Lloyd's Register presentation to 1st blue shipping summit 2011


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Lloyd's Register's Ship Energy Manager, Dr Zabi Bazari, speaking to 1st Blue Shipping Summit in Athens today, highlighted the potentials for energy saving in shipping.

His main message was that despite significant energy savings that can potentially be achieved, this may not be realisable if current shipping regulatory, legal and financial frameworks are not developed along the line to support the uptake of new technologies and processes.

He argued that a robust regulatory framework together with enhanced contractual arrangement, between charterers and ship owners at one side to facilitate cost-benefit sharing from energy saving operation processes, and also between technology suppliers and ship owners on risk-benefit sharing arising from energy saving technologies are not being fully utilised yet.

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Lloyd's Register presentation to 1st blue shipping summit 2011

  1. 1. Ship Energy Management: Drivers and complexities Dr Zabi Bazari CEng, CEnv Ship Energy Services Lloyd’s Register, London, UKContent11 How to reduce ship fuel consumption?22 Main drivers?33 Complexities?44 The way forward?55 Concluding remarks 1
  2. 2. How to reduce ship energy use / CO2 emissions? • Energy-efficient ship design. • Larger ships and economy of scale • Low carbon fuel (e.g. LNG) • Slow steam • Technology retrofit • Operation optimisation • Just in time operation • Itinerary optimisation • Ship capacity utilisation • Trim optimisation / weather routing / etc. • Technical optimisation • Hull maintenance • Diesel engine optimisation • Machinery usage minimisationDrivers: Fuel costs• High and increasing fuel prices• Sulphur regulations leading to increasing use of expensive: • Low sulphur fuel • Distillates 4.50 1.1.2012 1.1.2020 1.1.202 * 5* 3.50 Outside ECA-SOx• Increased energy use due Fuel oil sulphur % 1.7.2010 to future technologies: 1.50 1.1.2015 • SOx scrubbers 1.00 0.50 Inside ECA-SOx 0.10 • Ballast water treatment Year * 2020 date may be deferred to 2025 depending on • NOx reduction devices outcome of a review of fuel availability to be completed 2018 2
  3. 3. Drivers: IMO GHG (energy efficiency) regulations EEDI Shipyard IMO Initiatives SEEMP On GHG control Ship owner / EEOI operator EEDI and SEEMP will become mandatory EEOI will remain voluntary Drivers: IMO GHG’s Market Based Measures (MBMs) Trading Emissions ETS CapsPort or flag (Emissions states Trading System) Fuelcollect and Others Levycontrol the CO2 charges e.g. STEEM (Ship Traffic, Energy and Marine GHG Fund Environmental Model) MBMs SECT (Ship Efficiency LIS Trading System) (Leveraged VES Incentive (Vessel Scheme) Efficiency System)IMO is at early stages of discussion on Based on Ship Energy Efficiency MBMs Rewards efficient ships 3
  4. 4. 22 ComplexitiesComplexities: Stakeholders and responsibilities Flag State Concept of ‘Shipping’ Concept of ‘Industry’ Bank as ship Refinery Port State owner Yard as ship Technical owner manager Charter Owner Owner Regulator Operator – as Charter as owner or charter agent Crewing CompaniesLarge number of stakeholders influence ship operation 4
  5. 5. Complexities: Stakeholders (IMO Guidelines on SEEMP) Ports Ship Operator Ship Energy Management Cargo Owner Stakeholders Ship Owner Ship Charterer More coordination between stakeholders is required for energy efficiencyComplexities: Economics of ship operation• Who pays for the fuel? • Charterers • Ship owners • Cargo owner • Etc.• Who benefits from energy efficiency?• Who pays for energy efficient technologies / operation processes? The financial aspects of “ship energy saving”, in terms of saving” cost-benefit, is very complex cost- 5
  6. 6. Complexities: Measurement, monitoring, finacial and legalframeworks• Fuel consumption measurement.• Performance assessment & verification.• Large number of energy-saving products with significant saving- level claims.• Lack of financial-legal frameworks to reward energy efficient operation. 22 The way forward? 6
  7. 7. Way forward: Regulatory regime• An EEDI regulatory framework that is truly representative of ship’s technical energy efficiency.• Regulations on operational fuel consumption measurement, CO2 inventory and their verification.• Making industry pay for CO2 emissions (MBM).Way forward: Financial and legal framework• Upgrading of charter party contracts to enable / incentivise energy efficient operations.• Development of risk-sharing contracts between technology supplier and owners for claims made for various technologies.• Development of benefits-sharing practices on fuel savings; between owners/managers and charterers. 7
  8. 8. Conclusions • There are a number of major drivers for ship energy efficiency. • There are a number of major complexities within the industry that impedes move towards more energy efficient operation. • Solutions to these complexities will pave the way for a more energy efficient shipping industry. • The way forward should include: • A more robust regulatory framework. • A charter-party framework that rewards energy-efficient operations. • A financial framework that give a shared cost/benefit to stakeholders for uptake of new technologies or new operation processes. Thank YouFor more information, please contact:Dr. Zabi BazariShip Energy Services ManagerEnvironment - SMTLloyd’s Register71 Fenchurch StreetLondon, EC3M 4BST +44 (0)20 7423 1756E zabi.bazari@lr.orgw www.lr.org/marine Services are provided by members of the Lloyds Register Group. For further information visit www.lr.org/entities 8