Arlie Sterling admits he was a little worried.
The president of consultancy Marsoft has been working since about 2018 on a structure to provide carbon credits to shipowners for vessel enhancements that reduce emissions.
But with the dawn of shipping’s inclusion in the European Union Emissions Trading System (ETS) this year, was there a real chance that his firm’s efforts would take a hit?
“We wondered about that — we were concerned,” Sterling told TradeWinds on the sidelines of the annual Association of Ship Brokers & Agents cargo conference in Miami Beach, where he was preparing to moderate a panel on the ETS.
“You can’t count your carbon twice. So during the time a ship is employed in the ETS, it is not eligible for carbon credits. We worried that might put a damper on what we were trying to do.”
Happily, those fears were misplaced. He has found that the ETS had the opposite effect.
“It caused shipowners to become more aware of the cost of carbon. And when they heard that our product could be paying them, it increased the level of interest,” he said.
“Rather than have a chilling effect, it’s been the reverse. It helps shipowners see the advantages of what we are doing.”
TradeWinds last caught up with Sterling on the subject in November 2022, when he explained the proprietary GreenScreen programme and Marsoft’s partnership with ClimeCo, a Pennsylvania-based company that deals in the carbon credits market.
The alliance allows Marsoft to offer companies an integrated approach to securing such credits and then monetising them in the voluntary market.
While the scheme was still evolving then, eligible retrofits were said to potentially apply to “a suite” of measures ranging from premium coatings to weight-flow devices, engine tuning and wind-assist modifications.
Shipowners could benefit from improved fuel efficiency in carrying out the retrofits, and then get paid again in carbon credits that recognised improvements in emissions.
At the time, owners told TradeWinds they were intrigued but needed to learn more about the market for the credits.
Nearly two years on, there are believers, Sterling said.
Marsoft now has 230 ships enrolled in the programme.
Among the main participants: Danaos with 30 ships, Tomini Group (25), Great Eastern (22), Star Bulk Carriers (19), Global Ship Lease (15), Brave Maritime (14) and Diana Shipping (11).
“There’s been a tremendous amount of progress. We’re really meeting some milestones,” Sterling said.
Based on current numbers, the programme is poised to reduce emissions by 1.3m tonnes over the next few years and put $11m in total back into the pockets of shipowners through sales into the voluntary carbon credits market.
The first credits under the programme were issued only recently by auditor Gold Standard, which undertook a rigorous review of emissions data, he said.
There has been frustration around the pace of the auditors’ review, which Sterling described as “very slow”. The initial audits have taken nearly one year.
“Frankly, it’s probably a good thing,” he said. “You want to make sure you don’t have any warts.”
First sales have come in at $15 per tonne, which is at the top end of the range Marsoft had guided, according to Sterling. Average reimbursements have been between $50,000 and $75,000 per ship, which pales in comparison to the fuel savings actually achieved by the efficiencies but helps nonetheless.
Advanced coatings are the most rapidly growing measure, he said, but owners are also installing ducts, tuning engines and generally exploring a suite of alternatives.
Wind-assist projects have entered the market within the past six months and are an area to watch.
