Reducing the footprint
Financial incentive schemes are critical in driving fuel efficiency, reducing shippers’ carbon footprints and benefiting shipping’s bottom line, says Carbon War Room's Peter Boyd
As the industry looks to lower fuel costs, increase profits and reduce emissions, ports are becoming increasingly interested in rewarding the efforts of leading owners and operators who go beyond compliance to using environmental measures to competitive advantage. Offering financial incentives to more efficient ships makes this point in the clearest possible way, and is already paying dividends for first movers.
Currently, there are a variety of initiatives that are becoming increasingly adopted by the ports. These include, for example, the Port of Singapore, which has programs to incentivise vessels transitioning to cleaner fuels, as well as the Environmental Shipping Index (ESI), which is becoming increasingly developed, implemented and used across the industry.
However, many programs have largely focused on ‘local pollutants’ such as SOx and NOx. To compliment and strengthen the ESI and other indexes, the ‘A to G’ Greenhouse Gas Emissions rating, which contains information on over 70,000 existing vessels, offers a simple and easy-to-use tool for ports to provide incentives without additional paperwork. Port Metro Vancouver was the first port to introduce the A to G rating system through its cutting-edge ‘Eco-Action’ program just over a year ago, and more ports are expected to make similar announcements in 2014.
The A to G rating system is a collaboration between the Carbon War Room, a global non-profit, and maritime risk experts, RightShip. Together, our organisations have set out to extend the great work of other rating schemes in the shipping industry by focussing entirely on energy efficiency, which in turn equates to lower fuel bills and carbon emissions. The A to G Rating uses credible data, verified by vessel owners and operators, engine manufacturers and yards, to offer incentives to vessel owners such as reduced port dues, and in turn its application can also benefit the port itself in several ways.
As the wider supply chain increasingly expects, and in many cases insists on, transparency surrounding emission reductions, shippers, carriers and charterers will look to ports that are proactively encouraging vessel efficiency.
Ports play a crucial role in raising the profile of sustainable shipping beyond the maritime industry as the port’s supply chain partners include retailers, thus providing a critical link to consumers. As the most visible element of shipping, ports can provide much-needed transparency for shipowners by highlighting the benefits of this investment in clean technology.
Currently, 22% of the non-container charter market uses the ‘A to G’ rating system to inform their vessel chartering process, making it the most widely-used index in the industry. This represents 1.6bn tonnes of cargo, 16 companies, and 15,000 vessel movements per annum, and includes the three first movers, charterers Cargill, Huntsman and UNIPEC, who in 2012 agreed to phase out the least fuel-efficient ships from their fleet. It is great to see charterers using the information to increase demand for more efficient ships, with the aim of developing a market that values energy efficiency.
Research conducted by University College London reveals that while progress is being made, efficiency is still not wholly being reflected in improved daily rates for those vessels, but the die has been cast and ship owners and operators are beginning to see a correlation between vessel improvements and the bottom line.
Looking ahead, the next step for ports is to work collaboratively as a global network to encourage the use of energy efficiency index ratings. Highlighting the cleanest vessels commercialises sustainability; provides tangible proof of the performance and importance of clean technology; reduces pollution levels and lastly, results in a positive impact on the bottom line. This powerful combination provides an extremely attractive proposition for today’s market.
We encourage interested ports to contact us at email@example.com.
Peter Boyd is chief operating officer of the Carbon War Room. He served as launch director of the Carbon War Room from initial concept by Richard Branson and fellow founders in early 2009, and now focuses his time on developing and implementing the strategy.
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