages. The European Commission will provide ship users with aggregate and transparent data identifying the most fuel-efficient vessels.
The Polar Code Is Adopted
The 68th session of the International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC) saw the adoption of the Polar Code and the associated MARPOL amendments to make the Code mandatory. The Polar Code is expected to enter into force on 1 January 2017.
Black Carbon’ Definition is Approved
It was at MEPC 68 in May 2015, that the IMO also agreed upon a definition of ‘black carbon’ (BC) emissions from international shipping. It describes BC as “a distinct type of carbonaceous material, formed only in flames during combustion of carbon-based fuels. It is distinguishable from other forms of carbon and carbon compounds contained in atmospheric aerosol because it has a unique combination of physical properties”. The 68th session also asked for voluntary studies to be carried out on BC emission data to understand its impacts and to start implementing methods to reduce it.
Shipping Escapes From COP21 Agreement
The final text draft for COP21 to agree a global climate deal was reached in December 2015. The final decision agrees to keep global temperatures below 2°C with the promise to endeavour to limit global temperatures even more to 1.5°C. The deal will also review each country’s contribution to cutting emissions every five years to ensure they scale up to the challenge.
Although an earlier draft of the Paris Agreement that was released on December 5 hosted a small ‘optional’ reference, this reference was dropped meaning that both shipping and aviation industries are not bound by the Paris Agreement
Greener Shipping Operations Rewarded
The Liberian Registry Launched A Green Initiative
The Liberian Registry launched a green ship initiative in 2015 to ensure that the Liberian Flag fleet remains at the top of environmental compliance. The initiative was designed to reduce global carbon emissions, enhance fleet efficiency and competitiveness and promote a greener Liberian fleet. Ships choosing to participate benefit from a 50 percent annual tonnage tax discount in the first year.
The Registry also announced in 2015 that they would offer up to 50% tax discounts for ship owners retrofitting efficiency technologies. A financing partnership established between the Liberian Registry, Carbon War Room (CWR) and EfficientShip Finance (ESF) facilitates tax breaks of more than US $53 million in addition to the fuel savings acquired by the efficiency retrofits, helping ship owners and operators reduce fuel costs and increasing charter rates.
$1.3 Million Was Up For Grabs From MARAD For Vessel Emissions Reductions
MARAD announced that it would offer up to $1.3 Million in Federal funding for projects supporting vessel emissions reductions. The closing date was June 2015 but those U.S.-flagged vessel owners, operators, or sponsors successful now have funding for a maximum of 50 percent of total project costs under two separate applications including exhaust gas cleaning and alternative fuels such as LNG.
Shanghai Launched Bunker Price-Linked Shore-Power Incentive Scheme
Shanghai, in an effort to reduce shipping emissions, implemented an incentive scheme for ocean-going vessels (OGVs) calling the port to use shore-power. Vessels that utilize shore-power at the port receive a flexible price discount based on Singapore bunker pricing. The incentive plan was developed after a thorough study on the cases of Los Angeles, Hamburg, and Shenzhen, which all run similar program
Prince Rupert Port Expand Their Green Programme
Canada’s Port of Prince Rupert saw significant enhancement and expansion of its Green Wave environmental programme during 2015. Originally launched in 2013 to provide incentives for shipping companies to install emission-reduction strategies, it has generated international attention for its role in promoting sustainable practises and technologies. Ships which implement emission reduction measures or other environmental practises now receive discounts on harbour dues when calling at the port.
Ship Efficiency Retrofit Grant Launched By Carbon War Room
Carbon War Room (CWR) issued a request for proposals (RFP) in 2015 to ship owners or charterers for a grant to help finance a single-vessel retrofit with a bundle of proven technologies to reduce fuel savings by 10–15%.
Port Of Gothenburg Introduces Green Ship Discount Scheme
Environmental discounts for vessels with high environmental performance was introduced at the Port Of Gothenburg on January 1, 2015 to encourage a reduction in environmental impact according to the port, “beyond the levels stipulated in international regulations”.
Canadian Shipowners Association Launched Ballast Tech Fund
The Canadian Shipowners Association (CSA) contributed $1.5 million to the establishment of a research and technical evaluation fund for ballast water technology on the Great Lakes and St. Lawrence Waterway. To date, 14 state-of-the-art high efficiency ships worth over $700M have been invested in to drive marine protection with a range of technologies utilised by Canadian ship owners to reduce emissions, discharged and the environmental footprint of shipping.
3,610 Ships Now Registered Under Environmental Ship Index
The International Association for Ports and Harbours (IAPH) presented the results of five years’ worth of data from ships registered under the Environmental Ship Index (ESI) scheme in December 2015. A scale of 0 to 100 is used, whereby a score of 100 demonstrates exceptional environmental performance in terms of emission of air pollutants such as sulphur oxides (SOx), nitrogen oxides (NOx) and carbon dioxide (CO2). The IAPH revealed that of the 3,610 ships registered under the ESI, 175 have a score of over 50 and 4 of these ships have obtained the maximum score of 100.
GHG Rating Tool Used For Two Billion Tonnes Of Goods Shipped
To date, the 35 charterers that use the Rightship Greenhouse Gas Emissions Rating to factor the most efficient ships in their supply chain selection have collectively undertaken over 26,000 vessel movements, shipping more than two billion dead weight tonnes actually. Not only does this scheme help charterers to calculate and benchmark the ships’ carbon footprint, it also supports corporate social responsibility and enables charterers to save money through the lowering of fuel bills.
