Clean steam ahead

Globally, shipping accounts for 3% of total annual carbon emissions, and pressure on the industry to reduce pollution is intensifying. Though it makes up a small proportion of total global shipping, it’s no secret that the cruise sector has been keen to take a lead in cutting greenhouse gas (GHG) emissions and set an example for the rest of the industry, but times have changed.

In 2018, the Cruise Lines International Association (CLIA) announced an industry commitment to reduce the global cruise fleet’s carbon emissions by 40% by 2030, from a 2008 baseline. Regulators, too, have acted to bring the shipping industry in line, with the International Maritime Organisation recently adopting new requirements for data reporting and emissions reductions this year.

On the operator side, Carnival made history in 2018, with the launch of AIDAnova, the world’s first cruise ship to be powered by LNG both at sea and while at ports. The following year the company launched its second LNG powered cruise ship – Costa Smeralda. Others have followed suit, although alternative fuel-powered vessels still remain a niche segment of the industry.

Since the CLIA made its commitment, however, the world has been through a pandemic that brought the cruise industry to a standstill. The question now is whether cruise operators can stay on course to meet their emissions obligations at a time when revenue growth and cost reduction are at the top of the agenda.

“While cruise ships comprise far less than 1% of the global maritime community, cruise lines are at the forefront in developing responsible environmental practices and innovative technologies that lead in environmental stewardship,” says Brian Salerno, senior vice president of maritime policy for CLIA. “We are committed to pursuing net carbon neutral cruising in Europe by 2050. On a global scale, the cruise industry was the first maritime industry segment to publicly commit to meeting the IMO’s 2030 carbon intensity reduction goal.”

“Cruising is a small fraction of the total shipping sector,” agrees Dr. Alexis Papathanassis, professor of cruise management at Bremerhaven University, who has dedicated 16 years to researching the industry’s economics. “There are around 300 cruise ships only, representing a small part of the tourism industry compared to, for example, the number of hotels and aeroplanes.”

Given the limited impact the cruise industry can have on its own, it is understandable that, amid the on-going pandemic, survival would take precedence over sustainability, but Salerno feels that the industry will press ahead with its commitment.

“It has been an incredibly challenging year and half for the cruise industry, and it goes without saying that furthering responsible resumption of operations will continue to be the foremost priority for us for the foreseeable future,” he remarks. “That said, the cruise industry has remained focused on its commitment to responsible tourism practices and a cleaner, more sustainable future. Reducing our environmental footprint and continuing to work closely with destinations and communities to be good stewards of the places we visit are key focus areas for us.”

Pressure from above

To some extent, the industry has no choice but to keep up its pursuit of sustainability. In June 2021, the IMO’s Marine Environment Protection Committee adopted amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI that will require ships to reduce their greenhouse gas emissions. Comprising both technical and operational measures to improve energy efficiency, the new measures will require all ships to calculate their Energy Efficiency Existing Ship Index (EEXI), and to establish their annual operational carbon intensity indicator (CII) and CII rating.

“We are supportive of the IMO adopting further measures to reduce the rate of carbon emissions,” says Salerno. “The cruise industry is a pioneer and early adopter of maritime environmental protection practices and will continue to diligently work towards a long-term sustainable future.”

CLIA has already joined with other maritime trade associations and IMO Member States to propose an international maritime research and development board/ fund (IMRB/F). This would generate an estimated $5bn over ten years to advance the kinds of technology needed for international shipping to meet the IMO’s goals of reducing carbon emissions by 50% by 2050 over 2008 levels, and to phase them to zero as soon as possible. At present, the IMRB/F proposal is still under consideration at IMO, but CLIA remains hopeful that it will be adopted, though it accepts a different path to achieve decarbonisation might be chosen. “The IMO’s recent adoption of the CII, while well intentioned, will likely require further refinement to be truly useful to regulators,” Salerno believes. “The focus on carbon intensity, without also considering its relationship to overall carbon output, could generate unintended consequences. The cruise industry remains engaged with the Marine Environmental Protection Committee and its associated work groups to refine the CII formula so that its true purpose in not distorted, and will continue to work, day-in and day-out, to meet IMO’s ambitious goals.”

Funding the necessary technological changes will be crucial, particularly as the cruise industry, though sailing again, has seen average income per passenger decline compared to previous years, while vessel utilisation is also lower than usual.

“The cruise industry is a profit-making business, so it won’t do what is financially harmful,” says Papathanassis. “It will try to make money under competitive, regulatory and demand restrictions. Cost, demand and regulations must be balanced. In terms of demand, generational change – especially after the pandemic – means people are more sensitive to climate issues but, although sustainability is important, our research indicates that people are reluctant to pay for it.”

“Cruise lines are still burning cash,” he adds. “They had to shut down quickly and there is a cost to getting everything up and running again. Demand has fallen and cost has risen. But there is one positive effect – the pandemic has fuelled rejuvenation of the fleet. Some older ships have been decommissioned or scrapped, with new ones coming into service.”

The tools to build change

A younger fleet will comprise more technologically advanced, more energy-efficient vessels. The pandemic has expedited that transition and Papathanassis welcomes the change.

“More of the ships planned for the future will use LNG, which creates fewer emissions,” he observes. “Of the ships on order out to 2027, 40% of the total capacity corresponds to LNG-powered vessels, which is a very positive sign.”

The CLIA notes that with more than $23bn being invested in ships with new technologies and cleaner fuels, there will be a large environmental benefit, building on top of the industry’s early adoption of advanced technologies. This includes exhaust gas cleaning systems, the use of LNG, advanced wastewater purification systems and much more.

“The introduction of carbon pricing will not alone solve the underlying core challenge, however, which is the lack of alternative marine fuels,” warns Salerno. “Further political and regulatory attention will be needed to accelerate the development of alternative fuels and make them available for bunkering in European ports.”

Though regulation alone cannot solve such problems, it does compel the relevant stakeholders to find solutions, though it raises issues of its own. “A top-down, regulatory approach has a big impact, but there are many legal complications, not least the question of who enforces regulations on the cruise industry, which operates globally,” says Papathanassis. “Regulation is the quickest and best way to bring about change, but it is very challenging.”

What could make a big difference is the evolution of awareness of sustainability among passengers. Invariably, regulatory push is more powerful when coupled with demand pull, but much will depend on how much attention passengers pay to the use of alternative fuels such as LNG and, more broadly, the sustainability credentials of individual cruise lines.

“Considering the growing public awareness of environmental matters, it is important to keep in mind that cruise ships operate completely within public view at all times so that our reputation and our continued ability to provide a memorable vacation experience rests on responsible stewardship,” believes Salerno.

For Papathanassis, there is another question – can customers tell if a cruise is environmentally friendly or not?

“It comes down to reputation and public perception,” he says. “IMO regulations help with this, but compliance and enforceability are the issues. Also, the IMO regulations focus just on emissions, but you have to look at sustainability from a systemic point of view or you are just moving the problem to a different place. That said, new technological options generate an organic pull towards sustainability and improved energy efficiency. The move to LNG, for example, is good for reducing emissions, but the industry’s approach cannot just look at emissions.”

In other words, regulations must address the cause of the problem, not just the symptoms. As the industry continues to move towards LNG and other low-emission fuels, it will no doubt make great progress towards the IMO’s ambitious goals, but only if those changes are part of a holistic approach that includes, but is not restricted to, a cruise ship’s choice of fuel.

While the common consensus is that something as financially damaging as a global pandemic will restrict wholesale investment in eco-fuels, consumer focus – and criticism – of the negative impact of fossil fuels was growing long before Covid-19 reared its ugly head. As the planet warms and sea levels rise it will only intensify further.