Regulation is a key driver when it comes to decarbonising the shipping industry and data is integral to upholding that regulation, writes Helen Barden*, NorthStandard.
The International Maritime Organisation’s (IMO) Greenhouse Gas (GHG) Strategy is to reach net-zero GHG emissions from international shipping by or around 2050, and there are various check points to meet along the way.
Complete and accurate data will be needed to know whether the targets are met, and at MEPC 81, in spring 2024, agreed amendments to Appendix IX of MARPOL Annex VI showed IMO increasing interest in securing more complete data on ship emissions. The amendments will enter into force in August 2025, require the submission of additional data to IMO’s Document Collection System (DCS).
The Carbon Intensity Indicator (CII) Regulations are already heavily reliant upon data, not only to ensure that the attained annual operational CII can be correctly calculated, verified and recorded, but also so shipowners (and charterers) can monitor how the vessel is performing. The calculation also offers guidance on whether the ship’s operation needs to be adjusted to meet the required annual operational CII.
Knowledge sharing in shipping
Any discussion of CII Regulations must acknowledge the problems associated with it, including the apparent unfairness and inefficiencies which have perhaps watered down their impact. Conversely, new and deeper conversations between owners and charterers about data that have been brought to industry (in part) by these regulations must be seen as a real positive.
It would be fair to say that there is a nervousness from stakeholders when it comes to data transparency and sharing of data. However, the regulations have increased the need for owners and charterers to be on the same page when it comes to the ship’s operational efficiency. The regulations have therefore prompted more dialogue between owners and charterers about data accuracy and transparency, and the sharing of data.
Industry initiatives like the Sea Cargo Charter are encouraging that dialogue, and in April 2022 its expansion to include shipowners now allows charterers and shipowners to monitor and report their emissions under a common framework.
Cost will also always be a driver for shipping and, in this context too, data is proving key. Taking the European Union’s Emission Trading System as an example, emissions are now directly attributable to a cost. As this will, in general, be passed down the charterparty chain and on to the end user, charterers have an interest that goes beyond the cost of fuel itself and includes reducing their EU allowance cost exposure. The incentive to ensure data accuracy is clear.
Furthermore, with the expected introduction in 2027 of the IMO’s market-based measures – one an economic measure and one a technical fuel standard – the focus on cost will only keep on growing. So too, therefore, will the focus on data truth, transparency and verification.
The true costs of change
Of course, not all costs can be immediately absorbed or passed on as part of the trade when it comes to decarbonisation. The cost of energy efficiency technologies (EET), or alternative energy sources like wind propulsion, may be prohibitive to an owner unless there is cost sharing or financing available. Nevertheless, understanding the savings any given EET or wind technology may provide will require complete and accurate data and analysis.
For owners and charterers, greater consistency of data will be helpful for developing more transparent methodologies to calculate the true impact of EETs.
The framework provided by Poseidon Principles to integrate climate considerations into ship financing also depends upon high quality data and analysis. And for future fuels and technologies, obtaining data, for example from pilot projects, will allow for more informed discussion and fact-based decisions.
Scrutiny of data and data sources will therefore inevitably increase, as a reflection of the critical role transparency plays in realising regulatory, commercial or voluntary objectives. Verification and certification will continue to be imperative, as will the clarity of the frameworks within which the data is being used.
And to get full value from the data captured, collaboration and shared learning amongst stakeholders will be vital to drive the energy transition. Commercial considerations which act as a brake to information sharing must therefore be weighed up against the risk of missing important pieces of the decarbonisation jigsaw because one stakeholder holds on to data that would be useful for another.
Good work is being done by many to get the shipping industry to net zero, but a joining up of data and knowledge will be vital if we are to use it in the timeliest way and for maximum impact.
*Helen Barden, Senior Solicitor – External Affairs, NorthStandard
To find out more about NorthStandard and its work on decarbonisation, visit north-standard.com
