Efficiency may be the one-size-fits-all solution for marine shipping

Shipping is at the nexus of the triple planetary crisis — climate, pollution, and biodiversity.

More than 80 per cent of all the stuff in our lives comes to us by ship, and shipping accounts for nearly three per cent of global CO₂ emissions. The sector’s use of heavy fuel oils contributes to air pollution and negative health outcomes for people. Ship discharges into the global ocean spread invasive species, contribute to acidification and dead zones, and are the main source of underwater noise pollution.

So it’s fair to say the shipping sector matters when it comes to putting efforts into reversing the interlinked issues the planet faces today.

Addressing climate change is at the top of the list of pressing shipping issues. Although not 1.5 C-aligned, the International Maritime Organization’s (IMO) recently agreed-upon revised climate targets ramp up ambition in the sector significantly, and are calling for absolute greenhouse gas reductions from 2008 levels of 30 per cent by 2030, 80 per cent by 2040, and net zero by 2050.

In Canada, shipping doesn’t yet have its own set of targets but is lumped in with the federal government's overall target of 40 to 45 per cent below 2005 levels by 2030 and net-zero emissions by 2050.

Whether it's 30 per cent or 40 to 45 per cent by 2030, the debate within the shipping sector on how to get there is centered on the transition away from fossil fuels, which, along with wind propulsion, is critical for the ultimate transition to zero emissions.

However, new safe and scalable zero-emission fuels, such as green methanol and hydrogen, are not yet widely available. Thus, absolute emission reductions required this decade, and the sustainability of the sector in the long term, can mostly be unlocked with efficiency.

A more efficient vessel can cover the same distance while consuming less fuel, leading to reduced GHGs and air pollutants. Efficiency saves fuel costs, and if considered appropriately, can minimize underwater noise, decrease the risk of ship strikes on marine animals, and reduce ship pollution discharges.

Furthermore, efficiency is essential in avoiding the entrenchment of fossil fuel infrastructure and ineffective greenwashed fuel solutions such as LNG, which releases methane to the atmosphere, and which has been proven to be insignificant in achieving GHG reductions, especially when compared with efficiency measures.

Regulatory tools with the potential to leverage efficiency in the shipping sector are already in place. Although often overlooked, the Carbon Intensity Indicator (CII) was adopted in 2021 and came into effect on January 1, 2023. CII, a measurement that encourages increased energy efficiency in ships, is determined by multiplying the vessel's annual fuel consumption by a carbon emissions factor to produce an estimated total carbon emissions for the year; those emissions are then divided by the vessel’s total transport work to arrive at its CII rating. CII ratings are mandated by the IMO and become more stringent each year until 2030, meaning vessels will likely need to reduce their carbon intensity over time to maintain or improve their rating.

The CII is one of the few mandatory measures on the books at the IMO that aims to reduce GHG emissions. However, to support the sector in achieving its 2030 targets and beyond, the gaps in the current CII system must be addressed.

These include the absence of a full life-cycle emissions assessment of fuels; no accounting for other climate pollutants beyond carbon dioxide, such as black carbon and methane; weak enforcement mechanisms; and patchy application across fleets on certain types of vessels. Perhaps the biggest weakness of the CII is that it is not a true measure of efficiency. Because the indicator is based on fuel consumption, it can be met by switching to problematic fuel choices, like LNG, rather than actually improving efficiency.

The good news is that the CII’s review period is due to be completed in 2026. Now is the time to reboot the CII system, closing some of the operational unfairness and putting the sector on a steep reduction pathway. Here’s the recipe for a CII that could actually fix the industry’s efficiency problem:

• True efficiency: Transforming CII into a measure that compels the sector to reduce overall fuel use/GHG emissions based on energy use (i.e., megajoules). This would drive absolute emissions reductions and increases in technical and operational efficiency, and reduce shipping’s overall demand for fuel, with important co-benefits. This would also incentivize operational measures like slowing down and using wind energy technology, two key tools for decarbonizing the sector. In this way, co-benefits would be leveraged, such as the reduction in underwater radiated noise and whale strikes. A 10 per cent reduction in global fleet speed could yield a substantial 13 per cent decrease in GHG emissions; this reduction could result in a 40 per cent decrease in underwater noise and a potential 50 per cent reduction in the risk of whale strikes. Following the recipe analogy, converting CII to megajoules per ton-mile is the core ingredient for efficiency, with other measures outlined below being secondary options.

• Strengthening rating thresholds: To meet the 2023 GHG Strategy’s goal of a 30 per cent reduction in shipping emissions by 2030, the CII should require that, by 2030, vessels improve their emissions intensity between three to five times more (33 per cent - 55 per cent reduction). Furthermore, the CII framework must be extended beyond 2030 to maintain efficiency gains even as zero-emission fuels achieve scale.
  
• Stronger enforcement: There are no penalties for failing to observe the CII framework’s requirements. According to a recent study an estimated one-third of all ships are currently non-compliant, and half of all container ships will be non-compliant by 2026. Through stringent financial penalties or the revocation of a ship’s certification, the CII framework should incorporate clear consequences for failing to meet its requirements.
  
• Transparency: CII ratings are confidential unless voluntarily disclosed by vessel owners. Without access to vessel ratings, the public cannot hold non-compliant vessel owners accountable. Moreover, without public access to the data, verifying the accuracy of those determinations is impossible.

Canada has a unique opportunity to lead the CII’s review for some truly transformative outcomes. Canada has been a leader at the IMO and domestically in reducing underwater radiated noise from shipping. Innovative approaches on the west coast to protect the acoustic habitats of southern resident killer whales have led to global initiatives, and Canada was front and centre at the IMO during the revision of its ship noise guidelines last year.

Canada has a chance to step up as it has done on ship noise and put efforts into reforming the CII. An improved CII would reward operational measures like speed reduction, which can significantly reduce noise. CII would help Canada’s aspirations on noise while reducing air pollution and carbon emissions, addressing human health impacts associated with the shipping sector and tackling climate change. Potentially, efficiency is the closest to a one-size-fits-all solution the sector will get.

Andrew Dumbrille and Elissama Menezes are co-founders of Equal Routes, a new non-profit centering communities and rights holders to create a sustainable and equitable marine shipping sector.