International shipping emissions return to peak 2008 levels due to insufficient energy efficiency improvements: New Report
LONDON : A new report released by UCL and UMAS shows rising GHG emissions and slowing carbon intensity reductions in international shipping between 2018 to 2022. The study builds on the IMO’s Third and Fourth GHG Studies, of which both organisations are authors of, offering valuable insights into the sector’s response to global events and policy developments. The report highlights the interplay of factors influencing emissions trends in the container, oil tanker, bulk carrier and cruise segment, responsible for approximately 70% of the shipping sector’s emissions. While some efficiency improvements are observed across various segments, the continued growth in transport work, despite the blip during the Covid-19 pandemic, necessitates further action to achieve ambitious emissions reduction targets set in the IMO’s Revised GHG strategy adopted last year.
The Covid-19 pandemic had a significant but transient impact on the trends observed. In 2020, the pandemic-induced reduction in trade led to a decrease in transport work and a subsequent reduction in total emissions but this trend was quickly reversed post-pandemic with a surge in trade in 2021 resulting in a spike in transport work, reduced efficiency, faster average speeds, consequently increasing overall emissions.
Dr Tristan Smith, Professor of Energy and Transport at the UCL Energy Institute, said: “The IMO has imminent key decisions on both efficiency and energy policy in 2025. The message from this analysis is that the fleet actually has a latent efficiency opportunity – because during the period to 2022, utilisation and speeds of many ship categories actually trended in directions countering efficiency improvements. But these are trends that can be rapidly reversed with minimal technological intervention and should also come with cost reductions to trade. The analysis also shows that market forces and weak regulation will not crystallise these potential efficiencies – increasing the stringency and efficacy of CII regulation will be key if 2022-2030 is to achieve the 20-30% GHG reductions committed to in IMO’s revised strategy.” The low rate of carbon intensity/energy efficiency improvement (2012-2022) can be attributed to weak drivers of further efficiency after the initial efficiency ‘corrections’ on both ship speed and design in 2008-12. Known market barriers and failures inhibiting business case and motivation for efficiency improvements and continue to leave many technical and operational efficiency measures under-used. The results also evidence the low efficacy of the EEDI regulation in driving fleet wide efficiency improvement. The 2018-2022 period shows only a small increase in transport work and tonne nautical miles of ~ 1% p.a., significantly lower than ~ 3% p.a. growth observed in 2008-2018. Similarly the trend in carbon intensity has slowed with an estimated 1.1% p.a. reduction 2018-2022, contrasting with higher average of ~ 3% improvements over the period 2008-2018.
The rapid efficiency improvements achieved in 2008-2012, including both operational improvements induced through slow steaming and technology improvements that such as ‘eco ships’ contributed technical efficiency gains, appear to have plateaued. The absence of any driver beyond market forces and IMO’s EEDI regulation limited the incentive to go beyond the ‘lowest hanging fruit’ in efficiency. This implies that the CII regulation that entered into force in 2023 needs to have both stringency and enforcement to drive strong efficiency improvements in line with the IMO’s revised strategy, otherwise the efficiency opportunity will be left behind.
Dr Haydn Francis, Consultant at UMAS, said: “This analysis reveals a stagnation in emissions reductions from international shipping since 2018 and highlights the need for renewed efforts in fleet efficiency and carbon intensity improvements. While this can in part be attributed to the effects of COVID-19 on supply chains, there remains a clear need to focus on targeted strategies that address the varying trends across segments and support a cohesive path toward decarbonization.”
The report dives deeper into the specifics of trends in individual ship types and their constituent ship sizes, which provides some further explanation for the lacklustre improvement in carbon intensity 2018-2022. Even over the period 2018-2022, many individual segments of international shipping have seen reductions in productivity – ships are spending more time at berth, less time at sea, and in many instances the ‘median’ ship is doing less useful transport work per year (when they are loaded, many ships have smaller cargoes in 2022 than in 2018). This is against a backdrop of continued ordering – tonnage has increased counter to the trends in decreasing demand for different segments (e.g. large oil tankers). This helps to explain how in one example (oil tankers) the overall trend between 2018 and 2022 there is an improvement in AER (Annual Efficiency Ratio – the carbon intensity measured assuming 100% utilisation of a ship’s cargo carrying capacity), whilst over the same period the EEOI (Energy Efficiency Operational Indicator, which considers actual cargo carried), has deteriorated. This is particularly important given EEOI is what matters when considering the long-run trend in absolute emissions as a function of demand for transport and shows its critical not to take AER improvement as a positive sign if it is not also supported with a trend in EEOI improvement.
Fortunately, the explanation is also an opportunity – if demand in different segments of international shipping comes more into line with the fleet capacity/supply over the coming years, there is a lot of potential for higher utilisation and rapid improvement in operational carbon intensity as measured by EEOI – given average ship sizes are higher, technical efficiency of individual ship is (modestly) lower and average speeds are, at least in 2022, remaining low.