Alisdair Pettigrew, Managing Director, BLUE …old.mareforum.com/MARE_FORUM_ISTANBUL_PRESENTATIONS_2013/...Alisdair Pettigrew, Managing Director, BLUE Communications Public Relations

Alisdair Pettigrew,Managing Director,BLUE CommunicationsPublic Relations and Public Affairs - marine, energy and environment sectors

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The Carbon War RoomOperation Shipping Efficiency

Self Funding Fuel Saving Clean Tech Finance in Shipping

Alisdair Pettigrew, Consultant and Senior Advisor, the CWR

Mare Forum, Istanbul, March 21st, 2013

The Carbon War Room

Source: McKinsey &Co Cost Curve (over-simplified by CWR)

All about the ROI: Shipping is no exception

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DNV’s Shipping Version….

TechnologyCWR - Dismantling

Market Barriers

CWR’s Model Ideal for Shipping

Technologies (& Measures) Not the Roadblock

Latest hull coatings (FP)9% CO2 reduction, >1000 vessels

Satellite weather routing8% CO2 reduction, >500 vessels

Waste heat recovery 12% CO2 reduction, 4 APMM+...

Sails / Wind7-15% CO2 reduction,

Trial on 2 vessels

Air Cavity7-15% CO2 reduction, Trial on 5 vessels

‘Veth-Z-Drive’ rudder propeller technology

‘Aquatanker’ uses solar wind sail and solar cell array technology.

Multi-Phase Approach

1. Solve for Information

2. Improve Demand Pull

3. Improve Capital Flows

Framing the Opportunity

SOLVING NFORMATION / TRANSPARENCY: ShippingEfficiency.org

»EEDI – What is it?

» Energy Efficiency Design Index (EEDI)

» A formula produced by the IMO to calculate the amount of CO2 emitted (in grams) by a vessel for every tonne of cargo carried a nautical mile based on:» Total engine power» Fuel type & specific fuel consumption» Cargo carrying capacity» Speed

EVDI™ – What is it?

Existing Vessel Design Index (EVDI™)

This formula produces the amount of CO2 emitted (in grams) by a vessel for every tonne of cargo carried a nautical mile based on:

Total engine powerFuel type & specific fuel consumptionCargo carrying capacitySpeed

Developed by RightShip based on the same assumption as the EEDI, this formula can be validly applied to existing vessels right now

More info…

More indices…

ApplesVersusApples!

Retrofits and UpgradesDropdown menu of retrofits and upgrades

Verification procedures ensure rating is an accurate reflection of reality

The Demand Pull: Charterers using A to G as a policy

The Demand Pull: Charterers using A to G as a policy

Incentives for clean tech investment are arising, but in this market – who pays?

CAPITAL FLOW / FINANCE MODELING: A Snapshot: Self Financing Fuel Saving Consortium

Financier (“high risk” initially)

Monitoring company

Propeller company

Hull Coating company

Vessel Owner

Fuel SavingEscrow Account

Bunker FuelProvider

SFFSCMembers (incl. Tech

co’s, owner(s), charterer's),

monitoring co., etc)

FinancialSurplus

Capital &InterestPayments

Payment to technology suppliers

Legal Charge / other rights Unsecured

Loan Agreement

Charterer's)

Performance guarantees

Technology partners

CashFuel

Use of ship Inclusive day rate

Structural Option A Example – “Financier funds Owner”

FuelSaving

GuaranteeAssignmentRights

Tech

Methodology and Monitoring: Key to Success

Fuel consumption (e.g. tpd)

Time in operation (e.g. days pa)

First dry dock

Monitoring continues

Monitoring begins

Apply an agreed long-term underlying deterioration trend

Estimate post-dock baseline from pre-dock data, extrapolated if necessary

Estimate the fuel saved over guarantee time (e.g. 1 year post drydock)

Why only now? Methodology and accurate data key

Good quality pre-drydock data!Metocean dataOperational data (speed, loaded/ballast, trim)

A ship with fairly standard operation (no long periods stationary pre or post docking, consistency in operating speeds)

Long time-series (e.g. preferably 10+ years) performance data for a number of similar ships to determine long-term deterioration trend

Good quality energy monitoring equipment (flow meters etc)

Time (money) for method refinement / data processing

3rd party quality control/data processing verification

Self Financing Fuel Saving Consortium

Example: A 10-year old VLCC: approaching 2nddrydock cycle three year project:

At a HFO cost of $700/ton & annual fuel cost of $17.2m

Minimum 8% fuel saving guarantee (from 1-3 technology providers)

$1.6m retrofit cost, $1.9m total cost (including insurance, consultancy and finance premium)

$1.8 savings per annum= 13 month payback

Remaining 23 months sees $3.45m “upside” fuel savings split between financier, owner / charterers, clean techs, consultants

Thank youE: [email protected]

Twitter: @shipefficiencyW: shippingefficiency.org