What shipping companies can do today to reduce their environmental footprint (and save money)
By Aaron Holton, CEO, Tres Solutions
Pull up any shipping journal and it’s not difficult to ascertain what the maritime industry is focused on. In an informal review last week, 20 per cent of the headlines across four leading industry news outlets were about regulation, technologies, fuels or other initiatives to reduce emissions from the maritime sector. In a recent virtual conference, half of the sessions were related to how shipping was gearing up for decarbonisation.
This narrative is not new, but it is growing louder. The industry has and will continue to improve ship design, introduce alternative fuels and pioneer new technologies to reduce maritime’s impact on the environment. Governments, regulators, customers, investors and banks demand it. Although the change may be difficult for some stakeholders, it will happen, and we’ll all be better off for it.
Change your mindset
Resistance is futile, so discussions should shift to what we can do about it today. As Theodore Roosevelt said, “Do what you can, with what you have, where you are.”
At Tres Solutions (Tres), we help our customers improve the efficiency of operations. This includes improving data quality, optimising consumption, increasing operational efficiency, minimising daily running costs and importantly, reducing emissions.
We actively contribute to discussions around efficient ship design and environmentally friendly fuels, but we are not directly responsible for these outcomes. Shipowners, technical managers and charterers are also influencers and perhaps testers but again, do not directly control the outcomes.
It’s important that our customers ensure they have a robust fleet renewal program in place, make sound decisions as it relates to hull coatings, install energy savings devices on ships and comply with IMO regulations around low sulphur fuels, among others.
These strategies undoubtedly require commitment and investment. It is important not to forget the impact of streamlining vessel performance on emissions. With a basic commitment to improving data collection and implementing better operating practices, shipping companies can begin reducing their environmental footprint today. Don’t forget that this will also have the dual benefit of helping save money!
For context, for each metric ton of VLSFO consumed, 3.114 metric tons of CO2 are emitted into the atmosphere. The global average bunker price for this same ton of fuel is US$360. If a fleet of 36 tankers (5.4 million total DWT) consumes nearly 350k MT of fuel per year, they are also emitting 1.1 million MT of CO2 into the atmosphere with an estimated fuel bill of almost US$125 million. Think about the potential of reducing consumption via a more proactive vessel performance optimisation program – 5 per cent improvement would yield US$6.1 million savings and a reduction in CO2 emissions of 54k MT. That’s powerful!
This does not include the benefits from emissions control of halocarbons (HC), particulate matter (PM), sulphur oxide (SOx), nitrogen oxide (NOx) and methane (CH4). All of these will be increasingly tracked, and reduction targets enforced as regulations evolve.
The “Tres Approach” is designed to help customers address this very challenge. We work with each company to establish clear and more importantly, controllable targets to improve vessel performance and reduce emissions.
Choose your unique path
Not every shipowner, technical manager or charterer has to approach this the same way. A charterer usually has a different set of goals compared to an owner, but both can take steps to improve environmental efficiency.
The image below shows the actual impact of a targeted vessel performance optimisation strategy from a notable tanker owner. Since 2017, our Tres Vessel Analytics (TVA) software and service platform contributed to emissions reduction of 14 per cent. This equates to 76k MT of fuel savings, or US$26.6 million.
Whether you have an in-house program or use a third-party system like TVA, it’s important to make sure you have reliable data and then a suite of tools at your disposal to improve decision-making. When the goal is efficiency, there should be no stone left unturned. TVA covers holistic performance, so can drive improvement via a combination of hull & propeller performance, main engine maintenance, auxiliary engine utilisation, trim guidance, CLO consumption optimisation, port optimisation, voyage planning and many others.
Measure the Impact
There are a number of ways to measure the impact of your performance program as it relates to environmental efficiency.
Based on your Ship Energy Efficiency Management Plan (SEEMP), you should already be monitoring environmental and operational efficiency using the Energy Efficiency Operational Indicator (EEOI). We like this metric because it not only provides an indicator of the energy efficiency of ships in operation, but also enables internal (and external) benchmarking of vessels.
EEOI will also continue to gain prominence as a measure of efficiency. The Sea Cargo Charter global framework uses EEOI as a way to measure climate alignment among its signatories.
Many shipping companies will be required to disclose its Annual Efficiency Ratio (AER) to financial institutions as a way measure and compare the carbon efficiency of fleets. Other companies will look at absolute emissions or normalise emissions based on tonnage.
Again, it’s important to be clear about what you are trying to improve and then accurately measure and manage toward these goals. Doing so will not only reduce the environmental impact from your operations, but it will also help your company save money. It’s a win-win for everyone, so why wait to get started?