Rolls-Royce scores on efficiency and emissions

From The Times
July 25, 2008
David Robertson

Soaring fuel prices and concern over CO2 emissions have forced the global shipping fleet to start buying more efficient engines, which has led to a surge in orders for Rolls-Royce.
The British engine manufacturer said yesterday that its marine division had seen a significant jump in sales as some ship operators had adopted alternative propulsion systems. Rolls is using cutting-edge technology developed for power stations and the aerospace industry to build a new generation of ship engines.
Its Bergen engine for tugs and ferries has been developed from a unit used in more than 300 power stations, while the MT30 engine for larger ships is based on the Trent engine used on commercial jets.
Sir John Rose, the chief executive, said that the rising cost of diesel and environmental pressure to cut emissions had encouraged ship owners to step up efforts to overhaul their fleets.

The global shipping industry is estimated to produce about 1.2 billion tonnes of carbon dioxide a year - equivalent to 4.5 per cent of the world's total and twice as much as that produced by the aviation sector.
The European Union is so concerned by the impact shipping has on the environment that it is considering including the industry within its carbon trading scheme, which penalises companies that produce excessive quantities of CO2. Ship owners are also eager to improve their operating efficiency as the price of fuel has rocketed in the past year. A mid-sized cargo ship will burn about 50 tonnes of fuel a day, while the very largest tankers and container ships can use more than 300 tonnes a day.
Some ship operators have started to replace older engines while the estimated 3,000 ships that will be built in the next decade will be equipped with propulsion systems developed by companies such as Rolls.
The Derby-based manufacturer said yesterday that sales in its marine division increased by 45 per cent to £1 billion for the first six months of the year and its order book grew 17 per cent to £5.5 billion.
Sir John said that the division had benefited from a boom in demand from the offshore oil and gas industry, as well as growing environmental and cost pressures in the shipping fleet. He said: “The same level of technological focus on efficiency has not gone into the marine sector as has been seen in aviation.”
The Bergen marine engine uses liquefied natural gas rather than traditional diesel fuel and emits 20 per cent less CO2 and 90 per cent less nitrous oxide. It has been installed on five Norwegian ferries and Rolls said that it was in discussions to sell the engine to other tug and ferry operators.
The MT30 is a gas turbine that is 80 per cent based on the Trent aircraft engine. The powerful MT30 will be used by the US Navy for its next generation of destroyers and Rolls has also identified supertankers as a possible market. Rolls describes this technology-sharing strategy as “invent once, use many times”.
The company's marine division was one of several parts of the business to post strong first-half results yesterday.
There has been concern about Rolls' exposure to the civilian aerospace market, which is under pressure from the worsening economic environment and high fuel bills. Sir John said that there would be some softness in the civil market, but Rolls would not be badly affected because of its strong maintenance and servicing operations.
He said: “It is inevitable in this environment that there is going to be some softness in aircraft orders and that is a fact of life. But we think we will be resilient because 63 per cent of our revenue in the civil sector is from after-market servicing.”
On a rolls
First-half results
Group order book up 17 per cent to £53.5 billion Group underlying sales up 12 per cent to £4.21 billion. Group pre-tax profit up 3 per cent to £389 million Civil aerospace sales up 5 per cent to £2.10 billion Defence aerospace sales down 5 per cent to £769 million Marine sales up 45 per cent to £1.02 billion