Shipping’s first AER emissions index

By Andreas Symeonidis,
Marketing Manager, METIS Cyberspace Technology

To help shipowners reap the financial rewards of environmental compliance, METIS Cyberspace Technology has launched the Predictive AER Emissions INDEX, the first solution of its kind in shipping.

With the International Maritime Organization aiming to halve the shipping industry’s greenhouse gas emissions by 2050, owners are paying ever-closer attention to their vessels’ environmental performance. The threat of sanctions is the primary motivation for many shipowners, but regulatory compliance also offers more positive financial rewards.

Designed to incentivise maritime decarbonisation, the Poseidon Principles comprise a framework helping financial institutions consider environmental factors when lending to shipowners. Owners whose vessels are financed under the Principles and keep pace with the IMO’s annual efficiency ratio (AER) stand to benefit from more favourable terms and conditions on their loans.

Invest, adapt or dispose

METIS Cyberspace Technology has developed a tool that enables these owners to forecast the trade-off between emissions reductions and debt servicing for their ships and fleets.

Named ‘METIS Predictive AER Emissions INDEX’, this industry-first solution allows shipowners to determine the most appropriate and cost-effective response to their vessels’ environmental performance – whether investment, a change in operating profile or disposal. It works by calculating a ship’s standard deviation from the AER and considering how investments or operational enhancements may affect environmental performance and overall costs including outstanding debt.

Owners falling short of the AER can use the solution to determine the impact of various deficiencies on general ship performance, while those outperforming the AER could use the tool to reduce borrowing costs or gain access to other incentives. Already, the INDEX has led one owner to conclude that some of its vessels might never need investment to cut emissions, that others require action now or at a later date, and that two should be disposed of immediately.

From AER to CII

Built on existing METIS infrastructure, the Predictive AER Emissions INDEX draws on thousands of data points from shipboard sensors and external sources to create structured, ship-specific indexes for the Poseidon Principles. Meanwhile, METIS’s cutting-edge artificial-intelligence and machine-learning technology ensures that the tool reflects the realities of shipping operations.

Although the INDEX was conceived with the AER in mind, it will also help owners comply with the IMO’s forthcoming carbon intensity indicator (CII) regulation. Due to come into force in 2023, the CII will measure vessel efficiency in terms of grams of CO2 emitted per cargo capacity and nautical mile, resulting in a rating from A to E. Ships rated A or B will be offered incentives, whereas D or E ratings will require corrective action.

In the next phase of development, METIS plans to add its widely used scenario-based analysis to predict the influence of individual technology upgrades on financing options under the Poseidon Principles. At a time when shipowners are under increasing pressure to reduce the environmental impact of their operations, helping them to see the true commercial value of emissions-reduction measures could prove pivotal.

Meanwhile, personnel and stakeholders on board and ashore have immediate access to real-time insights and interactive support through the METIS Virtual Personal Assistant. As shipping’s first chatbot, the Assistant communicates with users in plain English, sharing vessel performance analyses, informing of machinery malfunctions and assisting with voyage planning and maintenance scheduling. Thanks to its underlying machine learning technology, the chatbot also refines its insights and recommendations over time.

The METIS cloud platform is the first end-to-end, AI-powered data solution in shipping. As such, it provides a unique service, enabling users to integrate insights from multiple sources to gain a full picture of ship performance. The benefits of this holistic approach can be felt across the board and by every stakeholder.

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