How not to use the MRV CO2 emissions data

The EU legislation mandating shipping lines to report CO2 emissions is in principle a good starting point for regulating emissions for the shipping industry on a factual basis. After all, MRV is designed to provide access to actual data which is of course the foundation of any rational decision process.

However, when the data is then used in a way which misrepresents reality – or at a very minimum disregards operational realities – the risk is that the whole process is undermined, and the legitimacy the process was supposed to bring to bear could evaporate. And this is certainly not what the industry needs.

The problem can be seen exemplified in the new report from the International Council on Clean Transportation (ICCT) which provides a flawed analysis of CO2 emissions per carrier.

Herein MSC is called out as the largest emitter of CO2 amongst the shipping lines in the EU. Based on the raw MRV data this is quite likely true. But it is also misleading in that the way the data is treated completely disregards operational reality across shipping lines.

Just as a very simple example. On the Asia to Mediterranean service MSC and Maersk collaborate in the 2M alliance. For full year 2018 they operated 4 dedicated weekly Asia-Med services. Out of these, MSC operated 76% of the vessels arriving and departing, whereas Maersk operated 24%. There is no public information on what the actual split is of cargo between Maersk and MSC on these services. If MSC carries less than 76% of the booked cargo, they are actually being accredited with CO2 emissions “used” by Maersk.

Given the way alliances work, some carriers tend to be over-represented with vessels they operate in one trade, and under-represented in other trades. That is in the nature of their fleet composition versus the alliance needs. Hence the “naming and shaming” performed in the ICCT report can be completely off the mark depending on the alliances’ – and other VSA’s - operational setup.

Similarly: Carriers performing their own feedering services are also attributed their full CO2 footprint from these feeder vessels. But carriers using 3rd party feeders are not held accountable for those emissions. They are instead ascribed to for example Unifeeder and X-Press feeders which in the ICCT report are listed as the 9th and 10th largest container shipping emitters. A large carrier can therefore reduce their emissions significantly simply by outsourcing their feeder services.

Assigning the CO2 emissions purely to the vessel operator is therefore highly likely to significantly misrepresent who is actually responsible for the emissions.

If the intention ultimately is a CO2 tax based on emissions, the problem is not very big. In this case, alliance partners would simply assign a price to slots where they are over-represented as a partner. Similarly such pricing would be part of rates on feeder vessels.

But if the intention is to create public and/or political awareness as to individual shipping lines’ CO2 footprint, this is likely counter-productive as the emissions performed as an operator cannot be taken to be identical to the emissions related to the shipments actually performed by the individual carriers. Misleading analysis will create tension between the lines and the public/political sector creating a divide rather than a consensus on how to actively address CO2 reductions going forward.

Completely aside from this, there is a methodological problem with the EU MRV due to the fact that it is “only” EU based and not global. For shipments to and from the EU, emissions are reported on the basis of the last port of call before coming to the EU, or the first port of call after leaving the EU.

As such, all Asia-Europe services will be able to dramatically reduce their CO2 footprint in the EU by having a call to load/unload a minimal amount of cargo at for example Port Said in Egypt before and after calling an EU port. This way they only include the fuel consumption to/from Egypt instead of the much longer journeys performed today directly to/from places like Singapore and Shanghai.