Danish Shipping: Fleet-based CO2 compliance is a shorter way for green transition

The path to lower CO2 emissions from ships could be shorter by choosing a fleet-based approach to efficiency requirements, a new analysis prepared for Danish Shipping by CE Delft shows.

If new low- and zero-emission ships are to enter into operation and more expensive climate-neutral fuels are to gain acceptance by the end of this decade, CO2 regulation should be possible on the basis of a shipping company’s fleet and not of an individual ship.

Specifically, instead of requiring that all ships of a company meet the required carbon intensity indicator (CII) individually, companies could opt to comply by demonstrating that their fleet (or a number of their ships) does not emit more than it would if all ships would meet the required CII.

This means that the money which would otherwise have been spent on improving the CII of all non-compliant ships can be used to let ships sail on low- and zero-carbon fuels in such a way that the total emissions would not exceed the emissions of a compliant fleet, according to the study.

The analysis shows that if the oldest ships are allowed to continue unaltered rather than be retrofitted, that would release funds to build completely new ships with very low or no CO2 emissions.

At the same time, the approach ensures that total CO2 emissions would not be greater if the older ships are also required to be retrofitted.

“We are clearly proponents of looking at a fleet in its totality when measuring the CO2 emissions of a shipping company. Instead of spreading efforts too thinly on all ships, you should instead focus on the newest and greenest ships, and this has been confirmed with the new study,” Maria Skipper Schwenn, Executive Director for Security, Environment and Maritime Research at Danish Shipping, commented.

The report found that fleet-level compliance can contribute to the business case of using low- and zero-carbon fuels. In the best cases, over 70% of the additional costs of using low and zero-carbon fuels can be covered by not investing in the improvements of other ships in the fleet. The total emissions of the fleet will then be the same as when all ships would have had a C label. Fleets of 2 to 3 ships or more can help the business case for ships sailing exclusively on low and zero-carbon fuels. Taking into account that in some cases fuels can be blended with conventional fuels, fleet-level compliance could be an option for many shipping companies.

Danish Shipping will use the analysis in the work of the UN’s maritime organisation, the International Maritime Organization (IMO). Negotiations are currently underway into how ships should meet efficiency requirements.

“It is extremely important that the world fleet becomes more efficient, but if we are to achieve our goal of being carbon neutral by 2050, the new fuels must also be part of the picture.”

“The analysis states that green fuels will not be in use in this decade unless an incentive is created. That incentive can be created by the IMO adopting a fleet-wide approach – without compromising the level of ambition,” Skipper Schwenn added.

The Danish Maritime Authority has submitted the analysis to the IMO – not as an actual proposal but as a set of ideas that can be included in the discussions as background information.

“The analysis is part of influencing the IMO member states and making them see that a fleet-based approach is the most logical, sensible and ambitious way of pushing for the green transition for ships. The fleet-based approach can be organised in such a way that you are at least as likely to achieve the set reduction targets. We therefore believe that CO2 regulation should be possible at fleet level if the shipping company or ship operator so wishes,” Skipper Schwenn concluded.