DET NORSKE VERITAS
WBCSD MARITIME SECTOR PROJECT
PROJECT PROPOSAL
1
INTRODUCTION
Seaborne transportation is relatively accessible, significantly less costly and more
environmentally friendly than other means of transport such as trucks, air and rail. A
globalized world cannot manage without shipping and the world fleet is expected to grow
with the world economy. It is therefore essential for the maritime industry, including the
users of seaborne transportation, to map a way forward which is environmentally friendly
and at the same time cost-efficient and workable in terms of legislation and other
frameworks.
Shipping has many stakeholders, who have different expectations. Shipping must adapt to
global concerns around transparency and reporting, and shipping must satisfy corporate
responsibility expectations also to make the industry more attractive as a work place for
future generations.
The most urgent issues for shipping at present are around emissions to air. IMO has
recently mapped out a way forward to deal with SOx, NOx and particulate matter related
emissions from ships. This clarifies the situation and leaves the emission of green house
gases with particular focus on CO2 as the big remaining issue.
The pressure on shipping to contribute with CO2 emission reductions in line with other
industry sectors is therefore increasing. Shipping is in this setting in a different position
than e.g. the automotive industry, which may see a zero carbon future through
electrification or other means. The available fuels for shipping on a 20 year or longer
horizon will most probably be carbon based and include conventional fuel oils, distillates
and natural gas. This leaves aggressive fuel saving as the way forward to reduce CO2
emissions in the short and medium term. The industry must also consider the possibility
that the society at large towards 2050 will demand more, with the implication that yet not
identified fuels and technologies may have to be considered.
Recently the air plane manufacturers announced programs to reduce green house gas
emissions from future generation planes by as much as 50%. Shipping should benchmark
itself against such targets.
Aggressive fuel saving to reduce CO2 emissions in shipping can be accomplished by a
combination of actions in five different areas:

Deployment of new technology onboard

Enhanced ship management
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DET NORSKE VERITAS
WBCSD MARITIME SECTOR PROJECT
PROJECT PROPOSAL

Enhanced logistics

Removal of port induced restrictions

Deployment of yet not identified fuels and technology
The analogy with the automotive industry is obvious; the deployment of technology will
provide the industry with ships with enhanced emission characteristics (ref. cars with
stated CO2 emission per km). Changes to how the ships are used through enhanced ship
management and cargo logistic practices will further reduce the emissions (ref. taxation
of car fuels and other incentives to push for more fuel efficient use of cars). Enhanced
port and terminal operations may contribute to remove congestion, quicker port turnaround and fewer physical restrictions on ships (ref. road construction).
The full potential of fuel saving can only be accomplished by a joint effort which
involves cargo owners, charterers and preferably port operators in addition to ship
owners, yards and equipment manufacturers. The rapidly escalating fuel prices should
represent a common driver and a source of funding of the required investments.
Assuming that the world fleet burns 400 million tonnes of fuel p.a. at a price of 500
USD/tonne, a 30 % fuel saving would represent a cost saving for the industry in the range
of 60 bill. USD p.a. The fuel price is expected to increase with higher crude oil prices and
a change towards distillates as the primary ship fuel.
It is essential for the industry, when legislators and other parties are now working on new
legislative frameworks in IMO and as a preparation for the Copenhagen 2009 conference,
to ensure that the results are overall suitable as a practical way forward.
2
WBCSD SECTOR INITIATIVE
Over the last 10 years, the World Business Council for Sustainable Development
(WBCSD) has been the platform for successful sector projects within forestry, mining
and minerals, cement industry, mobility (car manufacturers) and electricity utilities. The
aim of the WBCSD sector projects is generally to confront the key global sustainable
development issues facing a particular industry, adopting a participatory approach to
developing solutions broadly supported by stakeholders. They are voluntary initiatives
demonstrating the power of partnership and the commitment of companies to work with
others to manage some of the most difficult dilemmas in their industries. The WBCSD
provides the process, quality control and outreach competency for these projects. It
offers a credible, neutral platform for companies in an industry sector to jointly
investigate sustainability challenges. It coordinates the work program, ensures quality
control throughout and markets and disseminates the output.
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DET NORSKE VERITAS
WBCSD MARITIME SECTOR PROJECT
PROJECT PROPOSAL
WBCSD is very well positioned to take a similar role in the maritime industry, with the
purpose to provide a balanced view on different ways forward and to recommend on
workable legislation and frameworks and their implementation.
After the WBCSD council meeting in October 2007, Captain Wei (CEO of China Ocean
Shipping Company, COSCO) and Henrik Madsen (CEO of Det Norske Veritas, DNV)
decided to explore the possibility of setting up a maritime sector project through the
WBCSD. A first scoping meeting was held in March 2008. This project proposal is
based on the initial discussions with the WBCSD and later meetings with three core
project participants: DNV, COSCO and Leif Hoegh.
3
PROJECT PROPOSAL
Several sustainability issues and dilemmas are on the agenda within the maritime sector.
A common sector approach or position on these will be more powerful and create more
trust than if individual companies try to manage them in isolation. The following three
areas are proposed for the WBCSD sector initiative.
3.1
CO2 emissions from shipping – scenarios towards 2050
CO2 emissions from shipping in 2007 are not known very accurately. DNV Research and
Innovation has estimated annual emissions to some 864 million ton of CO2 by a bottom
up approach considering the different ship types and their trading patterns. Another study
by Intertanko in 2007 is based on fuel used by the shipping industry and estimate
emissions of 1.160 million ton of CO2. Total man-made CO2 emissions in the world in
2007 are estimated at about 32 billion tons and shipping thus contributes some 3% of
total CO2 emissions.
The future CO2 emissions from shipping will from a bottom-up point-of-view depend on
the feasible reductions per ship from technology implementation and improved
operational practices and how this aggregates to total predicted emission levels given
different scenarios for the growth of the world fleet. The future CO2 emissions from
shipping will also from a top-down point-of-view depend on how the society at large
formulates its expectations to and the goals for the shipping industry. A successful
approach needs to be balanced, taking into consideration legacy issues such as the speed
of replacement of older tonnage, the time required to implement new practices in a truly
global industry and the time required to ratify and implement new legislation in a way
which secures a level playing field between the parties in the industry.
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WBCSD MARITIME SECTOR PROJECT
PROJECT PROPOSAL
It is the proposal to approach the task by establishing a limited number of scenarios
which reflect different CO2 reduction ambition levels and assess the feasibility and
consequences in terms of implementation.
3.2
Sustainability incentives in the logistics chain
IMO is seeking to guide the implementation of new technology by introduction of a ship
CO2 design index. This approach should be supported as a workable way for legislators
to set increasingly strict functional requirements for CO2 emissions, for ship owners to
formulate clearly stated specifications for newbuildings and for cargo owners and
charterers to compare the CO2 performance of different ships.
It is harder to see how legislators can drive new behaviour which influences effectively
on how the ships are used. Current attempts involve an operational CO2 index for ships
and different schemes for CO2 pricing. The first attempt has the limitation that the
operational deployment of the ship results from the co-operation between the cargo
owner or charterer and the ship owner. An operational ship index will therefore vary from
charter to charter. A scheme for CO2 pricing, e.g. a cap and trade scheme will need to be
global and therefore complicated to put in place and manage. It is worthwhile to observe
that even a high CO2 price, e.g. 60 USD/tonne CO2, corresponds to an increase in fuel
cost of only 20 USD/tonne. This is a much smaller number – maybe only 10-20% - of the
potential from fuel cost saving.
Fuel saving and related CO2 emission reductions from enhanced operations should
therefore result primarily from actions taken by the industry itself. The potentially large
reduced costs from fuel saving, as demonstrated by the two examples below, should serve
as an incentive for responsible cargo owners, charterers and ship owners to assess how
they can co-operate in new ways to enhance or change the ship management and logistics
practices. It is envisaged that this assessment should include a review of current standard
chartering contract formats in order to align the shared incentives between the parties to
make large scale fuel saving happen.


The annual fuel consumption for a post-panmax container ship, an aframax tanker and a
handymax bulk carrier are typically 38.000, 17.000 and 8.000 tonnes per year. Assuming
a fuel price in the range of 500 – 800 USD/tonne and a fuel saving potential in the range
of 20 – 30 %, the prospective corresponding cost saving per annum are 3.8 – 9, 1.7 – 4.1
and 0.9 – 2.1 mill. USD.
Assuming that the world fleet consumes approximately 400 million tonnes of fuel per
annum, the aggregated value of a 20 – 30 % fuel saving at a fuel price of 500 – 800
USD/tonne is 40 – 96 bill. USD per annum.
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DET NORSKE VERITAS
WBCSD MARITIME SECTOR PROJECT
PROJECT PROPOSAL
It is the proposal to approach the task by bringing together cargo owners and shipping
companies to assess how it is possible to align the cooperation and provide common
incentives to reduce fuel consumption through better technical management and logistics.
3.3
Accountability and reporting
The maritime industry must prepare for more transparency and greater scrutiny of its
environmental performance and the performance in other sustainability related areas. It is
in this respect important to notice that the possible implementation of modified best CO2
and fuel related operation practices may require new reporting practices.
It will be important to identify and take stock of the key issues and dilemmas for the
sector, how these have changed over the years, what is driving this change, what are the
trends that the companies need to consider in their business models for the future and
who are the key players in this agenda.
It is proposed that the sector should work towards common reporting practices based on
identified new needs (e.g. related to emissions to air mitigation) and on recognized
guidelines and standards such as the Sustainability Reporting Guidelines of GRI
(including the requirements of GRI Logistics and Transportation Sector Supplement) and
the AA 1000 Principles of AccounAbility.
Key challenges that should be addressed are how to:

determine the most critical sustainability indicators for the industry that respond to
stakeholder scrutiny and expectations,

develop forward looking performance indicators that can guide sustainable
development in the maritime sector, and

ensure consistency and comparability of the reports to facilitate benchmark of
performance in the maritime sector.
The outcome should be a set of common performance indicators for the maritime sector
that align the daily operations and business decision making processes with a best
practice guideline for sustainability in shipping that will assist the maritime sector in
managing, reporting and communicating their sustainability performance.
4
NEXT STEPS
DNV will invite relevant WBCSD member companies to a workshop to further discuss
this proposal and to define the final scope of a WBCSD maritime sector initiative.
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DET NORSKE VERITAS
WBCSD MARITIME SECTOR PROJECT
PROJECT PROPOSAL
During this meeting, it will also be decided what other companies should be invited to
join the initiative in order to provide an efficient and powerful platform for the sector on
these topics. Henrik Madsen (DNV) and Captain Wei (COSCO) will co-chair the
project. Project organisation beyond this will be proposed during the workshop.
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