Climate Change and Energy International shipping Key trends and developments in carbon & energy performance Steve O Malley Ken Walsh 1
Ships are and will continue to be significant emitters International & domestic maritime policies Responsible parties Emission reductions through efficiency gains Role of logistics planning and energy management is a recognized global leader in solving important problems in the defense, intelligence, homeland security, civil, and health markets. It has approximately 33,000 employees worldwide and had more than $10 billion in annual revenues in 2016. 2
Maritime shipping activity is already efficient Approximately 80% of global trade by volume More than 70% of global trade by value (UNCTAD) Lowest GHG emission rates for transportation Source: IMO GHG Study, 2009 3
But maritime shipping is extensive 3.1% global CO 2 emissions during the period of 2007-2012 2.6% global CO2 emissions for international alone (IMO 3 rd GHG Study 2014) World shipping routes European Commission Fuel usage (bunker) represents 40-50% of vessel operating costs Reducing bunker consumption makes good business sense and reduces emissions 4
Shipping fleets 89,464 propelled seagoing merchant vessels of 100 GT and above 56-60,000 routinely engaged in international service Does not include: inland waterway vessels fishing vessels military vessels yachts barges offshore fixed and mobile platforms Source: UNCTAD secretariat, based on Clarkson Research, Seaborne Trade Monitor, 2(5), May 2015 5
Projected Growth in Shipping Growth driven by global GDP Through 2008, international trade grew faster than global GDP After 2008, international trade growth has matched global GDP Slower GDP growth expected in OECD nations Concommitant emissions growth from shipping Currently 3.1% of global GHG emissions Could rise to 13-16% as Paris Agreement is implemented unless further action is taken to reduce shipping emissions Source: World Economic Outlook Database, October 2016 GDP projections from https://data.oecd.org/gdp/gdp-long-term-forecast.htm#indicator-chart 6
Scope of Paris Agreement Includes domestic shipping Excludes international shipping (maritime & aviation) However, the International Civil Aviation Organization (ICAO) & the International Maritime Organization (IMO) are organizations within the United Nations and obligated to support the Paris Climate Change Agreement 7
International Maritime Policy Requirements: IMO (International Maritime Organization) - Member States agree to adopt and enforce IMO rules/policies as regulations/laws Flag States Registered vessels must comply with IMO/Flag State requirements (Forty percent of international vessels are flagged under Panama, Liberia, or Marshall Islands) Port States May board ships to verify IMO compliance documents issued by the Flag State and to enforce port/national requirements (which may be subject to other international agreements, i.e. World Customs Organization ) 8
International Maritime Policy Technical interpretations or standards related to rules are produced by: Class Societies Approve/inspect plans and vessels For work done on behalf of Flag States, the class societies may be referred to as Recognized Organizations ISO (International Organization for Standardization) Develops technical standards to support IMO rules and/or address issues raised by industry leaders Industry groups (i.e. SIGTTO, SGMF) Produce guidance documents for specific industry sectors 9
International Versus Domestic Voyages It is the service and not the vessel size or voyage distance Purple - International voyage Gold - Domestic voyage USCG joc.com 10
Domestic Maritime Policies Vessels not engaged in international service are generally not subject to IMO requirements National authorities regulate domestic maritime activity Policy effectiveness varies by country Emissions from domestic vessels are included in that nation s GHG emissions budget 11
Responsible Parties Shipbuilding Vessel operations Port Land transport Cargo IMO & Flag State Beneficial Vessel Owner Vessel Operator Port Operators Port State & IMO Shipping Lines National government & Paris Agreement Land based Transporters Cargo Owner Beneficial Cargo Owner* Logistics Planner (in-house or 3 rd party logistics) 12 * Entity that benefits from the shipment
Emission Reductions Will Accompany Efficiency Gains Source: World Energy Outlook, IEA 2012 13
Sources of Efficiency Gains Logistics planning New technologies Fleet management IMO revised strategy??? EU requirements IMO EEDI & SEEMP Ship design/retrofit LNG as fuel Reduced speed Larger ships Shipping Promises Many Paths to Efficiency Gains Conventional engine improvements Likely Possible Uncertain???????? 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 14
Conventional engine improvements (1990-2010) Fuel Oil Consumption (grams per KWh) Engine Age Slow Speed Diesel Medium Speed Diesel High Speed Diesel Before 1983 205 215 225 1984 2000 185 195 205 Post 2001 175 185 195 Source: http://www.imo.org/en/ourwork/environment/pollutionprevention/airpollution/documents/third%20greenhouse%20gas%20s tudy/ghg3%20executive%20summary%20and%20report.pdf Rates of 165 g/kwh have been achieved on certain ships Source: http://shipandbunker.com/news/world/221518-wartsila-engine-breaks-efficiency-world-record 15
Larger ships (1995 2015) Fuel savings For containerships, increasing size from 4,500 TEU to 8,000 TEU reduces fuel consumption rate per tonne-nm 25% Increasing from 8,000 to 12,500 TEU reduces consumption rate per tonnenm 10% Capital Costs Increasing size from 4,500 TEU to 8,000 TEU reduces construction cost per TEU 15% ABS Ship Energy Efficiency Measures Advisory 16
Reducing speeds (2007-2025?) Fuel consumption reduced 12-15% when large containership reduces speed by 1 knot Fuel consumption reduced 17-22% when oil tanker reduces speed by 1 knot Source: ABS Ship Energy Efficiency Measures Advisory Reducing the nominal ship speed from 27 to 22 knots (-19%) will reduce the engine power to 42% of its nominal output. This results in an hourly main engine fuel oil savings of approximately 58%. A further reduction down to 18 knots could save 75% of the fuel. The reduced speed however results in a longer voyage time; therefore the fuel savings per roundtrip (for example Asia Europe-Asia) are reduced by 45% at 22 knots, or 59% at 18 knots. These are calculated values, and the actual values depend also on a number of external factors, such as the loaded cargo, vessel trim, weather conditions, and so on. An example of the results of slow speed steaming provided by Wärtsilä U.S. Energy Information Administration 17
Liquefied Natural Gas (LNG) as a fuel (2005 onward) Many reported GHG emission rates Well-to-wake Tank-to-wake Methane slip Multiple ship types LNG-fired engines Dual-fuel engines LNG-ready Fuel choice depends: on fuel prices on SO 2 /NO x emission limits Photo: JAXPORT Marine Unit via NASSCO 18 2016 LEIDOS. ALL RIGHTS RESERVED.
Ship design/retrofit (2010 2025) Wake equalizing and flow separation alleviating devices Pre-swirl devices Post-swirl devices High-efficiency propellers Podded & azimuthing propulsion Hull optimization Cold ironing ABS 19
IMO: Energy Efficiency Design Index (EEDI) Ship Energy Efficiency Management Plan (SEEMP) (2013 2030) EEDI (grams of CO2 /tonne - nm) based on a fully loaded ship operating at 75% of engine output Most international ships built since 2013 are required to meet an EEDI Ships built after 2024 are required to attain 30% efficiency improvement over the 1998-2010 reference line Ship operators for vessels built since 2013 are required to develop a SEEMP http://www.imo.org/en/ourwork/environment/pollutionprevention/airpollution/pages/default.aspx 20
European Union (EU) requirements (2023 onward) EU Commission's 2011 White Paper on transport EU's CO 2 emissions from maritime transport should be cut by 40-50% from 2005 levels by 2050 In 2013, the EU Commission set out a strategy to progressively integrate maritime emissions into the EU's policy for reducing domestic GHG emissions: Monitoring, reporting and verification of CO 2 emissions from large ships using EU ports GHG emission reduction targets for maritime transport sector Further measures (including market-based measures) in the medium- to long-term https://ec.europa.eu/clima/policies/transport/shipping_en 21
IMO s revised emission reduction strategy (2023 -??) Enact fuel record keeping in 2018, with results reported beginning in 2019 Complete a Fourth GHG study of 2012-2019 period by Fall 2020 (this report would include 2019 fuel data reporting) Begin data analysis in Fall 2020 Produce a revised emission control/reduction strategy by 2023 http://www.imo.org/en/ourwork/environment/pollutionprevention/airpollution/pages/ghg-emissions.aspx 22
Fleet management programs (2010 onward) 08 February 2017: Maersk Line s reduction target is 60% less CO 2 emitted per container moved by 2020 (2007 baseline) combined with growth in volume transported means we can sustain our efforts at decoupling growth from resource consumption. By the end of 2016 Maersk Line had reduced emissions by 42% per container. Our Maersk-wide target is a 30% relative CO 2 reduction by 2020 (2010 baseline). By the end of 2016 we had achieved 25% reduction. http://www.maersk.com/en/the-maersk-group/sustainability/our-commitment-to-reduce-co2 25 November 2015: CMA CGM, a leading worldwide shipping Group, is pleased to announce a 50% improvement in its CO 2 performance for its owned fleet. Thanks to an efficient environmental policy sustained by deploying innovative solutions, this success was accomplished in 10 years. https://www.cma-cgm.com/news/1005/cop-21-paris-climate-conference-in-10- years-cma-cgm-has-improved-its-carbon-performance-by-50- June 2015: BSR s Clean Cargo Working Group developed a standard methodology for credible and comparable CO 2 emissions calculations and benchmarking in the Ocean Container Shipping Sector (https://www.bsr.org/en/collaboration/groups/clean-cargo-working-group) 23
New technologies (2015 onward) Smart ships Air lubrication systems Renewable energy assist Combined cycle gas turbines Hybrid systems Use of alternate engine fuels Fuel cells 24
In Design Phase: Combined Cycle Gas Turbine Containership GE H series power generation gas turbine in combined cycle mode: 480-megawatt unit rated thermal efficiency of 60% Model of the PERFECt ship (Credit: DNV GL) 25
Logistics planning (2015 onward) Big data to optimize ordering and distribution Fleet selection and negotiations Management of entire supply chain Use of transport vehicles & containers efficiently Possible use of horizontal collaboration Efficient cargo routing to destination Tracking of emissions across all transport modes Condition of service Default values Overall goals trump segment goals 26
Logistics planning through energy management SEEMP works in conjunction with organizational energy management program (EMP) ISO 50001 is an international organizational EMP that includes logistics (routing and cargo) World Trade Organization may allow compliance with ISO 50001 as a measure to avoid carbon border adjustment fees 27
Thank you! Contact Information: Steven O Malley, Tele: +1 425 442 7521, email: omalleys@leidos.com Kenneth Walsh, Tele: +1 919 836 7579, email: kenneth.j.walsh@leidos.com www.leidos.com 28