Shipping Total Life Cycle Emissions and Externalities.

The following is a patchwork / excerpts from few papers of mine to clarify the difference between emissions and externalities, and the importance not to stop at direct emissions but to embrace a total life cycle externality approach.

The focus is on shipping. But the concepts apply to each and every industry.

It should always be remembered that there can be no quality of life at zero cost and zero risk. Actually there can be no life at zero cost and zero risk, since all human activities involve some cost, even if only an opportunity cost, and some degree of risk.

It shall also be recalled that every activity generates unwanted effects, by products, emissions... as the efficiency of any activity is always less then 100%. Now, since we cannot make emissions zero, contrary to the fanfares, we need to accept that emissions will always be present. There are not free lunches, and there are no zero emissions lunches either.

As a result of these basic considerations, too often forgotten by the media (who just love to cry wolf) and by the general public (who uses 99% guts and 1% brain), it is imperative, in particular when taking decision impacting on human life and on the environment:

• to analyse the total life cycle costs and the risks associated with the different alternatives;
• to identify which is the allowable cost and the allowable risk that the society is willing / able to pay;
• to devise strategies to reduce the cost and to mitigate the risk, as far as reasonably practical;
• and finally to select the alternative best capable of minimizing costs and risks.

Of course, it is not enough to restrict one’s analysis to internal costs and risks (or private costs), also the external ones (externalities) must be taken into account.

As per definition externalities are generated whenever decisions, actions, processes result in incidental costs or risks being borne by third parties, costs and risks that are not reflected in the “market price” of a particular product or process.

Externalities can be positive or negative (e.g. Ammonia is a fertilizer, and emissions in the form of Ammonia slip also have a positive effect on crops and flora), and not only related to emissions (e.g. running a sea route between two ports develops the ports and the hinterland, creating jobs and economic value outside the pure "shipping" economic exchange).

However, in the context of ship propulsion and power generation, we can basically restrict ourselves to the externalities arising from emissions and pollution. Since such externalities are far from negligible, the criterion of pure economic efficiency to decide upon which project / alternative / ship / propulsion system / fuel is best is inconsistent and inapplicable when considering the society as whole.

Legislators and regulating bodies should therefore consider externalities with great care, in particular an effort shall be made to consider the global externalities relevant to the complete life-cycle of the project, good, service under scrutiny. Unfortunately, all too often, externalities are considered only in respect to a specific phase of a project, generally the operation, ignoring the total lifecycle.

And this is exactly where IMO regulations are inadequate and need an urgent, ample and deep revision.

But let's go back to externalities. The real aim in quantifying externalities is to provide a better base for comparing different options on equal terms, or at least a more complete and holistic understanding, with as little bias as possible, and with a scope as wide as possible, so as to achieve two main goals:

• to improve the understanding and thereby to enable comparisons of current and near future ship propulsion technologies, based on environmental, economic and socially relevant factors;
• to support rational decision-making for sustainable development and to provide unbiased research findings to decision-makers and stakeholders.

Externalities can be divided in the following main categories, and they shall be evaluated by performing a thoroughly risk assessment, considering both for standard operation, accidents and their likelihood.

Health Effects on Mankind: Mortality and Morbidity: Effects on the health of persons directly involved in handling that particular fuel or energy source (e.g. coal miners, workers engaged in building power pants, or in our case ship propulsion plants...). Effects on the health of the general population (e.g. exposure of population to air pollution caused by burning fossil fuels, deaths due to flooding consequent to the rupture of a dam…)

Other Social and Economic Effects: Effects on the population other than health related (e.g. relocation of people due to the construction of a dam, acid rains on crops...).

Effects on the Environment: Effects on the environment and natural habitats (e.g. health effects on animals due to air pollution, destruction of natural habitats due to the construction of a dam or due an oil spillage…).

Climate Change: The main concern in this case is climate change, global warming and the consequences on the planet.

The following scheme, from ExternE [https://www.externe.info/externe_d7/], shows the analytical framework for comprehensive technology assessment for power generation, which can be taken as a reference also for ship propulsion.

All health effects on Mankind shall be duly and deeply considered.

Health effects on wildlife are seldom considered, and they are rather difficult to be quantified.

Effects on the environment and natural habitats are often considered, at least partly, and included in the Total Life Cycle Cost of a plant, as there are often requirements for mitigation of long term impacts and for environmental remediation following decommissioning (e.g. for mining).

The main difference in quantifying direct / short term effects and indirect / long term ones is that for the former cause / effect relationships are more easily identified while for the latter cause / effect relationships are often not clear and debatable, as a consequence to quantify the externalities due to the latter is much more difficult and highly imprecise. There are also many cases in which short term impacts are not followed by longer term ones. Oil spillages have high direct short term impact but small medium long term ones (e.g. the Persian Gulf). Nuclear accidents have shown both low short term and negligible long term environmental impacts. Dams have both short term and long term impacts (e.g. Aswan High Dam)

In addition it shall also be considered whether externalities are due to accidents, and how probable or remote these accidents are, or if they are due to “normal” operations. E.g. mortality related to hydro-power and to nuclear power is only due to accidents, while mortality and morbidity related to fossil fuels is largely due to air pollution which is an inherent by-product of the “standard operating procedures” for that technology.

In projecting historical data into the future it must also be considered if the issues occurred in the past will have the same impact / frequency or a smaller one as a results of better technology and working practices, more stringent regulations, better emergency preparedness and contingency plans...

As we see from the above externalities are a complex matter, highly statistical and debatable. They do not provide "exact" answer, but they provide significant and extremely valuable qualitative / quantitative insights on what the side effects of a technology are.

Without considering externalites we simply cannot decide which technology is better and which is worse. It shall be noted that Global Warming Potential is, in a way, an externality, but since Climate Change is just a (small) part of the entire picture, by itself it is inconclusive.

Now, let's tun to IMO regulations and clarify why they are inadequate and need an urgent, ample and deep revision.

First of all IMO regulations are a piecemeal approach to direct emissions (imposing thresholds on individual direct emission ), not a coherent approach to total life cycle externalties (considering the global combined effect of direct and indirect emissions.

Considering thresholds on individual emissions is always a bad idea: suppose there is a technology that emits at 99% for all thresholds, and another technology that emits at 0% of all thresholds but for one, for which it emits at 101%. It can easily be argued that the latter is better than the former, but the former is compliant, the latter is not.

Considering direct emissions and neglecting indirect ones is also a bad idea: suppose we have a technology that generates 100 direct emissions and 100 indirect ones, and a technology that generates 1 direct emissions and 1000 indirect ones. The former is in principle way better, but when looking at direct emissions only it would appear to be the opposite. Actually regulations on direct emissions favor displacing emissions to other phases of the life cycle rather than to reduce the emissions, since displacing is generally much cheaper and easier to be achieved. Electro fuels in particular are very critical in this respect.

Finally not considering externalities does not allow to compare technologies having different mix of emissions and emitting in different places. E.g. emitting in deep sea, far from human settlements, has much less consequences in terms of mortality and morbidity than emitting on shore. Without externalities we cannot say if 1 ton or CO2 is better or worse than 2 tons of SOx, or if it is better or worse to emit 1 ton of PM in deep sea or 3 tons of NOx on shore.

How can we fix these issues that are deeply rooted in IMO regulations? Even more so when considering that IMO does not have a mandate to regulate on shore emissions (that are the bulk of the indirect ones!).

The easiest, most practical and most efficient fix is to overhaul the Energy Efficiency Design Index, EEDI, making it a racing horse out of the limping donkey it currently is.

EEDI, is actually a CO2 direct emission index (not even CO2 equivalent emissions!!!), and which has absolutely nothing to do with energy and with efficiency and with pollution. It is only an index representing the tons of emitted CO2 over the tons of cargo capacity and the traveled distance [tons CO2 / Tons cargo / nm]

EEDI should be modified to consider Total Life Cycle externalities in place of direct CO2 emissions, making it an index representing the total life cycle extenalities over the tons of cargo capacity and the traveled distance [USD / Tons cargo / nm]

In order to achieve the above IMO shall be establish:

1. a direct emission database for different combinations of prime movers and fuels (Methanol + Slow Speed Diesel Engine, Ammonia + Fuel Cells, LNG + High Speed Otto Engine, batteries...), in tons of emission for tons of consumed fuel (tons for KWh in case of electricity);
2. an externality dabatase for direct emissions (externalities for SOx, NOx, PM, CO2, CH4, N20, NVOC, scrubber waste water...) in USD for tons of emissions;
3. an indirect externality database for building and decommissioning prime movers (internal combustion engines, turbines, fuel cells, batteries, solar panels...);
4. an indirect externality database for different fuels (fossil fuels, green electro fuels, non green electro fuels, non green synthetic fuels, green electricity, non green electricity), comprising building and decommissioning of the relevant production / refining plants, in USD for ton of fuel (USD for KWh in case of electricity).

All the above is for the largest part already available, especially in studies relevant to on-shore power generation, and need to be consolidated and updated.

Failure to do the above will result in:

• misunderstanding on what is actually green or clean and what not;
• driving substandard solutions;
• exploiting loopholes.

I hope the above is clear and comprehensive. Probably it is not, having written / patched it together on a Sunday morning (nope, it was a Saturday morning)... Just comment below for any comments, criticism, request for clarification....