Unni has been writing extensively about the international bunkering and shipping market since 1997, when she joined the team that built up the Bunkerworld news service. She has earned a reputation for accurate and insightful reporting on the Bunkerworld and Sustainable Shipping news services, and is well respected for her analysis and editorial skills.
She has attended numerous conferences on the bunker market and environmental aspects of shipping, and regularly attends meetings at the International Maritime Organisation as a journalist, further deepening her understanding of the regulations that govern global shipping. Unni has also participated in bunker conference as a speaker and moderator, and sat on programme committees.
Unni is currently a board member of the International Bunker Industry Association (IBIA). She is the first and only journalist to be elected to the board, a testament to the confidence the bunker industry has in her as a knowledgeable and valuable industry representative.
Prior to joining Petromedia, which is now part of Platts, she worked with an international market intelligence dept. of the Financial Times Group in London. Unni is a Masters Graduate from the School of Oriental and African Studies in London, with a major in Contemporary Politics of the Middle East.
2013 marked the start of a new era of globally binding International Maritime Organization (IMO) regulations aimed at reducing greenhouse gas (GHG) emissions from shipping. A new chapter 4 to MARPOL Annex VI came into force, requiring all new ships to meet minimum energy efficiency standards, and for all ships to keep on board a Ship Energy Efficiency Management Plan (SEEMP). But these technical measures are only the beginning. As pressure grows on shipping to play its part in reducing global CO2 emissions, the introduction of market-based measures (MBMs) somewhere down the line seems inevitable.
The two main models of MBMs typically discussed are an Emissions Trading Scheme (ETS) and some form of fuel or CO2 levy. Both would put a price on carbon. But, we may ask, how high must the carbon price be to encourage fuel efficiency? Many argue that only a cap and trade system will guarantee CO2 reductions, but the shipping industry opposes an ETS as it seems impossibly complex to devise a fair and transparent system. A fuel or CO2 levy would be easier to implement, but there is a risk that it would simply become a tax on shipping without any discernible effect on CO2 emissions.
If the price is too low, the market incentive to improve efficiency won't have any effect. NGOs have proposed a $25 per metric tonne (pmt) carbon levy on shipping to raise $25 billion a year by 2020, of which at least $10 billion should be directed to the Green Climate Fund agreed by the UNFCCC which will seek $100 billion to be raised each year. Shipping organisations object to the sector being used as a 'cash cow' paying a disproportionate share into the fund compared to its CO2 output. A $25 pmt levy on CO2 would roughly equate to $75 pmt of bunker fuel as each mt of fuel burnt produces about three mt of CO2. The industry has sustained much bigger fuel price increases than that in the recent past without any impact whatsoever on efficiency.
Prior to the shipping rate bubble bursting in mid-2008, crude oil and bunker prices rose rapidly until they peaked at an all-time high in July 2008. But with the global economy and trade encouraging a shipping boom, rates were so good that ships were still making money, even as the price of the main IFO380 bunker fuel rose from around $60 pmt in 1999 to over $750 pmt in July 2008, according to Bunkerworld data for Singapore. Until then, it was full steam ahead and lots of newbuilds being ordered. Slow steaming only really began to be used in the container sector in 2009, when - despite relatively low bunker prices compared to the first half of 2008 - rates came under intense and sustained pressure, still seen now due to overcapacity.
So market forces pushed energy efficiency to the front of the agenda out of pure necessity, but the time may come again when rates go up to such an extent that even less energy efficient operators can make money. Slow steaming goes out the window for many operators if rates are high and customers want speedy delivery.
In this scenario, a $25 pmt carbon price would have little effect, but there is already another part of MARPOL Annex Vi that could prove to be the ultimate MBM; the global sulphur limit that could be enforced as early as 2020. The fuel cost increase associated with moving from the current 3.50% sulphur limit to 0.50% will exceed anything we're likely to see in terms of CO2 cost.
The price difference between regular high sulphur fuel (IFO380) and a distillate fuel that could meet a 0.50% limit in Singapore during the first four months of 2015 was around $200 pmt (and would be higher if oil prices where higher). The cost of distillate fuels compared to regular high sulphur fuel oil (HSFO has, over the past few years, been at premiums of 50% or more.
It is hard to envisage the IMO or anyone else agreeing on a MBM that could be any more effective at encouraging efficiency than this potential $200 pmt or 50% increase in fuel cost.
But what about ships that use scrubbers or LNG? Scrubbers mean no fuel premium and the vessel will use extra energy to run the scrubber. LNG is very clean, it may cost less than distillate fuels, but its GHG profile is dubious due to methane slip either from the ship itself (depending on the engine type) and taking well-to-propeller life cycle methane emissions into account.
There are two ways to view that. Both scrubbers and LNG entail a big upfront investment, so if we want to encourage their use we should let them keep the incentive provided by the distillate premium. Or, if we think the drawback to energy efficiency is serious, tax ships using HSFO but not those using cleaner fuels.
There is, unfortunately, a trade-off between cleaner air and less GHG emissions when shifting from HSFO to distillates. It takes energy to get the sulphur out of HSFO, either at the refinery through further processing or on the ship if using a scrubber. The question is: who pays for that extra CO2?
This text has been adapted from a Commentary in the Jan/Feb 2013 issue of the Bunker Bulletin, the Bunkerworld magazine.
you wrote: "Customers want fast transport" , so you think of Woolworth, H & M, Otto-Versand - I think of us as consumers, and we people have no influence on the global dealing companies.
We have our people's desire: be able to buy imported goods with a smaller CO2 footprint.
So I think that the IMO and the WTO need´s to speak at one table to feel the time pressure, how to reduce Emissions during transport of goods across the oceans, or otherwise to buy CO2 certificates.
COP-21 is in front of us and the IMO
I repeat once again: we consumers do not care whether a pair of jeans is 20 days or 30 days on the high seas. Almost all citizens can also pay € 85, instead of 65 €. There is a movement, called FAIRTRADE, which sees even so.
So then I come to future ship propulsion systems, which at least can be used in bulk ships immediately, and even asap in other types of ships have to be use; COP-21 in Paris is the Point of change and the IMO is strictly in the barriers.
To date, the IMO has pressed with promises (EEDI + SEEMP), to use still the oil, instead of modern wind drives.
The MEPC where not gently with the Marstall Islands.
So, Shipowners can further makes its money on the old ways with the oil driveed ships.
Now also helps no scrubber and no more Methane: it is thrown away money with little environmental effect.
You wrote it with your own words.
Modern wind drives must forth in bulk from now; in other types of ships soon.
B9shipping and Ecoliner have overtaken the Pintarig of Capt. H.B. Schwarz.
DynaRig and Pintarig had could be installed for 30 years in many ships.
At the end: also square rigged sailing ships needs an engine, maybe an electric propulsion, maybe with LNG or hydrogen, to be able to drive in calm wind conditions.
My hope ist, that you will continue your article in this direction.
Thanks, if you accept my bad english.