The shipping industry has the opportunity to save $70 Billion per year on fuel and reduce carbon and other pollutants by 30 percent.
Operation Shipping Efficiency aims to encourage investment, development and installation of energy efficiency technology to improve the efficiency of the fleet, by providing transparent data to the wider market. The latest International Maritime Organization study highlighted that up to 75% fuel efficiency was potentially achievable.
Operation Shipping Efficiency envisions a future shipping industry whereby technologies that deliver both real cost savings and reductions in carbon emissions are deployed on both new and existing ships. From modern wind power, energy recovery (waste heat recovery from engine) and hull optimization air lubrication to new optimized engines and the latest in rudders, hull coatings and propeller technology, the future fleet will be a flagship for efficient transport. As a result of retrofitting the existing fleet, new jobs and business will be created for ship-yards and contractors around the world.
About the Shipping Operation
The maritime shipping industry emits more CO2 than Germany and is the 6th largest producer of greenhouse gas (GHG) emissions globally. Despite being the most efficient method of cargo-transport, because over 90% of the world’s goods are transported by sea, the industry emits more than 1 billion tons of CO2e per year. Maintaining business as usual will result in an estimated 250% growth in emissions by 2050, leaving the industry responsible for 18% of global emissions.
This challenge provides a significant opportunity to reduce costs and emissions. At current bunker fuel prices, the industry can save $70 billion per year and reduce emissions by 30% through the adoption of technologies and operational measures.
In spite of the cost savings, these technologies are not yet being broadly adopted by the industry. We have identified several market barriers responsible for this, based on five years of engagement with industry stakeholders and reviews of current research and surveys conducted by University College London Energy Institute. These market barriers include:
- Suboptimal information regarding relative vessel efficiency
- Split-incentives, whereby approximately 70% of the bunker fuel in the industry is paid for by the cargo owner; the ship owner has no incentive to pay for the technologies as they would not benefit from the resulting fuel savings
- Lack of access to capital to fund the retrofits
Working with experts across the industry, the Carbon War Room has identified three key objectives to address the barriers and encourage greater efficiency in the shipping industry:
- Improve the flow of information about the relative efficiency of the existing fleet and enable greater transparency
- Increase the demand for energy efficient vessels and efficiency retrofits
- Unlock new sources of third-party capital for efficiency retrofits by attracting sources of private finance and developing the financial mechanisms to accelerate investment
STRATEGY & PROGRESS
Using this approach, we have achieved the following to date across our objectives:
Improve Information Flows and Transparency
- In partnership with RightShip, we provide the world’s first carbon-specific eco-label for the industry through ShippingEfficiency.org, and drive widespread use of the tool by the industry.
- Launched in December 2010, the GHG Emissions Rating is a simple-to-use tool enabling charterers and shippers to select the most energy efficient vessel; allowing terminals, insurers, and banks to provide preferred rates for more efficient vessels; and rewarding ship owners for investing in efficiency technologies for their vessels.
Increase Demand for Efficient Vessels and Efficiency Retrofits
- Currently, 25% of the non-container charter market uses the GHG Emissions Rating system to inform their vessel chartering process, positioning it as the main carbon-specific index in the industry. This represents over 2 billion tonnes of cargo, 36 companies, (including Cargill, Huntsman, and UNIPEC UK), and 22,000 vessel movements per year.
- In January 2014, Prince Rupert Port Authority and Port Metro Vancouver became the first ports in the world to offer incentives to the most efficient vessels calling to their ports based on the A to G rating, rewarding those ship owners who invest in more efficient fleets. Now, we are promoting adoption of the rating system at other ports around the world. Read more in our news bulletin
Mobilize Capital to Finance Technology Retrofits that Enhance Efficiency
- Most recently, we have partnered with PwC and UCL Energy Institute to develop innovative finance models that can provide financing for efficiency retrofits to cover multiple vessel upgrades. Read more about these finance models in our whitepaper Hidden Treasure: Financial Models for Retrofits
- We are also working to build consortia around bankable deals to bring more capital to the industry. In the long term, our goal is for these financing models to be widely used across the industry, facilitating the adoption of more efficient maritime technologies within the existing fleet.
Getting Involved with Shipping Efficiency
- Charterers and Shippers: Join the movement of industry leaders using GHG Emissions Ratings to inform vessel selection
- Shipowners: Contact us to explore opportunities to retrofit your fleet using third-party finance
- Ports: Contact us for information on offering incentives using the GHG Emissions Ratings