Mark Grundy
Managing Director of Global Marketing & Communications
Landmark Multi-Technology Ship Retrofit Expected to Slash Fuel Use by 25 Percent
“This deal proves the profitability of shipowners and charterers collaborating on multi-technology retrofits.”—José Maria Figueres, former Chair of the Board of Trustees, Rocky Mountain Institute and Carbon War Room.
March 10 2016, London, UK—Carbon War Room (CWR) announced today that a collaboration between Hammonia Reederei, a Hamburg-based shipowner, and New Orleans-based charterer Intermarine, has enabled the retrofit of three sister vessels with multiple efficiency technologies. Under anticipated operating conditions, each vessel is expected to see 25 percent fuel savings, to be shared between Hammonia and Intermarine.
CWR awarded Hammonia a $120,000 grant to retrofit the vessels Industrial Ruby, Industrial Royal, and Industrial Revolution. The project won praise for its ambitious use of multiple technologies, as well as for its revenue-sharing collaboration between charterers and owners. Intermarine has agreed to award Hammonia a rate that is above market rates through a retrofit clause in the charter party. This effectively shares the fuel savings between both parties, while also earning Hammonia a five-year time charter.
Furthermore, as Industrial Ruby is Liberian flagged, this vessel is eligible for a 50 percent tonnage tax discount for the first year after retrofit. This is part of the incentive scheme offered by the Liberian Registry to encourage and reward efficiency retrofits using third-party finance.
The retrofit bundle installation includes an optimized bulbous bow, rudder optimisation, high-performance hull coating, and trim and ballast optimisation at standard drydock. The 10,536 dwt Industrial Ruby is the final vessel to leave drydock after undergoing the retrofit and was relaunched on 1 March.
Hammonia purchased Industrial Ruby as well as sister vessels Industrial Royal and Industrial Revolution second-hand. The vessels’ financier has extended the liens to finance the bulk of the $1.2 million retrofits.
Galen Hon, Shipping Operations Manager, Carbon War Room, commented:
“This deal showcases how to overcome the split incentive between owners and charterers, and delivers hard proof of the fuel savings from deep retrofits. Hammonia and Intermarine should be congratulated for employing best practices to measure and monitor savings, and for sharing their data—which will increase industry confidence in the profitability of retrofits. These first movers will inspire more owners and charterers to follow in their footsteps.”
The CWR grant funded the installation of continuous monitoring software on Industrial Ruby, Industrial Royal, and Industrial Revolution in order to measure, verify, and publicise the fuel and carbon savings. The data will be analysed by the independent third-party University College London (UCL) over a five-year period, with initial results being released to the industry six months post-drydock.
According to DNV GL, only one in 10 companies aims for greater than 10 percent savings from its retrofit projects. After two years of working on retrofit finance, CWR views this deal as a model for the industry to achieve far greater savings, while creating win-win scenarios for both charterers and owners. This is especially pertinent in today’s market of overcapacity. CWR’s team can work with and support any interested owners or charterers to help them develop or find financing for efficiency retrofit projects.
This project is funded by the Dutch Postcode Lottery, which recently granted €1 million ($1.09 million) to CWR and Rocky Mountain Institute (RMI) for their LeaderShip project, expanding their efforts in the shipping industry, including collaboration with the Port of Rotterdam.
“The Dutch Postcode Lottery is thrilled that our commitment to a green and sustainable future is being realised by way of this collaboration, thanks to Carbon War Room and Rocky Mountain Institute. More efficient ships give environmental benefits for port communities around the world,” said Margriet Schreuders, Head of Charities, Dutch Postcode Lottery.
Owners, operators, and charterers interested in discussing retrofit financing should contact James Mitchell at jmitchell@carbonwarroom.com
About Carbon War Room
Carbon War Room (CWR) was founded in 2009 as a global nonprofit by Sir Richard Branson and a group of likeminded entrepreneurs. It intervenes in markets to accelerate the adoption of business solutions that reduce carbon emissions at gigaton scale and advance the low-carbon economy. CWR merged with Rocky Mountain Institute (RMI) in 2014 and now operates as an RMI business unit. The combined organization engages businesses, communities, institutions, and entrepreneurs to transform global energy use to create a clean, prosperous, and secure low-carbon future. The combined organization has offices in Basalt and Boulder, Colorado; New York City; Washington, D.C.; and Beijing.
Carbon War Room launched Shipping Efficiency in 2010. Since then, it has worked with RightShip to develop the GHG Emissions Rating and make it publicly available at ShippingEfficiency.org. The rating ranks vessels against others of a similar type and size on a simple A to G scale, from most to least efficient. It is now used by charterers to shift a fifth of the world's shipped tonnage to more efficient ships annually and by other shipping stakeholders including ports and banks.
In collaboration with UCL Energy Institute and other industry experts, CWR has created new financing models for efficiency retrofits and partnered with investors to unlock financial barriers to greatly reduce the carbon footprint of the international shipping fleet.
Image credit: Roy Beusker
About the Dutch Postcode Lottery
Since 1989, the Dutch Postcode Lottery has been raising funds to support organizations working for a fairer, greener world. Today, 2.7 million people in the Netherlands play every year, vying for hundreds of thousands of prizes each month. As they play, they’re supporting charitable causes: half the price of each ticket is distributed among 95 nongovernmental organizations. Since the Postcode Lottery's founding, it has donated over €4.7 billion to organizations working on behalf of humanity and the natural environment. The numerous bodies receiving support annually include UNICEF, WWF, Amnesty International and Doctors Without Borders. In 2005, Postcode Lotteries were started in the United Kingdom and Sweden, where the People’s Postcode Lottery and Svenska PostkodLotteriet respectively raise funds for good causes. Novamedia, founder of the Postcode Lotteries, is the third-largest private charitable donor in the world.
Media Team
Nick Steel