IMO decided the key mandatory measures to reduce ships’ carbon intensity

The entire shipping industry is actively discussing tightening environmental regulations. Where two maritime people meet, the debate quickly turns to change. What is the fuel of the future? How do these environmental regulations affect cargo flows and even ship concepts?

Shipping has a long history of staying out of the overall social burden. As late as the end of the last millennium, the same fuel was used in shipping as in cars, for example. As environmental standards were tightened in car traffic, an increasingly cleaner portion of the fuel was burned in cars, and the remaining, increasingly dirty, cracked waste was burned at sea.

Ten years ago, the maritime industry first woke up to the fact that environmental requirements changed existing shipping. In the Baltic Sea, the Sulfur Directive entered into force five years earlier than elsewhere, already in 2015. The whole of the world moved under the Sulfur Directive in 2020.

At first, the requirements of the Sulfur Directive seemed overwhelming. After all, the affordability of shipping was based on cheap fuel, but soon various exhaust gas cleaning systems and new cleaner fuels came into the industry. The anticipated shift from sea to land did not happen.

Since the Sulfur Directive, attention has been paid to carbon dioxide emissions in shipping. In 2018, the International Maritime Organization (IMO) decided to reduce the carbon intensity of international shipping, ie CO2 emissions from maritime transport performance (grams / tonne-kilometer), by at least 40% between 2008 and 2030.

The meeting, which ended this week, decided on measures to reduce the carbon intensity of shipping by 11% between 2019 and 2026. Decisions on 2027-2030 were postponed, as were measures until 2050. The decision also does not contain effective punitive rules if ships do not take the required corrective action to reduce emissions.

The Finnish Ministry of Transport and Communications, as well as many others, was disappointed with the decision because the targets are so low. Personally, however, I think it is important that the goal is set. It is important that there is a basis on which to base future decisions and to initiate the development of new innovations and technologies.

Shipping currently accounts for less than 3% of global greenhouse gas emissions. This may be small from some point of view, but the share will of course increase as other sectors of energy production or transport become more low-emission. For this reason, every act is important, shipping cannot remain just a bystander.

The service life of a vessel is practically always more than 20 years, up to 30 or more. It is therefore important that the ship designs already on the table take the best possible environmental standards into account – energy solutions are as emission-free as possible and the ship’s energy consumption is kept to a minimum in relation to the amount of cargo carried. The industry now has a foundation that we are on the way to zero-emission shipping – slower or faster.

New regulations can be introduced through regulations, financial incentives and information. Regulations can also be divided into precisely the criteria or targets set, ie whether the desired emission level is defined or whether a specific technology is required. Maritime has traditionally required a certain technology, but more and more often the required level is set and the means are left open. This will enable operators as well as technology developers to respond to tightening regulation with new technology or new operating models, which will accelerate the development of the industry.

Financial incentives are also very popular. Emissions trading is perhaps the most well-known financial incentive, others include staggering different charges according to emissions.

The emission reductions now set are the criteria set for the target, but not completely. They also treat different types of ships differently. Rutherford et al. (2020) estimate that the emission reductions required for the largest container vessels are up to 50%, while only about 5% reductions are required for smaller ro-ro vessels.

There are three ways to reduce emissions from shipping. Ship fuel solutions, ship design and operational solutions, ie ship type selection and ship speed choices. Energy companies are currently in an accelerating debate about fuel solutions and ship designers about new technological solutions, but everyone acknowledges that operational solutions can still bring the biggest emission reductions at the lowest cost. For example, very common slow-steaming significantly reduces emissions without requiring additional technology or new fuels.

Contrary to popular belief, cargo in international transport is sensitive to changing modes of transport if conditions change. During last year’s pandemic, as passenger air traffic declined, rail traffic between Europe and Asia has increased. Similarly, we see that cargo volumes have increased in unit traffic this year as declining industrial batch sizes shift to unit transport.

It is important, therefore, that the low-carbon targets for maritime transport do not rely solely on technological solutions or fuels, or even on existing operational models such as speeds or cargo modes, but support less low-emission traffic and each cargo batch can find the transport mode that suits it best in cost, emissions and speed.

A special challenge in Finland is winter shipping. Although in southern Finland a comprehensive ice covering the sea is not even visible every winter, it is still present in Northern Finland more than every winter. There is a major industry that is completely dependent on shipping. Consumer goods are imported to Finland largely through the unit ports of the south (eg Helsinki, Hanko, Turku) and exported to the north, but transporting industrial raw materials by sea is often the most environmentally friendly option.

IMO standards place ships serving Finland in winter in a different position than ships operating elsewhere, and penalize them. Finland has therefore pushed for an option in which the voyage of ships on ice would be excluded from emission bills. There was no answer to this in last Thursday’s decision, but the decision was postponed, which is, of course, a matter of concern in the industry.

As a follow-up, our eyes turn to the European Commission, which intends to make a proposal in the summer of 2021 to extend emissions trading to maritime transport. The big questions are how to prevent cargoes from switching routes outside Europe in a way that minimizes emissions charges, but even increases emissions themselves.