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Microsoft Cloud Authors: Andreas Grabner, Nick Basinger, Kevin Benedict, Pat Romanski, Liz McMillan

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Bottom Line Impact of Cap and Trade

Right before MEPC 61, there was quite a bit of press regarding the potential establishment of Cap and Trade in the shipping industry. If Cap and Trade were to be established, what would be the potential bottom line impact of such a scheme on ship owners’ daily operations?

Carbon Positive publishes an interesting web site, previously mentioned several times here on Clean Air at Sea, http://www.carbonpositive.net/ . Take a look at their home page, and scroll down a bit. On the bottom right, they have prices listed for carbon credits as applicable to industry in several markets where Cap and Trade regulations are in existence.

Which figures should ship owners pay particular attention? The EU market indices. As CO2 regulations will most likely hit the EU first, these are the most relevant. Now, a VLCC operating without CO2 controls emits in excess of 100,000 tons of CO2 annually: That is an enormous bottom line impact on operations. At 17 Euros per ton, that equates to 1.7 million euros per year, for one vessel. This is equivalent to more than two month’s fuel expenses for some operations. Though some ETS have exemptions and subsidies, a ship owner with a large fleet will absolutely feel the impact, as will their shareholders. Add in the costs associated with reporting and compliance, and Cap and Trade becomes very expensive.

Ship owners simply cannot afford to wait until regulations are in place before planning to minimize their carbon footprint. What should be done?

  1. Install a performance management system.
  2. Examine the amount of time spent within the EU waters, since this is likely the first location.
  3. Install emissions monitoring. This may or may not be required by the rules, but without bona fide proof of emissions, you are at the mercy of regulatory authorities.
  4. On new builds, design the vessels for CO2 minimization in addition to fuel and cargo efficiency.
  5. Consider CO2 reduction systems, such as STI’s.

 The time to plan is now. All of the solutions mentioned above take time in order to implement. The costs of an ETS are enormous over the long term. Your business and profitability are at risk. Why chance it by sticking your head in the sand?

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I am currently Sales and Marketing Manager, Asia / Pacific for France Helices. Created in 1977 by Paul BEZZI, FRANCE HELICES is today an international company. French marine propulsion leader, FRANCE HELICES is also one of the international leaders. Research and development are a very important part of FRANCE HELICES program, the CAD's department is equipped with the latest computer technology, using most up to date programs. Our engineers and technicians determine from the customers specifications and designs, the type of propulsion system to suit the boat's application. They can also advise on the ideal choice of power and optimum gearbox ratio to obtain the maximum thrust. There are many FRANCE HELICES' inovations and patents such as Surface Drive System (SDS) which enable boats to obtain very high speed with excellent handling capabilities and high quality Controllable Pitch Propeller systems (CPP) for both professional use and pleasure application. The constant research using cavitation tunnel testing, guarantees high efficient propeller blade shape for our customers. More than 20 000 propellers per year are manufactured by FRANCE HELICES workshops. In all sizes from small sailing boats to large fishing vessels to navy boats or mega yachts. The FRANCE HELICES workshops are equipped with modern foundries capable of casting propellers up to 3.5 tons in NiBrAl. They are also equipped with CNC milling machines and CNC lathe machines. FRANCE HELICES has four sites which cover the complete range of production. The development of FRANCE HELICES, supported by shareholders places our company as a leader in the international market and insures a constant development, worldwide, in order to be close to the end user.

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