A Review of Future Energy Efficiency Measures and CO2 Emission Reduction in Maritime Supply Chain

A Review of Future Energy Efficiency Measures and CO2 Emission Reduction in Maritime Supply Chain

Muhamad Fairuz Ahmad Jasmi (Faculty of Business and Management, Universiti Teknologi MARA (UiTM), Puncak Alam, Malaysia) and Yudi Fernando (Faculty of Industrial Management, Universiti Malaysia Pahang, Malaysia)
DOI: 10.4018/978-1-7998-3473-1.ch168
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Marine pollution has increased society concerns on issues of coastal, emission, global warming, climate change, and marine ecosystems. The pressures are in the shipping industry to adopt green practices and contribute to the better world. The shipping industry which involves in maritime supply chains has been encouraged to adopt the low carbon technologies and energy efficiency practices. However, to what extent the maritime supply chains practice the energy efficiency measures and CO2 emission reduction remain relatively unknown. While this pursuit is a positive indicator, there is still limited adoption in these seemingly cost-efficient technical and operational measures aiming at reducing energy cost. Thus, it is crucial to understand the current practices in order to institute a more realistic baseline and reliable evaluation towards future energy efficiency improvement. Moreover, all of these reduction measures must go through detailed planning and should engage the attention of management level and maritime stakeholders for effective implementation.
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As the world's largest industry, the maritime supply chain sector is a significant contributor to global CO2 emissions. Based on the recent report (see Figure 1) by the International Maritime Organization (IMO), the maritime supply chain sector currently accounts for approximately 3% of global CO2 emissions, projected to double or triple by 2050 (Buhaug et al., 2009). Conversely, it is also projected that 25-70 per cent of CO2 emission can also be lessened with appropriate strategies through better energy efficiency practice, adoption green technologies and improved logistics system (Johnson & Styhre, 2015). However, the implementation of all current cost-efficient technologies aiming at reducing fuel consumption and curbing emissions have proved to be inadequate to counteract the effects of rapid growth of maritime supply chain sector (Eide, Longva, Hoffmann, Endresen, & Dalsøren, 2011).

Figure 1.

CO2 emission projection for maritime transportations

Source: International Maritime Organization (IMO)

Due to this concern, numerous studies have been taken in the field of substitute power sources and energy-saving measures for shipping operation to reduce CO2 emission. Nevertheless, the gaps remain between existing knowledge and the execution of energy efficiency measures by maritime supply chain organizations (Styhre & Winnes, 2013). As in other numerous sectors, several measures that would improve fuel efficiency and CO2 emission in the maritime supply chain have yet to be implemented despite their known cost efficiency. This situation is known as energy efficiency gap in the literature. This situation is generally occurred due to lack of understanding/awareness, low capital, weak policies and slow technology adoption. While Sorell, Mally, Schleich and Scott (2004) underpin this problem through recognition of organizational barriers such as organizational risk, asymmetrical of information, hidden costs, higher capital, split incentives and bounded rationality.

From the legislator viewpoint, these problems call for proactive policy intervention in this sector. IMO as a sole global legislator has been implementing a few chapters in its MARPOL Annex VI in achieving a comprehensive goal to reduce GHG emission in shipping operation (Kader, 2013). Current IMO declarations such as Energy Efficiency Design Index (EEDI), Ship Energy Efficient Management Plan (SEEMP) and Energy Efficiency Operational Indicator (EEOI) are to collect data on energy consumption and emission so that reliable measures can be implemented. IMO also is in the ongoing discussion on the possible implementation of sector-specific market-based measures (MBM) to further curb specific CO2 reduction within this sector (Hannes Johnson & Andersson, 2016). This annex will eventually become a blueprint for many maritime organizations to abide as it is obligatory to follow suit these regulations in order to fulfil the global requirement for trade in the future. However, as the volume of trade is predicted to rise over the year, total reductions in fuel consumption and CO2 emissions from the sector are not expected to lower despite these new regulations (Anderson & Bows, 2012).

Key Terms in this Chapter

Sustainability: It refers to the ability of the organization to maintain a certain rate or level especially in term of natural resources or ecological balance. In most literature, sustainability also constitutes the three bottom line concept of sustainable development which emphasizes improving the economy, environment, and social dimension.

Energy Efficiency Gap: It refers to the difference cost potential improvement of energy efficiency and the level of energy efficiency actually realized. For example, although cost-effective technologies that can improve energy efficiency are recognized, they are not always implemented due to this ‘energy efficiency gap'.

Energy Efficiency: It refers the goal of reducing the amount of energy required to provide products and services. The energy definition in this context can be fossil fuel or electricity.

Maritime Supply Chain: It refers to entire shipping industry consisting of shipping lines, port terminal operators, freight forwarders and land-based logistic system. It is a part of comprehensive worldwide logistics systems of moving cargoes between places.

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