EEXI approach poses challenges for ferry segment

If the IMO adopts the Energy Efficiency Existing Ship Index (EEXI) approach, the new rules will have a particular impact on the ferry sector, Kari Reinikainen hears.

The IMO will choose the way ahead from four basic options at its meeting in the autumn. The first one involves speed restrictions of ships, the second one limitations on engine power, the third one focuses on energy efficiency of operations and the final one on basically extending the Energy Efficiency Design Index (EEDI) to existing ships. “This now seems like the option most likely to be approved, although its implementation will involve a number of challenges,” Marttinen told The Motorship and referring to the final option.

The basis challenge is that EEDI is designed to work best on ships where the weight of the cargo is the most important limiting factor, such as tankers and dry bulk carriers. However, it is less well suited for passenger and roro vessels – in the last named, the volume of cargo being the key limiting factor.

The forthcoming EEXI legislation is likely lead to a need to technically upgrade the ships involved in 2022-23 so that the ships will meet the requirements of the IMO, said Vesa Marttinen from MarineCycles, a new Finnish consultancy company. 

Technology retrofit wave likely to follow

“EEXI is scheduled to take effect in 2023, so some kind of wave of technology retrofits is likely to take place in 2022-23,” Marttinen continued. This would involve ways to reduce resistance, including the location of the propulsor; how to increase the efficiency of the power plant and that of other users of power on board, from cranes and pumps to various aspects of the hotel department on cruise ships and ferries. “These could include ways to reuse waste energy or to use the shaft to provide power for other users etc.,” he said.

The three ways maritime has reduced its environmental footprint so far have been use of data to improve operations, use of operational learning to improve new buildings and new technology for the vessels. All these three options that are on the table will be needed for the shipping industry to meet the IMO’s goals to cut green house gas emissions by half by 2050 from the levels of 2050.

From an investment payback time, changing operations would offer the best option, but this would require broader changes to the contract infrastructure and other business models of shipping. “A vessel will have to arrive at a port as stipulated by the charter party, irrespective whether or not a berth is available for it to load or discharge,” Marttinen explained.

Slower speeds would require more vessels to perform the same transport work. Here the focus should be not only on the emissions from operations but the environmental effect from building all the additional tonnage.

“This is a very serious matter. If the shipping industry fails to meet its environmental challenges, its image in the face of the public may suffer very irrevocably. It will be harder for the industry to employ talented young people and a failure would encourage moving production closer to consumption. Globalisation of raw materials, production and consumers is the force that powers shipping,” Marttinen concluded.

Questionable if shipping has funds to invest in upgrades

Among the EEXI options on the table, the IMO is likely to choose the one that resembles EEDI, although other ones also remain in discussion, agreed Esa Jokioinen Director of Sales & Marketing at Deltamarin, the Finnish consultant naval architects.

In the EEDI-based option, a reference line of emission intensity would be calculated for each ship type – grammes of CO2, divided by deadweight tonnage and multiplied by nautical miles traveled. “This reference lines would then be tightened over time and if a vessel does not meet the new requirement, its engine output will have to be limited, the fuel it uses changed, its efficiency improved by e.g. the installation of energy saving devises and if none of these work, the ship would have to be scrapped,” he told The Motorship.

The situation now resembles that a decade ago, when EEDI was under discussion. A key challenge is that there is no good and simple solution suitable for everyone, Jokioinen said.

The financial position of the shipping industry poses a dilemma in its own right. On one hand, owners of cargo vessels – passenger ships are an entirely different matter – are unwilling to make significant investments in tonnage more than 10 years old, while on the other, significant improvements in the fuel efficiency of large numbers of existing vessels would be required for the measures to significantly reduce emissions.

Owners are already struggling with a sharply reduced world trade as a result of the Covid-19 pandemic, the aftermath of the IMO 2020 emission control rules and uncertain prospects for the recovery of the global economy. It is questionable if the shipping industry has the financial resources to make the necessary investments in upgrading existing tonnage or to order newbuildings to replace inefficient tonnage in the next few years.

Jokioinen said that he is monitoring closely the cooperation of lenders to shipping under the Poseidon Principles banner and e.g. green house gas emissions ratings developed by RightShip.

“I believe that they will come to a wide use at a shorter timeframe and steer owners to the same direction as EEXI for existing ships and for new investment. At the end of the day, this is steering shipping in the right direction – although not in the one that is the easiest from a financial point of view. Old, inefficient tonnage will have to be removed from service and replaced by more efficient vessels and gradually the industry needs to move to more CO2 emission friendly friends,” Jokioinen pointed out.

Although the IMO is promoting an important and just cause with EEXI, Jokioinen said that the proposals underestimate the technical and financial challenges that arise from its objectives. “Ultimately, this will be a political decision and not a rational one,” he noted.

Assuming that the IMO will come to the same conclusion, a door remains open for a way out: emissions trading. In his previous job, Jokioinen followed developments in the aviation industry. It was soon discovered that cutting emissions by the ways, which are now on the table in shipping would not succeed, emissions trading emerged as the most viable solution to move things forward. This could be the case in shipping as well. The European Parliament is due to debate precisely such a proposal in September.

Set ship-specific targets for ferries

The best way for the ferry industry to reach emission control targets of the IMO would be to set targets specific to each vessel and let the owner to decide how this should be reached, said Johan Roos Director of Regulatory Affairs at Interferry, the global organisation representing the ferry industry.

Ferry industry is in the lead to develop and test new solutions to power ships and the adaption of a less fluid approach by the IMO could mean that the incentives to innovate could be wiped out. Roos mentions a ferry service between his home city of Helsingborg and Helsingor in Denmark.

Ferries on the 20 minute crossing use batteries for the entire trip and the electricity is generated at wind farms, which means that the operation has zero emissions Yet the proposed EEXI approach would not reward the company’s achievement in any way.  

“The IMO is typically sceptical of allowing operational measures to demonstrate compliance as they are more difficult to verify than design arrangements,” Roos said. However, as most ferries only operate between two ports, operational requirements should not really pose a problem as they can be continuously monitored by flag state, port state and class.  

Reducing the engine power or speed of ferries could pose major challenges for operators, because these vessels operate often tight schedules with limited time of turnaround in port. If the crossing took longer in the future, then this could not be compensated for faster turnaround in ports, which could lead to a fall in the frequency of crossings with all its economic implications.

Additionally, all ferries have more engine power than they need to meet their design speed, as a back-up in case something goes wrong. “We will not support any scheme that mandates lowering power on-board, but we are agreeable to operators getting full recognition for any carbon emission saving measure they put in place; be it bio-fuels, batteries, new propellers or lowering their average speed when appropriate,” he told The Motorship.

It would seem that a fluid and pragmatic approach from the IMO rather than a one-size-fits-all one would be much in the interest of the shipping industry. Whether the political will exists to take such an approach is another matter. If not, there is a risk that the ferry industry’s good work towards meeting emission reduction targets might be undermined. This cannot be the aim of the proposed legislation.

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