The Decarbonization Challenge & Its Impact

What is Decarbonization & What is the stipulated goal for 2050.

Climate change is a reality. The temperature rise, owing to an increased carbon footprint, poses a real threat to our world. Decarbonization is the process of reducing CO2 emission, and thereby greenhouse gas emissions, into the atmosphere. Currently, the shipping industry produces about 3% of the global CO2 output. Of the 0.9 Gt, almost 87% of emissions come from international freight shipping. IMO, the sector’s UN regulatory body, has targeted to reduce this alarming output to half by 2050.

Measures/Platforms introduced to control and monitor co2 emissions.

Content Overview: 
Explain interim solutions, fuel options and regulation measures introduced to track the emissions including IMO DCS, CII, EU-MRV, UK-MRV, Sea Cargo Charter

The need of the hour is alternative fuels to power all fleets, including 60,000 cargo vessels. From hydrogen, ammonia, and methanol to nuclear fuel – many innovations are in the pipeline. Currently, shipping companies need to look at short-term solutions in the interim period. LNG (liquified natural gas) is a fossil fuel producing fewer emissions but gives rise to very potent methane gas. Other companies are considering lengthening transit times to reduce fuel consumption and manage their emission output. However, owing to timelines and budgets, this is not a feasible option for many companies. But, everyone is compelled to consider their environmental impact through maritime regulations and initiatives like IMO DCS, C II, EU-MRV, UK-MRV, and the Sea Cargo Charter. Wondering what they are? These initiatives focus on monitoring, reporting and eventually reducing the carbon footprints of ships.

De-code IMO DCS, CII, EU-MRV, UK-MRV, Sea Cargo Charter.

IMO DCS: The International Maritime Organization’s Data Collection System was adopted in 2016. It requires ships to report energy and fuel consumption data along with other parameters. It calculates the EEXI measuring the ship’s energy efficiency versus the standard, thereby controlling emissions.

CII: The Carbon Intensity Indicator is a framework adopted by the IMO in 2020, requiring ships to adhere to a mandatory rating system, ranging from A to E. Depending on their operational outputs, A is the most carbon-efficient while E is the least. It encourages the use of technology and practices to reduce emissions by incentivizing fleets.

EU-MRV: This refers to the EU’s Maritime Transport Monitoring, Reporting, and Verification of CO2 emissions. The regulation was introduced in 2015 for vessels above 5,000 gT, promoting data transparency and reduction of emissions in line with fixed targets.

UK-MRV: An offshoot of the EU-MRV, this was established in 2018, owing to BREXIT. It also applies to 5,000+ gT vessels operating in UK waters to reach the United Kingdom's environmental goals.

Sea Cargo Charter: This framework for charterers, launched in 2020. aligns charter ship activities with climate goals. In collaboration with ship owners and operators, it creates accountability, propagating best practices towards maritime decarbonization.

Recently, the July IMO MEPC 80 meeting centred around the revision of the GHG emissions strategy. It declared new targets aiming at net-zero emissions by 2050.

The Impact on Business
The financial impact of IMO DCS, EU-MRV, UK-MRV, and the Sea Cargo Charter on businesses varies depending on the size of the shipping company, the operational efficiency, the types of vessels, and their commitment to environmental sustainability. Implementing monitoring, reporting, and verification compliances involves investment in technology, systems, and processes. Operational changes like route optimization, fuel alternatives, etc also lead to initial costs. However, fuel-saving measures could help optimize costs in the long term. Additionally, environmentally responsible companies could command better prices due to their competitive edge. Charterers will now consider vessels with lower carbon impact. The same is expected of investors, financial institutes, port authorities, customers, etc, owing to the changing market landscape. Companies that fail to adapt will likely face reputational risks while those that do can benefit from emerging opportunities in the growing field of sustainable shipping.

How can SSH help?

Here is how Smart Ship© Hub comes in:
Smart Ship© Hub helps organizations whether the choppy seas of the decarbonization challenge through digitalization and technology. It can help with voyage metrics including data standardization, collection, cleaning, and verification in addition to analytics on ratings and results for submission and approval.

Smart Ship Insight is an Analytics & Predictive Data Modelling that helps 24/7 tracking of the fleet and key operational areas including expenses, margins, Vessel Consumption, and more.

Smart Ship Mobile: Gives a complete visual of the fleet’s performance, fuel consumption, trends, financial impact, downtime analytics, and voyage performance on mobile at any point in time through Smart Ship native apps.

Our Predictive Fuel Utilization system gives 100% visibility on Fuel consumption and mainly aids optimization. It considers dynamic weather conditions, vessel conditions, laden state, routes, comparisons with historical trends, and correlations between fuel and other vessel parameters.

Smart Ship© Hub can safely report that 100% of our customers have been able to maintain their CII ratings, even improving them over the months. Many vessels under the SSH digital network are now granted a “Green Ship” notation.

Conclusion: 
It is alarming to note that the average global temperature has shown an increase of more than 1℃ since pre-industrial times. This seemingly small number has a large impact – ecological, physical, and health-wise. Extreme weather events like floods, droughts, storms, and heatwaves along with sea-level rise, altered crop growth, and disrupted water systems are but a few of the repercussions involved. And, human emission of carbon dioxide is the primary driver of climate change. The shipping industry needs to and chooses to join forces to combat the world's most pressing challenge currently. And, Smart Ship© Hub is committed to helping smoothen the process for our industry partners, as well as for the planet.