2013 Environmental Summary

In this section:

C02 Emissions - Fleets Measures to Reduce Emissions CO2 Emissions - Electricity and Staff Travel Waste Management Context and Objectives Outcomes Energy Saving Initiatives - A Case Study Total Number of Significant Oil Spills

Virtually all of CNCo’s significant environmental impacts are due to transportation used for logistical purposes and these are reported separately in this section (corresponding to GRI indicators EN3, EN4) and in more details in EN29, “Environmental Impacts of Transporting Goods”.

2013 Environmental Summary - Quick View Table



CO2 Emissions - Fleet

CNCo had a total GHG footprint in 2013 of 625,426tCO2e¹² - As with previous years, over 99.8% of this footprint is related to marine fuels consumed in transporting cargo, shown in the table below.

380 IFO tonnes 193,977
Liner 181,528.79
Bulk 12,448.00
   
180 IFO tonnes 2,807
Liner 2,475.32
Bulk 332
   
MGO (t) tonnes 2,907
Liner 2,819.54
Bulk 87.00
   
LO (L) litres 1,381,358
Liner 1,381,358
Bulk n/a


¹ - (see tables EN 16, EN 17, EN 19, EN 20 in the Data Section: Environmental)
² - ISO 14064 Scope 1 and 2

Variation in CNCo’s overall CO2 emissions have historically been reflective of the changing size of our fleet – for example, an 18% reduction in emissions in 2012, corresponded to an 18% reduction in tonnage; However in 2013 Scope 1 and 2 emissions rose by only 2.4% despite significantly a higher fleet expansion as the newer vessels are designed to have a step change in higher fuel efficiency and thus a consequent lower environmental footprint.

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Measures to Reduce Emissions

Efficient Newbuildings

As part of a major expansion and renewal programme, CNCo took delivery of six S-Class vessels and two B.Delta39 bulk carrier vessels (W-Class) in 2013. Fuel efficiency is a key element in the design and specification of both the S-Class and B.Delta39 Class, which include a number of features including:

  • Main engines with maximum efficiency at 70% and 60% MCR for the new W and S type respectively, as the vessels are specifically designed for the draft and load to be expected on each trade on which the vessels are scheduled to be deployed;
  • Electric cargo cranes using approximately 40-50% less power and have zero potential to leak hydraulic oil to the environment compared to similar electro-hydraulic cranes;
  • Reduced auxiliary power, through enhanced heat recovery, vessel energy management system, low energy lighting and forced draft fans;
  • Advanced hull design, especially around the aft end and propeller area;
  • Fuel reducing trim-optimisation software being placed on board.

While expansion of our fleet will inevitably lead to increased emissions, we anticipate the acquisition of these new, highly energy efficient vessels will yield tangible and lasting CO2 emission reductions per tonne/km, above and beyond those attributable to market fluctuations.

We see this as a first step in eventually de-coupling the growth of our business from increase carbon emissions, in line with our ambition to be Net Zero with respect to carbon.

It is currently too early to report on the actual performance of these vessels and their impact on our overall emissions, and we look forward to doing so in 2014.

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Slow Steaming

In 2011 we commenced our programme to systematically evaluate slow steaming alternatives across all of our trades, estimating annual savings of 16,678 tCO2e (-2.4% of our total emissions) or 207,650 GJ energy. After a successful pilot involving fitting slide valves in the main engines that permit slow steaming on one of our trades without affecting the engine we expanded the initiative to all the ships on that trade.

This initiative was undertaken through the generous sponsorship of our parent company’s Sustainability Fund and this has assisted in further moving CNCo towards its goal of having net zero environmental impact.


Lower Carbon Fuels

In 2011 we committed to investigating using alternative, lower carbon fuels such as LNG or Bio-Diesel.

  • The Swire group purchased Argent Energy, registered in UK, in 2013. This company has successfully overcome the obstacles of manufacturing bio fuel (IFO and MGO) from waste vegetable oil and fats (of which 500,000 tonnes are produced annually in the UK alone), and their bio-fuel has been used by a number of bus companies in the UK for some years. We started investigating the use of fuel derived from waste fats, to power ships in the CNCo fleet, working with Wärtsilä to investigate the technical feasibility of this in their marine engines.
  • Increasingly biodiesel is being used in conventional marine fuel blends, with quantities of up to 7% not requiring reporting. We are now working with our Bunker suppliers to investigate the implications for our CO2 reporting, and the potential for increasing the blends, and will report further in this area in 2014.

Cold Ironing

We sought initial discussions with various port authorities on the feasibility of cold-ironing to mitigate the environmental impact of FO consumption of our vessels on long-term charters during 2013. This is certainly technically feasible, but the capital costs are very high for both ship and port facilities, and modifying the ship-side fittings and equipment to take this reduces the economic flexibility of re-programming ships to work on other trades in our liner network. Until cold-ironing is more widely available in ports it is almost impossible to economically justify fitting this equipment on our tramping B.Delta39 handysize class bulk carriers.

Average energy performance of CNCo’s fleet, normalised by distance and cargo carried is expressed by the EEOI figure, which in 2013 was 30 for our liner fleet. This does not represent a significant change from previous years, but it must be borne in mind that as trade patterns change, so does our scheduling of differently sized vessels on different trade routes, so we are not comparing our fleet usage /operations on a like-for-like basis, year on year.

We certainly are however closely monitoring individual ship, and collective trade-fleet EEOI metrics and are seeing a general downward trend in our footprint as the newer more energy efficient ships replace the older ones.


Average energy performance of CNCo’s fleet, normalised by distance and cargo carried is expressed by the EEOI figure, which in 2013 was 30 for our liner fleet.
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CO2 Emissions – Electricity and Staff Travel

As with our overall GHG emissions from our fleet, changes in our onshore electricity use (primarily in Singapore, Australia and New Zealand) reflect changes in occupancy and business growth, rather than underlying changes in efficiency; Electricity consumption (470,229kWh) and corresponding CO2 emissions (241 tonnes) rose by 1.74% in 2013, reflecting renewed growth following office space rationalisation in 2012 which resulted in a reduction of 17.3% in 2012.

All of the electricity used by CNCo is supplied by the local national grids.

CO2 emissions associated with onshore and offshore staff air-travel, decreased from 4,547 tCO2e in 2012 to 3,098tCO2e in 2013 (-31.9%). This is despite our total workforce increasing by 31.54%.

This is explained primarily by reduced business travel as the (anticipated) result of a number of causes:

  • the rationalisation of the Swire Shipping Liner Trades business model in which, as reported last year, we ensured that we had local managers closer to our key customers, resulting in a reduced need for air travel,
  • where internal meetings across the company locations were required, we extensively used our now fully commissioned teleconferencing facilities, and
  • a good proportion of the increase in personnel was due to the absorption of functions and services requiring little or no travel, and which were previously carried out by third or allied parties, back into the CNCo group.

Other Emissions

All the other 2013 emission metrics, for NOx, SOx, VOC and PM increased slightly (by between 4.4 to 6.4%) and the major metric, of our Scope 1 and 2 CO2 footprint, increased by only 2.4% over our figures for 2012. This is despite an increase in fleet activity (measured as Vessel Operating Days) of 23.1%, from 9,089 to 11,187 days.

This represents a reduction of a material 16.8% in normalised Scope 1 and 2 CO2 footprint per unit of activity and is in small part due to the increasing legislative requirements to use lower sulphur fuel: by California Air Resources Board (“CARB”) regulation off California, and voluntarily within HK Port Limits (by members of Fairwinds Charter group, including CNCo), to be regulated soon in HK and expected to be expanded to the entire Pearl River Delta in subsequent years.

In the main however, it is substantive evidence of the very real step change in environmental impact and fuel efficiency that has been achieved in our programme of replacement of older tonnage with new, eco-designed, ships operated to the maximum efficiency using the latest technology, as detailed above.

2011 2012 2013
SOx metric Tonnes (mT) 14,776 13,051 13,858
NOx (mT) 17,506 15,510 16,259
Particulates (mT) 1,396 1,233 1,313
VOC (mT) 261 231 241


Waste Management

CNCo monitors waste generation both ashore and aboard. CNCo’s owned vessels follow the IMO Marpol Waste categorising system. It was designed to control waste management on board vessels and define the ways in which different materials can be handled, either through disposal ashore, to sea, or disposal through incineration onboard.

The following categories are defined and included in our analysis:

Cat. 1     Plastic (discharge to shore only)

Cat. 2     Biodegradable timber and paper materials

Cat. 3     Ground biodegradable rags, glass or metal

Cat. 4     Paper products, rags, glass, metal, bottles, cargo residue etc.

Cat. 5     Food waste

Cat. 6     Incinerator ash (non-plastic)


As a company determined to emphasise the importance of sustainable development and reduce its impact on environment, CNCo also monitors the following in addition to the categories above:

  • Batteries sent ashore
  • Drums sent ashore
  • Waste oil sent ashore
  • Scrap metal recycled ashore

In our operating offices, CNCo endeavours to reduce paper usage and wastage by using only FSC certified paper and utilising paper recycling for all waste paper, including confidential waste for which a dedicated “confi-waste” recycling contract is in place.


EN22A

CNCo’s decision to use responsible, “Green and Safe” ship recycling yards when recycling its ships the end of their economic lives continued through 2013. Our trans-shipper, MV Erawan came to the end of its contract in mid-2013 and was sold to be recycled at the same green and safe yard that was used in 2012 for the 4 D-Class ships.

This is in accordance with CNCo’s voluntarily adopted policy that

“It would only send vessels for recycling to yards that have valid and verified accreditation issued by a reputable independent third party against all standards: ISO 9001:2008, ISO 14001:2004, OHSAS 18001:1999 and particularly ISO 30000:2009, and preferably be an “A” member of International Ship Recycling Association”.

Context and Objectives

It is widely reported that a large number of ship recycling yards globally using the beaching method have poor (or very poor) health, safety and environmental standards and are often found using child labour along with violating labour and human rights. This evasion of the costs of responsible recycling by some shipowners is causing avoidable harm to both the beaching yards’ workers and the nearby communities. Our corporate conscience will not permit us to support this and so we have taken the decision, at an acknowledged cost premium, to go beyond legislation and positively promote the use of, and in so doing encourage the expansion of, more responsible “Green and Safe” ship recycling yards.

This has not gone unnoticed by some yards globally and is a way for the yards to both maintain and enhance their ‘local licence to operate’ by the provision of a safer workspace for their employees, a less polluted environment and more harmonious society for the key stake-holder communities in the vicinity of their yards.

Even if only a small percentage of the publicity is correct, and the ship recycling yards that practice beaching cause harm to workers and the environment in the surrounding communities, this can be avoided by the willpower and commitment from the shipowners to not support those yards commercially.


The Green and Safe yards chosen were subject to on-site Superintendency and number of detailed audits from both our Fleet Managers and Lloyds Register (LR) which was engaged as our independent process monitor.

The key decision is to adopt a completely new view of the way the company defines the boundaries of its operations. Historically, responsibility for an asset has ceased on completing the sale transaction. In the new paradigm, the prior owner now continues to take some responsibility for its asset, (in this case – its responsible recycling) after all usual liabilities and responsibilities would have passed to a third party: the willing and aligned buyer.

There are a number of yards that have been externally and independently audited by the EU and awarded “Green and Safe” AA status*. Already around 19% ships to be recycled are reported to be routed to yards rated / operating this way. For our ships being recycled in 2012 our S&P broker charged a small premium to intimately manage the recycling process and Recycling Plans were produced before work started.

The Green and Safe yards chosen were subject to on-site Superintendency and number of detailed audits from both our Fleet Managers and Lloyds Register (LR) which was engaged as our independent process monitor. Close out payments were dependent on the production of a satisfactory recycling completion report by LR.

The yards were clean, and importantly injury-free, whilst we were there, and any hazardous waste was all disposed of appropriately. The yards we used were of course not perfect; LR audited and issued non-conformances during the recycling, but the yard took these in the spirit of continuous improvement and closed them all out prior to the completion of the recycling. This shows that the yards are willing to improve their practices in the market where they receive financial incentive and are not squeezed out financially. It also shows that a joint commitment will lead to better outcomes for both parties.

For further information:
http://bit.ly/1osumph

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Outcomes

1
The cost to CNCo of exercising leadership by voluntarily but proactively using more responsible, “Green and Safe” ship recycling yards over the yards with poorer standards has been a (not-insignificant) loss of around 8.0% of the potential net profit from the disposal of the ships.
2
The driver behind the decision was simply that CNCo decided that it was morally unacceptable to support parts of the industry with such poor practices where workers were being killed or injured unnecessarily (as evidenced by the better safety records in “clean and green” yards). However we believe that this voluntary taking of additional responsibility will be recognised by not only our employees, who will see us as an Employer of Choice (and so increase retention/decrease turnover costs within the company), but also our clients, customers and analysts (especially those servicing Socially Responsible Investors – an increasing band these days) that we are striving to be an industry leader on Sustainability as further evidenced by our membership of SSI.
3
Further detailed research in this area would permit the Social Return On Investment (SROI) to be quantitatively calculated, based on the inputs (leakage of recycling work, and better commercial returns, from yards with poorer, to those with better standards), outputs (reduced fatalities, injuries and environmental harm) and impact on the communities and the businesses.
4
As taking more extended responsibility for ‘Life Of Asset’ and for those workers associated with it when it is up-cycled, becomes more widely accepted in our industry, evidence of the increased use of “Green and Safe” yards will be demonstrated commercially to the laggard yards with poorer standards.
5
However boycotting “bad” yards must only be the first step; it is clearly recognised that a close second intent is that the pan-industry organisations and industry leaders must forge a partnership with those laggard yards that have the commitment (borne of natural market forces) to help them raise their standards. Market pressures will help them see that running clean and green yards is the sustainable future for their workforce, the local environment, and their own bottom lines.


Market pressures will help them see that running clean and green yards is the sustainable future for their workforce, the local environment, and their own bottom lines.
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What are the first steps an organisation can take to replicate this idea/initiative?

1
The owner of the ship to be recycled must decide to exercise leadership in the industry, even in the absence of legislation. This involves the paradigm shift of taking responsibility for an asset even after it has been transferred to a new owner.
2
The owner of the ship to be recycled must establish an internal policy to accept the need to pay a reasonable premium to support safer working practices and better protection of the environment in key stakeholder communities that the shipping industry has historically relied on, but have been under the radar for many in the past.

We are proud to have commitment from senior management through to the Fleet Operations department to be able “to do the right thing”. We believe that by showing leadership and being transparent in this area we can begin to convince our peers to help enhance the environment, the social conditions of ship recycling yard workers and their families, and the reputation of the industry.


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EN22B

Hand in hand with responsible recycling goes responsible shipbuilding. This enables us to “close the loop”, such that if we can track the material that goes into a ship then when it comes time to recycle it we know where the more hazardous and more valuable materials are and the ship can be dismantled more safely and cost-effectively so the old asset is UP-cycled and the steel and other materials more efficiently used to build the next new asset. The story of what we are doing follows below.

In mid-2011, CNCo committed to work with other industry leaders to reduce shipping’s negative effects on the environment and joined the Steering Group of the Sustainable Shipping Initiative (SSI).

The SSI is a four-stage initiative designed to help the industry make long-term plans for future success. Its membership comprises a cross-industry grouping bringing together 16 leading companies from across the industry and around the world with NGO’s Forum for the Future and acting as “robust in-house challenger”, the World Wildlife Fund:

  • Ship owners, charterers and operators: BP Shipping, Bunge, Cargill, Carnival Corporation, China Navigation Company, Gearbulk, Maersk Line, Rio Tinto Marine and Tsakos Energy Navigation.
  • Shipbuilders, engineers and service providers: Daewoo Shipbuilding & Marine Engineering; Wärtsilä.
  • Banks and insurers: ABN Amro, RSA.
  • Classification societies (setting technical standards): DNV and Lloyd’s Register
  • Representing shipping customers: Unilever

In the first stage, members launched a Case for Action in May 2011 in which we stated:

“Our goal is to transform the global shipping industry and the wider maritime sector, establishing a new, sustainable approach as the norm.”

It analyses the social, environmental and economic challenges shipping faces and how best to react to them and it calls on the industry to take far-reaching action. This analysis is a call to action for the worldwide shipping industry. The SSI members believe that, with far-sighted leadership, businesses can weather the storm and emerge stronger and more sustainable. And we believe that the industry has a vital role to play in helping create a sustainable, low-carbon economy.

In 2012 CNCo joined the SSI “Closed Loop Material Management” (CLMM) workstream. The three members of the CLMM work stream (Carnival Cruises, Maersk and CNCo) worked on three pilot projects and a stakeholder consultation process to investigate the feasibility and added-value of using a database system to track shipbuilding materials from building to recycling.

The goal is to achieve full transparency and accountability for the social and environmental impacts of all materials, from construction through to recycling of ships (“Life of Asset”). This goes significantly beyond the concept of a “Green Passport” for ships that only covers hazardous materials and looks at ALL materials that have gone into the construction of a particular ship. That ship can then be much more safely and efficiently recycled at the end of its life, giving a higher return in final sale value to the last owner, and making the earth’s resources last longer. Consider: the energy required to manufacture a tonne of steel from iron ore (in itself a finite resource) is 60 times less than that required to recycle a tonne of “scrap” steel!

This concept is already in wide usage in the European and US automobile industry, so we are seeking to adapt it to the marine sphere and avoid “reinventing the wheel.

The CLMM challenge was to look at how ships could be better designed, built, operated and dismantled to drive higher value and more efficient recycling of materials and components. The aim was to understand the feasibility and value of tracing and tracking the materials used in ship construction through to recycling. Our target is to collect data of about 98% by weight of all the materials used in the construction of two new vessels and a cruise ship cabin.

The 2040 goal of the CLMM is to achieve full transparency and accountability for the social and environmental impacts from construction through to recycling of ships.

Our findings will be reported in our 2013 SD Report, and at an industry-sharing event in Singapore in Sep 2013, but we firmly believe that if scaled up the impact could be …

  • Safer, cleaner, healthier and more profitable ship recycling by helping owners realise the true value of ships at the end of their life
  • Significant CO2 savings from more effective recycling in the wider ‘steel loop’ and establishing ways to further reduce the use of finite resources in future shipbuilding
  • Potential CO2 and financial benefits from ‘design for remanufacture and reuse’.
Energy Saving Initiatives – A Case Study

A commitment to building green, sustainable vessels that save energy and perform efficiently was at the forefront of CNCo’s plans for the 8 new S-Class 31,000dwt MPVs, designed to carry containers, bulk and break-bulk cargo, that were built at Zhejiang Ouhua Shipyard, Zhoushan, PRC, and launched in 2013.

CNCo has a strategic vision “to be the leading provider of sustainable shipping solutions and our customers’ partner of choice”. To meet this vision we have defined 5 strategic objectives, including that of Operational Excellence: promoting innovation, operational excellence and providing a safe, healthy and secure working environment. Underlying this are defined goals to help us achieve this, including, significantly, one of halving our Net Environmental Impact.

CNCo is also working with the other members of the industry leadership group, the Sustainable Shipping Initiative¹, to meet its vision for 2040. This vision states that “Shipping plays a critical role in the global economy. Recognising that the challenges of the future demand significant change, SSI members have developed a shared Vision for 2040 – a vision in which sustainability equals success”. The SSI understands that this means, inter alia,

“Changing to a diverse mix of energy sources, using resources more efficiently and responsibly, and dramatically reducing greenhouse gas intensity”.

Major capital expenditure events such as committing to building a new class of ships are the classic times to seize the opportunity to make a step change in technology with a commensurate increase in efficiency and decrease in negative environmental impacts. CNCo’s new S-Class vessels are designed to have “best-in-class” environmental features, including fuel efficiency and emission reductions to deliver the lowest carbon footprint possible from operations.

All areas of the ships have been designed to achieve energy savings and reliability by considering such factors as the likely trade routes together with the speeds that will probably be required to maintain the schedules, the potential load factors and thus draft, etc.

A list of energy efficiency initiatives include:

  • Reusing exhaust gases from the main engine and generators to make steam to heat the fuel
  • Using a hull form that optimises cargo capacity for low fuel consumption
  • Wake ducts to improve fuel efficient
  • Cargo cranes that consume only 40-50% power of traditional cranes, and are electric rather than hydraulic to mitigate all chances of oil spills to the environment
  • Adoption of a newly designed Sea Water Cooling System (“SWCS”) for the main engines and generators on board.

The latter initiative involves a critical component with huge potential for energy savings as well as operational and maintenance savings. Controlled by centrifugal pumps and AC motors, the SWCS is a key component on ships. The system pumps ambient sea water into a circulating loop. This loop provides a heat exchange with the vessel’s fresh water cooling system, which works to cool the shipboard energy consumers, including the main engines, generators and auxiliary equipment. Once the sea water has taken on heat from the fresh water, it is pumped back into the ocean as cooler ambient sea water is drawn in and introduced into the system.

The sea water cooling pumps on the new S Class vessels are arranged in 2 x 100% configuration, which means that one pump is always active and, in a traditional system, would operate at 100% flow with the second pump being redundant in normal service.

However based on cooling level requirements, the operating pump does not always need to run at 100% flow (a worst case scenario is 32 °C at full flow). Depending on the area of the world in which the vessel is operating, sea water temperatures may be low enough that a lesser flow would provide the sufficient cooling to the fresh water cooling system.

Given its commitment to operating sustainably, CNCo investigated methods of controlling the pump’s flow rather than running it at 100% to save energy. We selected a new system: “Colfax Fluid Handling Smart Technology CM-100 Series” to provide variable speed operation for the pumps, giving a potential energy saving of 80% per ship, significantly reducing the energy expended and thus lowering each vessel’s carbon footprint.

There are additional advantages in terms of sustainability: by running the pumps at only the level needed to provide pre-set cooling levels, the effective lifetime of the pumps, motors and related equipment is extended. This then results in less frequent need for replacement, and fewer items that require scrapping/recycling.

CNCo expected savings of around 50% annually for repairs and maintenance. The CM-1000 equipment selected provides 24/7 intelligent monitoring to detect component failure, misalignment, wear, damage or leakage. Monitoring is constant, which permits faster, more targeted, maintenance intervention than spot / regular checking by engineering staff. If auto-monitoring detects the need, the pump will switch the system from the operating pump to the stand-by pump to ensure continuity of operation whilst repairs can be effected. After a year of operation CNCo found that the new system works effectively and saves significant amounts of power, with a commercial payback of about 6 months simultaneously with the environmental benefits this upgrade provides.

Jerry Chen, CNCo’s Product Manager said at the beginning of the S-Class operations:

“Sustainability is about having the least negative impact on the environment. We are confident this system will work well to deliver more sustainable operations, and that support and spares for the pumps will continue to be available for 30 years, the expected lifetime of this class of ships”.

Total Number of Significant Oil Spills

As would be expected, the prevention of spills and leakage of oil and other hazardous marine pollutants, and our effective response should there be an incident is assessed as having the highest materiality to all of our stakeholder groups and to ourselves internally as a major impactor on our business.

Our target for any oil spills of any size from our fleet continues to be ZERO.

In recognition of this, our target for any oil spills of any size from our fleet continues to be ZERO.

The lowlights of 2013 were two very minor, but avoidable, spills of hydrocarbons (1litre of hydraulic and 20 litres of sludge). Procedures have been tightened to prevent a recurrence.

However they were still below both our target rate for 2013 and a very healthy 42% below the Tokyo MoU industry average rate of 3.07 for Dec 2013 (and 36% below the Paris MoU rate of 2.77). We believe this is in part due to the bedding in of many brand new ships and we are working to resume a decline in the DpI rate in 2014.

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