Improving the energy efficiency of vessels is a necessary step towards a sustainable decarbonization of shipping. Increased energy efficiency also offers cost savings through lower operational expenses, along with reduced emissions of greenhouse gases (GHGs) and pollutants. Looking at the bigger picture, reducing the world fleet’s energy demand leads to a much greater decrease in resource demand upstream in the energy production chain.
Figure 1: Energy losses in the fuel production chain from energy required for e-fuel production to energy delivered on board.
One way of improving the energy efficiency of existing vessels is by retrofitting energy efficiency technologies (EETs). In this document, EETs are changes to a physical aspect or control systems of a vessel made with the intention of reducing the energy required for propulsion. Examples of implementing EETs include:
Fitting a new bulbous bow to the vessel
Replacing the vessel’s propellers
Applying a low-friction (i.e., foul release) coating to the hull during dry docking
Implementing engine control software to optimize fuel consumption
Installing suction sails for wind-assisted propulsion
The aim of retrofitting EETs on existing vessels is to immediately reduce the vessel fuel consumption and energy demand, which leads to reduced demands on both conventional and alternative fuel production, and a reduction in GHG emissions. It should also bring a positive net cash flow to the fuel bill owner and be a positive business case in an asset's lifetime.
A large part of the global fleet is not owned and operated by the same company but is instead operated through time-chartering agreements. In these agreements, the charterer normally pays for the fuel. This may cause a split-incentive problem: the charterer benefits from fuel savings achieved through retrofitting EETs, while the shipowner normally bears the cost of the retrofit — an investment which is not necessarily reflected in the vessel’s charter-market value. As a result, shipowners often lack a strong financial incentive to invest in EETs. Additionally, perceived risks related to the operation of the technology, return on investment, variation in fuel prices, and other factors may result in misaligned interests.
Sharing the benefits and costs of implementing EETs at the individual contract level may help align the interests of owners and charterers, thereby reducing barriers to implementing EETs. To enable cost-benefit sharing, the parties need a method for quantifying the benefits of EETs: specifically, reduced fuel consumption, energy demand, and GHG emissions.
Purpose of this technical guide
This guide provides the MMMCZCS’s recommended best-practice procedures for tracking the benefits of EETs retrofitted to existing vessels to reduce propulsion power requirements. The procedures include calculating fuel savings with a sufficient level of confidence and transparency to support each party’s own commercial decision-making on cost-benefit sharing.
The methodologies for evaluating the performance improvement are based on either: 1) operational data obtained before and after the EET retrofit, or 2) in-service trials of the technology, if it can be switched on and off and is not intended for continuous use.
The procedures use the vessels’ performance monitoring data and performance evaluation principles found in industry-acknowledged standards and procedures for vessel performance monitoring and evaluation, as well as other relevant industry publications.
The technical guide is intended for use on monohull cargo vessels with conventional propulsion trains, i.e., the engine drives the propeller shaft(s) directly through mechanical connections such as gearboxes and clutches.
The guide can be adapted to other vessel types with other types of energy generation solutions and EETs, provided there is an understanding of the principles upon which these standard methods are based.
The guide only covers the technical evaluation of the fuel savings as determined by vessel performance monitoring activities. The scope of this guide does not include how fuel and emissions savings are distributed between parties, as such arrangements should be determined independently by the parties involved in any cost-benefit sharing agreement.
