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Tech seen helping push acceptance for sharing cost of decarbonisation

There is no getting away from sharing the cost of decarbonisation and technology and digitalisation will help make it easier to do so transparently and efficiently.

The Seatrade webinar on Shipping's Decarbonisation Challenge - The role of technology and digitalisation, part of the Hong Kong Maritime Week, comprising a panel of ship owners and managers as well technical specialists moderated by Seatrade Maritime News editor Marcus Hand also discussed other challenges as shipping faced perhaps its most important issue of the day.

"To make decarbonisation sustainable the ship owner has to pass the costs down the chain," said Wah Kwong Maritime Transport Holdings md Capt Zhou Jianfeng.

Reiterating the point and giving the ship managers' perspective, Anglo-Eastern Ship Management Asia coo Carsten Ostenfeldt said: "The principle is that the polluters should pay, which I think is a very sound principle." This will of course mean that the charterers and eventually consumers will end up footing the bill for decarbonisation.

He went on to elaborate by noting that currently much of the burden of decarbonisation falls on the operators and owners which does not adhere to the polluter pays principle and is being complicated by schemes such as the EU's impending emissions trading scheme. This not only does not address the root of the problem but is also unfair, he said.

"The polluter, in this case the charterer, is the one who decides how the transportation should happen," Ostenfeldt pointed out, noting these elements of shipping are all out of the hands of the ship manager and owner. "So the whole system has to be rethought," he emphasised, adding that technology will help to make it much easier to pinpoint where exactly the emissions are coming from and how it is accounted for.

Carbonbase founder Max Song, whose Hong Kong-based startup helps to calculate, track, trade and offset carbon emissions, agreed that in order to make it more likely to get charterers to agree to pay there was a need to put in place systems to track and reflect how this flows through to their downstream usage. "We need to have an additional system that connects this entire value chain all the way to the person buying a car or groceries or whatever."

On the more purely technical side of things however, DNV Regional Head of Maritime Advisory and director of Maritime Decarbonisation and Autonomy Centre of Excellence Shahrin Osman said most ship owners were still struggling to understand where the industry currently stands on emissions technology.

But the good news is that DNV has seen good interest in alternative fuels. Shahrin said for example that the percentage of newbuildings with alternative fuels capability had doubled from 6% in 2019 to 12% of all newbuildings in 2020. Of these, LNG seems to be the preferred choice, although some ship owners are also investing in so-called ammonia and methanol-ready vessels that can be easily converted to the new fuels when they become readily available.

DNV is also working on the concept of the Decarbonisation Stairway, which looks at emissions reduction as a continuous process making use of all technology as it becomes available and evolving with it.

"If you look at the regulations, we expect a continuous reduction in terms of emissions and the solutions are not always currently available so there is a need to anticipate that every five years or so there will be a need to take more drastic action to reduce your emissions," he warned.

In this context, Carbonbase is trying to provide the software tools owners need to achieve their decarbonisation goals. The company is already working with companies such Wah Kwong to provide monitoring solutions to help meet upcoming standards such as EEXI and CII.

But Song also broached a radical new idea of creating a nautical equivalent of the renewable energy certificates which are already currently in use in the power generation sector. These market-based instruments certify that electricity has been generated from a renewable energy resource and are gaining acceptance from big companies such as Amazon and Tesla.

"What if we were to create a concept similar to REC called a green nautical mile certificate," Song asked. This would be a certificate assigned to ship owners and charterers that are prepared to go the extra mile to invest in the technologies to provide green shipping as a service.

Watch the webinar on demand here.

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