Shipping is facing a race against time to reduce its carbon footprint in line with International Maritime Organization targets.
Evidence from METIS Cyberspace Technology shows that a data-driven approach will be key to shipowners’ efforts to cut emissions and achieve compliance.
With the International Maritime Organization’s carbon intensity indicator (CII) regulation due to come into force in 2023, shipowners are under mounting pressure to address their vessels’ environmental performance. The CII is based on the annual efficiency ratio (AER), IMO’s measure of vessel efficiency in terms of yearly carbon dioxide emissions per tonne-mile. The CII provides ship operators with the factor by which they must reduce CO2 emissions annually to ensure continuous improvement and comply with regulations.
Applying to cruise, cargo and RoPax vessels of 5,000 GT and above, the CII regulation will see ships rated from A to E based on their AER performance. Vessels graded A or B will be offered incentives – and while C is enough to achieve compliance, D and E ratings will require corrective action.
If this is not motivation enough for owners to improve their ships’ fuel efficiency, the Poseidon Principles lending framework also uses the AER as its carbon intensity metric. Designed to encourage the decarbonisation of shipping in line with IMO objectives, the Poseidon Principles help financial institutions to factor in environmental considerations when lending to shipowners. Twenty banks, together representing more than a third of global ship financing, have so far signed up to the initiative.
Owners whose vessels are financed under the Principles and keep pace with the AER stand to benefit from more favourable terms and conditions. According to the findings of a recent report – The Sustainability Imperative by international law firm Watson Farley & Williams – a ‘lack of compliance with environmental regulations/policies’ would deter a majority of financiers from continuing to fund the maritime industry. Moreover, when asked for which aspects of environmental standards they require additional compliance, 86% of respondents answered ‘emissions targets/monitoring’.
“Environmental compliance is a priority for capital providers, who generally place great importance on the ESG performance of their portfolios,” says Mike Konstantinidis, CEO, METIS Cyberspace Technology. “The Poseidon Principles give lenders a framework for monitoring the carbon intensity of their maritime investments, which in turn encourages sustainable shipping practices from the borrower. This inspired us to develop the Predictive AER Emissions INDEX, allowing owners of vessels financed under the Principles to reap the rewards of compliance and maximise asset value.”
In a first for the industry, the METIS Predictive AER Emissions INDEX enables shipowners to calculate an asset’s standard deviation from the AER and gauge the impact of investments or operational enhancements on environmental performance and overall costs including debt servicing. In this way, users can identify the most appropriate and cost-effective means of reducing their fleet’s carbon footprint, which may be further investment, a change in operating profile or simply disposal.
“Equipped with this level of insight, shipowners can be assured of meeting their AER targets, keep emissions to a minimum in accordance with IMO regulations and avoid over-investing in assets due disposal,” explains Konstantinidis. “As an example, a pilot study saw one owner conclude to that, to cut emissions, some of its vessels would require action now or at a later date, others might never need investment, and two should be disposed of immediately.”
While METIS designed the INDEX with the Poseidon Principles in mind, the tool can support owners with any AER-related initiatives, Konstantinidis continues. “Shipowners falling short of the AER can use the INDEX to determine how various deficiencies affect overall ship performance, and those outperforming the target could use it to reduce borrowing costs or access other incentives,” he says. “With the CII regulation coming into force in the near future, these capabilities will prove invaluable.”
Yet the METIS Predictive AER Emissions INDEX is only one facet of an extensive portfolio of solutions geared towards compliance and sustainability. The company’s end-to-end, cloud-based artificial intelligence platform, METIS Space, analyses data from numerous shipboard and external sources to deliver insight on vessel performance across a range of specialised solutions, among which several directly target emissions reduction.
For instance, the CO2 Monitoring functionality provides accurate calculations of GHG emissions – not only carbon dioxide but also sulphur oxides and nitrogen oxides – and reveals how these emissions correlate with engine power and vessel speed. “Through a combination of emissions monitoring, voyage analysis and route-cost optimisation, shipowners can make quantifiable improvements to operational efficiency and environmental performance,” states Andreas Symeonidis, Marketing Manager, METIS. “Insights obtained through METIS Space have already allowed one owner to cut fuel consumption by 27.5%, with another reducing voyage time by a day and a half while using less fuel.”
Meanwhile, the METIS Electrical Power Profile Overview, a recent addition to METIS’s growing suite of analytics tools, offers a data-based evaluation of the benefits of installing electrical power sources to cover energy needs during port operations. Drawing on an advanced proprietary algorithm, the application makes its calculations using data acquired automatically by vessel sensors. The new functionality builds on METIS’s Fuel Oil Consumption Profile Overview, which harvests the vast amount of data available to METIS analytics to quantify all factors affecting a vessel’s fuel consumption based on three months’ performance monitoring and machine-learning models.
Users of METIS Space can further enhance vessel performance and reduce emissions through hull- and propeller-fouling analysis, Symeonidis continues. “To calculate the impact of hull and propeller fouling on fuel consumption, we employ a machine-learning model that is continuously retrained using the parameters of shaft power, fuel-oil calorific values, ambient temperature and seawater temperature,” he says. “The model can predict fuel consumption with an accuracy of over 97%.”
The METIS cloud platform offers additional functionality by way of optional service modules for monitoring exhaust-gas cleaning and ballast-water treatment. By helping shipowners to optimise these processes, these modules can minimise the release of harmful sulphur oxides from scrubbers as well as damage to marine life caused by the discharge of improperly treated ballast water.
Today, METIS Space is enabling efficient and environmentally friendly operations on board over 270 vessels – and as its uptake continues apace and the underlying machine-learning algorithm gathers more and more data, its ability to support emissions reduction will only improve. With decarbonisation the most pressing issue currently facing the maritime industry, the METIS cloud platform is demonstrating its considerable value to shipowners worldwide.
* CEO, METIS Cyberspace Technology