Tag: Nautical

  • Decarbonization efforts will lead to a net increase of 237 Bn ton-miles, predicts Veson Nautical

    Decarbonization efforts will lead to a net increase of 237 Bn ton-miles, predicts Veson Nautical



    Analysis from Mikkel Nordberg, Veson Nautical’s Senior Shipping Economist, indicates that the advantages stemming from the expansion of renewable energy capacity may outweigh the negative effects of diminished coal demand.

    When considering a medium-term timeframe spanning from 2023 to 2026, Mr. Nordberg’s estimations project that decarbonization efforts could result in a net increase of 26 million tons and 237 billion ton-miles. Decarbonization should not be considered unfavorable by dry bulk owners, as it will likely be a key demand driver the next couple of years.

    Renewables set to overtake coal by 2025

    Thermal coal stands for about 36% of the world’s total energy generation and is the worst emitter, so replacing coal with renewable energy sources is a big step in the right direction.

    Using data from IEA, Veson estimates that the global coal demand for electricity generation was roughly 5,770 Mt in 2023. Meanwhile, data from Oceanbolt, a Veson Nautical solution, shows that the total seaborne trade of thermal coal was 1,114 Mt last year, indicating that about 19% of coal used for energy production is transported by sea.

    Using data from Energy Information Administration (EIA), Veson estimates that producing 1 TWh of energy requires around 520,000 tons of thermal coal. This means that the reduction in thermal coal demand will be 273 Mt. Assuming the seaborne thermal coal trade retains its 19% share of the total thermal coal demand, it suggests a reduction of 52.7 million tons in seaborne thermal coal trade by 2026.

    The green transition needs dry bulk commodities

    The IEA is expecting electricity production from renewable energy sources to increase 3,200 TWh by 2026, which is an increase of 35.7%. This would require significant production of solar panels and windmills, that are largely made of steel and other metals transported on dry bulk carriers.

    Assessments from ArcelorMittal and Windeurope.org indicate that crafting 1 MW of production capacity involves approximately 40 tons of steel in solar panels, 120 tons in onshore windmills, and 150 tons in offshore windmills.

    Applying these metrics, Veson’s calculations indicate that the renewable energy expansion will demand approximately 101 Mt of steel by 2026. Assuming a ratio of 1.6 tons of iron ore to produce 1 ton of steel and maintaining the current blast furnace share of steel production at 71.5%, this translates to a projected increase in iron ore demand of 115.22 Mt.

    Information from Oceanbolt shows that the total seaborne trade of iron ore amounted to 1,639.8 Mt during the same period. Consequently, we estimate that approximately 68% of the iron ore supply is transported by sea. Applying this ratio, our analysis concludes that the expansion in renewable energy will lead to a 78.8 Mt increase in the seaborne trade of iron ore by 2026.

    Growing iron ore demand exceeding the demise of coal demand

    Based on the IEA projections, our calculations show that decarbonisation will lead to a decrease of ~53 Mt in the seaborne trade of thermal coal, and an increase of ~79 Mt in the seaborne trade of iron ore.

    The maritime industry needs to consider the effect on ton-miles. Data from Oceanbolt shows that the average distance sailed during 2023 in the coal trade was 3,838 nautical miles, while it was 5,573 NM for iron ore. By multiplying the volume increases with the respective distances we conclude that there will be a 202 Bn decrease in ton-miles from thermal coal and a 439 Bn increase in ton-miles from iron ore. As a result, the decarbonization efforts will lead to a net increase of 237 Bn ton-miles. This is a 1% increase in total ton-miles from 2023 to 2026.

    The full whitepaper is “When global warming cools down, dry bulk heats up” available to download now.
    Source: Veson Nautical



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  • Veson Nautical launches Emission Expense Settlement Workflow, enhancing its comprehensive EU ETS contract management solution

    Veson Nautical launches Emission Expense Settlement Workflow, enhancing its comprehensive EU ETS contract management solution


    New feature allows IMOS clients to easily assess their carbon exposure, calculate their emission expense, and manage the cash, allowance or hybrid settlement across individual contracts

    Tuesday 5th December, 2023, Boston (MA) Veson Nautical (Veson), the global market leader of maritime freight management solutions, today announces the release of its Emission Expense Settlement Workflow, enhancing its EU ETS contract management solutions for individual voyages into the European Union. Veson’s IMOS platform now provides users with a comprehensive, digital commercial management solution to assess the commercial viability of each contract based on their carbon exposure and costs, and to settle their emission expenses depending on the clauses in their contracts.

    The Emissions Expense Settlement Workflow is the latest EU ETS product update from Veson. Users can now track the settlement of emissions expenses using cash, EU Allowances or a combination of the two for each charter party within the IMOS platform. This follows the polluter-pays principle, where the party directing the vessel into the EU covers the cost of emissions.

    Developed in close consultation with charterers, commodity traders, owners and operators over 2 years, it builds on Veson’s real time carbon calculator for emissions applicable to the EU ETS. It is also used in conjunction with Veson’s Trading and Risk module, where clients can assess the potential cost for an individual voyage, including the equivalent carbon price for the allowances in the market.

    Users of the updated IMOS platform can use this information to take strategic action to issue the amount of allowances required to cover emissions, managing their EU ETS allowances and hedging against allowance price movements. Clients can see their risk position in any market, at any time, based on fixed contracts and their hedging strategy.

    Bobby Morse, Group Product Manager said: “We are excited to launch a product that provides critical support for all clients who do business within the EU. At Veson Nautical, we’re focused on product development which delivers clear ROI and benefits to the users. We’re thankful to our clients and the maritime community for their valuable input and support in developing this tool.”

    Josh Luby, Group Product Manager said: “Veson’s goal was to deliver a baseline solution to support our clients across all sectors that are impacted by this new regulation. We are confident that we have completed that task. That being said, we know that there is still more to be done and we know that the industry continues to evolve how they will handle some of the more nuanced elements of the regulation. We will continue to work with our clients, and the industry, and are committed to deliver additional functionalities to help support them throughout 2024 and beyond.”

    With the addition of the Maritime industry into the European Union Emissions Trading Schema (EU ETS) starting the first of January 2024, any voyages that include cargo operations in an EU port will have an associated emissions expense. To best ensure that the industry follows the polluter-pays principle, where the party that is directing the vessel into the EU covers the cost of emissions, contracts are being amended to include clauses to recoup these costs.

    All functionality is applicable on a contract-by-contract basis within Veson’s IMOS platform fully and integrated into the comprehensive workflows that charterers, commodity traders, owners and operators already use. Clients can add the functionality to their subscription by contacting Veson directly.
    Source: Veson Nautical



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