An alliance of Swedish dry bulk charterers called the Responsible Shipping Initiative has teamed with DNV to launch a feasibility study aimed at developing a commercial framework for orders of green-fueled newbuilds for the the Baltic and North Sea areas and beyond. The RSI members aim to decarbonize their supply chains by reducing their Scope 3 emissions and to meet their sustainability targets in response to growing market demands and regulatory reporting requirements across the value chain.
The initiative is made up of energy sourcing and logistics company EFO, power company Stockholm Exergi, packaging company Billerud, steel company SSAB, forest owners’ association and industry group Södra, and agricultural cooperative Lantmännen.
The RSI members see a strong need for green newbuilds to replace the aging shortsea fleet operating in the Baltic and North Sea dry bulk trade and beyond. Many of the vessels are expected to reach the end of their economic life in the next five to 10 years. The study, supported by R&D funding from the Swedish traffic administration Trafikverket, aims to accelerate the energy transition in the regional sea trade by identifying opportunities for green fleet renewal through transport systems analysis and interaction with cargo owners, shipowners, suppliers, and authorities.
“Despite great strides being made to reduce our carbon footprint from land transport, progress has been lagging in shipping, even though this accounts for a large share of our transport needs,” said RSI chairman Sebastian Tamm, Sustainability & Logistics Manager at EFO. “This market-driven initiative is a great opportunity to share knowledge, define parameters and standards, find common ground and discuss possible synergies to determine what is achievable in relation to future shipping needs,” Tamm says. “Through an exchange of knowledge and information, shipowners will be able to gain a better understanding of the market’s requirements to make the right newbuild investment decisions.”
The study will analyze the consequences of introducing new vessels based on two alternative green ship concepts.
- The ECO-Bulk concept is designed to reduce emissions as much as possible within current commercial terms.
- The ZERO-Bulk concept for zero emissions is expected to require more collaboration and longer commitments between stakeholders.
This analysis will examine different scenarios based on the existing commercial frameworks, as well as alternative business models such as collaboration between shipowners and bunker suppliers, and public investment support. It will also factor in new environmental regulations, including the EU’s Emissions Trading System (ETS) for shipping.
“One of the key challenges to the broader uptake of alternative fuels is the uncertainties among shipowners about what the market wants and is willing to pay for over the lifetime of a new vessel,” says Hannes von Knorring, Principal Consultant at DNV Maritime. “Transport buyers may also lack information on what options are available, and what the practical consequences are to their value chains. We have started by mapping each participating company’s current transport routes, cargo volumes, employed vessels and ports to understand the logistical and cargo handling requirements and identify areas with the largest potential for green fleet renewal.”
“We have already discussed some possible synergies, for example, in supply of alternative fuels and access to shore power, as well as how to use vessels more efficiently,” says Tamm. “Through this project, we will better understand the solutions that can be deployed, tailored to the needs of a large group of cargo owners. I’m hopeful that in the next five years this could lead to standardized vessel sizes in the regional trades with that can meet our transport needs with much lower emissions.”