A study released by UCL Energy Institute and Carbon War Room claimed that vessels with higher design efficiency, as measured by the GHG Emissions Rating, save more fuel on average than design alone would indicate. The study's press release said this means, for example, that in 2012 the difference in fuel costs between a B-rated and an F-rated Capesize vessel was, on average, $5,500 per day, or nearly $1.5 million annually. In my opinion, this conclusion is unrealistic. When I checked for the daily hire for a capsize in 2012, I found that it was only $10,000 a day, meaning that if a ship saved $5,000 per day, it would be 50% cheaper than the competition. That doesn’t make sense! So, an owner doesn’t know he is $5,500 per day cheaper than his competition? Or, if he does know, doesn’t he demand a piece of the savings? So what is going on? In my opinion the key is that fuel efficiency here is defined as being analogous with the artificial "GHG Rating" instead of a ship's actual fuel consumption.
In my presentation at the 2016 GREEN4SEA Conference, a year before, I talked extensively about EEOI and its relation to MRV. I noticed that because human nature likes simple categorizations, we would like to have a single index showing us the fuel efficiency of a ship. Although a single simple index is attractive, it is utopia. Last year, in my presentation, I proved that EEOI is nothing more than a random number generator. There are indices based either on EEDI or EEOI. For example, CSI (Clean Shipping Index) and ESI (Environmental Ship Index) are based on EEOI when they try to calculate the CO2 emissions (i.e. fuel consumption) of the ship. Based on these indices, if the ship has a good performance, operators get a good discount when their vessels are entering some EU ports. They measure many different things but when they try to measure CO2 emissions, they use EEOI, therefore, the results are not correct.
In their official position paper on GHG, BIMCO -the largest shipping organization- says that “operational efficiency indices, such as the IMO Energy Efficiency Operational Indicator (EEOI), are overly simplistic or even misleading on an individual ship basis and therefore irrelevant. Also, such indices could be wrongly perceived as valid selection criteria when assessing the efficiency of a ship prior to chartering.”
When I read the study under review carefully, apart from the related press release that it was produced by many maritime news sites, I noticed that the study proves me right. The study finds no statistical difference between A/B ships and the rest except a 2% for Panamax Bulkers only (no difference for the other ship types including Containers and Tankers). Consistently reports D ships but also A/B ships being worse than E/F ships. In other words, the rating seems random, as expected. Despite this, later in the study there are ‘assumptions’ and ‘explanations’ that conclude to the result of the $5,500 daily saving. So, one would wonder, what is the purpose of these kind of studies and press releases? To justify the “Refrigerator - A,B,C” rating system? To attract more Charterers as subscribers? The conclusions of the study mention that “the results are encouraging for charterers. Charterers can readily exploit the weak or missing price signal … by hiring vessels with good GHG Ratings and low fuel consumption rates without having to pay an added premium for the privilege.” But this is not how shipping works; charters are very aware of what they pay for. If these ships were really less costly on fuel, charterers would line up to charter them first. The reason they don't is because the "GHG Rating" is not in any way representative of fuel efficiency.
In this particular study, the GHG rating is not based on EEOI but it is based on EEDI (or EVDI which is the same formula with a different name). The question is whether EEDI is a better indicator of efficiency than EEOI. I am afraid I will disappoint you again, let’s have a look into some EEDI calculations to understand why. In the ships my company builds we fit a larger than standard main engine so the ship operates near 75% MCR in REAL conditions, not at the clam sea trial conditions. Thus I operate at minimum SFOC point in real life. That saves about 8% of fuel consumption compared to a standard ship. The Regulation EEDI limit for this size ship is 5.10 gr.CO2/t-nm, the EEDI for a ship with a standard engine (6 cylinders) is 3.74 gr.CO2/t-nm and the EEDI of my Ship (with a 7 cylinder engine) is 4.31 gr.CO2/t-nm. Therefore, my ship is 15% worse on EEDI than a Standard Ship. Yet my consumption at SAME dwt and speed is 2.5 tons / day less! SO, which you would prefer; a good rating or a good fuel consumption? Don't be fooled: Yards claims that “our ship’s EEDI is 15%, 20%, etc. below the required EEDI” are no real indication of efficiency. In conclusion, the news on ships with good GHG Ratings not getting extra benefit are fake news! Because Good GHG Rating is irrelevnt to actual fuel efficiency.
Above text is an edited article of Panos Zachariadis presentation during 2017 GREEN4SEA Conference & Awards
You may view his presentation video by clicking here
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The views presented hereabove are only those of the author and not necessarily those of GREEN4SEA and are for information sharing and discussion purposes only.
Panos Zachariadis, Technical Director, Atlantic Bulk Carriers Management
Panos Zachariadis is Technical Director of Atlantic Bulk Carriers Management Ltd since 1997. From 1984 to 1997 he was Marine Superintendent in the company’s New York office. His shipping experience spans diverse areas including sea service in bulk carriers and oil tankers, dry dock repairs, new building supervision and specifications, ship operations and chartering. He holds a MSE degree in Naval Architecture and Marine Engineering from the University of Michigan. He has been attending IMO since 2004 as a member of the Greek delegation. He was extensively involved with IMO’s Goal Based Standards and the Greek study which reversed the IMO decision to make double hull bulk carriers mandatory. He was also instrumental in developing the new IMO coating standard (PSPC) for all ships’ ballast tanks. Currently he is involved in the new IMO environmental regulations for ships. He has written numerous technical guides, papers and articles and has been awarded the 2011 Efkranti Shipping Personality award for promoting Greek Shipping internationally. Member of Hellenic Chamber of Shipping and UGS technical committees, BIMCO Marine Committee, ABS European Technical Committee, BOD HELMEPA and MARTECMA.