INTERVIEW: Shipping firms should use more tech for GHG reporting, says Normec Verifavia director

Shipping companies should introduce information technology to their greenhouse gas emissions reporting so they can better meet regulatory and clients' requirements in a timely manner, Yuvraj Thakur, managing director at verification agency Normec Verifavia, told S&P Global Commodity Insights.

Many shipowners are still collecting voyage and fuel usage data via the "noon reports" prepared by the chief engineer, sometimes manually with figures in a non-standardized format.

Thakur, whose company verifies GHG reporting on behalf of the authorities, suggested the industry should seek to automate the reporting process with digital technology as the EU is tightening regulations on maritime emissions.

Shipowners "have to be more proactive ... The data has to be concise, has to be in a proper format," Thakur said in an interview. "If your data is not correct, if your data is not in the right spirit, it won't be validated."

The EU has extended its Emissions Trading System to cover maritime transportation from January, requiring companies operating ships of 5,000 gross tons or more to pay for GHG during voyages to, from or between EU ports.

Brussels is also due to start lowering the greenhouse gas intensity of bunker fuels used in EU-related trades through FuelEU Maritime rules from 2025, with the European Commission suggesting simply burning oil-based fuels won't be a compliance option.

The regulations are leading to more robust reporting, Thakur said, as the industry shifts to a multi-fuel future where shipowners seek to cut GHG while controlling compliance cost.

"They must input the right caloric values for the fuels ... This will shift their interests to be a bit more numbers- [and] technology-driven more than anything else," Thakur said.

Calorific values would affect shipping companies' fuel cost estimates. In volumetric terms, fossil methanol would be the cheapest bunker fuel in Rotterdam for ships in intra-EU voyages in June, with a monthly average of $405.16/mt, according to Platts data from S&P Global. But when adjusting for energy density it would cost $18.84/Gigajoule, more expensive than LNG, 3.5%-sulfur and 0.5%-sulfur fuels.

Timely reporting

While the EU only requires shipping companies to calculate their emissions on a yearly basis when complying with the ETS and FuelEU Maritime, Thakur said collecting emissions data needs to be in a much more timely manner.

The comment came as an increasing number of shipowners are proving voyage emission figures to charterers based on contractual requirements, which would enable them to ask their customers to share compliance costs.

"This is not going to be an annual activity," Thakur said. "Going forward, this is almost a daily activity ... the frequency of verification is increasing by the day."

Platts assessed the EUA contract for December delivery at Eur66.22/mtCO2e ($72.05/mtCO2e) on July 22. The penalty for non-compliance under FuelEU Maritime would reach Eur71/mt for consumption of 0.5%S fuel, the prevalent bunker type, without any abatement in 2025-2029, shipbroker Braemar has estimated.

The EU's rules for both the ETS and FuelEU Maritime are set to tighten in the coming decades for the bloc to be climate neutral by 2050.

"The cost will be right in your face ... In the future, the impact of verification on the pocket will increase" with regulations coming in, Thakur said.