Emissions & shipping - do we save or destroy the environment?

The world decides this week. So here’s some fuel for thought…

Shipping accounts for producing 4% (and rising) of the world’s greenhouse gas (GHG) emissions. By 2050, it’s projected shipping will be responsible for up to 17% if nothing changes.

While shipping is the most efficient means of transport per ton of cargo, they abide by a very different set of emissions and regulatory standards than any other industry. It’s also one of the most pollutant.

I’m proud to say Nautilus Labs has developed something which will help reduce emissions, and save shipowners and operators money. Even better, it’s coming at the perfect time for this industry.

This week (Oct 24–29, 2016), the UN group which dictates international maritime law — The International Maritime Organization (IMO) — meets to set new emissions and pollution standards and procedures for the multi-national shipping industry. It will be one of the most pivotal meetings of this century, and no one is talking about it.

How ships pollute. It’s more complex than you think.

How is it that 15 of the worlds largest ships pollute as much as the worlds 780 million cars?

The key that few point out, is that this particular statistic relates to sulfur oxide (SOx) production. The two pollute differently.

Yes, it’s true, cars produce more GHG than the shipping industry. However, in one year, those 15 ships will produce as much SOx as the 780 million cars on this earth combined.

At their core, they sound similar. They burn oil, which drives an engine, which is used to move stuff. Seems similar enough, at least, I always thought it was. But there’s one defining difference: they burn a completely different type of oil.

Shipping is so pollutant because of two words — Bunker Fuel.

Bunker, as the industry calls it, is the last remains of the oil refinery process. It’s the shit of the shit. Bottom of the barrel. The stuff they can’t sell to anyone else.

People compare it to liquid asphalt.

It’s actually illegal to burn this fuel on land because it’s emissions are toxic. They have 2,000 times more parts per million of SOx’s compared to a standard diesel engine burning the same amount of highway diesel fuel. It’s responsible for 60,000 pre-mature deaths worldwide in 2009 around coastal areas near shipping ports.

In other words, cars, trucks, and planes are less efficient per pound of cargo moved and therefore, will burn more fuel. But the fuel they do burn is significantly more refined so it burns much cleaner than bunker.

It’s very difficult to compare shipping to other transportation methods, or even energy generation, because the underlying chemistry is vastly different. It starts with a completely different chemical, with far less love put into it.

Solving this problems is not nearly as easy as we’d all like it to be. There’s an economic side to this…

Shipping company’s business models rely on maintaining the lowest possible operating costs. And they’re already struggling. I wrote about that in more detail here in “The Financial Crisis No One Knows About”.

Requiring ships to burn lower sulfur fuel means more refining, which means it will cost much more. Shipping companies quite literally cannot afford to switch fuels without endangering their businesses viability.

And oh yeah, they don’t even make this type of fuel.

And then there’s the “international” side to this…

We’re not just talking about reform in the US, since of course, the country is only “responsible” for ocean 200 miles off the coast. The vast majority of a ships life is spent in the wild west, international waters. Where the drinking age is a suggestion, and few emissions laws exist.

Imagine trying to get a majority… of the world… at the UN level — to agree on capping emissions levels. Keep in mind, every country relies on this industry for trade, and most of the industry is in the private sector.

Economies are at stake.

It’s a complex and messy problem to solve. So how big is this problem exactly?

How much do they burn?

A single 10,000 TEU ship (5,000 40 foot containers) will consume 75 to 80 METRIC TONS of fuel per DAY only traveling 15 to 18 knots. That’s equivalent to ~20,000–22,000 gallons of fuel per day. Over a pacific crossing taking 30 days, it will burn between 600,000 & 660,000 gallons in total.

NOTE: The shipping industry does not measure bunker by volume (liters or gallons), because bunker expands and contracts by a substantial amount based on the temperature. I’m approximating to a volumetric average for clarity and to make sure it’s relatable to any industry outsider (which is almost everyone).

Figure a ship will do 10, 30 day trips on average per year. That means it will burn 6,000,000–6,620,000 gallons of bunker in a single year.

Over the 54,000 commercial vessels in this sector, we’re talking about: 324,000,000,000 (324 Trillion) gallons per year. Which is 887.6 million gallons of bunker a day.

887.6 million a day. Holy Shit.

To put all of this into perspective, Tesla Motor’s total electric miles driven has just passed 2 billion, and in total has sold 167,481 cars since it’s founding to the end of Q3 2016. This has saved (a reported) 120M gallons of gasoline. Since it’s founding.

Improving the efficiency of these ships by just 0.1% will save 388,800,000 million gallons of bunker in a single year. That’s 3.24 times what Tesla has saved in 8 years.

Again, I know when it comes to emissions you cannot compare auto and marine. But, I want to give a sense of scale that every man and woman will understand.

How are shipping emissions currently regulated?

MARPOL Annex VI, is the name of the legislation that currently dictates the international emissions “laws”. Here’s a great short read on the current general state of international ship emissions: “Annex VI”.

This was created and mandated by the Marine Environment Protection Committee (MEPC), an IMO group, which is a mix of government & private sector individuals.

Wait, I thought the IMO was a UN government group? Well, it is.

But because shipping companies are generally private international conglomerates and do not belong to individual countries (minus China COSCO Shipping, and Hyundai Merchant Marine, and few Arab players), they’re involvement in these conversations is critical to this working at scale.

Because countries rely so heavily on them to keep their economies alive, “we”, as in the world, have to make changes that work within their businesses.

It’s a true match up of the health of the world economy vs. contributions to the survival of the human race.

So how do you regulate a truly an international industry with roots spanning far past a single country and global alliances?

As you could expect, “regulated” is a loose term in this industry. Because, regulation only works if there’s people and systems in place to actually do the regulating. Which unfortunately, is a huge challenge when most of the activity happens in international waters where there’s no regulation.

Which government is responsible?

The US? No, Canada?

France? No, Germany. No, Denmark.

It’s gigantic issue with no good answer.

You may be asking: “Didn’t the UN just sign the Paris Agreement laying out a plan to eliminate carbon & GHG production, as well as assisting developing nations adoption of clean energy and emissions practices?”

Yes. But it omitted shipping.

It would not have gotten passed if it included Shipping. So they excluded it. Too much is at stake.

As crazy as that seems, it was a genius bureaucratic move. The Paris Agreement was passed in April and the same day the IMO did it’s part, in it’s MEPC-69 meeting: They agreed on a mandatory system for collecting ships’ fuel consumption data.

Despite the fact that the US and EU and others with Emission Control Areas (ECA’s) have been “quietly” monitoring emissions 20–40 miles offshore, there never was a way to check the true emissions at sea in international waters.

So, FOR THE FIRST TIME since 1997 when the IMO first agreed upon MARPOL Annex VI — Prevention of Air Pollution from Ships emissions laws for international water, they’ll actually have “a system” to monitor the ACTUAL emissions of REAL ships at sea. They’ll finally be able to hold people accountable.

This was in April 2016.

It is now October, 2016, and zero progress has been made on the definition, development, and implementation of this system. We should not be surprised, things generally don’t change quickly at this level.

But we do not have time to wait another year or two. We need this right now.

What’s being done?

The good news is that things are moving.

We are at a pivotal time for shipping. On Oct. 24–28, MEPC is having their 70th meeting (MEPC-70) in London to specifically discuss:

1. The mandatory MARPOL Annex VI requirements for ships to record and report their fuel consumption, which were approved at the last session (MEPC-69). This is the data collections system I was referring to above. It’s taking some time, but it’s finally being discussed.
2. Continuing to improve the energy-efficiency design standards for new ships and associated operational energy-efficiency measures for existing ships.
3. The Committee is expected to establish a working group for an in-depth debate on how to progress the matter of reducing GHG emissions. They’re specifically looking for a CO2 roadmap for the industry.
4. Whether the Global sulfur cap implementation date is to be upheld? Some background here: the global sulfur cap in bunker fuel is currently at 3.5%. The current legislation in Annex VI says the cap is to be reduced to 0.5% on January 1, 2020. HOWEVER, that date will only be held, if the review of the current availability of low sulfur fuels shows there will be fuel availible, on that date. This review is slated to happen BEFORE 2018 (so about right now). If it’s determined that there will not be enough low sulfur fuel, the 0.5% cap will be pushed to Jan 1, 2025. NOTE: this issue is out of the control of the shipping industry!!! This is directly correlated with the oil refineries of the world.
5. Designation of the North Sea and Baltic Sea as emission control areas for nitrogen oxides (NOx). This should pass, but again it’s contingent on shipping companies being able to get their hands on lower nitrogen fuel to burn in these areas.
6. The MEPC will be invited to approve draft Guidelines for on board verification of the sulfur content of the bunker being burned.
7. A few other non-emission related issues which you can read for yourself here.

Here’s the meeting agenda they posted, if you’re interested in digging deeper.

Will all of this get resolutions in a single week? Absolutely not.

As I said, this will take time. Too much time. A group with that many stakeholders and interests cannot move at the pace needed, but at least it’s moving.

Enter Nautilus Labs.

In the coming months, Nautilus Labs is releasing a product that won’t just give shipping companies insight into how much fuel each ship is actually burning, but will be able to help reduce fuel consumption at a meaningful operational level.

Yes, this will save shippers money. But more importantly, it will provide change at the pace we should be pushing for, in a world where we do not have enough time.

If this sounds like something you wish you knew earlier, please share this post.

If you’re a shipowner, and are interested in beta testing for your fleet, we’d love to meet you.

If this sounds like a cause worth working towards, we’re always looking to meet passionate talent. Shoot us an email at careers(at)nautiluslabs.co if there’s interest in joining the family.

John Oliver, if you read this, please do a segment on it. I’d be happy to share information.

Disclaimer: I’m Co-Founder of a new company called Nautilus Labs where we’re developing a proprietary product to save shippers money, and reduce operational cost for ship owners & operators.

Additional Information

If you’re interested in digging deeper than I’ve had time to, (and if you’re passionate about emissions control, I hope you do), please reach out to me. I’d love to hear what you uncover. There’s a lot of reading and not enough time for one person to comprehend it all.

USA

In the US, the EPA was tasked with managing Annex VI. Here’s the public page describing what is being done…

The regulation is mandated by the Act to Prevent Pollution from Ships (APPS).

EU

The EU is mandating that emissions reports be submitted by any ship entering or exiting an EU port by August 2017. It’s called the EU-MRV Scheme and it’s brilliant.

What information do we have?

The most recent study from the IMO on shipping’s impact is from 2014. It’s called The Third IMO Study Greenhouse Gas Study 2014. It’s a 324 page document, and it’s the most comprehensive set of data that I could find on this problem.