The maritime industry contributes nearly 940 million tons of CO2 emissions annually which accounts for nearly 2.5% of the world's total CO2 emissions (Source: UK Research and Innovation)
But in less than 120 days from now, the IMO’s two new regulations - Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) - will apply to existing ships of 400 gt and above.
IMO’s intention is for these new regulations is to reduce the total greenhouse gas emissions from shipping operations by 50% by 2050 (against its 2008 emission levels) and carbon intensity of all ships by 40% by 2030.
The EEXI regulation is one of the most significant measures by the IMO to promote more environmentally friendly technologies and reduce the shipping industry’s carbon footprint. For CII, the annual rating ranging from A to E will be issued based on ratio of the total mass of CO2 emitted to the total transport work undertaken in each calendar year and if the rating is below ‘C’ corrective action must be taken immediately.
All of which raises interesting questions about the options available to ships of a certain age – let’s call them vintage assets. One engine manufacturer has warned that more than 80% of bulk carriers and container ships will be in the lowest C,D and E CII categories by 2030 if no action is taken, damaging their commercial viability.
Is scrapping the only commercially feasible option for vintage assets which fall foul of the new regulations? Taking a holistic approach, looking at the vessel’s full life cycle assessment, is there a case for extending the life of older vessels, rather than consigning them to the scrap heap?
If the purpose of EEXI and CII is to save the environment, phasing out vintage assets could be unintentionally counter-productive and lead to greater environmental damage.
Analysis clearly shows that newbuildings are responsible for significant energy consumption/GHG emissions when taking into account the transportation and handling of the raw materials used in steel production.
In their academic paper on “Assessing Environmental Impacts of Ships from a Life Cycle Perspective” joint authors Stefanos Chatzinkolaou and Nikolaos P. Ventikos state: "The Life Cycle Assessment (LCA) of building, operation and recycling is studied for a panamax tanker and impact on human health (climate change) and ecosystem quality is estimated. The results show that the “ship building has 40% impact and steel production process under the scope of ship building alone responsible for nearly 90% of the total CO2 emissions.”
For a universal approach – also now referred to as the Circular Economy - a life cycle assessment/material balance analysis of the ship’s operational life must also be evaluated.
Circular economies preserve value in the form of energy, labour, and materials with the maximum value extracted from resources before they become waste. It is a framework to tackle not only climate change but also biodiversity loss and pollution.
There are three simple ways shipping can become more Circular.
The first is to consume less - which ensures better use of resources. The second is to consume better. The third is to create systemic change.
And change is already happening. There are other methods to reduce EEXI including retrofitting clean technologies, waste heat recovery systems, air lubrication technology, wind-assisted propulsion, to name a few.
Clearly, questions remain over the commercial viability of retrofitting expensive energy-saving equipment on older vessels. It is clear from the evidence that repairing and extending the life of (mid-sized, vintage) ships is more environmentally friendly than building a new one. The sooner this ‘uncomfortable truth’ is accepted, the better.