The document summarizes key findings from a PhD thesis on greening the maritime industry. It discusses drivers for eco-innovations like new regulations on sulfur emissions. Case studies analyzed partnerships for developing environmental technologies and potential business models for suppliers. Regulations and partnerships were found to motivate eco-innovations, while collaborations helped match suppliers with customers and test technologies. Business models bundling installation, service, and monitoring into packages could increase supplier value by moving from product to service focus.

1. GREENING OF THE MARITIME
INDUSTRY
A short summary of Ph.D. thesis by Roberto Rivas Hermann, Aalborg University
in cooperation with MARCOD
November 2015

2. Setting the scene
The greening of the marine industry has been investigated in the now finished Ph.D. study.
Special attention has been given to the interplay between requirements in the maritime
environmental legislation, market demands and development of product and service eco-
innovations.
“The global market for ship repair and maintenance was estimated at 18,5
billion USD, with 50% covering labour costs and the other 50% the spare
parts and subcontracts with suppliers”.
Danish marine equipment suppliers and service providers can integrate environmental
technologies in different phases of ships’ life: research and design, construction, operation and
end-of-life.
In these supply chains, there are new demands for environmental products and services from
both the market and from legislation. For example, during operation, requirements towards
for example energy efficiency and the environment, become a key driver for retrofitting ships
with environmental technologies.
The International Maritime Organisation (IMO) has approved more than 40 environmental
conventions and 800 environmental regulations since 1958.
In the period 2010-2020, the type of environmental technologies is diverse both for new ships
and for existing ships subject to changes (retrofit) for installing these kinds of technologies
(Table 1)
2

3. Technology Construction Operation End of Life
Low sulphur heavy fuel oil
SOx scrubber
Pure LNG engine
Dual-fuel engine
Exhaust gas recirculation
Selective catalytic reduction
Propulsion efficiency devices
Waste heat recovery
Shaft generators
Hull shape optimisation
Smaller engine/de-rating (speed reduction)
System efficiency improvement
Hybrid propulsion system
Ballast Water Treatment System
Low NOx tuning
Lightweight constructions
Ship recycling
Selection of environmental technology required by environmental regulations
2010-2020. Source: DNV (2012)
Table 1
3

4. Adding value to the services provided
In the past 20 years, the once important shipbuilding sector in Northern Jutland has changed
from new ship constructions (ship yards) into a more complex network of maritime service
and equipment supplier firms.
These suppliers are integrated into the value chains of four industrial sectors: shipping, fishing,
offshore oil and gas and offshore wind power. With the support of intermediaries (such as
MARCOD and local ports), some business networks of suppliers have been established with
these main characteristics:
Formal networks through a management board, paid fees and a website.
Provision of services or services associated with particular products
(such as installation of refrigeration equipment in fishing vessels)
The offer of new products and services related to environmental protection.
The maritime networks acknowledge that the potential market of environmental technologies
brings opportunities during the construction of new ships, but also during operation and
retrofitting of existing ships.
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5. The focus of the PhD thesis is to improve the understanding of how Danish maritime suppliers,
in particular those in Northern Jutland, can deliver environmental products and services to the
shipping industry.
In other words:
How can value be added to the services provided by the maritime cluster in Northern Jutland?
A multiple case study is made in order to analyse four important conditions for the current
maritime clean tech initiatives:
1. Drivers for environmental technologies,
2. Partnerships for cleaner shipping,
3. Business models for environmental products and services
4. The role of intermediaries such as networks and cluster managers, in environmental
retrofit projects.
5

6. question
6

7. Question 1: Drivers for maritime eco-innovations
A case study of sulphur content regulation on marine fuels in Northern Europe
The main findings of this case study can be summarized as:
The price difference between low sulphur graded fuels and heavy fuel oil opens opportunities
for alternative means of compliance with the low sulphur regulation. Two of these means of
compliance could be clear opportunities for suppliers from Northern Jutland:
a) Sulphur scrubbers can be installed in ships in order to wash out the sulphur content in the
smoke emissons. However, the solutions are only slowly accepted by stakeholders due to:
A wide perception that the technology is on testing status and is expensive to install
Lack of reception facilities at the ports
A long time span between company decisions and certification and installation of units.
b) Liquified Natural Gas (LNG) is increasingly seen by authorities as a viable technology of
compliance. However, some challenges ahead for maritime suppliers in Northern Jutland:
Lack of bunkering infrastructure, but partly addressed through EU funds
Bunkering regulations need to be created and harmonised for Sulphur
Emission Control Areas (SECA)
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8. There is no consensus among the interviewed stakeholders about the value of installing
environmental technology on board. It is either considered as an extra cost or as a potential
element for creating value for customers.
From the shipowners’ perspective, voluntary programs as the Clean Shipping Index are
instruments that improve the company’s image and in turn attracts customers. Yet, they have
not been fully promoted in the industry, because of their fragmentation in several different
labelling schemes.
“All these regulations come with costs, and therefore we are assessing
future risks [associated with these regulations]. It is our strategy to look
at very early stages and try to tackle from there on. Further, this implies
abatement of future risks and future costs to be ahead of the game”
(Shipowner).
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9. The role of
intermediaries in green
retrofit projects:
THE HOW (II)
Business
models for
environmental products
and services:
THE HOW (III)
Drivers for
environmetal products
and services:
THE WHY
Developing products
and services through
partnerships:
THE HOW
9

10. question
Question 2: Partnerships for eco-innovation:
Two Danish case studies
The experience from two partnerships, the Partnership for Cleaner Shipping and the Green Ship
of the Future is analysed in order to understand, why the actors in the Danish maritime clusters
create partnerships for greening of the industry. Several factors can be highlighted:
The partnerships are motivated by environmental regulations
Developing competences and creating end-user supplier alliances for maritime
eco-innovations
Creates a niche for collaborative development and testing
Matchmaking and creating supply networks among national suppliers
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11. In the case study, the processes and outcomes of two partnerships in the
Danish shipping industry were analysed. Some of the main contributions can
be listed in the following way:
Northern Jutland Maritime Cluster
Some maritime service firms in Northern Jutland are already part of the studied partnerships.
The case provides insights to practitioners (such as MARCOD, regional authorities), of possible
replication of these partnerships at a local level in a more systematic way in order to support
exchange of knowledge and growth.
Pilot projects can be developed in the region, following similar principles used in the
partnerships, for example regarding participation, the scope of activities and roles of different
actors.
Generalization to other contexts
Processes and outcomes of partnerships for eco-innovation can be evaluated and developed
according to three elements: participation, the scope of activities and roles.
Cluster management organizations can consider these aspects, when planning possible
partnerships for cleaner technologies.
The work provides insights to practitioners on how to overcome the tension between open
and innovation-based networking on the one side and closed and development-oriented
collaboration on the other side.
11

12. question
12

13. Question 3: Business models for product and service
eco-innovations:
A case study of ballast water treatment systems (BWTS)
The purpose of this study is to understand how to generate value for maritime service suppliers.
The issue of investigation was:
Which business model will lead to a profitable relationship between service supplying SMEs
networks, equipment manufacturers and shipyards?
In the BWTS market, one can identify a combination of business models in the different phases
of the BWTS life cycle (Figure 3). However, the actors have not yet tried out any business models:
product service-system, where the shipowners pay per volume of water treated,
rather than for the equipment
re-think BWTS from a sold product to a service system that could be built
around BWTS products
complete packages of installation, service and monitoring from a BWTS consortia
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14. Research methods in a snapshot
An exploratory case study of ballast water treatment systems was made with two hypothesis:
A Product Service-System (PSS) can be characterized as payment for a service (for example
volume of water treated), rather than for a product.
The Danish BWTS manufacturers, service firms, shipyards and shipowners were interviewed.
Manufacturing
Few BWTS units manufactured
Manufacturers with leading role in the supply chain
Characteristics of the business model in the different phases of the BWTS life cycle
Hypothesis I: “Current business models contain
elements of Product Service-Systems in the market
niche of ballast water treatment systems”
Hypothesis II: “These elements could be basis
for increasing value in the offering of integrated
services and products to the market”
Installation
Shipyards as “hubs” of collaboration between service suppliers,
manufacturers and shipowners
Operation
Manufacturers avoid a strong fixed dependency on a single
shipyard that may limit the manufacturer’s ability to make
extensive contacts worldwide
Maritime service firms flexibility as such as flying squads
Figure 3
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15. The case study contributes to the practice in the maritime cluster of Northern
Jutland and beyond, as summarized in the table below.
Northern Jutland Maritime Cluster
The installation phase is driven by the shipowners’ needs of installation and geographical
service.
The operation phase provides new opportunities for links between manufacturers and maritime
service companies.
Generalization to other contexts
The proposed functional result PSS, Product-Service-Systems for BWTS can serve as inspiration
for Danish suppliers. There is a realistic potential to carry pilot projects given that a partnership
for ballast water is already in place, and some stakeholders have already commissioned reports
to better understand port-based BWTS.
The case presents an eco-efficient value rate model. It provides direction for innovation on a
product and PSS level, as well for business strategies and regulation development.
The case of BWTS in Denmark extends the literature on PSS through the consideration of the
maritime industry, an example of a complex OEM-supplier structure with the business dynamics
of a new market that is being created through environmental regulation.
(OEM: Original Equipment Manufacturer)
15
Table 2

16. question
Question 4: Functions of intermediaries such as
networks and cluster managers in innovation processes:
A case study of retrofit of a small island ferry with clean technology
The case study of the partnership sheds light on processes and outcomes deriving from cluster-
based test projects in the maritime industry. The case study includes a closer look to the role of the
organizations that facilitate these collaborative networks and the innovation processes therein.
The focus was on small island ferries and demonstration projects
In the case study we identified several functions provided by the intermediary MARCOD (Table 3).
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17. The main contributions of the case study to the practice are:
The research process was carried out as a self-reflexive task by all actors involved.
The list of functions of intermediaries provides further ideas to cluster management
organizations (such as not only in the maritime industry), to define competences of their
employees and further areas of support to local firms.
The roles of intermediaries are well described functions in the literature.
The function as technological knowledge partners can help the process of selecting the “right” actors
Key functions played by the intermediary MARCOD in the retrofit of the Læsø FerryTable 3
Foresight and
forecasting
Scanning and
information
processing
Brokering
(Collector)
Broad
networking
Setting up
adhoc groups
Knowledge
recombination
Brokering
Increasing
connectivity
Follow up
adhoc groups
Foresight about regulatory push in the
shipping industry: sulphur regulations
on fuels
Forecasting new products/ services to
respond to the demand rising from this
new regulation
Filtering technical options for the
demonstration project
Scoping the project
Collecting proposals of ships where the
demonstration project could be
developed
Collecting more specific technical
proposals
Elaborating a detailed budget
Organizing maritime business
conference
Initial idea of a 1:1 scale demonstration:
the green ferry retrofit
Inviting to open meetings where several
suppliers participate
Organizing a in situ visit on board the
vessel
Preparing a catalogue of technology to
be installed in the demonstration projects
The consultant from the intermediary
organization MARCOD used his previous
knowledge tp propose the project SEMS
Intermediaries provide potential
solutions for a SEMS prototype
Intermediaries select the solutions and
partners
Finding a third party approver for the
HVAC system
Invite relevant external partners
Defining partner role in the development
of SEMS
Fundraising
Orchestrating adhoc group activities
Following up initial commitments
Initiation Development
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18. Conclusions
Greening of the maritime industry:
What are the insights of this PhD thesis?
A key focus on the cleaner shipping “in the making”: the four areas of inquiry paid particular
attention to the role of suppliers, end-users and intermediaries in the supply of environmental
products and services.
The four case studies highlight how suppliers respond to different sets of drivers.
One outcome is that maritime service and equipment suppliers are not passive actors. Instead,
they actively engage along with end-users in the co-creation of new environmental products
and services.
Partnerships and pilot projects can be seen as “experimental spaces” or living labs of learning
about the relationships taking place in the supply chains. As an example, some big players
(equipment manufacturers) get advantages of these partnerships as for example influence
the regulation setting through technical norms.
Greening of the maritime industry:
Implications to business models and cluster performance - a long term perspective
Several areas of research and further collaboration in partnerships between the different
actors are relevant in the future.
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19. New networks and collaborative projects could be formed around cleaner technologies such as:
Composite materials
Electrical ferries
Ship decommissioning
Technologies related to the ballast water convention (soon to be approved)
Market drivers have also influence on the demand of environmental products and services
by shipowners. Business-to-business customers influence the market through eco-labelling
standards. The environmental impacts of seaborne transportation are seen as part of the
assessment criteria.
The “triple helix” relations between industry, universities and governmental institutions in the
cluster take importance in the development of new competences to respond to the demands
of environmental products and services. Ongoing competence development initiatives in the
Northern Jutland maritime cluster are an example of this trend (such as through MARCOD)
In terms of business models, the following could be proposed for further research and
development:
More flexible contracts between service firms and equipment suppliers
A closer analysis on the business models in different phases of a product’s life cycle. Here
comes into play the role of intermediaries in creating capacities and promoting alternative
perspectives among suppliers and end-users.
An open perspective on possible new type(s) of ownership structure. My thesis did not
attempt to be a broad survey of the different possible cases, but instead an in-depth
analysis of a model with BWTS as example.
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20. References to published articles:
1. Rivas-Hermann, R. and Remmen, A. (2015) Drivers for eco-innovation in the shipping
industry: A case study of the North European emissions control area. Journal of Cleaner
Production. In review. Journal of Cleaner Production
2. Rivas-Hermann, R. Smink, C.K. and Kerndrup, S. (in press) Partnerships for environmental
technology development in the shipping industry: two Danish case studies. International
Journal for Innovation and Sustainable Development.
3. Rivas-Hermann, R. Köhler, J. and Scheepens, A. (2015) Innovation in product and
services in the shipping retrofit industry: a case study of ballast water treatment
systems. Journal of Cleaner Production. Vol 106, pp. 443-454. http://dx.doi.
org/10.1016/j.jclepro.2014.06.06231T
4. Rivas-Hermann, R. Mosgaard, M. and Kerndrup, S. (In press) Intermediaries functions
in collaborative innovation processes: retrofitting a Danish small island ferry with green
technology. International Journal for Innovation and Sustainable Development
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22. MARCOD
MARCOD is an independent maritime center which strengthens and facilitates the maritime
companies, network and competences in an international maritime industry. Our goal is to
create growth in the Blue Northern Jutland. We communicate knowledge about the maritime
industry to the Blue Northern Jutland and are a cluster secretary and development resource for
the maritime companies and network in Northern Jutland. We have extensive knowledge of the
maritime industry and a comprehensive network to the maritime participants in Denmark and
Scandinavia such as: authorities, industry organizations, associations and businesses.
The center was established in 2010 and is organized as a foundation with sponsorships from
Northern Jutland Growth Forum, Business Region North Denmark, municipalities and ports from
Northern Jutland, as well as Lauritzen Fonden, ENV Fonden and The Danish Maritime Fund.
Department of Development and Planning, Aalborg University
The field of the Department includes development and planning in a broad sense, and thereby
it reaches from the social science aspects of development (technological, environmental,
international and administrative aspects) to physical planning, sector planning, land
management, and to technical subjects such as road engineering, road safety, surveying and
mapping. The department is part the Faculty of Engineering and Science.
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23. Roberto Rivas Hermann
Roberto Rivas Hermann (León, Nicaragua, 1982) graduated as an Environmental Quality
Engineer at the University of Central America, Managua, in 2006. After some professional
experience in maritime pollution control at the environmental consulting firm EPC S/A, Roberto
worked from 2007 until 2009 at the Nitlapan Institute (University of Central America) as a
researcher for an international project on local water resource governance funded by the Danish
Research Council for Development Research, Ministry of Foreign Affairs.
In 2009 he obtained an Erasmus-Mundus scholarship to pursue the Joint European Master in
Environmental Studies at the Technical University Hamburg and Aalborg University. His MSc
thesis inquired on eco-entrepreneurship with a focus in the maritime industry of Frederikshavn.
In October 2011, Roberto began this Ph.D. project in collaboration with the Maritime Centre for
Operations and Development (MARCOD)
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24. More publications by Roberto Rivas Hermann:
www.marcod.dk