In an exclusive interview to SAFETY4SEA, Mikko Kuosa, CEO of NAPA, emphasises how uncertainty can paralyse efforts to transition shipping towards a low-carbon future.
In this regard, organization must take a methodical approach to gathering, integrating, and analysing of data, and partnerships will act as a catalyst to spread knowledge, develop new legal frameworks, and combine clean technology for maximum impact.
SAFETY4SEA: What are the top priorities in your agenda for the next five years?
Mikko Kuosa: Shipping’s focus for the next five years must be on making the most of existing technology that can significantly reduce its greenhouse gas emissions today. The entry into force of the IMO’s Carbon Intensity Index (CII), the extension of the EU Emission Trading Scheme (ETS) to shipping and the adoption of more ambitious decarbonization targets by MEPC 80 all send the same signal: tangible action and emissions reductions are needed this decade. The good news is that shipping has the tools it needs at its fingertips, in the form of digital and energy efficiency technology that is already available. Given that zero-carbon fuels won’t be available at any meaningful scale for at least another decade, progress will be achieved through clean technologies such as wind-assisted propulsion and air lubrication, alongside operational measures such as voyage optimization and weather routing solutions. According to McKinsey, a consulting firm, about 80% of shipping’s decarbonization progress this decade will come from efficiency measures, and about one-third to 2050.
Another key area of focus for the next five years must be to harness ships’ data to boost their efficiency. The wealth of data collected on board can be turned into a goldmine of insights to boost operational efficiency, optimize voyages and reduce fuel consumption, while ensuring safety. But to seize these opportunities, companies need to implement a systematic way of capturing, integrating, and analyzing data – by deploying electronic logbooks, for example. Finally, as we enter this era of profound transformation, we should make the most of collaborative projects to learn from each other’s experience and combine our diverse expertise to innovate in ways that work in practice for our companies. We need partnerships to build and share knowledge, create new contractual frameworks, and even combine clean technologies for maximum impact.
S4S: From your perspective, what are the key barriers that the maritime industry is currently facing with regards to decarbonization? What are your suggestions to turn these into opportunities?
M.K.: When it comes to shipping’s decarbonization transition, uncertainty can cause paralysis. Shipowners, charterers, shipyards and others all seek greater clarity in their decision-making. On fuel and technology choices, for example, we know that there won’t be a “one size fits all” decarbonization solution for all fleets and vessel types, so owners need greater certainty on what technologies and fuel choices will be right for their ships and operations. This is where the latest generation of digital tools and operational data can play a key role, by enabling the industry to model, predict, and validate the impact of different decarbonization measures. For example, by using digital twins we can simulate the impact of installing batteries, new fuels or wind propulsion technologies on a vessel’s operations, structural strength and stability – both for newbuilds and for retrofits. Meanwhile, we also know that we will need collaboration to succeed. The challenges of decarbonization are so broad ranging that no individual company can solve them alone. These include not only developing new technologies, fuels and the new designs that will incorporate them, but also the supply chains and infrastructure to deliver these fuels, and new business models to remove harmful incentives that still stand in the way of more efficient operations. To achieve this, we need to collaborate more and create partnerships not only within shipping, but also across industries and the energy sector. We see that many companies are willing to collaborate, but what is often missing is a clear framework to enable different stakeholders to join partnerships without hesitation, and with the confidence that collaborating will not put their own organizational goals in jeopardy. Data-sharing and simulation tools can make these partnerships work in practice, by providing a neutral, factual picture and a better understanding of the commercial implications of new collaborative projects. Blue Visby is a great example of such collaborative framework, enabling companies to come together to tackle “sail fast then wait” with confidence, through a transparent and neutral digital platform.
S4S: Are you satisfied with MEPC80 outcome? What would you like to see up to 2030?
M.K.: The IMO’s revised strategy on GHG may not be perfect, but it does provide the shipping industry with something it had been demanding for a long time: greater clarity on what decarbonization progress will be expected this decade and the following two. Are the interim checkpoints for 2030 and 2040 as ambitious as we could have hoped? The short answer is no, especially as the strategy fails to align shipping with the Paris Agreement target of limiting global warming to 1.5°C by the end of this century, although it keeps it within reach, according to an analysis by UMAS. Yet there is cause for optimism. MEPC 80 has sent a series of important signals to the industry. Firstly, the level of ambition has been significantly strengthened, and a much-needed net-zero emissions goal “by or around” 2050 has now been formally adopted, signalling that full decarbonization in shipping must happen by the middle of this century. Secondly, although non-mandatory, the adoption of interim goals for 2030 and 2040 clearly indicates the need for more focus on tangible and measurable actions that can take place during this decade. An approach based on “sitting back and waiting for new fuels to become available” is now untenable. In short, the direction of travel is clear, and the focus must turn to how these ambitions can be achieved in practice, starting now. There is a lot that we can do as an industry to take control of our own emissions and draw our own pathways towards net-zero in a way that makes sense for our fleets and businesses. The sooner companies start planning the journey, the better off they will be. MEPC80 has spoken, but the full outcome of this historic agreement will be defined by what the industry does next.
S4S: What are some of the key actions you are taking to address the critical issue of climate change?
M.K.: When we look at decarbonization in the maritime sector, it’s not that technology doesn’t exist; rather, we see a wealth of solutions, from wind power to energy efficiency systems and voyage optimization, that are already available to reduce shipping’s carbon footprint today. But the challenge that we see too often is that we are developing solutions in silos. To reap the full benefits of digitalization, voyage optimization and clean technology innovation, we need to work collaboratively. As a software and data solutions provider, NAPA plays a key role in enabling and supporting new partnerships. A recent example is our joint study with Norsepower and Sumitomo, where we brought our diverse expertise together to answer a crucial question: “What emissions reductions could be achieved by combining wind propulsion and voyage optimization?” This project’s unique contribution was to put a validated figure on this potential: up to 28% emissions reductions on average. And we’re not stopping there, as a second phase of the project will examine how we can make those results even better in the future by integrating those insights into the design process and in operations.
S4S: Do you believe the maritime industry is moving in the right direction? What do you see as the defining ESG trends driving maritime toward the future?
M.K.: While MEPC 80 was an important step in the right direction, it is important to remember shipping’s decarbonization isn’t solely driven by IMO – national, regional and industry forces are also at play. On the regulatory side, the targets of this latest GHG strategy are hardly the only emissions reduction goals that owners will need to meet in the short and medium term – the EU ETS and HELCOM, (the Helsinki Convention) for instance, will also impose emissions reductions from shipping in the near future. Additional pressure will come from shipping’s key stakeholders, such as investors, financiers, insurers, and cargo owners. As society’s expectations shift, capital injections will increasingly come with strict environmental, social and governance (ESG) criteria, meaning that companies will need to demonstrate climate action to secure funding. For example, in the cruise industry, we already see that capital injections needed by companies to recover from the pandemic slump come with strict ESG criteria. Furthermore, the pressure on merchant shipping is also growing, as cargo owners face greater scrutiny of their Scope 3 emissions. In other words, our customers’ customers are seeking greater ESG accountability, which is based on accurate data and reporting. This impacts everyone in the supply chains, including transporters. Therefore, ESG transparency and accountability are no longer a “nice to have” for shipping, it is critical to doing business, and that trend will only grow stronger in the coming years. This will increase the need for digital reporting solutions that can enable companies not only to report on, but also to improve their ESG credentials.
S4S: Do you have any projects/ plans that you would like to share with industry stakeholders?
M.K.: The Blue Visby project, which NAPA is coordinating together with Stephenson Harwood, is progressing at pace. In a nutshell, Blue Visby combines an innovative contractual framework with state-of-the-art digital technology to create a dynamic “queuing system” that optimizes and staggers arrivals times for groups of vessels travelling to the same port. The aim is to reduce unnecessary time spent in anchorage, while also enabling ships to slow down, cut their emissions, and arrive one after the other – all without losing a competitive advantage, as the algorithm maintains their order of arrival as if they had sailed independently without the solution. This is a formidable example of collaboration in practice, with companies coming together to solve one of the most complex problems that still stand in the way of emissions reductions: “Sail fast then wait”. The number of participating companies has more than doubled since the project was launched a year ago, from 13 to 27 today, spanning shipping companies, government agencies, classification societies, consultancies, financing and environmental organizations. Several real-time virtual pilots have been completed in recent months, and building on their success, a major milestone was achieved with the launch of the first real-life prototype for chemical tankers, in collaboration with Marubeni.
S4S: What is your message to industry stakeholders with regards to a more sustainable future for shipping?
M.K.: Future-proofing shipping must begin today, with actions that can have an immediate impact, such as energy efficiency technology, voyage optimization and ESG reporting. Taking small but smart steps today will pay off – in the short term, businesses will benefit from fuel savings and more efficient operations, and in the long term, they will gain a competitive edge and be in a better position to make big decisions on adopting new fuels, for example. These decisions don’t have to be a leap of faith – with the right data and simulation tools, companies can test, assess, predict and validate the impact of decarbonization actions and ensure their safe deployment. The industry’s zero-carbon path is as multifaceted as it is complex – but we should not let ourselves be distracted from the bigger picture. Every ton of carbon that isn’t released into the atmosphere matters; every fraction of a degree closer to the 1.5-degree target of the Paris Agreement keeps the planet more livable. With the right data-driven insights, doing good business and doing good for the planet can go hand in hand.
The views presented hereabove are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.