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The jungle ship

Season 3, Ep. 7

Craig Eason 

Hello, and welcome to the Aronnax Show, a podcast about the shipping and ocean space. It’spowered by Fathom.World. I am Craig Eason and that is Danielle Doggett, the CEO of Sail Cargo a company she launched to do something very, very different.

This episode of the Aronnax Show is dedicated to the ship in the jungle. A wooden ship being built in a wooden shipyard on the coast of Costa Rica and destined to sail with sustainable cargoes by shippers seeking sustainable shipping up and down the west coast of the Americas.

I was drawn to the story of CEIBA, as the vessel will be known, not only because of the extremeness of the idea, but how Sail Cargo is going to sail in a competitive market, and according to Doggett’s plans make money.

According to the website CEIBA is a 46 meter three masted squared-rigged, wooden schooner. It’s cargo capacity is modest, the equivalent of 9x twenty foot container sunder the deck.

The vessel looks like a romantic and some will no doubt say foolish dream of returning to the past, but CEIBA will have a battery system on board to power two electric engines and have the ability to use its propellers while under sail power as turbines and generate electricity to recharge those.

I spent an hour on a Zoom call with Danielle, me in my home studio in Sweden and she in her wooden shipyard the jungles of Costa Rica, which is more than evident in the background noise throughout the interview.

I wanted to know how this carbon-positive plan would make money, and to dig into her plans for future vessels, which include fuel cells with the potential for onboard hydrogen generation and even other larger vessels which she is currently collaborating with other potential partners on.

But I began by asking Danielle about the challenges of not only deciding to build a sustainable ship, but to build a sustainable shipyard, and find cargo owners who really believe in sustainable supply chains enough to invest in them.

 

 

Danielle Doggett

Yeah, you've hit the nail on the head, as well add to that, that that's this is approximately a $4.2 million project. And we started this with $10,000 Canadian, which is about $7,000. And that's that was it.

 

Starting this with next to no financial backing actually made it more necessary for us to have the answers to every single question, to have planned better, to have a stronger foundation to have more, have done more feasibility studies, to have every everything figured out. Because we needed our investors to trust us. It's not easy to say to somebody you've never met, 'please send $20,000 to this account in Central America where I'm standing in a field', and we have nothing to show for it. So we needed to have those answers.

 

 

It's something important that you brought up, is that we are a for-profit business model, while we actually do maintain a lot of nonprofit organization goals and values. So I actually worked as a volunteer, or very close to volunteer for almost 10 years of my life, and so very familiar with the non-profit sector and very much in love with it. But that wasn't the point of this business. So we wanted to say exactly as you said that we can hold up our numbers, and that, you know, it's a much smaller scale, but hold up our numbers and the numbers beside Maersk or any other for profit shipping company. And we could say, look, we did it, we paid our taxes, we paid our investors, we paid our crew, and we did it, carbon negative. And so that was very, very important for us to be able to say that. And so we do have, as I said, values that are more traditionally associated with being in the nonprofit sector, which to me, this makes no sense why they're associated only with that.

 

 

But it's called a triple bottom line. So you care about the environment, you care about people and you care about financing. I do believe that the for-profit world is moving towards that a lot of people disagree with me. But it's the only way to make long term financial sense. And so that those things are inherent in our business model.

 

Craig Eason

How do you see this then scaling up? You've got the CEIBA, which is is it still going to be launched next year? 2022? Is it still on schedule? How do you see that scaling up?

 

Danielle Doggett

Yes, we are actually still on schedule, which is really amazing to say, we'll see if we're on schedule when it actually gets in the water. But we are. And it's very interesting. A lot of people think that CEIBA is a symbolic flagship, and that, you know, it's it's nice, but it's not scalable, I would actually completely different disagree. And when I look at how can we decarbonize the maritime sector, we do look at scaling up, but actually, we really look at scaling out in all directions. And so here, for example, in where I live in the Gulf of Nicoya, it's beautiful Bay in the Pacific in Costa Rica, we have an artesanal fishing cooperative here that has 90 boats, little open boats that are about five meters or 15 feet long. And this is, by the way, one of the poorest communities in the entire country, which is where we are located. And we're looking at their little boats and saying, How can we decarbonize that industry, because that's the entire Gulf, that's what all those families depend on. So we are looking as small as little open boats, and we are looking as large as very large commercial steel vessels as well. So with CEIBA, what we want to do is prove the value of clean shipping, which actually, we've already done, that. CEIBA has already achieved permission, because we have so many letters of intent from cargo clients, that we could easily justify building a second ship of the same design. So we see the scaling in in all, all ways that the maritime industry is active.

 

Craig Eason

Tell me a little bit about the cargo side then, because I quite often hear from ship owners, that there's a bit of a it's not a tense dialogue, but let's just say some of the stumbling blocks are often between what the shipping groups say they can do and what the cargo owners the charters say they want and are willing to pay. And there seems to be a bit of a standoff there, when you look at more traditional charter parties, when you look at the the the arrangement, the commercial arrangement that they have got between each other, that seems to be a bit of a stumbling block. But you're saying here that you've managed to identify how have you managed to find so many cargo owners that are willing to fill the CEIBA and another vessel?

 

Danielle Doggett

Well, they've they've found us as far as I can understand, they've they've really found us. And it's simple. They recognize that by eliminating their carbon footprint, they add value to the product, and that's just a simple mental shift. And people have begun to to make that shift. And so when I can say to somebody, you know, this is one reason actually we identified Canada as an interesting place to go because for example, coffee does not grown in Canada, at any commercial scale whatsoever. Maybe somebody has a tree in a greenhouse privately but or plant rather. So, assuming that there is no coffee grown in Canada and I go to Vancouver, which Vancouver loves coffee. They're massive coffee drinkers and if I go to a high end roastery that is, you know, say they have micro-lot biodynamic, Fairtrade, eco-packaging, organic, they're they're all the things, they are not carbon neutral, they are not carbon negative, not truly, they can offset it. But every single bean that's brought into Canada has a carbon footprint associated with it. So if the roaster in Vancouver can say, 'We are the first and the only carbon neutral coffee in the entire province of British Columbia', that's going to add value to the product.

 

Craig Eason

I mean, we're not we're not looking at a very large ship here are we and the cargo that you can carry is limited, but to balance surely being profitable for the cargo owners to be able to sail it on that vessel? Because are they then going to find that their prices are going to have to be higher as a result of putting something onto your vessel?

 

Danielle Doggett

Actually, absolutely not. It's a surprising thing to say but no. On the route that we've been looking at, which is Costa Rica to Vancouver, if the end product, which is, you know, one kilo of coffee on the on the shelf, or 2.2 pounds of coffee, that would be somewhere in the range of Canadian $30- so call it C$20 to C$25 or so a kilo. Basically, they would have to add around 70 cents to that final final end product. And for something like that kind of product where people are already willing to pay a little bit more, that was not a barrier. And actually, in conversations with our single largest cargo client, who signed signed a letter of intent, which is a coffee roaster, we've worked with them to create a new business plan, and we would actually be able to exactly price match their current service.

 

Craig Eason

Okay, so there's a good market entry point there, the good market incentive there.

 

Danielle Doggett

But at the same time, sorry, to cut ou off, at the same time, we could match their current service price, which I was, I was surprised to find that out myself. But why why should we? We are providing a premium service. And this is a premium, you know, exclusive opportunity. For this client we work really closely with we are going to do everything we can to lower the price. But why should we say it's cheaper than to subsidize fossil fuel industry?

 

Craig Eason

Before I go on to talking about what your plans are for the future, there's another question about what you're doing there today when it came to building a traditional style of vessel like you've got there are three masted schooner, square rig, - when it came to building ships like that, where on earth did you find the shipwright skills to do so.

 

Danielle Doggett

So although we don't, we don't really need to look for people they come to us from around the world, we've had around 26 different nations participate already in the build of this vessel. And the reason they come to us is this is, unless there's an undocumented, I can't say properly - Pinisi - Indonesian vessels that's not being properly documented, this will be the largest traditional wooden build currently in the world of a ship. So we attract world class timber framers and shipwrights like, like bees to honey. So that's amazing. And it's interesting this ship, CEIBA, is the largest ship of any kind built in the history of Costa Rica of any material, as well When she's launched, she will be the largest emission free cargo ship in the entire world at 9 TEU, with people that are building out of wood in the jungle starting with $7,000. But to me, that's like mind boggling. That's how slow the competitive shipping industry is, is that we're winning but like with a hammer and a chisel, and they're not doing it I don't understand. So CEIBA will be the largest in the world with 9 TEU.

 

Craig Eason

I guess in one way, you've set the bar high, but at the same time, you've set it quite low at the same time, haven't you? 

 

Danielle Doggett

should be able to beat that. Come on, guys. Take my title away. Like please. I want the shipping industry to change, you know, so CEIBA will be the largest but I hope it's not for long. There'd better be bigger boat soon.

 

Craig Eason

How are you working with bringing this vessel CEIBA into the maritime industry? When you bring an ordinary ship and you've got to go through all the classification requirements, you've got all the safety requirements, the flagging, you've got all of those regulations that you need to abide by? How are you going through with that? How are you have you found any obstacles that you've had to overcome in terms of bringing a vessel like this into international trade?

 

Danielle Doggett

Well, we are going through that process currently. So CEIBA will be fully classed up to modern safety standards, and adhering to all those regulations, regulations. We are hoping to have the flightsafety here in Costa Rica, though that does present some challenges because there are really no precedents here, set for that. And so they also are the maritime industry here is kind of small, they don't recognize ABS, they don't recognize other things, so whether or not she's actually flagged in Costa Rica is still to be determined.

 

One of the largest problems that I don't think that we will really face simply because of where we're based, but would typically be a commercial vessel built out of wood. And this is one reason that CEIBA is not and will never be built in Canada, because Transport Canada, which is the Ministry there, does not recognize wood as a viable material to make any commercial vessel out of, which is absurd, because we've been doing it as a human race for 1000's of years. And this is absurd to me, you cannot, you're not going to get an exemption. And your vessel also, you will not get one grandfathered in. But for example, the United States has a nationwide exemption to this, and which is why they have such a thriving beautiful wooden boatbuilding tradition that's still alive.

 

Craig Eason

So you can't build a commercial vessel in Canada made of wood?

 

Danielle Doggett

it's not gonna happen. Some people might tell you could apply for an exemption, but I've been familiar with it for many years, it's not going to happen. It's very unfortunate. And maybe one day, when I'm older, I'll work for Transport Canada, and I can't wait to strike that from the, from the paperwork.

 

Craig Eason

Let's talk a little bit about your future plans, because you made it clear on the website, that Sabre is a flagship, you're not stopping at one vessel. This isn't just a Showboat. This is a commercial enterprise. And there are commercial goals. So what are your plans? Tell me a little bit now about what you're doing next. Because you can't continue to build CEIBA after CEIBA where you're building it at the moment, you'd probably run out of wood before long.

 

Danielle Doggett

Well, it's funny you say that. So we, as I said earlier, are looking to expand kind of in multi directional, many different ways. And so really, we do actually, okay, it's not announced, I didn't say this, we're going to announce we are building a second ship of this design. You guys didn't hear it here, though. And that'll be announced quite soon. And no, there's no, no, no, you can build with wood.

 

We actually have an inherent tree planting program and say that is mandated to plant 12,000 trees before she hits the water, I think we've put around at the end of this year, it'll be 5,000 trees in the ground. And we've only cut down maybe 500. So we're putting at least 10 times more we were in 500 is pretty much the highest number that will be used for the ship, so we are planting many, many more. But here in Costa Rica, they have some of the most strict forestry laws. And it's one of the only countries in the world where the National Forest is actually increasing in size every year. And this is something that's very important for us to be able to verify that we are getting wood in a sustainable and regenerative manner. Actually, right now we have a nonprofit branch and they're running their "Trees for Seas" tree planting campaign. So if you want to plant a tree, you can contribute that way.

 

But to answer your question, we're also looking at building large commercial ships. We are forming some partnerships right now that are very exciting, with port authorities and industrial shipyards and naval architects, they're really the best from around the world. And if everything falls into place, which we're not sure if it will, there would be guaranteed cargo contracts for those vessels as well, the large commercial ones,

 

Craig Eason

and these larger commercial vessels, well, they all but also be looking at wood constructions, are you looking at expanding your vessel types as well?

 

Danielle Doggett

Yeah, these would actually be built of steel. And this is a big step for us because CEIBA is very beautiful, because she is inherently carbon negative and organic and her life cycle will be very beautiful. When that ship comes to its end of its life, which could be as long as 100 years, it's made of wood, and it goes back to Earth. And of course, steel is a natural material from Earth, but it's not really the same. When you look at lifecycle analysis. So I'm happy to say, you know, if we build a large steel vessel, I'd write imperfect, I paint the word imperfect, very large on the side of it, so even if the operation is carbon neutral, because we would not be using fossil fuels of any kind, the steel itself has a very heavy, heavy carbon and social footprint, which is something that we need to look into before I can really comment further. But we do intend to do feasibility studies and environmental impact studies on that. You know,

 

Craig Eason

I'm aware that the production of steel is particularly intensive, in terms of energy needs. I know there is there are projects, I've read of some research going into looking at renewable energy to provide electrification of steel production, in terms of how the the iron ore is, is melted down to produce the steel, but I believe it's very much in its infancy. So that and that was one of the questions I had about how you would how you could justify that switch to steel, given what you were saying before?

 

Danielle Doggett

Yeah, well, and it's funny, you know. Wth saiba we're very environmentally inclined, we're, you know, really bordering on being activists, I guess in some ways people always ask us, how can you be environmental if you're cutting down trees? You should build out of steel, so you don't cut down trees? And I say, Do you know the first step of making a mine? You clear cut. You clear cut, and it's typically in Brazil that has all the world's largest iron mines, you clear cut the Amazon and then you start so no, it's not more sustainable than building with wood. But this is something we haven't, we don't have a formal answer on yet. How do we justify working with steel still, which we will be doing research on that, and having statements and having carbon offsets and talking about that. But the justification is decarbonize the maritime industry, inspire others to do more, and work towards a better future. They invented the lightbulb working by candlelight, you know, so you kind of have to work with what you have, and push that forward. And that's what we're doing. So again, I would paint in letters imperfect on the side of that vessel.

 

Craig Eason

How do you say the CEIBA and the these other vessels that you're working on, they will also these other vessels will also be sail powered, so you're demonstrating the use of wind power primarily. But I know in the CEIBA, you're you're looking at other technologies on board, you're looking at having fuel cells and hydrogen. And another area that I found really, really quite interesting is this ability to use the propeller, when you're under sale to Gen to basically generate electricity to then as electrolysis and then generate your own hydrogen on board. Do you see this as being something that you can demonstrate on larger vessels as well, this ability to use fuel sales and use your own hydrogen generation?

 

Danielle Doggett

So just a quick point, CEIBA, the actual first ship we're building is going to be powered by to 150 kilowatt electric engines, which are supported by a very large battery bank. So those will be regenerated using the solar panels and as well, as you said, the propeller. So when the ship is actually being propelled forward using the sails, we can adjust that variable pitch propeller and just generate as much drag resistance and create electricity as we desire. We have conducted, in hope that's the right word now, in partnership, where we have contracted a feasibility study for a CEIBA-type vessel for using green hydrogen fuel cells to power the ship and this is something we're just beginning to explore now that's very exciting. CEIBA seems to, according to the study, which we've been reading, by Ad Astra rocket company, which is an affiliate of NASA, CEIBA seems to be the smallest vessel that hydrogen becomes feasible. And so to really scale hydrogen, you want to have larger and larger ships or at least larger and larger applications, and then that can justify a ship using that. So we're even looking at potentially having a hydrogen, green hydrogen, production facility here at our shipyard, which would power potentially a potential CEIBA-type ship, all of the work at the shipyard, and up to a fleet of 90 open boats, fishing boats, that I referred to. So when you have larger applications, even smaller ones make sense if they can fit in as part of it.

 

Craig Eason

The reason I was asking that I am aware of the Energy Observer, which is sailing around the world, demonstrating solar power, wind power, and the ability to generate its own hydrogen on board for a hydrogen PEM fuel cell that it has installed. And that's why I was interested in how you're taking what is essentially, what I see there as a demonstration of onboard hydrogen generation and putting it into a into living commercial space here, and then even scaling it up, even further to make it even more viable.

 

Danielle Doggett

Yeah, absolutely. We're very excited about moving forward with potential hydrogen in a large commercial vessel. So this is very, very early stages. But according to I got to meet an astronaut on two days ago, Dr. Franklin Chan was the founder of an Ad Astra rocket company, and he believes that it is possible and scalable and would be viable to do it on a very large scale. But basically, we're driven by the fact that we will not use fossil fuel, so we're not clinging to it, like every single other design out there have large commercial vessels. So you know, for example, OceanBird reduces their use by 90%, but they're just clinging to this fossil fuel, and I don't really know why. So as soon as you eliminate that from the equation, other things start to look more interesting.

 

Craig Eason

When you look at the effects of this scaling up aspect, and with the saber, you've got certain limits that you've got on the size of the vessel that when you designed it, but do you, you're saying with these other vessels when they become larger vessels, then as you're moving forward, you're looking at larger vessels, and how do you see what do you put them into the same kind of trade that you've got planned for CEIBA,, where you've got long term contracts with cargo owners who really want to demonstrate that they are actually sustainable in that part of their production?

 

Danielle Doggett

Yes, absolutely. And we it looks like, as tese contracts come together, so I can't say that they are secured yet, but all every single one of our larger conversations, they all want exclusivity. So they recognize the value of that, they want to have long-term exclusive contracts to really lock in the fact that they are special, they are the ones who have this, and they do not want to lose that service to to a higher paid a higher bidder. And so because there are so few ships, there's almost no ships available right now. And we're seeing pretty, pretty competitive conversations, actually.

 

Craig Eason

Who do you think that they do you think you'll soon start to see competitors emerge?

 

Danielle Doggett

Yes, and no, I mean, I hope we do. And I hope we see competitors emerge. But I just don't really see it happening. As I've said, this even Ocean Bird, which is a very wonderful example, I have the whole thesis study here on my bookshelf, clings to fossil fuels. So until there is a vessel that simply lets it go and they are emission free, and they're carbon negative, or minimum operational is carbon neutral, we literally do not have any competitor because we offer different service.

 

Craig Eason

So what kind of influence do you think you're having on the maritime sector?

 

Danielle Doggett

I'm not sure sometimes it feels a little bit removed here in their jungle shipyard in Costa Rica, and I don't always get to get out and really see what's going on. But just last week, actually returned from a sort of reconnaissance mission to the Bahamas to Grand Bahama and to New Providence, which is where Nassau is, and it seems like people are catching on, basically that this isn't simply greenwashing gimmick fad, this is long term financial stability. And this is resilience. And we see this with the Ever Given. And we see this with the COVID pandemic, and we see this with the fluctuating oil prices, and because of COVID, the lack of access to oil, shipping grinding to a halt. The resilience factors is in our faces. And people literally can't get the things they want to order on Amazon and this frustrates people. So it's in their face. Now.

 

Craig Eason

You said that the this is a sort of a $4 million project, and you started off with barely, I don't know, just a few, a few $1,000 in your back pocket almost. How have you managed to get those funds in? And what sort of business do you see this becoming? Because I see on your website, you're still looking for funding to be a stakeholder or a shareholder in Sailcargo? That is still part of your plan? Because obviously that's the business model. How are you managing with that process? Because at first glance, people might think, 'Oh, I'm investing in a charity wonderful', but you're not,you're a business. They're they're making a financial investment, effectively, aren't they? So what would I if I invest in Sailcargo? What do I get out of it?

 

Danielle Doggett

So right now, our only investment opportunity is to invest directly in CEIBA, the ship, which is represented by a company called Inverssiones Maritimes Ceiba, and that's the entity that just represent that ship, and you would own a part of that ship and the returns would come from the operation of that vessel. And you can actually email me right now, if you'd like at info at sailcargo.org.and I'll send you a info pack on all the return on investment projections, we present a 25-year plan. But really, it's a very long term investment as well, and so the operation of this ship should was proper maintenance be up to 100 years. And if you if you look at a container vessel that's up there right now, the average age is 10.5 years. And so there are some really interesting details about our business plan that they really tend to convince people.

 

What we will be doing soon, very, very soon, is opening up to receive investment with the umbrella company called Sailcargo Inc. and that's going to signify the shift that we're making, from only doing smaller wooden vessels and potentially scaling up into a pretty competitive, large commercial sector. Basically, just keep your eye on us and watch for these investment opportunities, but they're going to be popping up.

 

Craig Eason

That’s Danielle Doggett from Sail Cargo on the future plans for CEIBA, a CEIBA twin and her ideas on sustainable steel hulled ships in the future. And I hope to talk to Danielle again later in the year to hear how her plans have developed.

 

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But while it's a vital component of how we live our lives, it like other industries and parts of societies is under a lot of pressure to decarbonize Now decarbonisation and shipping is taking two distinct steps, the first phase is focused on doing something with the existing ships. And then there's the phase looking more perhaps at the new ships, the newbuilds. Some of these existing ships are large, very large and quite young, meaning that there'll be sailing the oceans for many years, and at the moment, they nearly all burn diesel fuel. And this, of course, pumps out CO2 into the atmosphere. There are a number of technologies being rolled out to help reduce this. And there's wind assist propulsion, and I've covered this extensively in earlier episodes of the ironic show, and I'll put a link in the show notes to some of them. But then there's other technologies to help ships get routed more efficiently. 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And here we matched the air lubrication technology. I think there are few technologies today.There are many, many, many technologies related to energy efficiency, but not all of them deliver high gains. And these are important ones that we must capture. So once we had identified air lubrication as one potential technology, we reviewed the technology because there are different ways to do air lubrication. And we match them with Silverstream - we have a specific way to do that, and one that has a lot of data that were provided to us. And we're able to evaluate that initial stage the technology, and then starts our innovation journey. And we did a lot of engineering that- It is two years that we have been working closely together with Silverstream. Once we have identify them as potential makers for these solutions. We did a numerical analysis, various numerical analysis, we went to HSVA model basing in Germany, we have test in scale. First, we have test the release the units in full scale in their cavitation tank, and then we have tests, in scale model, the full vessel, with our lubrication devices, to have more precise information about the gains that were available. And once we got that information, and we confirm his idea that was a technology with high gains on energy efficiency, then we moved to the pilot stage. And while all the fabrication of the equipment and studying on the vessel, that's the stage we are today,Craig EasonHow would you look at the companies that you you chose? There's a lot of companies, a lot of engineers, there's a lot of startups, there's a lot of businesses that are clamouring for the attention of ship operators, managers, companies, like yours aren't there. And I'm sure if you gave everybody your business card, there'll be knocking on your door as soon as possible to say, hey, I've got the answer for all of your problems. Here's my silver bullet idea. What kind of advice would you give to companies that have got ideas and solutions? What kind of advice have you got for them, before they even come knocking on your door?Rodrigo Bermelho/ValeMy advice would be be prepared to partner and share information. I think this is one thing that we got from Silverstream from the very beginning, they have partnered with us and they have incentivized that we go through all this process- numerical analysis and test -to validate the technicals- It is very difficult to deal with any maker if we are not able to validate their claims. And when we talk about innovation, we must acknowledge that sometimes we are talking about new theories or new ways of testing and there is some scope for it to be done that. So it's important that they realise that there is a pathway there is a journey together to validate the claims so that we can finally move to the real thing.Craig EasonSo this vessel, Sea Victoria, has now arrived in Brazil, it's left I presume it's recently left the dock where it had the system, retrofitted. It had the tests done, it's now sailed. It's sailed. Presumably as it sails towards Brazil. It sailed in ballast, but you've able to test the system in ballast is it went west. Can you tell me a little bit about how those tests went and also about the responsibilities and role of the crew on board when you've got a novel technology like that?Rodrigo Bermelho/Vale Yes, this is the first leg the first voyage the system is working. But we we think it's very premature to have any results. I think we are adjusting the system and we are trying to reach the maximum performance that we aim. I think we did a very detailed work before installing and we have solid numbers and now we have to take time to validate that we have assigned Lloyd's Register for our one year long term. Perfect assessments We have installed high frequency data collectors, sensors, and we'll have a lot of information to process within this one year of operation to to finally confirm and even exceed the expectations that we have with this savings. So, I would say that for the moment, we are very satisfied and we continue to work because innovation is just beginning. There is a long way in terms of the the work crews has to do, indeed, dealing with new technologies that are challenged and, of course, new process to be performed on board. One thing that we did that's I also recommend to everyone that's in doing new technologies to perform hazard identifications workshops, we did hazid/hazop workshops involving classification societies, the makers - Silverstream, the shipyard, ship designers ship operators, P&I Club, we brought everybody around the table we have, we were, honest enough to points all the new things and the possible problems that could arise from this operation, and try to identify actions to solve that or to manage the new process. So all this is a is a list there is a shared responsibility, among all parts, which one had to do the actions. And now this is also in cost of implementation and test and reviewing.Craig EasonLet me turn to Noah now because no, I've known you for a number of years now I've seen how silverstream has grown and developed since it concept I was talking to you. At the time, just before you had the first system installed on the Amelienborg. How many systems have you not got onboard vessels or contracted on board vessels?Noah Silberschmidt/Silverstreamas of today, we have 59, we provide a solution, both to newbuilds, and we're the only one that's doing retrofit solutions. The retrofit solutions are extremely important with new regulation on CII and EEXI. And we are at silverstream very focused in providing a product to help the industry, help owners that otherwise would have stranded assets, and try and make make them able to and have them give them a licence to to basically sail after 2023 regulatory environment. So it's a very important part of our strategy to do so. And we're scaling up part of Silverstein's business, just to do retrofits fleet deals. And that is, of course, something we're looking to do with all our.....currently, I think we only really have tier one owners, if you look Vale, Carnival, Shell and so on so forth. But it's something we are looking to be able to service the whole industry, whether them being,whatever you how want to grade them in tears. But we're also working with new builds, designers, new build teams, new build programmes and that's another way for Silverstream to be able to, let's say affect the market more. So yes, recently. I mean, three years ago, we did a fleet deal with Grimaldi which was 12 vessels. And then most recently, we did a fleet deal for Shell last year on a number of LNG vessels, which you can see on the website, which has got a lot of potential options attached to it. And then we have just now been involved in a lot more activities in 2021, which has not yet published.Craig Easonis the installing a cyst retrofitting a system is Is that likely to be a lengthy process, with each installation needing to be bespoke for this particular vessel designed around the vessel the number of air compressors that need to be installed on board, the positioning of where the air bubbles flow out from under that under the hull? Have you looked at how you can actually shorten that period of design and installation of a system?Noah Silberschmidt/SilverstreamOne of the workstreams we're currently doing at Silverstream is that we have a whole standardisation programme. So that means that we are working now with a fixed set of compressor types and standard systems. So if you tell me that you have a certain vessel, we are able to respond very quickly on single retrofit installation, we can will six month notice instal that, clearly, we would like to have a bit more time available to us, so we can resource it properly. But we are we are now ready for a client if the client is coming to us today and wants to do 40 retrofits over a period of five years. That is something we are currently set up to do.Craig Easonwhen it comes to insurance of new technologies. As with with 50 installations, and no incidents, there's a there's a certain pedigree that you're building building up here, but always the installation of new systems onto ships .and perhaps I could take this question to Rodrigo, about putting a new system onto his ship. When you go to your insurance company. They're going to look at you and think, okay, what's the additional risk here? Could you tell me a little bit about any conversations you had with the insurance companies, to explain to them what it was you were doing and what it entails?Rodrigo Bermelho/ValeYes, for Craig, yes, we have involved with P&I Club from the very beginning. And of course, we have covered the new technology and have ensured some aspects of this new technology on boards. Now our coverage. And as I have mentioned, we also brought the P&I Club to discuss together with the other stakeholders, potential risks that were in the project. So they were around the table when we did the hazid workshops. And I think that was a great partnership that we had with the steamship P&I Club. They were very competitive, they brought good insights. And I think this is building also a relationship that's needed cooperation that's needed when we talk about new technology and innovation.Craig EasonAnd you've said that there's the potential for the systems that you're installing now, the air lubrication and the and the the rotorsail system for them to be installed on the ships as well. Have you Have you discussed that further? Have you got a timeline for when that might start to happen?Rodrigo Bermelho/ValeYes, as I have mentioned, we have this low carbon pathway for shipping. Energy Efficiency plays an important role to demand the fuel consumption. Maybe you are aware, we have a lot of very large ore carriers that were designed as LNG ready. So 77 of these vessels were designed and built for future retrofits of LNG systems, so they have compartments dedicated compartment for LNG fuel tank for a round voyage and within our programme, we are working to develop other fuels for this space to turn into a multi-fuel compartment.So we have a project for a multi-fuel tank. One tank that could store ammonia, methanol, LNG. This is an important piece of our strategy, and the technologies - here the lubrication and also the rotorsails- they were designed it on these vessels- very large ore carriers. We have selected one Guiava-Max- that's 325,000 dwt. There are 47 vessels of this class, and 60+ vessels, the Vale-max class 4000, 000 dwt. These technologies they way we have designed them it's very easy to escalate the system here to all the vessels we are talking about. But it's a question at first to to validate the results, so we will go through these one year assessment to validate and refine the solution. Of coursewe have expectations to exceed the results that we have and I believe that the technology will improve and we can in the future have better gains, so, the pilot is for that as well. And once we we are comfortable with these gains that we can have, they will allow us to go for a more comprehensive solution on installing energy efficiency equipments on vessels, reducing the demand for fuel and going to alternative fuel solutions and fuel that we are studying like methanol ammonia for these vessels that are already have the space we can achieve close to 80% emissions reduction on existing ships. So we believe that we have an important competitive advantage to reduce emissions on existing ships. I think this is an important goal that we have.Craig EasonThat was Rodrigo them Hello from the Brazilian mining giant valet talking to me about the company's plans to reduce the emissions on the giant bulk carriers its uses and some other technologies that they're using to achieve it. And in terms of future fields, I was particularly interested in the idea of a multi fuel tank which can be used on board for different fuel types. As shipping moves into its next era. When fuels like methanol, hydrogen, ammonia, and biofuels will rise. The discussion about future fuels is a heated one, and there are proponents shouting louder and louder about specific solutions. On a personal note, I don't see why one fuel should win over the other just yet. different markets in different regions may have different answers, but one thing is for sure, there's going to be a need for more of it to be made. If we assume that part of the shipping industry will require green hydrogen and green ammonia, which is made from the hydrogen then industry needs to look at how the electricity is sourced. The most talked about sources are green electricity from wind power or solar power, possibly wave and tidal in the future to then there's the debate about the value of blue hydrogen and whether this is the transition to green. Blue hydrogen is where the hydrogen is made through Steam reformation, and the co2 generated is recycled or stored through CCS. But a recent paper in the US has pointed to another source of electricity to make hydrogen nuclear power. In the US lobby group, the Clean Air Task Force issued a paper last month suggesting that as nuclear power generates baseload electricity, it's an obvious source of power to make hydrogen for society. nuclear power stations already use significant amounts of hydrogen in their chemistry and water cooling. But this is currently sourced through the steam reclamation process of natural gas. There are now trials in the US and proposals in the UK to develop hydrogen from nuclear power and use it specifically in hard to abate industries such as shipping. The Clean Air Task Force paper was authored by its nuclear power expert, Brett rempel, I got in touch with him and I asked him about the nuclear industry in the US and its existing use of hydrogen. This is set to change. And the first demonstration projectsBrett Rampal/CATFthe reactors nuclear power plants around the world that use hydrogen in their operations are usually sourcing that steam methane and refined hydrogen in their in their operations. Right now, in the US, we have multiple demonstrations for demonstrations and nouns, the one with the location, as you know, just recently been confirmed by Exelon of nuclear hydrogen electrolysis demonstrations supported by utilities in the Department of Energy. The Exelon demonstration is going to be at the Nine Mile point, nuclear reactor, nuclear power plant, excuse me. And the existing power plants use the hydrogen in chemistry control and their water in some reactors. And in others, they use them to cool the generators. So keep the generators cool. So that that is a not an insignificant amount of hydrogen being used by the existing reactor fleet around this country. And so that's why a lot of these utilities and the Department of Energy is looking at the opportunities for sort of pairing the existing user which is also a clean energy generation source to produce the commodity that it's using. And the paper also alludes to a more advanced sort of electrolysis technology that's currently being studied and researched and even demo in some places. And there's high temperature steam electrolysis technology also tends to lend itself very well to nuclear technologies with which can offer a high temperature steam product at the end of its energy or in its energy generation cycle.Craig EasonWhat what's the benefit of building an electrolysis subunit to a nuclear power station compared to building it close to a wind power station or a solar panel? what's the what's the benefit of the hydrogen in this discussion compared to solar or wind generated electricity?Brett Rampal/CATFSure, well, I mean, depending on your region in your area, the option for pairing electrolysis with renewables might be, you know, the best option for you but for some reason There's some areas that just might not be possible for a area and density sort of need renewables while a great and growing source of our electricity in this in you know, in this global economy they tend to be relatively dispersed not take up a little bit a lot of land use the opportunities for nations or locations that are very reliant on marine shipping, such as Pacific island nations or you know, that all have land use me are problems land density problems, would probably struggle to produce or build out the needed renewable infrastructure to support decarbonizing both their electricity and expanding to produce additional zero carbon fuel sources. So from that standpoint, it offers a different side of the the teeter totter on renewables there. And then additionally, as as one of our the world's largest sources of clean, firm energy. Nuclear Energy offers this really, really useful base load always on sort of electricity that can, when paired with electrolysis, really turns production into a more similar sort of production to existing fuel production. Most fuel refineries and fuel production operations work most economically and efficiently when they're producing fuel, not when they're not producing fuel. So pairing electrolysis technology with an always available clean source of energy or electricity, helps support overall economic production of the zero carbon fuels.Craig EasonAnd in terms of the the location of nuclear power stations there may have this role, but most of them seem to be located next, next, or very close to water, large water sources because the amount of cooling water that they need, so they tend to be next to water, but I don't perceive them as being very close to ports. That question Can at that point leads to the if you if you can get the hydrogen electrolysis located next to the nuclear power station. So you've got that you're What about that link between the hydrogen that has been generated or ammonia or whatever product it is, and the actual end user?Brett Rampal/CATFSure. Well, you know, in the United States, we do have some existing nuclear power plants that you know, are not located directly next to ports, but are located nearby and the existing us pipeline infrastructure is extremely robust. And the opportunities for either hydrogen blending or hydrogen injection directly into dedicated pipelines for shipment and production, or are transitioning existing pipelines over to new operations with retrofit and upgrade, of course, those sort of opportunities, lend itself well for a gas commodity like hydrogen or ammonia. And when you're also talking about the next step, which our paper talks about, in terms of using ammonia instead of hydrogen, there is an existing ammonia transportation and production, market and infrastructure globally around the world. So the the distance from a quote unquote, large traditional port might not be super challenging for an existing nuclear power plant that might be located on the Gulf of Mexico or along the Mississippi River, if they could leverage existing transportation infrastructure for one of these, you know, technology for one of these commodity streams.Craig EasonThe obvious question is really, why not just put the nuclear power station or the nuclear power unit directly onto the ships, the in the US there was the Savannah and the Russians have got a large number of icebreakers in in service for many, many years. And of course, they had one deep one large container vessel kind of icebreaking container vessel that was is still nuclear power, I believe it's still actually in service. And then of course, there's all the military vessels both in the US and Russia and elsewhere that have got nuclear power plants on board, some of them have gone to nuclear power plants, I believe. And I know that this is a discussion that has also risen again, in maritime circles about the option of putting some of the developing technologies for nuclear power onto ships and star and using that as a way to demonstrate cleaner shipping, that you see that different from what you're suggesting. In terms of creating ammonia and hydrogen for the shipping industry.Brett Rampal/CATFSure. And just as an aside an anecdote the USS Enterprise, the Nimitz class carrier that came out actually had eight nuclear reactors on it, I believe. So some of these, some of these aircraft carriers have that multiple reactors on them. A lot of my original thinking began going down the pathway of putting reactors on ships, but when we sort of looked at the balances and the pros and cons and again, the timescales for decarbonisation, you know, and where existing, you know, nuclear technology is used or could be used now, we don't see a world where long durations transportation shipping becomes ultra reliant on, at least in the near term, on on a on nuclear propulsion on the ships, because, number one, there's ports around the world that are, are non nuclear areas and won't allow nuclear vessels and everything. So therefore, you limit your, your, your access, right there. Number two, there's liability issues for operating a nuclear reactor on a ship versus operating a traditional or zero carbon fuel engine on a ship. You know, those liability issues can include security and proliferation, as well as extreme cost liability issues. And then you've also got a workforce and manpower concerns. So the the the challenges with looking at the existing marine shipping fleet and talking about a large scale transition of all of its, or a majority or a large percentage of its workers to be nuclear qualified or to work on a ship with new versus what they're used to, which is they're very well experienced professionals in fuel operations and, and safe operations of marine engines. Those are high higher barriers than we thought in the near term for looking at an option like a zero carbon particle, which is an easier transition, it seems. And then in the paper, we discussed, like you discussed icebreakers, a couple other niches where we think nuclear propulsion will continue to expand and shipping like research vessels and sort of those niche opportunities that in the near term, really what lends itself well to this before the larger picture. It just seems like a larger lift right now,Craig Easonfinally, I'm aware that's back in the 60s, late 60s, early 70s. In the US, the military or one of the the engineering course, or something like that, put a nuclear power station on an old vessel and created a barge didn't power the vessel by him. But it was used in the Panama Canal. Russia has got its floating power station that's now active up in the in the Arctic, China has got a nuclear barge that is developing should be floating sometime this year, maybe or operational next year. And I know that there's a couple of companies that are looking at nuclear power on a barge so that the nuclear power itself becomes mobile. Do you see this as being able to work alongside that hydrogen generation, then as part of this process to create a much more flexible green fuel supply chain for the shipping industry?Brett Rampal/CATFI think we see novel and deployment and novel deployment methods as being important and integral to the growth and future deployment or achieving potential of nuclear decarbonizing or supporting large scale grid, decarbonisation or large scale energy systems, decarbonisation the the mobility aspect of putting them on the barges In my opinion, I don't necessarily think is the biggest driver for why they're doing that. I think it's more a sighting issue, if you can, you know, site the reactor offshore, it's a little bit easier in a lot of cases than siting it offshore. As you can imagine, based on experience that a lot of industries have learned for offshore versus on onshore siting in similar energy production technologies. So the and if you look at what a lot of these barges did or are doing, they're being moved someplace and left there for a long time. So the Sturgis the Panama Canal barge, stay there. Forever the academic Lavasa, I'm sorry, I probably butchered the Russian name of that is in a northern port located there for a long time. And I believe that's what the Chinese are planning to do. So I think it's leveraging existing shipyard building capabilities to kind of say, Oh, hey, how can we commoditize these products better? How can we increase the manufactured content? How can we assembly line these things out, and then we can use the waterways to then transport them, and then they have implantation there. So I think that does lend itself very well to the potential options for doing zero carbon fuels, because then you could, as you, you know, alluded to before and get them closer to those ports, or locations where the users are going to be.Craig EasonThat's Breck rampolla from the Clean Air taskforce talking about the idea of generating hydrogen and ammonia from nuclear power, and using it in the shipping industry, as well as the growing interest in nuclear power stations on a barge. Of course, there is the other option of having nuclear reactors as a power source on a ship. And while this still faces a lot of challenges, not least political and societal. There are companies looking at this possibility of UK has now issued a consultation for a draft merchant chip regulation that would align itself with the iremos nuclear code for nuclear ships. Well, that's it for this episode of the air annex podcast. I'm Craig Eason, you'll find me at fathom dot world where you can read our stories on these and other topics, please visit the site and subscribe to our newsletter. And of course, subscribe to this podcast on your favourite podcast app. And share this podcast with your friends, family and colleagues who are interested in the transition and transformation of the shipping and ocean space. Until the next time, goodbye.
6/23/2021

The devil in the detail of the CII/EEXI measures to curb shippings' CO2 emissions

Season 3, Ep. 10
The member state representatives who attended the latest meeting of the Marine Environmental Protection Committee did so remotely and battled through a growing lack of trust to finally agree the details of the two measures the IMO secretariat call the short term measures.These as anyone in shipping will likely know are the EEXI and CII.They will kick in in 2023 and while they will have an impact, have been decried by green lobby groups as not strong enough. But are they as weak as many sugest?Some of the green gorups decry these as not being able to create long term change, but are they here to do so? SUrely that will be the jo of the mid and long term measures (Market-based-measures) which will now begin to consume committee meetingtime.But also are critics only looking at the baseline average figures being talked about and not going into enough detail, particularly with regard the CII?In order to find out more about some of the deeper detail, Fathom World's Craig Eason spoke to Edwin Pang who heads up the IMO Committee of the Royal Institute of Naval Architects.Edwin has also been going into more detail than one can do in a podcast chat in inked In and you can read more about his insight into the details here.https://www.linkedin.com/pulse/alternative-view-imo-short-term-measures-part-1-eexi-edwin-panghttps://www.linkedin.com/pulse/alternative-view-imo-short-term-measures-part-2a-cii-edwin-pang