Maritime CEO 200: Green

Singapore: All week we are running a review of top interviews on Maritime CEO sorted by theme as we celebrate passing the 200-interview mark. Today we turn our attention to the environment.
 
Launched in late January by shipping media veterans at Asia Shipping Media, Maritime CEO has quickly become the portal for leading shipping insights.
 
 Every day we catch up with a top name in shipping to gauge their thoughts on the industry, with every Friday guaranteed to be a shipowner interview. The best interviews appear in our quarterly magazine. Our aim is to cover every facet of the industry, but only from the viewpoint of the top echelon of management. In our first 200 reports we have met up with the heads of:
 
– the world’s largest containerline
– the world’s largest breakbulk operator
– the world’s largest dry bulk operator
– the world’s largest LPG operator
– the world’s largest car carrier operator
– the world’s largest shipowning grouping
 
Every day this week we bring highlights from our first 200 interviews, split into segments. Wednesday sees the Maritime CEO team – with 20 correspondents across the globe – go green, chatting on sustainability issues with top names across the industry.
 
Green tech is something that will remain at the forefront of shipping, whatever the economic conditions, claimed the managing director of a leading oceanographic IT firm in one of our earlier interviews this year. 
 
Hobart-based Penny Haire, managing director of Tidetech, told Maritime CEO, that while she thought the “current climate of uncertainty” for shipping would “continue for the foreseeable future”, she stressed that: “Even in the event of a recovery, increasing bunker prices and environmental regulation will require the industry to pursue efficiency aggressively.”
 
The new chairman of the International Association Classification Societies (IACS), Roberto Cazzulo, told us the ecoship craze is here to stay. Cazzulo, who also heads up Italian class society, said: “Running costs are a key driver for this industry. Ecoships represent a matter that could determine whether ships are busy in years to come. Ecoships represent a differential, a competitive advantage. Ecoships are one of the most important areas for innovation today. Economic factors are driving it.”
 
 Nevertheless, he cautioned, “Ecoships are not a magic wand. It is important to get a balance between technical solutions and operational aspects.”
 
Forget newbuilds, it’s time to retrofit the existing fleet, a leading NGO told us. The shipping sector could save $70bn in fuel costs each year through relatively minor adjustments, claimed one of the founders of the Carbon War Room. Peter Boyd, coo of the think tank, said: “Just 30% efficiency savings through the adoption of clean technologies and operational measures, at current bunker fuel prices, would equate to a $70bn saving across the industry,” he said, adding: “With sustained high fuel prices and low levels of income, all players, whether environmentally progressive or not, have a shared objective – to reduce bunker fuel consumption and its associated costs.”
 
Although there is an appetite to finance newbuild ecoships at the moment, Boyd said market conditions point to retrofitting the existing fleet as a more beneficial and sustainable solution for the industry. 
 
“It offers,” he said, “a low-cost, high-value alternative to bolstering an international fleet already at overcapacity. Retrofitting the existing fleet in order to compete with newbuilds would avoid a two-tier market, and balance out the supply and demand of vessels.”  
 
With bunker prices remaining very high a new technology likely to hit the market in 2015 promises to cut fuel bills dramatically.
 
Oceanfoil has developed wingsails that can deliver 20% savings to owners’ fuel bills, according to managing director, Charles Moray. Moreover, owners can expect to reap the costs back from the installation of these sails within 15 to 18 months.
 
Meanwhile, three-year-old Eco Marine Power from Japan has unveiled a raft of eco designs from sails to solar and plenty more besides.
 
Greg Atkinson, a director and founder of Eco Marine Power, noted: “Of course in the current environment costs are a major concern for ship owners, so it is difficult for many of them to bear the upfront extra cost for green/eco ship related technologies.” He reckoned its up to Eco Marine Power to reduce the cost burden plus present shipowners with a return on investment (ROI) timeframe that is appealing to them. Shipowners are also concerned about the safety and reliability of new technology, Atkinson said.
 
 Nevertheless, the Eco Marine Power boss is adamant that the trend towards ecoships is more than just a craze even if the hype at times does undermine to some extent the very real shift towards making shipping more environmentally friendly.
 
“Those of us working with renewable energy and emission reduction technologies need to be careful not to over promise and under deliver,” stressed Atkinson.
 
Meanwhile, James Ashworth, lead consultant with Singapore-based oil & gas consultancy, TRI-ZEN International, reckoned shipping is going through a seismic shift right now towards LNG as a fuel onboard. 
 
“We are witnessing the greatest change in shipping since Winston Churchill advocated the move from coal, a UK plentiful strategic reserve, to imported oil for the Royal Navy,” he claimed
 
Churchill argued that oil fuelled warships could go faster, produced less smoke, avoiding discovery better and required no stokers, reducing the manpower burden. The idea was berated by the Admiralty hierarchy.
 
“The age of oil as the preferred fuel in shipping is coming to an end faster than most can comprehend and more uncomfortably than many would wish,” said Ashworth. 
 
The age of cheap oil is over, he reckons, noting how bunker costs have more than doubled in recent years.
 
Additionally, a raft of international emissions legislation, led by Europe and the US, via the International Maritime Organization, is progressively coming into force.
 
“The most logical and comprehensive solution lies in the adoption of liquid natural gas,” said Ashworth, adding: “Gas burns much more cleanly than marine oils, meeting all current and planned emissions targets.”
 
For all the talk of LNG as the saviour fuel for shipowners chastened by likely regulatory pressures, not everyone is convinced it is the answer. Douglas Raitt, global manager for bunker and engine performance consultancy, Fobas, is among those questioning the likelihood of the cooled gas powering ships anytime. Fobas is part of British classification society Lloyd’s Register (LR).
 
“The bunker industry as we know it will continue for longer than people expect,” Raitt said this April, adding: “LNG will only ever be for a small percentage of owners.”
 
Raitt has greater hope for methanol, an energy source that has not had the same media exposure as LNG as a ship fuel, but one he maintained is “attractive” on price, technology and from an infrastructure point of view. “Methanol, from a face value point of view, is more compelling than LNG,” Raitt reckoned.
 
The Fobas boss warned: “The debate on bunkers will become more polarised in the coming two to three years.”
 
Beyond the day-to-day running of a ship, there’s still much to consider when disposing of an ageing asset. Handling the life cycle of a ship in a green manner is still something a number of shipowners are keen to do, despite the downturn, argued the head of one of the world’s top green shipping consulting firms.
 
Gry Cecilie Sydhagen, ceo of Norwegian consulting firm Metizoft, told Maritime CEO: “What we see in our clients is that thinking long term even if the rates go in troughs, these customers also take the extra costs with green recycling to preserve the best possible footprint and sustainability.”
 
On ship recycling we were told that it will take up to the next decade for 2009 Hong Kong convention on ship recycling to come into the market. This was the view of one of the leading protagonists of green vessel scrapping. Petter Heier, ceo of Grieg Green, told Maritime CEO this April: “We are waiting for the Hong Kong convention to come into force, but it will take seven more years minimum. There is a long, long way to ratification.”
 
Grieg Green handpicks the world’s top recycling yards – by using its own ‘score-card’ rating method. The firm acts as a manager for owners seeking to scrap ships in a more environmentally friendly way.
 
The problem at the moment, despite the overarching need for shipowners to scrap to cut back on overcapacity in the global fleet, is all down to price, admitted Heier.
 
“Lots of owners have to recycle,” he admits, “but pricing remains a big issue.” 
 
Heier’s business is not helped out by the fact there is still a big $50 per ldt price difference between India and China, the latter being where Grieg Green opts to recycle.
 
“China has very thin margins for shipbreaking,” he noted.
 
Tomorrow, in our Maritime CEO 200 roundup we turn our attention to offshore owners.  [30/10/13]
 
 

 

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