Collaboration and shared learning amongst stakeholders will be vital to getting full value from the data captured as well as in achieving regulatory goals.
The International Maritime Organisation’s (IMO) greenhouse gas (GHG) strategy is to reach net-zero emissions from international shipping by or around 2050, and there are various checkpoints to meet along the way.
Complete and accurate data will be needed to know whether the targets are met, and at the Marine Environment Protection Committee’s latest session (MEPC 81), in spring 2024, agreed amendments to Appendix IX of MARPOL Annex VI showed the IMO increasing interest in securing more complete data on ship emissions.
The amendments will enter into force in August 2025 and will require the submission of additional data to IMO’s document collection system (DCS).
The carbon intensity indicator (CII) regulations are already heavily reliant upon data, not only to ensure that the attained annual operational CII can be correctly calculated, verified and recorded, but also so that shipowners (and charterers) can monitor how the vessel is performing. The calculation also offers guidance on whether the ship’s operation needs to be adjusted to meet the required annual operational CII.
Knowledge sharing in shipping
Any discussion of CII regulations must acknowledge the problems associated with them, including the apparent unfairness and inefficiencies that have perhaps watered down their impact.
Conversely, deeper conversations between owners and charterers about data captured (in part) by these regulations must be seen as a real positive.
It would be fair to say that there is nervousness among stakeholders when it comes to data transparency and sharing. However, the regulations have increased the need for owners and charterers to be on the same page about the ship’s operational efficiency.
The regulations have, therefore, prompted more dialogue between owners and charterers about accuracy, transparency and the sharing of data.
Industry initiatives like the Sea Cargo Charter are encouraging that dialogue, and its expansion in April 2022 to include shipowners allows charterers and shipowners to monitor and report their emissions under a common framework.
Cost will also always be a driver for shipping and, in this context too, data is proving to be key.
The incentive to ensure data accuracy is clear. Taking the European Union’s Emission Trading System as an example, emissions are now directly attributable to a cost. As this will, in general, be passed down the charterparty chain and on to the end user, charterers have an interest that goes beyond the cost of fuel itself and includes reducing their EU allowance cost exposure.
Furthermore, with the expected introduction in 2027 of the IMO’s market-based measures – one an economic measure and one a technical fuel standard – the focus on cost will only keep on growing. So too will the focus on data truth, transparency and verification.
The true costs of change
Not all costs can be immediately absorbed or passed on as part of the trade when it comes to decarbonisation. The cost of energy efficiency technologies (EET), or alternative energy sources like wind propulsion, may be prohibitive to an owner unless there is cost sharing or financing available. Nevertheless, understanding the savings any given EET or wind technology may provide will require complete and accurate data and analysis.
For owners and charterers, greater consistency of data will help develop more transparent methodologies to calculate the true impact of EETs.
The framework provided by Poseidon Principles to integrate climate considerations into ship financing also depends upon high-quality data and analysis. And for future fuels and technologies, obtaining data, for example from pilot projects, will allow for more informed discussion and fact-based decisions.
Scrutiny of data and data sources will therefore inevitably increase, as a reflection of the critical role transparency plays in realising regulatory, commercial or voluntary objectives. Verification and certification will continue to be imperative, as will the clarity of the frameworks within which the data is being used.
And to get full value from the data captured, collaboration and shared learning amongst stakeholders will be vital to drive the energy transition.
Commercial considerations that act as a brake to information sharing must therefore be weighed up against the risk of missing important pieces of the decarbonisation jigsaw because one stakeholder holds on to data that would be useful for another.
Good work is being done by many to get the shipping industry to net zero, but a joining up of data and knowledge will be vital if we are to use it in the timeliest way and for maximum impact.
Helen Barden, Senior Solicitor – External Affairs, NorthStandard
To find out more about NorthStandard and its work on decarbonisation, visit north-standard.com
-
IFRS 17: Making your financial controls automation truly work for you
- September 26
Shifting towards a more automated and streamlined workstream can free up time for insurers to critically analyse results that inform future financial planning.
-
Flood resilience: Water, water everywhere…
- September 11
Floods are one of the most complex natural perils with highly localised impacts, making them challenging to insure and data is key to the effective design of an affordable product to protect the vulnerable.
-
Contentious losses: Evidence-led forensic investigations stand the test of time
- May 17
Even minor cracks in evidence capture will become exposed when it comes to recovery and repudiation. Forensic investigations form part and parcel of many insurance claims in the Asia-Pac region. Whether a loss is complex, costly, or if there are expected to be questions down the line around causation and liability, insurers and their loss […]
-
Insurtech: Six tech predictions for the insurance sector in 2024
- January 11
2023 was undoubtedly the year artificial intelligence (AI) went mainstream in the insurance industry. Many leaders are now entering 2024 with high, and potentially inflated, expectations on the potential of AI to ignite an era of accelerated technology led change. Fintechs are seizing the moment, finding ways to bring value to traditional insurers. Insurers are […]
-
BHSI | Managing non-Asian exposure in long-tail lines
While US-exposed business can look attractive to Asian carriers, managing the volatility around the long-term results and the ability to model those losses are crucial, say BHSI’s Marc Breuil and Marcus Portbury.
-
Sedgwick | To Handle CAT Claims Well, Multi-Step Preparation is Key
When it comes to risk, it’s not a matter of “if” it’s a matter of “when” an event will occur.
-
HSBC Asset Management | Is it time to relook at Asian currency bonds?
With diversification and performance high on investors’ agendas, it seems a good time for global portfolios to revive allocations in Asian local currency bonds – including Hong Kong dollar (HKD) bonds.
-
PineBridge Investments | Why Asian insurers are exploring private credit and CLOs
The recent rollout of risk-based capital regimes across Asia calls for a closer alignment between insurers’ assets and liabilities. We explore potential ways to maintain a healthy investment yield and robust returns on regulatory capital.
Helen Barden, NorthStandard
Maritime energy transition: Data dialogue key to achieving decarbonisation goals
Helen Barden, NorthStandard