CTX completes VLCC design study

The results indicated that, under reasonable assumptions, EEDI will result in a slight increase in VLCC operational CO2 emissions. Even under an unrealistically optimistic set of assumptions, the phase 2 CO2 reduction is less than 3%.

CTX said that the reason why EEDI is so ineffective at reducing VLCC CO2 emissions was two-fold: –

1) EEDI does not limit CO2 emissions directly. For VLCC’s, EEDI mainly limits installed power. But at current and expected bunker prices, a non-EEDI VLCC owner/term charterer uses all the installed power only in a buoyant market, or about 10% of the ship’s life. For the great bulk of her life, a non-EEDI VLCC uses little or no more power than an EEDI compliant ship.

2) In limiting installed power, EEDI induces owners to use smaller bore, higher rev/min engines, which means that the EEDI-compliant VLCC will consume more fuel than the non-EEDI ship when the market is not booming, which is most of the time.

In contrast, CTX found that VLCC owners will respond to a $50 per tonne CO2 tax ($150 per ton BFO cost increase) by reducing speed in all but booms, thereby reducing VLCC CO2 emissions by about 7% over a market cycle. And unlike EEDI, a tax (or an equivalent ETS permit price) will apply to all VLCCs, including those already trading.

There is good reason to believe that the same analyses applied to smaller tankers and bulk carriers will arrive at very similar conclusions, CTX said.