Regulations encouraging innovation and incentives ‘vital’ for sustainable future

These are just a few of the questions that were raised at the Fathom Fleet Transformation Event in London late last year. Co-sponsored by Jotun, the two-day event attracted over 100 executives from the shipping industry. 

Speaking at the opening session, DNV GL – Maritime CEO and newly appointed IACS Chairman Knut Ørbeck-Nilssen, together with other senior figures including Jotun HPS Global Concept Director Stein Kjølberg, agreed that regulations are vital but they need to encourage innovation and adaption of new technology for the benefit of safety and environmental performance. 

“To ensure a quick take-up of new technologies and a smooth implementation of existing technologies, the integration of new technologies in the regulatory framework and regulatory effectiveness will be key,” said Ørbeck-Nilssen. 

Adapting regulations to new needs

Speaking in his capacity as IACS Chairman, Ørbeck-Nilssen said that an effective regulation should reward early adaptors. “At the moment, it can be argued that those who adopt last get the best financial return. IACS is working to adapt regulations to new needs and remove regulatory barriers that are hindering new technical advances. Also, IACS aims to ensure that an appropriate balance is struck between environmental and safety regulation. It has to be avoided that regulations are developed in isolation of one another.” 

Commenting on the onset of the upcoming regulations, Kjølberg said, “Over the next decade, the shipping industry will be impacted by a wide array of regulations that aim to ensure that this vital industry is environmentally sound, energy efficient and safe. It’s always difficult to align interests of stakeholders towards new regulations but it’s our opinion that they will create new opportunities for those who are prepared and risks for those who are not.” 

Practical solutions

While supporting international regulations, Kjølberg believes that they should not interfere in the practical solutions. “Our industry is becoming more complex and challenging but the challenges could be overcome by regulations that encourage innovation and incentives.” 

During his presentation Kjølberg highlighted digitalisation as a challenge and an opportunity. “Using Big Data, in an environment where capacity is already stretched, is a challenge for some operators. That said, those that are ‘going digital’ see the benefits. Using Big Data-digitalisation can open up new opportunities in the form of financial incentives (better terms from banks and financial institutions) discounts in connection with port, class and insurance fees, and commercial pool points relating to efficiency ratings. Standards, such as ISO 19030, can also be used for transparent monitoring and reporting.” 

“International regulations that apply to all players in the industry are crucial when it comes to making shipping more sustainable,” commented Erik Lewenhaupt, head of sustainability at Stena Line. “We need regulations if we are to maintain shipping as the ‘greenest’ mode of transport.” 

Collaboration is key

In his presentation which focused on environmental regulations and fuel alternatives, Lewenhaupt stressed the importance of collaboration. “Shipowners cannot act alone to make shipping more sustainable. Regulations, technology, availability and economy affect the choice of fuel. Stakeholders need to engage. Collaboration is key.” 

As pointed out by Craig Eason, who chaired the Fleet Transformation event, with economic and regulatory pressures changing the way vessels must be operated, it is vital the most effective technical and reporting strategies are employed. “Technical operations and the use of new technologies, fuel types can improve performance but how much will it cost?” asked Dr. Tristan Smith, Lecturer, UCL Energy Institute & Shipping. “There are challenges in bringing new technologies to shipping and the primary ones are the tough economic climate, which makes it hard for owners to get funding. The other is the need for a regulatory framework that supports owners in making decisions to opt for new technological solutions.” 

A well-managed transition creates opportunities

Commenting on how emissions restriction can be turned into a positive, Smith said, “The shipping industry is transforming and radical changes are needed to help meet the 2 degrees scenario. A poorly managed transition of the sector creates obsolescence, asset stranding and foreclosure risks, and additional cost for government and industry. On the other hand, a well-managed transition creates opportunities,” he argued. 

“To meet the new regulatory requirements and market needs, shipowners, including Wilhelmsen, need to enhance their capability to offer innovative, relevant and efficient services,” commented Inge Sandvik, Chief Digital Officer at Wilhelmsen. “To this end, there is a need for a behavioural change in shipping and that’s why we are making greater use of digitalisation, to create new efficient ways of working and improve customer interfaces.” 

“New regulations, technology and ways of doing business will, for sure, bring challenges but they are needed if the shipping industry is to transform successfully,” concluded Sandvik.