Energy Efficiency: A Pragmatic Approach in Achieving the Decarbonization Goals
Capital Link
Investor relations, financial communications, advisory firm-14 forums : Maritime, Commodities & Energy, MLPs, CEF & ETFs
The 4th Annual Capital Link Decarbonization in Shipping Forum was held as a digital event on July 1, 2024, and featured the panel discussion entitled “Energy Efficiency: A Pragmatic Approach in Achieving the Decarbonization Goals.” During the session, the panelists offered their insights into the path toward decarbonization in shipping.
Moderator: Mr. Jason Stefanatos , Global Decarbonization Director,? Maritime - ?DNV
Panelists:
Highlights:
?
Watch the Session:
?
In a recent session at the 4th Annual Capital Link Decarbonization in Shipping Forum, Mr. Jason Stefanatos M.Sc, Global Decarbonization Director – DNV, welcomed distinguished experts to discuss the pressing issue of energy efficiency in the shipping industry on the panel “Energy Efficiency: A Pragmatic Approach in Achieving the Decarbonization Goals.” The session focused on why energy efficiency has become a critical topic in the industry, the challenges and opportunities it presents, and the role of various stakeholders in achieving decarbonization targets in shipping.
Energy Efficiency: A Necessity Driven by Regulation
Mr. Stefanatos began the session by highlighting the increasing focus on energy efficiency to achieve decarbonization targets in the sector. With regulations becoming more stringent, such as the EU's CO2 tax on shipping operations and the upcoming IMO regulations, the industry faces significant pressure to reduce emissions. Despite these pressures, significant investments in alternative fuels remain limited and are primarily driven by commercial interests rather than emission costs.
A major challenge highlighted is the low availability of alternative fuels, with the industry needing a significant portion of the global green fuel supply to meet its targets. Mr. Stefanatos pointed out that improving energy efficiency is a viable solution to reduce fuel consumption and lower the demand for alternative fuels, easing future supply constraints. Moreover, in an environment where future fuel costs are expected to rise, minimizing fuel consumption becomes increasingly critical. The discussion included various industry stakeholders to explore regulatory and commercial pressures and investigate energy efficiency options.
The Shipowner's Perspective
As collaboration among stakeholders is crucial in reaching decarbonization goals, gaining perspective from all key players is fundamental. Speaking from an owner’s point of view, Mr. Fotis Dalmyras, CEO - Andriaki Shipping Co. Ltd. reinforced the importance of optimizing energy efficiency on existing ships and planning strategically for new technologies. He detailed current measures many owners are taking, such as reducing resistances, minimizing electrical power consumption, optimizing voyages and routes, and strict performance monitoring. Mr. Dalmyras emphasized the need for cooperation among all stakeholders to achieve significant reductions in greenhouse gas emissions through voyage optimization and efficient operations.
Advocating for a practical investment approach, he emphasized the need to enhance the energy efficiency of existing vessels rather than immediately investing in new, unproven technologies. Mr. Dalmyras suggested that investments should be directed towards biofuels, carbon capture, and wind-assisted propulsion, which can be retrofitted on existing ships, while gradually gaining experience with alternative or synthetic fuels as they become more reliable and commercially available.
领英推荐
The Manufacturer's View
Acknowledging the increasing trend among ship owners to prolong the life of their vessels by enhancing energy efficiency, Mr. Young Chang (James) Shon, President & CEO - Hanwha Power Systems Holdings Corp.; Hanwha Power Systems Co., Ltd., distinguished between increasing a vessel’s physical life and its operable life. The former involves repairing or replacing parts, while the latter focuses on improving efficiency to enhance economic benefits. By reducing fuel consumption and emissions, ships can avoid penalties from regulations like the EU's FuelEU Maritime, which starts in 2025 and requires incremental greenhouse gas intensity reductions over the following decade.
Mr. Shon mentioned that many ship owners are keen on retrofitting energy-saving devices to meet these regulations and extend their ships' operable life by up to ten years. He highlighted ongoing projects and discussions with customers interested in technologies such as air lubrication systems, rotors, and shaft generator motors. The key concern for ship owners is the effectiveness and payback time of these retrofits, especially if their vessels have a limited remaining physical lifespan. He expressed the need for cooperation with ship classification societies like DNV to establish accurate procedures and regulations for ship life extension. By integrating retrofits with life extension processes, he believes ship owners can achieve significant benefits, including avoiding penalties and prolonging the ship's economic viability.
Financing the Green Transition
On the road toward energy efficiency, both the technical and financial aspects are crucial, Mr. Stefanatos noted. For ship owners in particular, financial incentives for applying energy-saving technology to their fleets are particularly effective. Mr. Christopher Rex, Head of Sustainability & Research – Danish Ship Finance, provided insights into how the green transition can be supported from a financial perspective. A common approach financial institutions take to incentivize energy efficiency involves linking the loan margin to the ship's performance, thereby providing financial incentives for emission reductions. For instance, if a ship performs well in terms of emissions, it gets a discount on its loan margin, while poor performance results in a premium.
Mr. Rex identified a key issue in accurately measuring and comparing performance. He noted that current metrics, like the Carbon Intensity Indicator (CII) and the Annual Efficiency Ratio (AER), often compare apples with oranges. Two identical ships could receive vastly different ratings based on their operational circumstances, such as waiting times at ports. This discrepancy makes it challenging to fairly link loan margins to performance.
To address this, Mr. Rex suggested developing more meaningful and reflective benchmarks, such as fuel benchmarks for specific voyages. This would allow for a fairer comparison of performance across different operational contexts. He stressed that while current methods provide some incentives, a more robust and accurate benchmarking system is needed to support and incentivize energy efficiency improvements in the shipping industry.
The Role of Digital Technologies
Captain Pankaj Sharma, Managing Director – OneLink, discussed the critical role of digital technologies in supporting decarbonization efforts. Captain Sharma affirmed the significance of digitalization for decarbonization, noting that the maritime industry faces challenges with unstructured, fragmented, and often unusable data. To effectively manage and improve energy efficiency, it is essential to measure it accurately using the right tools and data formats. The current industry landscape is fragmented with various service providers using different systems, which hinders data integration.
Captain Sharma highlighted the advent of AI and modern data management systems as solutions to this problem. These technologies can help create a "marine data backbone" that can ingest data from multiple formats, providing valuable insights into the decarbonization journey. For example, assessing the performance of energy-saving devices like rotor sails requires integrated data to evaluate their optimal use, compatibility with engines, and overall machinery health.
He pointed out that applications like Enginelink, part of Onelink platform, are capable of efficiently managing this data. Additionally, market forces such as biofuels and the Carbon Intensity Indicator (CII) versus trade benefits also impact vessel ratings and charter rates. Digital tools are necessary to navigate these complexities and make informed decisions about operations.
The panel discussion underscored the complexity of achieving decarbonization in the shipping industry and highlighted the perspectives of all stakeholders. While regulatory pressures drive the need for energy efficiency, commercial incentives, and technological advancements also play significant roles. Collaboration among stakeholders, effective use of digital technologies, and innovative financing mechanisms are essential to navigate the challenges and capitalize on the opportunities in this critical journey toward a more sustainable future.
?
Capital Link – Disclaimer
Capital Link’s webinars, podcasts, and presentations may contain "forward-looking statements." Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "may," "will," "should" and similar expressions are forward-looking statements. These statements are not historical facts but instead represent only the beliefs of each participating Company regarding future results, many of which, by their nature, are inherently uncertain and outside of the control of the Companies. Actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For more information about risks and uncertainties associated with the participating companies, please refer to the regulatory filings of each participating company with the SEC or other Stock Exchanges where they are listed.
Founded in 1995, Capital Link provides Investor & Public Relations and Media services to several listed and private companies, including companies featured in these webinars, podcasts, and presentations. All these, including the one mentioned above, are for informational and educational purposes and should not be relied upon. They do not constitute an offer to buy or sell securities or investment advice or advice of any kind. The views expressed are not those of Capital Link, which bears no responsibility for them. In addition, Capital Link organizes a series of industry and investment conferences annually in key industry centers in the United States, Europe, and Asia, all of which are known for combining rich educational and informational content with unique marketing and networking opportunities. Capital Link is a member of the Baltic Exchange. Based in New York City, Capital Link has presence in London, Athens & Oslo. For additional information please visit: www.capitallink.com .
Contact
For more information, please email [email protected] or call +1 212 661-7566.