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Navigating Emission Prices in Shipping

This article examines recent progress and initiatives by the shipping industry to meet new IMO targets and provides Signal Ocean Platform data on emissions developments and trends.

The Signal Group
February 28, 2024

The shipping industry is striving for a green and sustainable future. However, managing emissions prices is a major challenge. It is critical for the shipping industry to strike a balance between environmental responsibility and economic considerations. To achieve this, shipping industry stakeholders must first understand the evolving landscape of emissions pricing mechanisms, which include carbon taxes, cap-and-trade systems, and international regulations from the International Maritime Organisation (IMO).

Ship owners and operators need to conduct thorough economic impact assessments to determine how emissions pricing will affect their bottom line. This proactive approach will allow them to make informed decisions about fuel choices, operational efficiencies, and investments in green technologies. In addition, investing in cleaner, energy-efficient technologies and alternative fuels such as LNG, hydrogen or ammonia can help mitigate the financial impact of emissions pricing while reducing the carbon footprint of ships.

Diversifying strategies is critical to managing the risks associated with emissions pricing. This includes exploring clean energy sources, optimising ship routes for fuel efficiency, and investing in emissions reduction technologies such as exhaust gas cleaning systems (scrubbers). Flexibility and adaptability will be critical as we move toward a green future. The ability to adapt strategies to evolving emissions prices and changing regulations will be critical to long-term success.

The Signal Ocean Platform & Emission Prices

Signal Ocean Platform's Emissions Pricing Report is a significant advance in understanding and quantifying CO2 emissions and associated costs in the shipping industry. This report is the result of our extensive experience on the analysis of vessel voyages combined with General Index's insights on route-specific markets, and their position as a regulated provider of benchmark services helps create this new standard for emissions pricing. 

What sets our issue price benchmarks apart is their outstanding precision. Rather than relying on general estimates, we carefully calculate our benchmarks for each voyage using real-time vessel tracking data, accurate vessel specifications, and detailed consumption curves. This approach allows us to determine voyage-specific emission and cost benchmarks for different ship classes and routes.

At a time when environmental concerns and cost efficiency are paramount, our Emissions Pricing Dashboard gives shipping industry players the tools they need to make informed decisions. Whether you're trying to optimise routes, estimate emission dues, reduce emissions, or improve cost efficiency, our voyage-specific benchmarks provide the accurate insights you need to achieve your goals. With this report, we're promoting transparency, sustainability and efficiency in the maritime sector and helping to shape a more responsible and competitive future for all stakeholders.

Key features of our Emissions Prices Report 

(data provided by the General Index)

Voyage-by-Voyage Calculation: We dive deep into the specifics of each voyage, ensuring that emissions and cost benchmarks are accurate and tailored to the unique characteristics of each journey.

Live Vessel Tracking Data: Our use of live vessel tracking data ensures that our benchmarks reflect the most up-to-date information available, allowing stakeholders to make informed decisions in real-time.

Vessel Specifications: By incorporating detailed vessel specifications, we account for the individual performance and efficiency of each vessel, resulting in benchmarks that are finely tuned to the vessel's capabilities.

Consumption Curves: Our utilisation of consumption curves enables us to precisely estimate fuel consumption at different speeds and conditions, offering a comprehensive view of emissions and costs at various operational scenarios.

Route-by-Route Analysis: We go beyond generalised regional estimates. Our report breaks down emissions and costs on a route-by-route basis, allowing for highly targeted insights and comparisons.

Multiple Vessel Classes: We cover a wide spectrum of vessel classes in the crude and clean tanker segments, recognising that emissions and costs can vary significantly between different types of vessels.

Emission Prices Suezmax and Aframax Dirty Tankers

The following image illustrates the dynamic changes in emissions volume (in MT) and associated cost (in USD) for the Suezmax West Africa Atlantic Coast to Continent full voyage route from 2019 to the present day. It vividly highlights the remarkable upsurge in emissions volume during the current year (depicted in the left chart) in stark contrast to the downward adjustment observed in the Aframax North Sea to Continent route (as depicted in the right chart).

Emission Prices MR2 and MR1 Clean Tankers

The following image illustrates the dynamic changes in emissions volume (in MT) and associated cost (in USD) for the MR2 US Gulf to Continent full voyage route from 2019 to the present day (depicted in the left chart) and the downward adjustment observed in the MR1 Central Med route (as depicted in the right chart) from the end of the first quarter this year.

In summary, effective management of shipping emissions prices requires a holistic approach that considers economic, environmental, and regulatory factors. By promoting sustainability, technological innovation, and collaboration, the maritime sector can transition to a greener future while balancing costs and risks. This transition not only aligns with global environmental goals, but also positions the industry for long-term success in a changing world. As the maritime sector continues to evolve, emission pricing will play a pivotal role in shaping its future and reducing its impact on the environment.‍

Stay up to date on the latest trends and pricing in dirty and clean tanker route benchmarks by following our Emissions Report Pricing.

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert

Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

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