Decarbonization of Ships

 IMO Announces Technical Regulations and Operational Measures to Regulate Greenhouse Gas Emissions

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1. The main plan is to reduce the carbon intensity of ships by 70% by 2050 compared to the 2008s and reduce the total emission by 50%.

1-1. Technical Regulation : Expand the application of the Efficiency Existing Ship Index(EEXI).

- Apply to both ships built without applying the energy design efficiency index and ships built with the application of EEDI

- Ships built before 2013 (not subject to EEDI) do not meet EEXI regulations

- Existing ships must meet the value reduced by about 20% compared to the ship energy efficiency standard value (average value by ship type and ton class from 1999 to 2009)

· More than 80% of all target ships do not meet EEXI

  

1-2. Operational measures: Carbon Intensity Indicator (CII) takes effect on 1 January 2023

- Calculate the grade of each ship based on the carbon emission efficiency of the ship in operation.

· When receiving a low grade, it is necessary to prepare corrective measures / disadvantage from shippers

- CII can technically improve ship performance and minimize carbon emissions. It is possible to maintain a high grade by considering the optimal operation

- Therefore, the shipping company strives to maintain a high grade throughout the life cycle of the ship

. CII inspection and certification must be completed by January 1, 2023, and ship rating (A to E) based on flight data for the next year

☞ At the same time, many ships flock to repair (maintenance) shipyards to raise EEXI regulations and CII ratings.

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2. Number of container ship scrapped by year

(Source : Aplhaliner)

 

2-1. Maersk fleet (Owned Ship) configuration

 Maersk counts 51 ships over the age of 20 out of 317 owned ships. If the market falls significantly in 2023, 51 ships over the age of 20 are likely to be scrapped. However, only 14 ships (4.4%) are medium-sized ships of 8-12K or higher, so it is not expected to cause rapid changes in the shipping market despite the old age.

Type	3K	3-6K	6-8K	8-12K	12-17K	17K+	Total
0-4 years		7			7	6	20
5-9 years		16		12	4	25	57
10-14 years	15	45	13	28		1	102
15-19 years	18	32	14	16		7	87
20+ years	19	16	2	14			51
Total	52	116	29	70	11	39	317

 

2-2. HMM fleet (Owned Ship) configuration

 Looking at HMM's fleet composition, none of the 44 ships are over 20 years old, and 15-19 ships are also identified as small and medium-sized ships over 8K. That is, it can be seen that HMM is very free in the IMO regulation applied in 2023.

Type	3-6K	6-8K	8-12K	12-17K	17K+	Total
0-4 years			2	8	12	22
5-9 years				5		5
10-14 years	5	2	4			11
15-19 years	3	3				6
Total	8	5	6	13	12	44

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3. Countermeasure

 It seems that the response strategies of each shipping company will be different until the actual IMO regulations are applied. It is necessary to constantly check the market conditions and the possibility of scraping.

 

3-1. Options to be adopted by shipping companies

- Reduction of carbon dioxide due to speed limit of ship

  · Shaft / engine output limit (different by ship)

- Equipped with fuel conversion or energy reduction device

  · Loss due to ship occupancy and loading costs

- Ship Scrap

  · In the case of old lines (20 years), there is a high possibility of scraping due to the burden of installation costs.

 

3-2. The variable is the market condition after all.

- It is necessary to grasp the proportion of old ships owned by each shipping company

- In the current high-leverl market, it is possible to install a reduction device even if it is an old line

 

Thanks.