Ships suffer the same split incentives as tenanted buildings: owners pay for energy efficiency while occupants (or leaseholders) enjoy the lower running costs. But what if customers can choose the cleanest greenest shipping lines? And what if new technology can rid the hull of barnacles and provide a smoother ride? The energy savings can be huge.

Global shipping emits about as much greenhouse gas as Japan or Germany and like the aviation industry, is difficult to regulate because it operates internationally and outside the control of a single jurisdiction.

Captain Warwick Norman, cofounder and former chief executive officer of Rightship and chairman of the Australian Marine Environment Protection Association, agrees that there are few incentives for the maritime industry to go greener. 

As well as dodging global emissions commitments such as the 2015 Paris Agreement, there are structural issues that hamper the industry’s low-carbon transition. 

For example, the shipbuilder pays the capital costs for the ship but does not end up pocketing savings from a more efficient fuel rate – the charterer does. Without a financial incentive, Norman says shipbuilders are less likely to build energy efficient ships. (This mirrors the split incentives in buildings where the benefits of sustainability initiatives accrue to the occupant but are paid for by the owner.) 

Customers driving change

This is why RightShip, a maritime risk management and environmental assessment organisation, hopes to drive change by arming customers that depend on cargo services with environmental data.

The organisation has devised a greenhouse gas emissions rating for ships so that companies can now see how efficient a ship or chartering company is compared to its peers. The tool will hopefully encourage organisations to consider their environmental impact when selecting a charterer or ship to transport its cargo.

Norman says investing resources in this tool was a strategic choice to drive change in what he describes as a conservative industry.

“The shipping industry is typically conservative and slow to act so we took a position that the best way to drive change was through the customers, to put the pressure on that way.”

He says that although most customers are “responsible people”, it can be a “difficult space” for them because it’s outside their mandate or they rely on contractors to manage shipping. 

He says early adopters of the tool have been larger organisations because they report according to scope three emissions, which includes all indirect emissions in the supply chain, both upstream and downstream emissions.

“We had the idea that ‘build it and they will come’ – like-minded people will come and take it up.”

How can ships be made more efficient?

When it comes to building new ships, Norman says design decisions can have some impact on energy efficiency, such as a more aerodynamic hull. Shipbuilders can also opt for more efficient engines and on-ship electrical needs such as LED lights, and they can stop barnacles growing on ship hulls by using a special paint (accumulated barnacles can reduce the fuel economy of a vessel by up to 40 per cent). 

Choosing lower carbon fuels and clean energy sources will become increasingly important in the future. The first crop of 100 per cent electric barges is currently being built by a Dutch company called Port Liner.

For existing ships, operational tweaks can offer some big energy savings, such as “slow steaming” (slowing the boat down) and cleaning the bottom of the boat regularly. 

Then you step into the more costly retrofit piece, Norman says, such as reshaping the bottom of the vessel.

On a macro level, he says there’s “some work being done to try and coordinate shipping operations a little better”.

“But there’s the marketplace to consider. Are you interfering with the marketplace if you put a logistics scheme across the whole piece?” 

Ports are next

AUSMEPA and RightShip have teamed up to develop an online tool that allows ports to measure emissions around the port.

“We saw this as an opportunity for ports to step into this space, improving the efficiency and putting more commercial pressure on shipping industry to shape their behaviour.”

There’s hope for the shipping industry yet

There’s been some other signs of progress in the industry. In April last year, the International Maritime Organisation announced in April 2018 that it aims to halve emissions from shipping by 2050.

Captain Warwick Norman will be speaking about leveraging data to bring about positive change in the maritime industry at Data4Good March 2019 in Sydney.

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