Assessing the implementation of technical energy efficiency measures in shipping

This study aims to assess the implementation of technical energy efficiency measures in shipping that are used to improve energy efficiency, reduce emissions and respond to changing market conditions e.g. high fuel prices

The Potential Role of Targets and Economic Instruments

The analysis presented in this report draws on a combination of economic principles and a synthesis of publicly available data and evidence from shipping and other sectors and countries. It sets out the economic case for the UK introducing (a) targets to reduce emissions of greenhouse gases (GHGs) and emissions to air of pollutants from UK shipping; and, (b) economic instruments to support the transition to zero emission shipping. It then considers two relevant interventions that already exist with the aim of reducing emissions – the Nitrogen Oxides (NOx) Fund in Norway and the Renewable Transport Fuel Obligation (RTFO) in the UK – and considers the pros and cons of those measures

Dead in the water: an analysis of industry practices and perceptions on vessel efficiency and stranded ship assets

This paper presents an analysis of the concept of stranded assets in the context of shipping. It presents the findings of a series of semi-structured interviews with the industry’s leading debt and equity financiers as well as a variety of financial intermediaries on the topics of energy efficiency, efficiency retrofits and stranded assets. The results show differentiation amongst financial actors and by entities that finance assets and those that finance balance sheets. Amongst debt players that finance assets, competitive advantage is a consistent rationale for the use of vessel efficiency information. Actors that view vessel efficiency as a competitive advantage typically either finance efficiency retrofits or have considered doing so. There is mixed awareness of stranded assets and perceptions of the risks they pose to vessel financiers. The case for the inclusion of vessel efficiency. information in vessel financing decisions is building, yet further work is needed. While some financial actors connect efficiency-derived competitive advantage to financial risk mitigation, there is a strong case for broader consideration in the context of market cyclicality and the associated increase in probability of vessel stranding. Such considerations may also have a positive impact on operational cashflow and thus investment returns. This research concludes that, should this link be analogous to other industries, vessel efficiency may be a good determinant of the vulnerability of portfolios to climate constraints on the industry that force the stranding of some assets

Barriers to energy efficient and low carbon shipping

Energy costs represent around 60–70% of operating costs of a ship and with the fuel price soaring to record levels, energy efficiency has become the top priority for many shipping companies. Numerous cost-effective energy efficient options (technologies for new and existing ships and operations) have been identified for improving the energy efficiency of ships. Analysis from industry leading experts and recognised bodies has so far shown substantial unrealised abatement potential using options that often appear to be cost-negative at current fuel prices. Apart from the shortcomings of the analysis, failure to realise this potential could be attributable to various market barriers and failures. This paper discusses non-market failures and market failures in context of shipping and draws on findings of a survey of shipping companies to assess their pervasiveness. The results are compared with analysis undertaken with the global shipping system model (GloTraM). Initial results from these methods suggest the existence of some non-market failures and market failures that have also been discussed in other sectors and industries

The impact of split incentives on energy efficiency technology investments in maritime transport

This paper presents the first analysis of how the split incentive market failure affects the implementation of energy efficiency technologies in the maritime transport sector. In maritime transport, split incentives occur due to the different types of charter (resulting in the divided responsibility for fuel costs) existing between shipowners and charterers. The paper uses a robust and rigorous framework of methods to operationalise the split incentive concept in a cross-sectional survey of 275 shipowners, representing around 25% (6000 ships) of the target population, resulting in the most comprehensive data on the implementation of energy efficiency technologies in shipping. The findings show, contrary to that postulated in the literature, that firms that have majority of their ships on time charter (i.e. those that don't directly observe the energy price signal but may potentially receive an energy efficiency premium) have a higher implementation of energy efficiency technologies compared to firms that operate ships on the spot charter (i.e. directly observe the price signal). To some extent the findings could be due to the effect that other confounding variables may have on the implementation of measures and the extent to which the shipping market is correcting or overcoming the split incentive efficiency problem

Effects of EU policy regulations on ferry operation: sustainability issues in public procurement of ferry services

This report brings together the activity from the Institute for Sustainability and UCL Energy Institute to explore the effects of EU policy regulation on ferry operations. UCL Energy Institute investigated the sustainability issues related to public procurement of ferry services in the North Sea Region. This report identifies the key drivers for public procurement and identifies some of the challenges that ferry operators and procurers can face. The report begins with a brief overview of the procurement process in EU and the problems that are currently being faced in the EU ferries sector. This report highlights how different types of ‘split incentives’ can stymie attempts to improve quality or sustainability of ferry services through the tender and procurement process. Policy recommendations that can avoid, alleviate or minimise the issues of split incentives include; Policies that target the design based efficiencies, such as the EEDI, policies that incentivise the improvements in operational or in-service efficiency of ferries, revisiting some aspects of public procurement and standardising them for uniform application across all the member states This report, coupled with the iTransfer Ferry Toolkit, produced by SEStran, forms a comprehensive guidance to all operators and procurers of ferry services in the North Sea Region and beyond. This report is part of iTransfer, a North Sea Region Interreg programme project, which is funded by the European Regional Development Fund. For more information visit www.itransferproject.e

The implementation of technical energy efficiency measures in shipping (MEPC 69/INF.8)

This document focuses on the implementation of technical energy efficiency measures. The data are derived from a cross-sectional survey of 275 shipowners and operators covering around 5,000 ships. This is an important undertaking given that very little data exists on the take-up of energy efficiency technologies for both, newly built and existing ship