Carbon emission estimates used in Poseidon Principles show a high degree of non-compliance in 2020 and unintended consequences for certain vessel types
Maritime Strategies International (MSI) has added an annual efficiency ratio (AER) calculation of vessel CO2 emissions to over 21,000 ships in its HORIZON asset valuation platform.
The new feature displays AER estimates for 2020 and compares this to the trajectory published by the Poseidon Principles based on IMO’s goals of cutting shipping emissions dramatically over the coming decades.
The Poseidon Principles include 27 signatories which have committed to measure the sustainability performance of their borrowers, and of these, 15 banks reported their portfolio climate alignment scores last year. The initiative has been quickly adopted as momentum has grown around the transparency of shipping’s carbon emissions and the link to owner, charterer and end-user ESG strategies.
“The Poseidon Principles AER trajectories are a market measure, not a regulation, but their alignment with IMO goals makes them an important measure of success in shipping’s decarbonisation efforts,” said MSI managing director Dr Adam Kent. “How well it reflects reality is an important point of debate for the whole industry and our initial findings suggest it must be judged a work in progress.”
Data modelled using the estimated AER values illustrates the scale of the challenge for the industry in achieving the declining emissions trajectory required by the Poseidon Principles. Using the estimated AER values, MSI analysis finds that:
“The ramifications of these findings are potentially far-reaching, skewing the provision of finance in favour of some vessel types, knocking on to decisions in the S&P markets, around newbuilding finance and shipyard preference for vessel contracts,” added MSI director Will Fray.
“A key plank of the principles is that they will adapt over time but the MSI analysis demonstrates this need is pressing.”
The vessel-specific AER estimates are available to subscribers to MSI’s HORIZON platform, which provides access the consultancy’s proprietary macro and shipping market models and asset valuations data.
MSI’s proprietary valuation tool Forward Marine eValuator provides historical and forecast values, earnings and operating costs for individual vessels, fleets or portfolios with Alternative Marine eValuator enabling clients to stress test forecast assumptions for their vessels against the MSI Base Case and custom scenarios.
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