The role of shippers and charterers in the drive to get to net zero
Many of the world’s largest cargo owners have publicly said they will only charter zero-emissions ocean transport services by 2040. This means they are favouring container operators that can demonstrate they are rapidly decarbonising their operations.
A webinar–Shippers and charterers: the drive for zero-carbon shipping by 2040 – organised by Riviera Maritime Media, gathered a panel to look at the issues and provide the perspective of beneficiary cargo owners (BCO). These were Aspen Institute Energy and Environment Program (Cargo Owners for Zero Emissions Vessels) associate director Ingrid Irigoyen, Liberian Registry executive vice president, innovation and regulatory affairs Thomas Klenum and Lookout Maritime chief executive Martin Crawford-Brunt.
Mr Klenum kicked the panel debate off by pointing out IMO is under “huge pressure” to fully decarbonise by 2050 or perhaps by 2040. And IMO’s Marpol EEXI and CII requirements came into force I November this year.
He singled out how charterers have a “significant influence on CII ratings”, citing examples including just-in-time arrival, time spent in ports, weather routeing and underwater hull cleaning. All will impact CII ratings.
Liberian Registry sees three key drivers for change to drive innovation and decarbonisation. The first is an international regulatory framework change from prescriptive rules and regulations to goal-based standards and risk assessment-based approvals. This will allow innovation in ship design.
The second is new environmental requirements: EEDI phase 3 and 4, EEXI, CII rating, enhanced SEEMP; and the third is the ‘fourth Industrial Revolution’: new technologies and alternative fuels.
Mr Klenum said, “Innovation in ship design by applying innovative design features, new technologies and alternative fuels can drive the required change to decarbonise international shipping and ensure compliance with the new environmental requirements EEDI phase 3 and 4, EEXI, CII rating, and enhanced SEEMP. International collaboration between industry stakeholders is needed to unlock this opportunity.”
Liberian Registry has been proactively pursuing participation on JIPs since 2016 with a focus on optimisation, applying new technologies and alternative fuels as part of its support to decarbonise international shipping.
Mr Klenum said, “Liberian Registry has actively participated in over 30 JIPs with high-quality stakeholders. The nature of these JIPs is ground-breaking and varies from testing and verifying second-generation biofuels, innovative container ship designs, onboard carbon capture, storage and reuse, and new materials for gas fuel tanks. We have also verified the effectiveness of underwater hull air lubrication system and other innovative technologies and design solutions.
Meanwhile, Mr Crawford-Brunt said, “There are expectations and tastes changing landscapes, and the implications are quite complicated with some unintended consequences. It is important to understand the score and position yourself well. You need to take a wider perspective on this, as this is a team sport.
“Shipping is more visible than ever before. Governments now understand what role emissions can play in the supply chain, and big businesses are increasingly committed to net green targets; we have seen legal action around non-delivery of these targets. There has been a growth in digital platforms, with multiple software products now available, more integrated workflows and what is more important, the ability to assess emissions’ performance.”
Mr Crawford-Brunt said the message is ship operators and owners need to think about their metrics and position themselves with the understanding cargo interests towards suppliers and partners is only going to grow. “Waiting to take action does not remove risk or reduce costs,” he warned, adding it was important to evaluate ships on either a ship-by-ship or route-by-route basis.
“Implementing improvements requires much more time that you would expect,” he said.
Meanwhile CII and EEXI will be “game-changers” for the way companies need to respond and engage. Mr Crawford-Brunt said it is important to look beyond technological and regulatory requirements and decision making needs to evolve. “It will require a wider perspective,” he said.
Next, Ms Irigoyen explained the role of Aspen Institute’s Cargo Owners for Zero Emission Vessels (coZEV), whereby climate-leading cargo owner companies have launched an ambitious target: to achieve zero emissions for their maritime freight by 2040.
The first-of-its-kind platform was launched late last year.
Ms Irigoyen said, “I’d like to focus on an important point which shows growing concerns among cargo owners about their maritime emissions and tell you about efforts they are making to achieve the Paris Alignment. Emissions reduction is a team sport and BCOs are essential players on this team.”
“Greater fuel efficiency is tremendously important and is something we can make progress on relatively quickly. We must pick up the pace as this sector has run out of time. BCOs are under greater pressure from customer shareholders and political systems.”
In her presentation, Ms Irigoyen explained to reach net zero by 2050 – or even 2040 – zero-emissions fuels need to reach 5% by 2030. “We need to get this transition off the ground. It is a short-term driver; we all need to be moving together.”
She said cargo owners understand alternative fuels are more expensive than fossil fuel. “They see the need and they understand [the industry] all need to invest together in a wholesale switch.”
coZEV is a cargo owner-led network to enable maritime freight customers to come together to use their “brand power and economies of scale to accelerate maritime decarbonisation through a series of actions and projects that are inclusive, transparent, and collaborative,” Ms Irigoyen explained in her presentation.
As a first step, a group of climate-leading cargo owner companies released the coZEV 2040 Ambition Statement in 2021 and stated their intention to use only zero-carbon ocean freight by 2040. They issued a call to policymakers to take action to accelerate the zero-emissions transition in shipping.
“We are sensing they are no longer sitting back and seeing what happens – they want to influence and have wins. There is a more insistent tone than seen previously.”
coVEZ is involved in several initiatives to get to net zero. It aims to enable zero-emissions deepwater shipping by the mid-2020s through green corridors; design new cross-value chain collaborative approaches; and come together for zero emissions shipping procurement.
coZEV’s policy is to organise BCOs to support policies that speed up and lower the cost of the net-zero transition.The organisation is keen to expand by including additional companies to send strong demand signals, gain economies of scale, and bolster influence.
