Could the Sea Cargo Charter change tanker shipping?

Feb 25 2021


A number of tanker and dry bulk charterers, including Trafigura, Equinor, Total, Gunvor, Shell, Occidental, and Dow Chemical, have attached their names to an initiative called the Sea Cargo Charter, which aims to provide a framework "for aligning chartering activities with responsible environmental behaviour to promote international shipping's decarbonisation".

The signatories agree to calculate and report the emissions from their chartering activities, and assess if they are aligned with the IMO’s ambition of reducing greenhouse gas (GHG) by 50 per cent by 2050 compared to 2008. This is something all large companies would probably be planning to do anyway.

 

Transparent reporting of emissions is a first step to reducing them. Nobody wants to release data showing that their emissions are very poor compared to their peers.

 

Catrine Vetereng, vice president, global segment director tankers, DNV GL, said during a DNV GL webinar that she believes Sea Cargo Charter will “to a great extent influence the tanker owners and the development of the ship.”

 

It is “setting goals for the tanker owners and bulkers, and promoting and incentivising international shipping decarbonisations, and connecting that with the charterer,” she said.

 

The framework

Sea Cargo Charter aims to develop a "framework for assessing and disclosing the climate alignment of chartering activities," with an aim to "assess and disclose whether chartering activities are in line with adopted climate goals."

 

This means that signatories will, on an annual basis, calculate the GHG emission intensity and total GHG emissions of their chartering activities, and will assess their climate alignment (carbon intensity relative to established decarbonization trajectories).

 

“Climate alignment” is defined as the degree to which voyage carbon intensity of a vessel category is in line with a decarbonization trajectory that meets the IMO ambition of reducing total annual GHG emissions by at least 50% by 2050 based on 2008 levels.

 

In order to take the volume and distance of cargo movements into account, the calculation is based on “emissions intensity”, which IMO calculates as “grams of CO2 per tonne-nautical mile”.

 

The Sea Cargo Charter relies specifically on the Energy Efficiency Operational Indicator (EEOI) as the carbon intensity metric, which produces the closest measure of the vessel’s true carbon intensity in operation, to a high level of granularity.

 

The EEOI uses the parameters of fuel consumption, the GHG emission factor for each fuel type, distance travelled while laden with transported cargo, and amount of cargo transported over given voyage.

 

A decarbonization trajectory is a representation of the planned rate of change of CO2 emissions per unit weight of goods over time.

 

The plan is that standard decarbonization trajectories will be produced by the Secretariat of the Sea Cargo Charter for each ship type and size class.

 

To assess climate alignment of a specific voyage, the carbon intensity is compared with where it should be, according to the decarbonization trajectory for its respective ship type and size class.

 

Shipowners will need to provide the data to their customers, if they are signatories, and signatories will provide the data to Sea Cargo Charter.

 

It says, "to ensure that information provided under the Sea Cargo Charter is practical, fair and accurate, Signatories will only use data types, sources and service providers identified in the Technical Guidance."

 

About Sea Cargo Charter

Sea Cargo Charter has a website at seacargocharter.org. It shares an office in Copenhagen with the Poseidon Principles and an organisation called Global Maritime Forum, which has 19 employees, describing itself as "an international not-for-profit organization committed to shaping the future of global seaborne trade".

 

A first Steering Committee will be elected at the first Annual Meeting of the Sea Cargo Charter Association, which will be held in 2021. In the interim, the Steering Committee is constituted of the first fifteen Signatories.

 

Members commit to “ensure ongoing compliance with the Sea Cargo Charter for new chartering activities through contractual means by using the Sea Cargo Charter Clause in charter parties.”

 

They also commit to “contribute to the update and addition of the Sea Cargo Charter Clause through the annual review process.”

 

Poseidon Principles

The Poseidon Principles, which might be considered a sister project to the Sea Cargo Charter, describes itself as a “framework for integrating climate considerations into lending decisions to promote international shipping’s decarbonization”.

 

It has 18 financial institutions as signatories, together representing a bank loan portfolio to global shipping of approximately $150 billion, more than a third of the global ship finance portfolio.

 

The signatories are ABN-AMRO, Amsterdam Trade Bank, BNP Paribas, Bpifrance, CIC, Citi, Crédit Agricole, Credit Suisse, Danish Ship Finance, Danske Bank, DNB, DVB Bank, Export Credit Norway, ING, Nordea, Société Générale, Sparebanken Vest and Sumitomo Mitsui Trust Bank.

 



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