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Shipping Gets Together to Reduce Emissions

Shipping industry behemoths are actively joining forces to reduce their environmental impact. It’s a move which could have major implications for shipping moving forward. In its latest weekly report, shipbroker Gibson said that “whilst we all know that one person can have a positive impact on any given situation, just think what impact 17 of the major oil companies, charterers, trading houses and miners could have on the environmental impact of ship emissions. As such, these companies have signed up to cut carbon emissions from all their shipping operations. Under the Sea Cargo Charter Association there will be a common approach to measuring the carbon emissions of each laden and ballast voyage, which when combined will provide an accurate figure of each signatory’s total annual CO2 emissions. These emissions will then be benchmarked against the IMO’s target to halve carbon pollution from 2008 levels by 2050”.

According to Gibson, “the impact of such a large group of companies coming together to address environmental concerns demonstrates a major swing in institutional thinking. The guidelines and the drive for accountability were drawn up under the Global Maritime Forum sustainable shipping initiative, which is also influenced under the Poseidon Principles, which provides a framework for financial institutions to measure the emissions of ships they finance and align them with the IMO reduction target”.

Gibson added that “it is hoped that with so many initial signatories, this will incentivise additional companies to invest in shipping decarbonisation. The Sea Cargo Charter is built around a contractual commitment agreed in a standard charterparty clause for the shipowner or operator to share with the charterer the tonnage carried, distance sailed and the fuel type and amount used for each voyage. Data for each voyage is collected and the carbon intensity calculated using the IMO’s energy efficiency operating indicator to reflect real operating conditions”.

The shipbroker also noted that “the current market situation highlights that companies that have already signed up to the Sea Cargo Charter account for around 11% of all spot tanker fixtures so far this year. Evidently, the signatories are still in the process of implementing the clause into their chartering contracts, with some companies having already had a similar clause in place prior to the launching of the Association. Whether or not owners and operators will resist the clause being inserted remains to be seen, however the collective power of the group may make it inevitable regardless”.

“There are also a number of players that have already started to address the emission issues by chartering dual fuel vessels, which has a beneficial impact of reducing CO2 emissions. In addition, there is increased interest from owners and charterers in exploring new technologies that can help reduce a vessels environmental impact through the use of wind and solar technologies, hull air lubrication and other emission reduction technology. The end-game is for shipping to reduce overall emissions of greenhouse gases from each and every voyage. The tanker sector has already started down this road with several owners, charterers and traders already signed-up to the Sea Cargo Charter Association. It is anticipated that the influence of the original 17 signatories will provide an impetus for other companies to sign-up. This could be the start of real change with more companies seeking ways to improve their environmental footprint”, Gibson concluded.

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