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Press Release

ICS Addresses OECD Shipbuilding Working Party

The OECD should be cautious about becoming involved in the question of what constitutes an ‘eco-ship’, was the message delivered to governments in Paris today by the International Chamber of Shipping (ICS) at a meeting of the OECD Working Party on Shipbuilding.

25 November 2014

ICS believes that this subject is best left to the International Maritime Organization (IMO) or for shipyards to negotiate with their customers. If further consideration were to be given to an OECD definition of ‘eco-ship’ this should not be used as a justification for future subsidies by governments that might lead to market distortion.

Referring to China’s new ship recycling policy whereby it is offering significant subsidies of about $250 per gross tonne for Chinese shipping companies that scrap vessels early and then place orders at Chinese shipyards for at least the same tonnage, ICS expressed concern that such incentives to artificially boost shipbuilding could have a negative impact on the speed with which the global supply/demand balance in shipping is restored.

ICS reminded governments that for reasons of safety, as well as economy, a ship was built with an expected life span of 25 years or more. It was a big thing indeed for ships to be recycled when they are only 15 years old, which in some cases was happening at the moment.

ICS also suggested that the CO2 emissions created by dismantling a new ship far earlier than intended, and then constructing a new one, were considerable, but were often overlooked, and could actually outweigh the CO2 saved through efficiency reductions achieved by the new ship replacing it.

Using the current definition of a fuel efficient vessel, a new-build ship that complies with the applicable Energy Efficiency Design Index (EEDI) – adopted by IMO to help reduce CO2 emissions – it should not always be assumed that ordering so called eco-ships would be in the best interests of the owner, their customers or the environment.

Many older ships, if operated at slower speeds, or given improvements such as engine upgrades or new propellers, may well continue to operate efficiently with low levels of fuel consumption that make them attractive economically and environmentally – especially if the owner has a smaller debt to service.

But in the long run all ships in operation would in effect be ‘eco ships’ as all new builds will have to comply with tighter EEDI IMO standards, and all of the existing fleet will eventually be replaced.