Intertanko Managing Director On New Shipping Industry Regulations

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  • Katharina Stanzel is managing director at Intertanko, a member-run trade association for owners of independent tankers.
  • She shares her thoughts about the upcoming shipping industry regulations, the future of marine bunker fuels, and industry efforts to set decarbonization targets.
  • She feels that we have changed the recruitment, so when we put a job out, we run it through checkers for the language to be neutral.

She spoke to S&P Global Platts shipping associate editor, Charlotte Bucchioni, about upcoming regulations in the shipping industry, the future of marine bunker fuels, and industry efforts to set decarbonization targets.

The Interview 

What’s your opinion on the EU Emission Trading System (ETS) being applied to shipping as announced by the European Parliament in September 2020?

The ETS is not a new discussion and we make a point of being proactive and providing commentary when industry consultations are put in place, as we want to be constructive.

The proposal from the European Commission is coming this summer. There may be this idea of having a fund [the “Ocean Fund” would support investment in green technologies and infrastructure and would be financed by revenues from auctioning allowances under the ETS], but there is nothing concrete and we don’t know what we’re shooting for.

What is important for us shipowners is that everyone understands shipping as a global business. What kept us going in the pandemic are the ships, and that’s because they go globally.

We do not think the ETS is a terrible idea and the industry is already coming to terms with the idea of a carbon levy, but we must push for Europe to come up with an integrated solution into the global system.

Ultimately, what they need to think about is keeping the global business of shipping running, and that means integrating with what will happen at the International Maritime Organization (IMO).

If trading schemes happen at a regional level, then what will be interesting is what happens to the ports just outside Europe—we could see the UK, Finland, or Russia become transshipment hubs, and I am sure there will be many other unintended consequences.

The European Commission is similarly trying to figure out what would happen and have said they have been receiving feedback on issues they hadn’t considered.

How far do you see efficiency improvements contributing to lower emissions? Is this sufficient for 2030 goals?

You can do so much with operational measures, which is what we talk about when discussing efficiency improvements. There are also modifications to the vessel, which we have investigated long before the Energy Efficiency Design Index (EEDI) came in.

Back in 2011, our technical committee was exchanging on operational and technical measures and comparing the savings that they were making by changing the hull coating for instance. The difficulty that we have been facing is that often these measures do not work cumulatively. Notwithstanding, we can achieve a lot operationally, and our members are already showing commitments.

When we come to the 2050 goals, which is the absolute, it gets more complicated. What zero carbon fuels will there be? Ammonia or hydrogen can be renewable but may not be zero carbon.

Before lockdown last year, I went to Iceland to discuss hydrogen opportunities as they have a lot of geothermal energy, and I believed they would have a lot of renewable energy from geothermal. But geothermal energy is not carbon neutral, and there is a lot of pollution that comes with it because you have sulfur in the fumes as heavy metals are dissolved.

Another shortcoming with hydrogen are the extreme temperatures. We are were working with a lot of companies to find the right material for the tanks.

But more pressing is the infrastructure issue, and that’s particularly important for tankers. In many sectors, they design a liner services where you know if you can supply fuel at these two points, you’ll be fine because they usually go from a to B, but for tankers it’s much more difficult as you could deliver the cargo virtually anywhere.

What do you think about LNG as a medium- or long-term option?

Some of our members that have LNG carriers use LNG as fuel and it makes absolute sense, as you use a fraction of the cargo for transportation – and the same goes for vessels that carry ethane and use it as a fuel.

My main concern with LNG is the belief between market participants that there are no longer issues with methane slip. When they say there is ‘no risk’, they talk about methane at the level of the engine, and that is true, as they have engineered that. But when did you ever fly over a fishing port and not see rainbow colors on the water because somebody’s spilled some diesel?

That is my biggest concern—if we use it on a big scale as a fuel, people will spill some, and it will be worse than current fuels given that methane is so much more potent than CO2. We need to really clamp down on making sure that people understand that this stuff, if it goes into the atmosphere, it’s a killer. While I think it will help us make a transition, I don’t think longer term we can really afford to work with it.

Ultimately there will not be one solution for everyone, and different solutions will appear based on the different types of trades. For near-shore ones, the ferry routes for instance, battery technology will work if we can get around the difficulty with sourcing rare earth sustainably and equitably.

Besides providing clear guidelines with regards to what they’re exactly looking for, what do you think we could ask from them to help the industry moving towards the transition?

We need the political courage from the regulators to tell us where the goal posts are. And if that’s ambitious, that’s fine, but it needs to be done so that the industry knows where to shoot at. For some time, the industry has been pushing member states of the United Nations to come to an agreement.

Many have criticized the IMO strategy for greenhouse gas reduction, and while it is an initial strategy, it is something we can work with and what we need more of. And if it is not ambitious enough, fine, let’s keep pushing. But it needs to be clear because ultimately, many of our members are individual owners who have few, but very expensive assets, and they do very risky trade with the danger of assets becoming stranded as the investment horizon in shipping is much longer than in many other businesses.

A typical, commercially operational life is on average 20 years, and that’s what it’s built for. If regulation keeps on changing, or is not clear with regards to targets, your investment horizon drops, as will all the high-quality criteria because you are going to design a vessel for 10 years. It is a race to the bottom. And if you look at the total cradle to grave carbon footprint of a ship like that, for just 10 years operational life, it is not acceptable from an environmental point of view given the steel production’s huge footprint.

Scrapping has been minimal over 2020 given coronavirus-related closures of scrapping yards, and has not increased much at the start of 2021. Is there anything that is keeping owners from scrapping vessels? Are there any risks posed by additional years of operations?

I have looked at the average age of vessels in our fleet just within Intertanko, and it is just over 10 years. I would not expect that anyone would scrap those early because there will be so much happening on the regulatory and technology side in the next decade. Plus, we still have a real complication about scrapping properly. Members are trying to do scrapping by the book according to all the conventions, but the big one isn’t in force yet [the Hong Kong Convention, the IMO treaty covering safe and environmentally sound ship recycling, has yet to be ratified by enough countries to allow it to enter into force]. We have said we are ready, and we are hoping to get it over the line.

When I came into this industry, the first oil spill I came across was the Erika [which broke apart in a storm off the Bay of Biscay in 1999, spilling 20,000 tonnes of oil], and it really defined my life. But we have come such a long way since then, and it’s important to stress that age is not correlated with accidents, but it’s about maintenance.

If you look at the tanker sector, there is no single statistic that shows that there is an increase in the likelihood of incidents with older vessels if well maintained and run. If you look at port stay control records, they have no higher incidence of having observations. The ITOPF has an annual tanker accident statistic, and they have graphed the effect of regulation on number of accidents, and it’s quite telling.

This might be different in other sectors, but for tankers specifically, because we have really cleaned up shipping operationally and procedurally in the last 20 years, incidences of oil spills keep going down.

You have built up incredible experience in the shipping industry, and more specifically in tankers. Do you have any advice for someone wanting to start a career in the shipping sector, especially for underrepresented groups?

Statistics show that only 5% of our leadership tiers are women. I am one of the people who ended up in shipping as a coincidence. I studied marine biology. I then ended up working in Indonesia and other places. And through pure serendipity, I saw a job advertised for ITOPF as technical adviser, looking at accidents from shipping and pollution from those accidents. And I knew instinctively it was the job for me. I’ve never looked back.

Shipping is such an interesting industry. It’s an international industry, which is great because you get to learn how to work with all different nationalities. The diversity in terms of nationalities is great, and a lot of people have not studied shipping or were not trained initially in the sector, which makes it even more interesting when interacting. The sector has a lot of room for self-development, and there is no strict career path.

All of us women in shipping tend to forget that we are women—we do not feel any discrimination on that basis. However, we should make it relevant for promotions and for hiring decisions as there is a reason why only 5% of top leaders are women. There is some great research about gender biases, and we should try and be unbiased in our decision-making.

We have changed the recruitment, so when we put a job out, we run it through checkers for the language to be neutral. It’s normal, it’s human. But we should challenge ourselves every day. It is tough, but you must do positive discrimination. Unless we challenge the status quo, and unless there is a sort of protected seat, it is hard to make the space for under-represented communities.

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Source: Platts

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