Precise measurements backed by accurate sensors will be critical for ship operators to meet more stringent CO2 and GHG emissions reporting requirements and regulations
As it becomes increasingly important for shipping to gather and report accurate data on all greenhouse gas (GHG) emissions, more and more jurisdictions are developing their own standards ahead of IMO. Additionally, investors are tying financing to sustainability, requiring ship operators to provide more transparency through environmental, societal and corporate governance (ESG) reporting.
These were key topics of discussion among panelists at Riviera Maritime Media’s ESG emissions reporting and compliance webinar held on 1 April as part of the Maritime, Environmental, Social and Governance Webinar Week. The event was held as shipping comes under intense pressure and scrutiny to measure emissions more accurately, as investors, regulators and authorities clamp down on marine pollution.
Panelists at the webinar, however, raised a range of issues such as important gaps in the data, lack of granularity and the fact that current regulations do not require all types of ships to file emissions reports. The webinar took place as measurements are being developed that will come into force in 2023.
Meantime, an ESG-focused investment community, a growing number of charterers and various legislators and regulators continue to insist on a more sustainable industry.
As panelist Lotten Kronudd, managing director of public affairs consultancy ADS Insight Scandinavia, said, the pandemic has not altered the EU’s determination to achieve climate neutrality by 2050 – a goal that is impacting every sector in Europe. In this vein, Ms Kronudd said a “significant chunk” of the EU’s budget, worth up to €1.82Trn (US$2.23Trn) between now and 2027 will be devoted to greening shipping and ports. This is because shipping accounts for about 11% of all EU transport CO2 emissions and 3-4% of total EU CO2 emissions. According to EU Monitoring, Reporting and Verification (MRV) data, ship traffic to or from ports of the European Economic Area was responsible for more than 138M tonnes of CO2 emissions in 2018.
Ms Kronudd’s firm has helped clients secure EU grants for funding methanol- and LNG-fuelled ships, installation of scrubbers and electrification.
In this “time of transformation”, she said, a global framework was needed that would help incentivise the industry to meet sustainability goals. In this, a crucial requirement was confidence in the integrity of emissions data.
Similarly, panelist Nick Makar, senior vice-president maritime administration and regulatory affairs for the Marshall Islands Registry, stressed that reporting frameworks would play a key role in the future as he provided a broad overview of a complex area.
As the EU and other jurisdictions push on with increasingly specific regulations, the industry will be required to provide more complete emissions data than at present, warned Simon Brown, managing director of marine emissions manufacturer Emsys Maritime. Citing methane slip in LNG as an example, he predicted it would become a major issue in future. “There is a significant amount of methane emitted than is measured at present,” he said. “The more information you have [about emissions], the better.”
He foresaw a challenging time for the industry, including significant investment in emissions measurement. “There will be a big focus on ESG with a lot of debate and regulatory change lying ahead,” he said, adding that regulations must however be sufficiently flexible to take account of future developments.
Echoing the views of other panelists, Allan Skouboe, chief technology officer at environmental sensor specialist Danfoss IXA, highlighted the mounting pressure arising from regional and local regulations. It was vital for shipowners and operators to be in full control of all emissions data so they could avoid penalties, he said. The key was more precise measurements provided by high-performing sensors, for instance in scrubbers – “the best point of control is to measure what is coming out of the stack”.
A quick poll found almost total unanimity on this issue, with 94% backing a question that asked: Do you consider continuous emissions monitoring systems – or emission sensors – to be a relevant means to ensure compliance and transparency with respect to air emission compliance at sea?
Reflecting this new-found level of interest, Mr Skouboe described how Danfoss has lately fielded a rush of enquiries for products that can effectively measure emissions compliance, such as its proprietary software platform EmViz that provides a total overview of a ship’s air and water emissions.
Judging from an online poll taken during the session, the industry is looking to reduce the administrative burden involved in emissions compliance. No less than 83% of the responders agreed that they would consider a software-based compliance monitoring and reporting platform (similar to the EmViz from Danfoss IXA) a relevant means to track and provide an overview of air emissions at sea, including providing easy documentation for authorities.
The IMO however must catch up. “We need legislation that sensors can make sense of,” said Mr Skouboe. “The IMO needs to work fast on this or other jurisdictions will jump ahead. Data collection tools are only relevant if regulators set standards they can measure against.” Backing him up, Ms Kronudd said: “The EU will want good quality data. In the long run, estimates won’t be enough”.
The panellists were unanimous on this issue. As Mr Makar said: “A global solution is needed to ensure a level playing field.”
As the volume of regulations mount, panelists noted a risk that the administrative burden will become too great for shipowners. It was vital, they agreed, to keep red tape as low as possible relative to existing rules.
Responding to one of several questions from attendees, Ms Kronudd was emphatic that UK ports would not be able to exploit any regulatory arbitrage in the way emissions and other ESG issues were managed, for instance by incentivising visits to one jurisdiction’s ports over another in the wake of Brexit. Under the Brexit agreement, UK ports were now able to become more attractive at the expense of EU rivals.Overall, according to instant polls taken among attendees, there is a big future for emissions reporting technology. A large majority – 83% to 17% – agreed that emissions reporting technology is going to be a standard tool on new construction vessels in the near future.
Another substantial majority – 68% - 32% – supported a question that a real-time emissions-optimised vessel would realise a higher charter rate. And a massive 92% said they would invest in automated ESG reporting technology if it would provide potential fuel savings.
Despite the complexities, emissions reporting is clearly already one of the most pressing issues in shipping’s green revolution.