A new international system for rating the fuel efficiency of ocean-going vessels will be established under Japanese leadership, it has been announced. A draft amendment to the relevant treaty will be adopted at an international conference in June, and the system is expected to be introduced in 2023.
The fuel efficiency rating system will be applied to large ocean-going vessels such as container ships, oil tankers, and cruise ships. Once a year, ship owners and operators will submit fuel efficiency data to the government where the ship is registered and rate it on a five-point scale (A-E). CO2 emissions are converted from the distance traveled, the weight of the ship, and the amount of fuel consumed and compared. The lowest E, or three consecutive D’s, will require the owner to submit an improvement plan to the government where the ship is registered. They are required to add devices to improve fuel efficiency or reduce the speed at which they sail. If the ship cannot be improved, it will not be allowed to sail.
Last year, the Japanese government and 19 other countries, including China, South Korea and Germany, jointly proposed a rating system for existing ships to a committee of the International Maritime Organization (IMO).
The aim is to encourage the retirement of ships with poor fuel efficiency and increase the number of ships with high environmental performance, with the aim of improving the fuel efficiency of ships by an average of 40% or more compared to 2008 levels by 2030 and halving CO2 emissions by 2050.
Source: The Yomiuri
PSR Analysis: Environmental regulations in the shipping industry have been aggressively enforced in the past, especially in the area of measures to prevent water quality deterioration due to ballast water. These are now expected to be enforced in earnest in the area of measures to prevent CO2 emissions.
Currently, China boasts the largest number of merchant ships in the world, followed by South Korea, which ranks second with its strength in building LNG carriers and offshore vessels, and Japan, which ranks third. These three countries together account for more than 90% of the world’s total. Over the past decade, the world has been in a state of oversupply relative to demand, and as a result, the market has shrunk, and the shipbuilding business has suffered.
The shipbuilding industry is a business that is greatly influenced by capital strength, and China is gaining strength with strong government backing, while South Korea has a strong business scale with Hyundai, Samsung and Daewoo. Japan’s shipbuilding industry has been pushed back by China and South Korea, and has tried to compete by restructuring the industry, including mergers of major shipbuilding companies, but the gap between Japan and the top two countries is widening.
It has been argued that “this new system will be a positive for Japan’s sluggish shipbuilding industry, because Japanese shipbuilding is strong in high performance,” but I disagree with it. In fact, Japan’s technological advantage over China and South Korea is not that great. Even if Japan’s technology is superior to that of China and Korea at this point, it will not take long for China and Korea to catch up.
The details of the system are still to be worked out, and there are many issues to be addressed before the system goes into effect, such as who will certify fuel efficiency, what penalties will be imposed on false applications, and how the initial cost of shipbuilding will be borne.
Recently, in addition to the green economy, which is about the environment in general, the blue economy, which is about balancing business with environmental protection of the oceans, has started to become a hot topic. While research on the blue economy has just begun in Europe and the United States, Japan, as a maritime nation, would like to take the leadership in this field.
CO2 emissions from the construction of new ships may become an issue in the near future, and in light of this, the question of whether it is better for the environment to build new ships or to operate existing ones may come up. In any case, shipping and shipbuilding companies will not be allowed to continue with the status quo and will be increasingly required to be environmentally conscious. The question is who will bear the cost so as to maintain the industry as a sustainable one. PSR
Akihiro Komuro is a Research Analyst, covering Far East and Southeast Asia, for Power Systems Research
