Software Vital to Emissions' Compliance

The European Commission’s Monitoring, Reporting and Verification (MRV) rules to collect emissions data officially entered into force on July 1, 2015.

MRV Regulation 2015/757 is a first step towards cutting CO₂ emissions from maritime transport and requires operators of ships exceeding 5,000 gross tons to monitor and report their carbon emissions on all voyages to, from and between E.U. ports from 2018.

MarEx spoke to Eniram’s Maritime Director, Melvin Mathews, about his views on compliance and technology in the face of increasing emissions regulation:

Will the MRV really make a difference?

Compared to an earlier scenario devoid of regulation, MRV will certainly make a difference. When MRV reports start being publically made available for scrutiny, it will also bring a certain amount of transparency, which was non-existent. This means it will be possible to draw comparisons between vessels on their environmental impact and to a certain extent on operational efficiency (which is greatly lacking in the shipping industry today).

However, verification of just documentation is not likely to ensure total compliance of any regulation in its full spirit. The IMO regulation on SEEMP is one such example, where at the moment only verification of documentation is expected.

Will MRV drive the use of fuel efficiency software in new directions?

I believe the MRV is the first step in enforcement of emission control. In its current form it will mostly be verification of reporting documentation and perhaps stricter enforcement through scrutiny of bunker delivery notes, log book entries, etc. However, at a later stage for MRV verification, certain fuel efficiency software capable of continuous monitoring, are expected to play a vital role to establish compliance at all times during a voyage.

Will digital developments be wasted on authorities looking for bits of paper?

As with any new regulation, the initial requirements are easier to implement for wider acceptance. As of now it certainly appears that the authorities are chasing bits of paper – for example, early indications can be seen from the SECA compliance. Most shipowners are diligent in following the regulation and switch to the appropriate fuel prior to entry into the SECA area. They willingly incur the extra cost of fuel to ensure compliance.

However, there are a few unscrupulous shipowners who carry out a low-sulfur fuel changeover just before the point of entry to the port rather than at the entry to the SECA area. This means that they willfully create a paper trail of a fuel changeover without actually switching to a low-sulfur fuel prior to the designated point of SECA entry.

Such shipowners, whose vessels come from outside the SECA area and call ports deep within the Baltic Sea, make illegal profits of tens of thousands of dollars every trip. If they switch fuel at the last moment just before arrival at port in the Baltic Sea and their documentation is in order, the chances of being caught are little. Even if caught, the fines imposed are so measly compared to the profits that it is still extremely lucrative to continue the practice.

However, regulations do get tighter with time and enforcement gets stricter too. A group of leading shipowners who want proper enforcement to ensure a level playing field are now lobbying for continuous monitoring. If successful, it will mean continuous monitoring all the time in the SECA so that regulations are complied with by one and all.

The best way to do this is by collecting incorruptible digital data continuously from vessels transiting the SECA area. Another deterrent is to increase the fines for non-compliance so significantly that it discourages any illegal practices completely. I believe strongly that continuous monitoring is the way forward, and it is going to be enforced sooner rather than later.

Will the level of accuracy possible be undermined by the practicalities of, say, the accuracy with which fuel is loaded?

Continuous monitoring and digital measurement of fuel, using precision mass flow meters at the delivery / receiving vessel, will ensure accuracy of the fuel loaded.  In the absence of this, some shipowners are fully aware of the loss of fuel at delivery and have no choice but to somehow factor the loss into their business. However, the proactive ones have gone ahead and installed the required measuring equipment to prevent the loss.

How can you make terms such as “big data” and the “Internet of things” real and reachable to the average shipowner just wanting to make a profit and meet new regulations?

An average shipowner who toes the line of bare minimum compliance, perhaps also just makes average profit. The shipowners who have consistently outperformed their peers are those who have constantly innovated and rapidly changed to meet the changing marketplace. These outperformers have almost always gone beyond compliance.

However, there is a cost associated with opting for technology or solutions beyond compliance. They are the ones who have struck the right balance through foresight, appropriate leverage and mitigated risk. ROI forecasts with accurate cost-benefit analysis have ensured profit optimization. Additionally, there is always learning from past mistakes, wrong decisions, incorrect actions, etc.

Shipowners who use data, especially in real time, have an edge. Insights from data allow companies not just to correct past mistakes but also prevent erroneous and unnecessary deviations quicker and much more effectively. The real-time, plan–do–check–act (PDCA) cycle is considerably short, allowing rapid and continuous improvement. This is the reason that almost all leading shipowners either already have or are developing “War-Room style” Fleet Operations Centers, which monitor their ships and suggest corrections to operations in real time. The average shipowner not engaging in such advances brought by technology will be very quickly left behind.

Will newbuilds of the future have a different design process/outcome as a result of the use of smart sensors, data warehousing, third-party (or inhouse) data analysis, etc.?

In the past, a ship – once designed –  got built and went into routine operation. Thereafter, the original designers got very little feedback on the performance of the vessel. Part of the reason was the difficulty in quantifying the performance of the vessel and the rest was the lack of transparency in the lifecycle of the vessel. Likewise, many ships of similar design got built long before improvements or new designs were made.

However, latest technology, reliable data and accurate analytics have changed that. It is possible not just to accurately quantify performance but also to transfer that knowledge quickly to all the stakeholders of the ship lifecycle. We now live in an era when, due to rapid feedback, ship designs, engine performance, etc. are improving at a much faster pace.