Over the past few decades, the rise in newbuild ships has seemed almost relentless. In the 1980s, only 40 cruise vessels were commissioned by operators, but between 2000 and 2013, that number rose to 167.
In 2008, things started to unwind. A combination of economic crises and political unrest caused a significant slowdown in the number of orders placed by the cruise industry. The drop in demand had serious multiplier effects, with employment and output falling across the shipbuilding sector.
Legislation isn’t making things easier. The North American Emission Control Area, slated for 2015, requires ships travelling within 200 miles of the US and Canadian coast to use fuel with a sulphur content of no more than 0.1%. At a time of serious financial pressure, industry leaders aren’t happy. Chief executive of Carnival Cruise Lines UK David Dingle described the regulation as the "biggest single threat to the cruise industry".
That might seem hyperbolic, but tensions between balancing books and industry legislation are difficult to resolve.
The International Maritime Organization (IMO) estimates the contribution of international shipping to global emissions at 2.7%. The cruise industry may generate only a fraction of that, but as a small part of the shipping sector, its involvement remains disproportionate.
Solving the problem of CO2 isn’t easy. Progress with the UN’s climate change convention has stalled, with the right combination of carbon taxes, emissions trading, compensation funds and market-oriented solutions yet to be agreed on.
But the IMO’s Marine Environment Protection Committee has made significant progress. In 2009, it announced a set of regulations designed to reduce CO2 emissions across the shipping industry, including the adoption of an Energy Efficiency Design Index (EEDI) intended to promote more energy-efficient equipment and engines in newbuild ships.
"The mandatory EEDI is aimed at cutting CO2 emissions in newbuilds with a view to improving efficiency," says Corrado Antonini, honorary chairman of the Community of European Shipyards’ Associations. "CO2 is by far the most dangerous emission, intrinsically linked to the combustion process and energy generation. It needs to be tackled."
The new CO2 standards are considered the first regulations of their kind, applying as they do across a global sector. Passing the directive was something of an achievement, given the political differences among the states involved.
But even with international agreement, success isn’t guaranteed. A lot will depend on the attitude of the cruise industry, whose lobbying efforts elsewhere suggest a concern about the impact of environmental legislation. Antonini is confident, however, that things can work out.
"Compliance with the new convention is not a problem," he says. "Operators and shipyards have shown themselves to be open-minded on emissions reduction, actively contributing to the rule-making process. Cruise ships have been at the forefront of energy saving over the years, making extensive use of diesel-electric generation and propulsion. In comparison with the cruise ships built ten years ago, newbuilds may have up to 100 additional energy-efficient solutions.
"The real problem for stakeholders in the cruise industry will be compliance at a cost that’s financially competitive. R&D will be essential to do this. The industry has already shown a great ability to react quickly and effectively. Present cruise ship technology is the result of a steady evolution, not a revolution. Good solutions are always a combination of innovative design guided by clear operational requirements and best practice."
Fincantieri, Antonini’s shipyard, is a good example of this approach. Alongside other members of the European shipbuilding community, the Italian company has been working hard on understanding the EEDI definition as it applies to cruise ships.
"We’ve been actively cooperating with the rest of the passenger shipping industry at IMO level," he says. "We want to make sure the new set of requirements takes into account our long-standing efforts and experience to make ships more efficient."
They’re not the only ones taking steps forward. Tom Strang, senior vice-president for maritime development and compliance at Costa Crociere, is on record saying similar things about collaboration and compliance.
"We’ve been working on the EEDI mechanism for cruise ships to come into the system," he said, "cooperating with the rest of the passenger shipping industry to make sure that it isn’t a very punitive set of requirements, and that it takes into account the industry’s long-standing efforts to make ships more energy-efficient."
The precise price EEDI will exact on newbuilds is difficult to assess. Initial costs for ship design and construction may be high, but the energy savings that accrue on the back of fuel bills may create an interesting market-based incentive. Because the price of fuel has such a large effect on total operating costs, it’s always been factored into the construction and design of cruise ships. As fuel prices continue to rise, a natural harmony may be found between the direction of the market and the goal of the EEDI.
"The financial impact will be strictly dependent on the needs and operational profile of the owner," Antonini says. "Equipment redundancy, time and service factors of energy consumers, HVAC set points and the type of fuel used are all important factors. Cruise ships are always complex, tailor-made products. Each solution requires careful planning and analysis of the costs and the benefits."
Meeting the regulations
Most of the new solutions around carbon reduction are looking at fuel and abatement technologies. Suppliers and manufacturers have started to produce and test products that are capable of meeting the regulatory pressure. But there are drawbacks.
"There are issues around size, energy consumption, integration and safety," Antonini says. "Abatement technologies like scrubbers often require a lot of energy. Their size and weight can penalise the ship’s payload. Nevertheless, several solutions are being studied to pursue the target of more ‘compact’ equipment that can be squeezed into modular ‘plug-in’ solutions that are easier to install and retrofit. Packages for retrofit would require further studies, but not everything will be possible. Innovation in newbuilds is more promising."
For Antonini, one of the most promising new ideas is the use of liquefied natural gas (LNG) as a dual-fuel solution. Recent estimates suggest the energy source could create CO2 reductions of up to 25% and SOx reductions of 95%.
"Having studied the use of LNG as a dual-fuel solution, we’re currently building a large passenger ferry with LNG propulsion," Antonini says. "Several solutions have been identified for the location and size of the LNG tanks, and the design has been supported by risk assessment and HAZID methodologies.
"LNG can also overcome the problem encountered with cold ironing in port," he continues. "Feeding LNG into the ship when docked is a green solution, which is more flexible in delivery than the electrical hook-ups currently in place across the west coast of North America. I think it’s the best candidate for an alternative power source; what we now need is a major effort to provide the necessary LNG bunkering facilities in port."
Cooperation between stakeholders will also be key if the industry hopes to meet the legislative demands by the 2014 deadline. Fincantieri is already cooperating with the Cruise Lines International Association and other industry partners on the EEDI requirements ahead of that date.
"We’re doing our best to fit ideas like electric power tables as seamlessly as possible into the regulatory framework," Antonini says. "All our passenger ships under design or construction will be in full compliance with the regulations when they enter into service."
Whatever impact the EEDI has on the cruise industry, its role in tackling climate change is self-consciously modest. The control of carbon emissions will form just one part of a global effort to slash greenhouse gas emissions.
"There is a need for pragmatic, balanced solutions and progressive green technologies across the board," Antonini says. "But the passenger ship industry already has a long legacy of success and quality. It should join forces under this context, bringing forward its own areas of expertise to create a greener future."
