By Akanimo Sampson
As the global shipping industry strives to reduce its impact on the environment with innovative solutions like battery-operated vessels, wind-powered ships and carbon-neutral shipping, green shipping is emerging as the key trend changer of the industry.
The industry has already set new environmental goals for itself, and for those outside the industry, it might be a little hard to quickly come to terms with what green shipping is really all about.
Wärtsilä Marine Business’ Market Intelligence Manager, Johanna Aromaa, says green shipping is about cleaner practices on the emission control, port management and equipment lifecycles i.e. circular economy. ‘’Achieving this will require a lot of effort by the industry in collaboration with regulators, port authorities and communities and we are moving in the right direction’’, he explains.
Wärtsilä is however, a global leader in smart technologies and complete lifecycle solutions for the marine and energy markets. By emphasising sustainable innovation, total efficiency and data analytics, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers.
In 2018, Wärtsilä’s net sales totaled EUR 5.2 billion with approximately 19,000 employees. The company has operations in over 200 locations in more than 80 countries around the world. Wärtsilä is listed on Nasdaq Helsinki. As of January 2019 Wärtsilä consists of two businesses; Marine Business and Energy Business. Services Business has been incorporated into Marine and Energy Businesses. Details about their markets here.In the mean time, the International Maritime Organisation (IMO) has played a big role in pushing for green shipping. It has mandated that the emission of sulphur content in fuel ships must come down from 3.5% currently to 0.5% by this coming January 1. It has also set targets for the industry to cut down Green House Gas (GHG) emissions by at least 50% by 2050 from 2008 levels and reduce the sector’s average carbon intensity by at least 40% until 2030, and 70% by 2050.
Currently, ships are also required to manage their ballast water according to D-1 and D-2 standards which require them to exchange and release at least 95% of ballast water by volume far away from the coast and restrict and limit the discharge of specified microbes harmful to human health and the marine ecosystem.
In April 2018, the Marine Environment Protection Committee addressed the issue of marine plastic litter from shipping in the context of the Sustainable Development Goals and asked for a significant reduction in marine pollution of all kinds, in particular from land-based activities, including marine debris and nutrient pollution.
These regulatory actions coupled with the fact that customers are now increasingly becoming conscious of their carbon footprint is driving innovation and creating the need for larger investments in green shipping.
According to Aromaa, ‘’the industry is at a turning point on figuring out how environmental regulations might be turned into a competitive strength and advantage. At Wärtsilä, we are currently working on driving innovation, looking for different ways to work together and taking on the challenge of tackling the changes needed to keep up with increasingly challenging regulations.’’
Going by a 2018 report by the Organisation for Economic Co-operation and Development (OECD) International Transport Forum, 28 of the world’s 100 largest ports, in terms of cargo volume, are offering port-based financial incentives such as a differentiated fee for greener ships to mitigate GHG emissions.
The green port fees are based on indices like the Environmental Ship Index, Green Award, Clean Shipping Index and GG Emission ratings, which express the environmental performance of an individual ship.
Interestingly, OECD is an international organisation that works to build better policies for better lives. Its goal is to shape policies that foster prosperity, equality, opportunity and well-being for all. We draw on almost 60 years of experience and insights to better prepare the world of tomorrow.Together with governments, policy makers and citizens, OECD works on establishing international norms and finding evidence-based solutions to a range of social, economic and environmental challenges. From improving economic performance and creating jobs to fostering strong education and fighting international tax evasion, the organisation provides a unique forum and knowledge hub for data and analysis, exchange of experiences, best-practice sharing, and advice on public policies and global standard-setting.
But, going green requires big investments in vessels, shipping infrastructure and innovation. There is hope though. Several European banks today are backing the idea of green shipping. For instance, the European Investment Bank (EIB) has signed framework agreements with Société Générale, ABN AMRO and ING to provide EUR 750 million for sustainable shipping, promoting the adoption of alternative fuels such as Liquefied Natural Gas (LNG) and ballast water treatment technology.
The programme aims to support the financing of new, greener vessels, alongside environmentally friendly retrofitting of existing ships. As a part of this programme, ING and EIB have recently signed a EUR 300 million agreement to support investments in the European maritime shipping market with a green innovation element.
BNP Paribas is offering performance incentive loans to its shipping customers where the rate of interest charged falls when the clients’ ESG score improves. German KfW IPEX-Bank – one of the largest ship financiers in the world – too has adopted Responsible Ship Recycling Standards to assess the energy efficiency of its shipping portfolio. It financed Germany’s first LNG-powered ship by providing $81 million for equipment, 72 environment-friendly, battery-powered, automated guided vehicles (AGVs) and Battery Exchange Station for the Long Beach Container Terminal (LBCT) in California.
With climate emerging as the top priority, leading marine companies like Wärtsilä, too, are taking the lead in green shipping with several initiatives such as the Smart Marine Ecosystem, Zero-Emission Shipping, An Oceanic Awakening, hybrid retrofit for short-sea shipping vessels and battery hybrid propulsion solutions among others. But it is not an easy task.
Again, Aromaa has this to say, ‘’the opportunity to being part in creating the Smart Marine Ecosystem is almost breathtaking as we can really move mountains, but only with collaboration and co-creation across multiple stakeholders. We cannot do it alone, but it will be a joint effort that requires validation, support and active involvement.
‘’The fast-emerging digital infrastructures that are developing on dry land need to be incorporated into smarter shipping management in the marine business as well. The big challenge is to find out how we can help support the environmental initiatives in the ecosystem as well.’’
Despite the challenges, the outlook for greener shipping looks bright. According to a recent report by Moore Stephens, new and existing investors will continue having an appetite for investments in the shipping industry in 2019 as long as it fulfills its environmental, social and governance (ESG) requirements. This means that investors are finally ready to forego purely commercial returns for greater sustainability and to solve problems of the future.
Moore Stephens International Limited is a global accountancy and consultancy network with its headquarters in London. Since Moore Stephens London was founded a century ago, Moore Stephens International Limited has grown to be one of the largest international accounting and consulting groups worldwide.
Today the network comprises 609 offices in 112 countries throughout the world, incorporating 30,569 people and with fees of more than $3.06 billion. Shouting out on its website, it said, ‘’you can be confident that we have the resources and capabilities to meet your needs. Managing audits and dealing with multi-jurisdictional tax matters of multi-national operations is the core of our business. The scope of our global client management extends, therefore, beyond the delivery of compliance services to advising on international business structures and tax planning to minimise tax liabilities.’’