January 2021 is the first month of the Sea Cargo Charter (SCC) reporting on emissions from ship chartering activities. A rush of questions from both signatories and companies that are considering joining, show that details need to be discussed further.
In September last year the Sea Cargo Charter (SCC) established a common framework for reporting emissions from ship chartering activities around the globe. The charter is applicable to bulk ship charterers and is currently signed by 18 large cargo and ship owners. January 2021 was the official start date for reporting, and it has created waves in the industry. Having measured and analysed emissions since 2019, Siglar has received a rush of questions, not only from the signatories but also from cargo and ship owners considering signing or to make their own reporting framework.
The overall impression is that important principles are defined by the SCC. The fact that some charterers and shipowners have agreed on a common set of reporting standards, makes the reporting process easier and supports the development of emissions reduction targets. This paves the way for real emissions reductions.
However, even though the overall principles are described, details need to be worked out and standardized. For instance, we experience a great variation in the interpretation of when a voyage starts and ends, and this cut-off point between two voyages needs a clear definition. There is furthermore an understandable frustration among operators with the large size bins of some ship categories, and how they create less competitive terms for smaller ships. Questions regarding how route deviations are treated have also been raised.
In some special cases we also observe that the framework might cause adverse ripple effects on emissions and on climate change mitigation efforts, mainly related to defining the charterer’s responsibility for the ballast leg, where the reporting standards in some cases can promote increased emissions. To make sure the adverse effects can be considered we help our clients monitor and report emissions, not only from the full round voyage as outlined by the International Maritime Organization and SCC, but also from the distance sailed after the decision point, which is when they effectively can influence emissions from a voyage.
The SCC climate trajectory, adopted from the International Maritime Organization, is based only on carbon efficiency, not on the total amount of carbon emitted. In theory this could provoke suboptimal routing with longer routes and more carbon emissions to keep the carbon efficiency number as low as possible. To incentivise climate change mitigation the total amount of carbon emitted should be taken into consideration.
These are all areas that should be addressed as we gain more experience.
The larger surprise for most companies new to reporting is the challenge of obtaining data from different ships and voyages at the right time in a workable format. As gathering data can be rather time consuming, most customers leave this work to Siglar. We use our experienced operations team and feedback from captains, traders, brokers, ship owners and sustainability experts to further develop the data collection process and the digital technology behind our reporting tools. This now minimizes our challenges related to the collection of data.
The SCC recommends signatories to use a third-party to perform the carbon intensity and climate alignment calculations. At Siglar we validate the intensity numbers for inconsistencies and anomalies. Any irregularities are then examined and corrected if necessary.
With validated data at hand, reporting in line with an agreed framework is easy. However, this is the moment to make an important decision. Are you content with reporting emissions only, or do you wish to take emissions reporting one step further and prepare for real emissions reductions and even turn efficient operations into a competitive advantage? This is what we call carbon efficient chartering.
Reporting emissions with Siglar means data collection on a detailed level, which in turn will provide insight on your shipping programs emissions drivers and areas of improvement. The Siglar Carbon Advisory service will help you set appropriate CO2 targets and suggest actions to efficiently cut emissions. Onboarding the Siglar Carbon Efficiency Platform will help you reach these CO2 targets by providing the information needed to make carbon efficient choices before chartering a ship and during the voyage. The platform lets you find the more carbon efficient ship for your cargo and monitor the voyage emissions daily to make corrective actions where needed.
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