Oil tanker SCF Primorye, owned by Russian state shipping company Sovcomflot, transits the Bosphorus in Istanbul, Turkey, April 29, 2024.
| Photo Credit: Reuters

The global commercial shipping industry could cut down its carbon emissions by 47 million tonnes per year by deploying artificial intelligence for sea navigation, a study by autonomous shipping startup Orca AI showed on Tuesday.

The use of the technology could reduce the need for maneuvers and route deviation from close encounters with high-risk marine targets such as vessels, buoys and sea mammals by alerting the crew in real time, according to the report.

Why it is important?

Shipping, responsible for moving about 90% of global trade, contributes nearly 3% to the world’s carbon dioxide emissions. This share is anticipated to rise in the coming years unless stricter pollution control measures are implemented.

The International Maritime Organization aims to cut emissions by 20% by 2030, a target under threat from the ongoing Red Sea crisis.

Key Quote

“In the short term, it can lead to fewer crew members on the bridge, while those who are on the bridge will have a reduced workload and more attention to tackle complex navigational tasks, optimizing the voyage and reducing fuel and emissions,” Orca AI CEO Yarden Gross told Reuters.

“In the long term, it will open the door to fully autonomous shipping.”

Context

Global carbon dioxide shipping emissions reached an estimated 858 million tonnes in 2022, a marginal rise from the previous year, according to the Organization for Economic Cooperation and Development.

An average of 2,976 marine incidents are reported per year, Orca AI’s study showed.

By the numbers

The reduction in route deviations could help ships shave off 38.2 million nautical miles per year from their travel, saving an average of $100,000 in fuel costs per vessel, according to Orca AI’s report.

AI could also lower close encounters by 33% in open waters, it said.

The growing shadow fleet of tankers transporting sanctioned Iranian, Venezuelan and Russian oil is filling up with the cheapest fuel available, hindering industry efforts to use cleaner fuel to cut shipping emissions, according to shipping data and sources.

The global shipping industry is under increasing pressure to use cleaner fuel to reduce both carbon and sulphur dioxide emissions and other pollutants and meet broader green targets.

Hundreds of tankers that are transporting sanctioned oil are posing a challenge since they are hard to track because of their opaque ownership and use of non-Western insurance and other marine services, and they have little incentive to follow cleaner shipping standards.

“You’re seeing greater numbers of ships that have found ways to circumvent sanctions by operating outside Western jurisdiction,” said Michelle Wiese Bockmann, principal analyst with maritime data group Lloyd’s List Intelligence.

“The dark fleet has gone on steroids. And the deceptive shipping practices that they’re engaging in are getting more and more complex and sophisticated.”

Those include dangerous ship-to-ship transfers of oil in international waters to avoid port state control scrutiny, falsifying ship identification numbers, tankers sending false information about their position, and the use of flag registries with lower standards of technical oversight and expertise, Bockmann said.

Lloyd’s List Intelligence estimates the shadow fleet had grown to around 630 tankers from 530 a year ago, to make up 14.5% of the overall global tanker fleet.

Some industry estimates put the number even higher, at over 800 tankers.

The numbers mark further rapid expansion following Moscow’s invasion of Ukraine in 2022 and Western curbs on Russian energy exports, which has led to ships being hit with sanctions.

Before the war, the shadow tanker fleet totalled around 280-300 vessels, according to Lloyd’s List Intelligence.

Such growth has raised concerns about its environmental impact as well as safety and the effectiveness of sanctions, including a Western ban on shipment and trading of Russian oil priced above a $60 per barrel limit.

Under the so-called IMO 2020 convention adopted by the United Nations’ International Maritime Organization (IMO), ships have to switch to low sulphur fuel from the higher sulphur fuel diesel the industry has used for decades.

No ‘scrubbers’

Enforcement of these regulations designed to lower emissions is up to IMO member countries, which can levy fines or detain ships for non-compliance. In April, the IMO called on its members to increase inspections on vessels deemed to be shadow ships and toughen fines for any irregularities.

The IMO rules say ships can only burn high sulphur fuel if they have exhaust gas cleaning systems, known as scrubbers.

Shadow fleet tankers, however, can run on higher sulphur diesel – that is estimated to cost 20% less than the greener fuel – without checks unless they are stopped at ports enforcing the regulations, people familiar with the matter said.

“A lot of shadow vessels have no scrubbers but they buy high sulphur fuel oil when they are in Russia,” one industry source said. “So, they are breaching the IMO’s sulphur limit.”

It is difficult to gauge the extent of non-compliance with IMO 2020 across the shadow fleet, but there has been a rise in cases of ships detained because of sulphur-related breaches.

Port authorities in Europe and Asia detained at least 10 ships in the first five months of 2024 in connection with the convention, up from six in the same period last year and five for the whole of 2022, according to Reuters analysis based on data from port enforcement authorities. Of the 10 tankers detained, nine had made previous calls to Russia.

Russian, Iranian fuel supplies

Russia and its partners in the Eurasian Economic Union, which includes Kazakhstan, Kyrgyzstan, Armenia and Belarus agreed in December they would continue using high sulphur fuel until the end of 2026.

This means that ships can still get high sulphur fuel at ports servicing those countries, people involved in the fuel shipping trade say.

Iran, another producer of high sulphur fuel, has supplied ships in the Middle East Gulf, the sources say.

In one such operation, the Casinova tanker loaded such fuel at Iran’s Bandar Imam Khomeini port in recent months, said Claire Jungman, chief of staff at U.S. advocacy group United Against Nuclear Iran, which tracks Iran-related tanker traffic via satellite data. The Casinova later transferred some of the fuel onto smaller ships waiting around the Basra Anchorage in southern Iraq, Jungman said.

The vessel’s Liberia based owner Le Monde Marine Services could not be reached for comment.

Casinova’s ship insurer West P&I said it was in the process of cancelling the vessel’s coverage after Reuters requested comment.

Ship certifier ABS, which has provided safety cover for the Casinova, was investigating its activity, a spokesperson for the U.S.-headquartered company said.

“ABS treats every allegation and the subject of sanctions very seriously,” the spokesperson said. “We remain committed to compliance with U.S. and UN sanctions regimes and all other applicable laws.”

Representational image of cargo ships at a harbour. Carbon tax on shipping will cut developing countries’ GDP by 0.13%
| Photo Credit: Reuters

The European Union, Canada, Japan and climate-vulnerable Pacific Island states are among 47 countries rallying support for a charge on the international shipping sector’s greenhouse gas emissions, documents reviewed by Reuters showed.

The documents, being discussed at an International Maritime Organization (IMO) meeting now entering a second week, outline four proposals with a combined 47 backers for imposing a fee on each tonne of greenhouse gas the industry produces.

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Support for the idea has more than doubled from the 20 nations that publicly supported a carbon levy at a French climate finance summit last year.

Backers argue the policy could raise more than $80 billion a year in funding which could be reinvested to develop low-carbon shipping fuels and support poorer countries to transition. Opponents, including China and Brazil, say it would penalise trade-reliant emerging economies.

Those countries are competing to win over the dozens of others—including most African nations—that diplomats say have yet to take a firm stance on the issue. The IMO takes decisions by consensus, but can also do so by majority support.

The U.N. agency last year agreed to target a 20% emissions cut by 2030, and net zero emissions around 2050. While countries agreed in talks last week to continue negotiations on the emissions price, an official meeting summary noted they were “split on several issues” regarding the idea.

Albon Ishoda, IMO delegate for the low-lying Marshall Islands, said a levy was the only credible route to meet the IMO’s goals.

“If this does not get passed, what are the alternatives? Because we’ve already agreed to certain targets,” he said. “Are we going back to the drawing board?”

Shipping, which transports around 90% of world trade, accounts for nearly 3% of the world’s carbon dioxide emissions—a share expected to expand in the coming decades without tougher anti-pollution measures.

A proposal tabled by the Marshall Islands, Vanuatu and others—which despite their high reliance on shipping have demanded an emissions levy for years—proposes a charge of $150 per tonne of CO2.

Researchers have said a $150 carbon price could make investments in low-carbon ammonia-fuelled systems economic compared with conventional ships.

Disagreement

China, Brazil and Argentina pushed back on the idea of a CO2 levy in IMO talks last year. A study by Brazil’s University of Sao Paulo found a carbon tax on shipping would cut GDP across developing countries by 0.13%, with Africa and South America among the hardest-hit regions.

A Brazilian negotiator said Brazil and other developing countries were seeking a swift energy transition with the least disruptive effects on their economies, especially for countries that rely on sea-borne trade.

A proposal by Argentina, Brazil, China, and others advocates a global fuel emissions intensity limit, with a financial penalty for breaches, as an alternative. That would mean if countries fully complied with the fuel standard, no emissions would face the fee.

“We will not be in favour of a flat levy likely to hurt developing countries, but we would be in favour of a good levy only applied to the emissions over a certain benchmark,” the Brazilian negotiator said.

Despite differences of opinion, member states are still attempting to agree on global measures to avoid more countries targeting the industry on a national level.

That would fragment the market with varying local standards, and cause a headache for companies shipping goods globally.