With regulatory changes relating to shipping emissions placing pressure on an already fatigued market, the industry is searching for answers to a complex question: How do companies remain competitive while meeting obligations to reduce carbon output along the maritime supply chain?
Shipowners are looking for any competitive advantage they can find and are constantly working to raise the bar above the business-as-usual mindset. It appears that regulatory compliance is no longer enough on its own; shipowners need to demonstrate their carbon credentials to secure a long-term charter in the current market.
To this end, maritime risk management specialists RightShip have been supporting many players in the maritime supply chain that are looking to lead the industry in decarbonisation through their Greenhouse Gas (GHG) Emissions Rating.
RightShip’s GHG Rating has been around since 2011, bringing transparency and a consistent framework to the measurement of the carbon emissions of vessels. Under this system, vessels are rated against peer ships (i.e., ships that are the same type and the same size) on an A to G scale, where A represents the most efficient ships.
The GHG Rating is also attractive to many from a purely commercial perspective. Any vessel that is more efficient burns less fuel—making it cheaper to run.
As of mid-2019, 121 organisations have access to RightShip’s GHG Rating—including 62 charterers who use it to select the most efficient ship for a voyage. This equates to approximately one in five charters, or 20% of all vessel movements around the world.
It is becoming increasingly evident that blue-chip companies want to take this carbon reduction one step further by measuring and managing scope 3 emissions along the entirety of their supply chain—thereby reducing CO2 from production to delivery and consumption.
Scope 3 emissions come from sources which are not owned or directly controlled by, but are related to, a company’s operations. These are more difficult to quantify and manage than emissions classified under scope one and two. In many cases, scope three emissions represent the largest source of a company’s emissions output—responsible for up to 90% of the total carbon impact.
RightShip’s verified carbon accounting tool takes specific information like the vessel name and IMO number, fuel type, cargo and voyage details and combines this information with the data that powers the GHG Rating.
The result? A robust calculation of the theoretical fuel consumption and equivalent carbon emissions associated with a particular voyage. With this measurement of scope three output, companies can set targets for emissions reduction and offset their supply chain emissions.
Over the last few years, Incitec Pivot Limited (IPL), a global diversified chemicals manufacturer, has demonstrated leadership in maritime decarbonisations by working toward ensuring carbon-neutral shipping activity for their operations.
Using the Carbon Accounting tool, IPL successfully offset approximately 73,000 tonnes of CO 2 for each of the financial years 2016–17 and 2017–18.
More recently, global mining company Anglo American used the scope three calculation to offset the carbon emitted for an entire ocean freight voyage from South Africa to Europe.
Anglo American has used the GHG Rating for many years to select charter party vessels. But for this particular journey, a ship operator bid for the iron ore cargo and offered to offset the emissions for the entire journey as part of the agreement.
The transit equated to 5,880 tonnes of CO2 emissions—including the ballast leg and the laden voyage, which were offset by carbon credits purchased to support the South Pole’s Gunung Salak Geothermal Energy project in Indonesia.