Although carriage by sea is rightfully regarded as the least environmentally damaging means of transporting goods around the world, decarbonization of the maritime sector still represents a huge challenge.
International shipping emissions account for about 2% of global greenhouse gas (GHG) emissions. In addition, marine fuel oil exhaust accounts for much of the transport sector’s sulfur oxide (SOx) emissions, and for a significant portion of nitrogen oxide (NOx) and complex particulate matter releases.
“As a key facilitator of world trade, representing around 80% of global flows, it is critical that the shipping industry addresses the climate impacts of its international activities. Collaboration across the value chain, new technology and digitalization are all key to making the transition to zero a success.”
Head of Freight
The theory of change teaches us to observe and act first upon our sphere of control and influence.
With this in mind, ship operators have the opportunity to reduce the fuel consumption – and therefore emissions – of the ships they charter by maximizing technical and operational efficiencies during voyages.
Technical efficiency stems either from improved hydrodynamic designs, such as new hull shapes and propeller innovations, or from energy-saving devices. This second group include anti-fouling paints, solar panels, wind propulsion devices, and air lubrication. Some of these technologies can be retrofitted during a vessel’s lifetime, and therefore allow ageing conventional ships to transition to attain 2030 emissions targets.
Over the course of the year, we have dedicated significant efforts to meeting hydrodynamicists and energy-saving device providers. With a focus on wind propulsion, we are now working on a comparative study which will help solve the economic equation, targeting to make a potential investment before 2023.
Operational efficiency relates to the day-to-day sailing of a ship: optimal weather routing, speed adjustment and improved navigation, based on a better understanding and forecast of sea conditions.
What do these endeavors have in common? Cooperation between operators and ship-owners, greater use of digitalization through sensor-based measurements and computer modeling, and stronger commitment from seafarers.
At LDC, we are in constant dialogue with ship-owners, engineers and tech-innovative stakeholders as we seek to push the efficiency envelope for the vessels we charter.
In October 2020, LDC became one of the founding signatories of the Sea Cargo Charter, a pioneering multi-stakeholder initiative that aims to champion responsible and sustainable shipping, transparent climate reporting and improved decision-making in line with the policies and decarbonization ambitions adopted by the International Maritime Organization (IMO).
The Sea Cargo Charter establishes a common baseline for shipping industry leaders to quantitatively assess and disclose shipping activity alignment with climate goals, including an ambition to reduce total annual GHG emissions by at least 50% of 2008 levels by 2050, with a strong emphasis on targeting zero emissions.
As a signatory, LDC commits to accurately measuring and disclosing the GHG emissions of its chartering activities. Following stringent guidelines, we will assess our climate alignment relative to established decarbonization trajectories, and report results on an annual basis. We also commit to making compliance with the Sea Cargo Charter contractually part of new chartering activities, working with ship-owners and other partners to meet this requirement.
This charter relies on granular analysis of a ship’s full voyage activity through the Energy Efficiency Operational Indicator (EEOI) carbon intensity methodology. It should lead to optimized decision-making, not only on vessel selection but also on fleet routing. Through time, it should also improve shipping carbon-efficiency allowing for targeted collaborative action on vessels, via operational efficiencies and potentially incentivizing technical retrofitting.
We also believe that the global reporting standards established by the charter are an essential step paving the way for a potential carbon levy mechanism, should IMO decide to follow the same path as European Union.
To improve something, we believe you first need to measure it. Accurately.
Regardless of the technical solution shipping elects to replace its current dependency on carbon-based energy, there will be a transition phase during which vessel efficiency will prove a determining factor.
Each ship is unique, and we need to understand a vessel’s specificity rather than jump to conclusions based on its size or the year it was manufactured. For this reason, we seek to improve through accurate measurement and analysis of the causation chain impacting each ship’s performance.
This project, which should come to fruition in the summer of 2021, leverages modern technologies, such as machine-learning and near real-time data, to build precise, tailored models of our ships’ performance.
These analysis models will then allow our Trading and Operations teams to select the most efficient way of carrying LDC’s products from origin to destination, with the ultimate goal of reducing LDC’s global environmental footprint.
The sustainability of a supply chain necessarily includes the welfare of its workers.
In 2020, around 300,000 seafarers were stranded at sea due to crew-change restrictions as a result of the Covid-19 pandemic, with some crews staying on board for over a year. This led to an industry-wide demand for the development of a dedicated code of conduct for actors across the shipping value chain, which recognizes seafarers as key workers and ensures their rights and wellbeing.
Currently in development by the Sustainable Shipping Initiative, the Institute for Human Rights and Business and other maritime industry players – LDC among them – this code is set to be published in June 2021.
For the code of conduct to be effective, collaboration will again be key; full consultation with ship-owners will be an essential step before any global implementation.
There is high ambition for this code. It is intended to be more than a statement of good intent.
It will be concrete and actionable, setting out in detail the responsibilities of supply chain actors and how the crew can seek support or initiate a grievance process.
The ships of the future will rely extensively on our partners at sea, who will be responsible for their data monitoring, sensors, new technology and safety procedures.
We believe that proper regard for these seafarers’ well-being is central to the health of our industry and its journey toward decarbonization.
In 2020, adoption of new technology and support for collaborative initiatives such as the Sea Cargo Charter paved the way toward our future.
The path to maritime decarbonization is under way, as we join forces with others to encourage innovation, wider and more intense cooperation on various forums, and greater engagement with governmental authorities.
As a matter of urgency, we believe the shipping industry should introduce a global regulatory framework and an incentive mechanism, such as a carbon levy, to reduce as far as possible its environmental impact. We also believe any such carbon levy should be introduced as a global standard, ideally governed by the IMO, to ensure the shipping industry’s transformation is underpinned by fair and harmonized global regulation.
Our main chartering and management teams are located in two of the world’s most dynamic, innovative shipping hubs: Geneva and Singapore. Collaboration with government authorities in these hubs is key to spearhead bold ambitions for decarbonization, our own and those of like-minded operators, and persuade the IMO to turn a concrete carbon levy program into a global legal obligation.
With growing scrutiny over climate issues from the public, financiers and governments themselves, who are setting bold new targets, obtaining decisive diplomatic support at the IMO for such a program remains an urgent priority for the coming months, to ensure a fair and sustainable future for the industry.
Contribute to ongoing SSI studies on ships of the future
Reduce our fleet emissions per ton-mile by 15%, compared to 2017
Status: In progress, on target
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