Environment

Material Issues

Fighting Climate Change

The global shipping industry is responsible for 90% of world trade by volume but it is also a large and growing source of greenhouse gas emissions. The EU has put in place legislation with specific climate and energy targets to reduce the sector’s carbon footprint.

In November 2020, MEPC 75 approved the new EEXI regulations and corresponding amendments to MARPOL Annex VI, introducing new short-term mandatory measures, requiring the application of technical efficiency measures for existing ships (EEXI regulations) and the reduction of operational carbon intensity indicator (CII) for ships in operation, while the guidelines are subject to finalization and approval at MEPC 76 in June 2021. The Shipping industry is now expected to develop “cleaner” and energy efficient vessels, while research on alternative options is constantly increasing and a considerable investment is made in the development of advanced technologies, emission abatement mechanisms, energy-efficient engines, and alternative fuels for ships to enable the industry to meet the decarbonization and sustainability targets.

The shipping industry has an important part to play in combatting climate change. The Paris Agreement aimed to reduce global warming to well below 2°C and pursue 1.5°C. Despite a brief dip in carbon dioxide emissions caused by the COVID-19 pandemic, the world is still heading for a temperature rise in excess of 3°C within the century. Urgent action is needed on both mitigation and adaptation. At the regulatory level, the shipping industry is addressing climate issues through the 1973/1978 International Convention for the Prevention of Pollution from Ships (MARPOL). In June 2021, the IMO adopted amendments to Annex VI of the Convention, which introduced new mandatory regulations to further reduce greenhouse gas emissions from shipping and require owners to set energy efficiency targets.

The reduction of GHG emissions from shipping was central to the discussions at MEPC 77 while a substantial amount of time was dedicated to the discussion of methods for reducing GHG emissions from ships, zero carbon technologies, the range of zero carbon bunker fuel options, the establishment of an automated IMO Maritime Research Fund (IMRF) for R&D (developed by the ICS).

2021 joined the list of the seven warmest years on record and was also the seventh consecutive year when the global temperature has been more than 1°C above pre-industrial levels, as the UN weather agency reported; edging closer to the limit laid out under the 2015 Paris Agreement on Climate Change.

Global warming and other long-term climate change trends are expected to continue as a result of record levels of heat-trapping greenhouse gases in the atmosphere. The long-awaited COP26 climate summit in Glasgow made important progress in a number of areas — but not enough. The world still remains off track to beat back the climate crisis.

Recognizing the urgency of the challenge, ministers from all over the world agreed that countries should come back next year to submit stronger 2030 emissions reduction targets with the aim of closing the gap to limiting global warming to 1.5 degrees C. To keep the goal of limiting temperature rise to 1.5 degrees C within reach, we need to cut global emissions in half by the end of this decade. In contrast, the United Nations calculates that these plans, as they stand, put the world on track for 2.5 degrees C of warming by the end of the century.

The transition to a climate-neutral society is both an urgent challenge and an opportunity to build a better future for all. All parts of society and economic sectors will play a role – from the power sector to industry, mobility, transportation, buildings, agriculture, and forestry.

Climate Related Actions at Danaos

Climate action is a global imperative. Since Danaos is one of the largest independent owners of modern large-size containerships, and a crucial link in the global logistics chain, we are highly committed to contribute to the transition towards decarbonization.

Optimization for energy efficiency

Innovation & Digitization

Emissions reduction

Decarbonization, Initiatives and Carbon Neutrality

Circular Economy and Responsible Waste Management

Sustainability and ESG are at the forefront of our strategy. Decarbonizing the transportation industry is only one part of the sustainability challenge related to consumption, it is of the most challenging sectors to decarbonize, but it is the one that may positively impact directly.

Digitalization of the supply chain, regulatory requirements and trade patterns driven by climate imperatives and customer expectations, are already forming the future of the shipping industry. At Danaos we acknowledge that all related stakeholders need to join forces to optimize ship operations at multiple levels. Given the complexity of the technological and energy source challenges involved, long-term solutions can only be deployed through partnerships with various industry stakeholders. While the technologies needed to build zero emission vessels and produce zero emission fuels and propulsion systems exist, they need to be further developed to ensure that they are safe, clean, and reliable. This will require further refining both the vessel and fuel production technologies and creating clarity around safety, sustainability, regulation, training, fuel and vessel life-cycle analyses, and fuel availability and infrastructure. At the same time, it should be demonstrated that zero emission shipping is viable at scale, while driving down costs and scaling up demand to enable broader deployment. Shipping stakeholders should align to support and enable the decarbonization of international shipping. Governments and regulators should establish policy frameworks that make zero emission shipping commercially viable, investable and equitable.

Call to Action is an initiative towards emissions reduction and decarbonization.

Danaos as a signatory to the Call to Action we are committed to several climate targets, and we intend to take concrete action towards decarbonizing the shipping industry. A collective key objective is to keep the global temperature increase to well below 2°C and pursue efforts to lower it to 1.5 °C; Danaos remains fully aligned to IMO actions. A sustainability committee is set up at Danaos that helps the company design the necessary environmental plans. Not only is it a core part of good governance, but its role is also to integrate both business and sustainability priorities so that the company is able to thrive.

Danaos’ strategy plans to achieve the environmental goals recorded in Danaos’ Low Carbon Transition plan (Danaos LCTP), including our GHG target to extend beyond the plans and targets set by the IMO, the Sustainable Development Scenario (SDS) as well as the UNFCCC (United Nations Framework Convention on Climate Change). In conclusion, Danaos LCTP addresses IMO targets and focuses on the Paris Agreement targets, following the SDS and pursuing efforts to meet the 1.5 °C goal.

* The Sustainable Development Scenario (SDS) is an additional scenario referenced in IEA-World Energy Outlook-2021. As a “well below 2 °C” pathway, the SDS represents a gateway to the outcomes targeted by the Paris Agreement. Like the Net Zero Emissions (NZE), the SDS is based on a surge in clean energy policies and investment that puts the energy system on track for key SDGs.

The low carbon transition plan for international shipping extends further than the NDC targets (Nationally Determined Contribution) under the UNFCCC), and it is formulated by IMO (International Maritime Organization).
Since the IEA considers the IMO’s GHG emission reduction target to be equivalent to the SDS scenario, we consider that our GHG reduction targets set out in our environmental vision are consistent with the IMO targets, and exceed them.

Ship Optimization for Energy Efficiency

The R&D Department at Danaos has extensively investigated options for minimizing transportation costs and the subsequent fuel consumption required per TEU. This includes optimizing the vessels’ design and operating profile and consequently monitoring performance.

Methods for optimizing energy efficiency on vessels

R&D at Danaos have studied and evaluated 38 methods for optimizing the energy efficiency of vessels. These are categorized according to the system that was optimized: propulsion system (main engine-propeller), fuel, on board energy management, reduction of hull roughness, intervention on the hull design to reduce friction or ripple resistance, or improvement of vessel operation. Following the above studies R&D assess a possible implementation on Danaos fleet by considering each ship’s hull lines, equipment, special features and assessing its dynamics through CFDs studies and model tests in experimental tanks.

The R&D department we have devised assessment the tools and incorporated those on the Waves Data Analytics Platform to assess vessels performance and rate as per IMO CII and other initiatives. “Waves” also forecasts future ratings by applying several speed and efficiency improvement criteria.

Danaos have deployed a Shadow Internal Carbon pricing tool. Using the “shadow “costing method, the cost of carbon within any business process is calculated (i.e., a specific business case assessment or strategy development) to demonstrate the carbon cost implications of specific business decisions. The resultant cost is communicated to stakeholders when needed. Typically, the price is set to a level that reflects the expected future price of carbon, such as the $100 per ton. The shadow carbon price methodology helps businesses understand likely carbon risk and prepare appropriately, well in time before the shadow price becomes a real price. Using this shadow cost pricing mechanism, we can disclose to CDP (which we plan to do so in 2022) an internal carbon price into our business strategies and actions.

Fuel Consumption	2019	2020	2021
*For 63 vessels (excluding new acquisitions)
HFO-LSFO	867,414 MT	899,411 MT	1,120,276 MT
MGO	51,380 MT	55,582 MT	66,922 MT

Power efficiency index	2019	2020	2021
* Power efficiency index , which is the % of saving of actual power consumption compared to the theoretical power demand as per Electric load analysis, is a measure of the energy efficiency as a result of the optimum energy management guided by the proper implementation of SEEMP measures onboard.
Power efficiency index*	33.7%	34%	30.5%*

Heading towards Decarbonization - Decarbonization Initiatives

It is very important to highlight that decarbonization will be carried out in two steps:

Step 1 At first, max. optimization of the current fleet is to take place, improving carbon intensity,
Step 2 Renewal of the fleet with zero carbon vessels, starting a decade from now and, developing in parallel carbon emission offset policies.

Supporting the global fight to reduce climate change the shipping industry is well heading towards decarbonization. To achieve the IMO targets, technical and operational initiatives are taken into consideration, including advanced emission abatement technologies and the introduction of alternative fuels in shipping operations.

Danaos through several projects in the last years has examined ammonia, methanol, hydrogen, and LNG-LPG as the most promising alternative fuels for propulsion, with ammonia so far presenting the most promising solution for achieving shipping decarbonization targets. Biofuels are also under review. Among the new technologies, we have examined fuel cells, alternative ship propulsion technologies, such as wind-assisted propulsion and carbon capture & storage, which may all have reasonable potential in shipping applications.

The Existing Energy Efficiency Indicator (EEXI) and the CII (Carbon Intensity Indicator) as put forward in MECP 76, are technical and operational measures selected to achieve the IMO decarbonization target. In 2021 Danaos proceeded with the calculation of the EEXI for all vessels. Danaos AER value for 2021 was 8.7 gr/DWT*miles.

An extensive study has been performed involving all vessels in Danaos fleet to identify the most efficient way to comply with the requirements. Engine Power Limitation (EPL) has been selected as the measure to reach the EEXI limits. An average EPL (Engine Power Limitation) limit in the range of 50-60% was identified.

The annual growth in containerized trade volume for 2021 is 5.9 % and expected to remain steady above 4% till 2026 (UNCTAD review of Maritime Transport 2021, https://unctad.org/publication). While according to ITF Transport Outlook 2021 the maritime sector accounts for more than 70% of freight activity and around one-fifth of freight emissions, demand for maritime freight has approximately doubled over the last two decades, growing by 3.7% annually on average (ITF Transport Outlook 2021, https://www.itf-oecd.org/itf-transport-outlook-2021).

Danaos has met IMO’s 2030 carbon intensity targets 11 years ahead, achieving 41.5% reduction in CO2 emissions per ton*miles for 2019 compared with base year 2008!

Current transport decarbonization policies are insufficient to pivot passenger and freight transport onto a sustainable path. CO₂ emissions from transport is expected to increase by 16% by 2050 (ITF Transport Outlook 2021, https://www.itf-oecd.org/itf-transport-outlook-2021) even if today’s commitments to decarbonize transport are fully implemented. The expected emissions reductions from these existing policies are cancelled by the expected increase on the transport demand. By contrast, more ambitious transport decarbonization policies could reduce transport CO2 emissions by almost 70% in 2050 compared to 2015. Such a reduction would bring the goal of the Paris Agreement to limit global warming to 1.5˚C into reach. It would require more and better-targeted actions to reduce unnecessary travel, shift transport activity to more sustainable modes, improve energy efficiency, and rapidly scale up the use of electric vehicles and low-carbon fuels.

To reach the above target a large portion of the world fleet would need to be using net zero-carbon fuels by 2050. This still needs to be tested, proven, and become commercially available. At Danaos, we believe that there is no single solution to dealing with the 2050 decarbonization challenge, we invest, we research and inform policy makers. While the implementation of energy efficiency improvement methods to optimize vessels’ performance and environmental footprint have been extensively studied and applied, these are not enough to meet IMO decarbonization targets. Danaos’ existing fleet’s improvement has an “optimization ceiling” as most installed engines onboard cannot be upgraded to dual fuel mode and burn zero carbon fuels.

It is therefore very important to highlight that decarbonization will be carried out in two steps:

Step 1: Optimization of the current fleet, to improve carbon intensity
Step 2: Renewal of the fleet with zero carbon vessels, starting in the next decade, developing in parallel carbon emission offsets.

Reduction in CO₂ emissions per ton*miles compared with the IMO’ 2030 carbon intensity targets
2019	41.5%
2020	45.0%
2021	41.4%

In Danaos we target 10% higher than IMO is connection to carbon intensity improvement vs 2008 reference year. Our target is 50% improvement in 2030 which is translated in 47.5% reduction in carbon intensity by 2025

The transition to low carbon fuels along with speed reduction and route optimization seem to be the only way for decarbonizing the shipping sector.

Upon the application of EEXI limit with EPL in 2023 and possible inclusion of shipping in EU ETS as per EU Fit for 55 proposals, the speeds are expected to decrease. In Danaos we target 10% higher than IMO in connection to carbon intensity improvement vs 2008 as a reference year. Our target is 50% improvement in 2030 which is translated in 47.5% reduction in carbon intensity by 2025. In addition to the above we are committed to apply Alternative Marine Power arrangement to 25% of our fleet by 2025 in an effort to support decarbonization at ports.

We are research focused

Our R&D Department was established in 2011 to explore innovative concepts and develop knowledge and competencies in a constantly evolving maritime environment. We apply our technical expertise and knowledge to improve fleet’s efficiency and the company’s environmental performance, thus maintaining our competitive advantage and leading position in the shipping industry.

The large-scale transition towards net zero by 2050 will, at some point require a full switch to zero-carbon fuels. Medium-term measures may, for some, include blend-in of carbon-neutral fuels, biofuels, or the use of bridging fuels such as LNG or methanol with a view to their bio versions subject to successful scale up in future while most short-term measures are largely about increased fuel and energy efficiency.

The closure of 2021 finds Danaos holding a leading role in bona fide maritime research and innovation. For several years embracing international research collaboration through an active engagement in joint initiatives and synergies, reflected by participating in 21 research projects co-funded by the European Union. The Danaos is ranked as the first profit-oriented private entity in Greek-Cypriot maritime research, investing value-driven effort in research activities to benefit in energy efficiency, vessel operational sustainability and service quality. Research interests are focused on alternate fuels (LPG, cells, H2, NH3, CH3OH) and energy sources (wind, solar, waves, electricity) assessment and feasibility, retrofits for energy efficiency (Waste heat recovery, bulbous modification, propellers optimization and appendages, antifouling, SCR). Maritime 4.0 revolutionists at Danaos we are working on IoT, big data analytics, AI, deep learning, robotics, autonomy, Underwater vehicles, simulation, maritime digital twin, augmented reality, cybersecurity and safety (mass evacuation system and vessel design). Our work is based on the development of decision support systems and models (bunkering, weather routing, anomaly detection, benefit of doubt, etc.) and LCxA (Life cycle assessment for x: performance, cost, efficiency).
Danaos promotes sustainable shipping in the medium and long term by participating in the EMERGE project. EMERGE is an EU project which has been granted a flagship status for the EU strategy for the Baltic Sea region. The objectives of EMERGE are (i) to quantify and evaluate the effects of potential emission reduction solutions for shipping in Europe, and (ii) to develop effective strategies and measures to reduce the environmental impacts of shipping.

Danaos investigates the application of renewable and fossil-free fuels

The roadmap for decarbonization in shipping is going hand-in-glove with the exploitation of alternative green fuels. DANAOS is studying and investigating the application of renewable and fossil-free fuels for sustainable and zero-emission waterborne transport. This investigation follows an integrated multidimensional life cycle assessment (LCA) where lifecycles of the alternative fuels are analyzed in classifications of Well-to-Tank, Tank-to-Wake phases. DANAOS applies LCA methodology assessing products of two EU-funded projects that explore alternative fuels and other energy efficient technologies.

Danaos considers fossil-sourced LNG as a bridging fuel for the future while BIO-LNG produced from biogas has started to attract attention as a source of low carbon LNG for shipping generated with low lifecycle GHG emissions. The process through which biogas is produced is difficult to scale up, this is technically and economically challenging. On the other hand, 2nd generation biofuels consist of a mid-term plausible solution, which is technically easy to apply; we are eager to test this in cooperation with our clients. A barrier holding back large-scale use of biofuels in the shipping sector is the lack of certainty on scaling and availability of feedstocks to produce sustainable biofuels. Potential sustainable biomass feedstock, such as wastes and residues, as well as crops grown on marginal, underutilized, and contaminated (MUC) lands, are a limited resource that needs to be used efficiently and shared with other sectors. The IMO working group is working in developing lifecycle GHG/carbon intensity guidelines (LCA guidelines), to be utilized when assessing the overall climate impact of new fuels.

Candidate future low- and zero-carbon fuels for shipping have diverse production pathways (for example, different generations of biofuels or hydrogen-based fuels produced by renewable energy sources or fossil fuels) entailing significant differences in their overall environmental footprint. The IMO LCA guidelines are setting a common framework for the lifecycle assessment of the GHG intensity of marine fuels, covering both the upstream and the downstream parts. Methanol is widely available and easy to handle and store and is a well proven solution from technical perspective although its carbon footprint does not make it eligible for long-term use. Green or synthetic methanol offer great potential, but environmentally sustainable feedstocks and production methods consist of a challenge to be addressed. Ammonia despite its drawbacks related to toxicity, storage and safety considerations is a carbon free fuel and seems to be one of the most promising candidates for shipping decarbonization however is technical maturity and reliability as a marine fuel remains to be proven. Green hydrogen could be a solution to the decarbonization of the shipping industry. However, creating a large supply of green hydrogen and transporting it to where it will be used is challenging and expensive. Technological, economic, regulatory, and environmental barriers are faced by the green hydrogen sector.

The carbon capture and storage technology, another area that Danaos is investigating as a possible solution to decarbonization.

Emissions Reduction

We have developed a monitoring tool for the fleets emissions to evaluate and monitor energy. Danaos calculates the emissions of the entire fleet, to ensure transparency and emissions management. These metrics are indicators of environmental performance and are shared with clients, upon request, so that they can in turn evaluate environmental footprint (value chain footprint – scope 3 GHG protocol).

In 2021 fleet emissions have increased by 24% compared to 2020, which was expected as 2021 was a booming year for the container shipping sector. Six new vessels have been added to our fleet in 2021 and another two at the end of 2020. Our fleet’s average speed for 2020 was 15.3 kn while within 2021 speed was increased by 1.1kn reaching 16.2kn, with at the same time 0.3m higher operating draft. Moreover, our vessels had 3% more steaming time compared to 2020. For the same reasons the fleet’s EEOI has been increased to 16.01 gr/tn*miles. Due to the increase in consumption, consequently all NOx and SOx emissions have been increased respectively. At this stage there is no available data to benchmark Danaos performance globally, we can only record however our own specific improvements which we demonstrate herewith.

On vessel assessments, increasing and decreasing trends have been observed. A detailed performance analysis and comparison between 2020 & 2021 is completed for each of the company’s vessels within the first quarter of every year and results are updated in the SEEMP manual.

In 2021 Danaos proceeded with six (6) 2nd hand new acquisitions, a set of sister ECO vessels, built in 2015 with their EEDI being 10.5 gr/tn.mile, already in compliance with Phase 3 requirements. The rest of Danaos fleet does not fall under EEDI regulations since all of our vessels were built prior 2013.

	2019	2020	2021
CO₂ (tn CO₂)	3,070,913	3,013,941	3,734,804
GHG Emissions Intensity (grCO₂/tn*miles)	15.99	15.09	16.01
SO_X (tn SO_X)	44,110	8,006	10,041
SO_X Eff (grSO_X/tn*miles)	0.23	0.04	0.04
NO_X (tn NO_X)	93,638	91,187	112,689
NO_X Eff (grNO_X/tn*miles)	0.49	0.46	0.48

The formulae used for the calculation of emission KPIs are in line with the ones used by the KPI platform: https://www.shipping-kpi.org/. We adopted the above approach to be fully aligned. After successful implementation of the IMO sulphur cap 0.5 back in 2020 along with 11 open-loop scrubbers’ installation. RnD is constantly studying on new technologies in an effort to identify the best fit for the fleet and the environment.
To ensure optimal functioning on scrubber fitted vessels and to accurately calculate SOx emissions, we integrated sulfur calculations in WAVES using emission ratios recorded from installed monitoring sensors. We monitor both air emissions and wash water discharges, to identify and rectify any potential malfunction and/or minimize violations.
Moreover, Danaos installed AMP to achieve reduction of emissions while at berth.

Environmental Monitoring incorporated in Waves

A sophisticated environmental routine that incorporates interactive Carbon Intensity Index calculations and vessel rating and projection of emitted CO2, setting the foundation for effectively responding to emissions trading or a levy scheme that may be launched next year.

Scrubber Monitoring incorporated in Waves

The Scrubber Monitoring feature is custom designed and incorporated in Waves data analytics platform. We can now provide users with good insights on scrubber operational data almost in real time and can easily confirm compliance with the regulatory requirements for all needed parameters. Moreover, the Scrubber Reference log is a feature that demonstrates compliance in case any monitoring sensor fails, indicating compliant operation under similar conditions meeting the regulations the malfunction is rectified.

Both direct (Scope 1) and indirect (Scope 2) emissions for the entire organizations are estimated annually. In addition, an emissions information dashboard per client is prepared annually to calculate value chain GHG (Scope 3) emissions related to Danaos business activity. The procedure for calculating Scope 3 emissions is established and involves suppliers and partners reporting on their Scope 1 and 2 emissions that relate to Danaos, relevant activities include the following:

Tickets
Crew training
Well-to-tank fuel emissions
Employee commuting
Suppliers/partners
Class travel/ shipyard related emissions
Agents/tugboats

Danaos Total Emissions Allocation

Danaos is on track for a carbon neutral future and remains a pioneer in taking actions for decarbonization and digitization

Ozone Depleting Substances

The Company modified all installations in older vessels according to regulations and any deliberate emission of ozone depleting substances (ODS) is prohibited. Similarly, any installation containing ODS in new building vessels (i.e., halons and chlorofluorocarbons (CFCs)) is also prohibited.
Freon Types in use are R-404A and R-407C. Freon losses for 2021 were at 5% of the total capacity (1053kg approximately). Since 2016 Danaos have managed to reduce Freon losses from 11% to 5% following the EU F-gas Regulation (517/2014) adopted in 1 Jan 2015. A service ban on HFCs with high Global Warming Potential (GWP >2,500) like R-404A, R-507 and R-422D has been imposed since 1 Jan 2020. Since the F-gas regulation applies to all EU countries and EU flagged vessels, replenishment of retrofit of systems with lower GWP refrigerants took place where required.

5% Total Freon Losses

Since 2016 we have managed to reduce our Freon losses from 11% to 5%

Ozone Depleting Substances	2019	2020	2021
Total Freon Capacity (tns)	18.8	22.1	22.1
Total Freon Losses (%)	7.0%	5.0%	5.0%

Circular Economy and Responsible Waste Management

Circular Economy is a recognized concept for sustainable growth and is increasingly gaining ground globally. The concept is expected to have a significant impact across products, markets, business models and value chains and on infrastructure. Since shipping is the most valuable link in the global trade, it can enable and capitalize on a circular conversion of global supply chains and influence the collaboration across value chains to facilitate this change. Circular economy favors activities that preserve value in the form of energy, labor, and materials so new designs involve durability, reuse, remanufacturing, and recycling to keep products, components, and materials circulating in the economy.

In the maritime industry parts from the vessels are continuously refurbished by a service provider until the end of their life span. The concepts for resource-efficiency, waste management and circular economy are all integrated into Danaos’ organizational policies.

In terms of circular economy Danaos has adopted the 3R reduce-reuse-recycle principle in its operations.
Garbage segregation takes place onboard as part of the DSMS – Safety management and pollution prevention procedures. We encourage preventing, reducing, recycling, reusing, and minimizing of waste streams including garbage generated on board. We provide separate waste streams at the point of collection so that garbage can be separated and discharged ashore more effectively.
Some of the spare parts onboard any vessel, mainly major components of various machineries can be reconditioned due to wear or deterioration. Reconditioning spare parts means restoring its condition back to near-new or original operational level making it suitable for further safe use with optimum performance and extending its lifetime.
Our ReNAV campaign/scheme is part of the company’s circular economy policy and launched by the Electrical Department with the purpose of upcycling old navigation and communication equipment. Our fleet has many sister vessels and equipment is often similar between vessels ReNav re – utilizes old equipment or spare parts extends life cycles reducing environmental impact. When a retrofit is performed the components removed are assessed and if unaffected by the fault that caused the need for retrofit are dispatched to another vessel or get collected in the office as spares for future use. Marine type monitors, processor cards and satellite communication systems are often part of the ReNav scheme. Parts or equipment which are not possible to be utilized in any way are stripped down to basic components (batteries, bare metal parts like frames etc., electronic components) and delivered for recycling.
E-waste generation is of major concern. Danaos invests on high end data and networking electronic equipment attaining information security and prolonged life cycles. Any obsolete equipment classified as e-waste can either be in working condition or be unusable. IT equipment which remains in working condition after it has been data-wiped and refurbished is donated to charity institutions. Any equipment that we can’t re use in house is recycled by professional companies.
In 2021, 150 IT items were classified as obsolete of which 40% (in operating condition) was donated to charity institutions.
We continuously investigate in ports all around the world sources of specific recycling, especially for large components i.e., main engine or radar.
Hazardous materials are dealt with according to Regulation (EU) No 1257/2013 of the European Parliament and of the Council, for vessels exceeding a gross tonnage of 500.
The scrap ships are recycled in facilities included in the European List of ship recycling facilities as laid down on EC Decision 2016/232326.
Since 2017 Danaos is training its own Quality Control Engineers, as “Hazmat Experts” (currently approved by two Classification Societies: KR & DNV) Danaos’ Quality Control Engineers have tested and prepared Inventories of Hazardous Materials for over 80% of the entire Fleet while acting proactively IHMs are in the pipeline for the rest of the fleet despite not being required to comply with EU SRR No.1257/2013 as per 2021 routes. Danaos places special attention to the proper recording of hazardous materials ensuring smooth cooperation with our suppliers, safe recycling of vessels at the end of their life and by selecting recycling facilities which embody safer practices.
Danaos has invested in garbage compactors. Garbage compactors are an eco-friendly way to process trash and other waste products, their use improves waste management while relieves the pressure on landfills, reduces the size of the waste and has the potential to assist in separating recyclable materials from landfill waste. As part of the 3R program our intention is to install compactors in all company vessels by 2025 and thus reduce the waste volume onboard by 50%.
Waste streams on board can be divided into two main categories: liquids and solids. Both are controlled, grouped in specific categories, and disposed according to MARPOL (International Convention for the Prevention of Pollution from Ships).
The Convention (MARPOL Annexes IV and V) also requires that Fleet vessels carry onboard a specific Garbage & Sewage Management Plan (GSMP), a Garbage Record Book and placards for the familiarization of crew and visitors regarding the proper handling of garbage on board. Shipboard personnel are trained on the procedures outlined in GSMP and this is recorded. Vessels are controlled for their compliance through audits and Port State Control inspections or local port agencies.
Operational wastes include those in solid form which are related to the ship’s maintenance. Some are disposed ashore for recycling i.e., metallic parts and others such as oily rags (which are non-recyclable) are incinerated onboard to reduce the volume of waste ending up at the landfills. In compliance with the regulations ashes are collected, retained onboard and discharged at port reception facilities to be further used as raw material in the construction industry. By next year the total amount of ashes disposed ashore will be counted as part of our systematic reporting.
Other garbage generated from the living spaces is segregated in categories and disposed ashore for recycling.
In 2021, we disposed for recycling:
– Plastics: 2,105 m³
– Cooking Oil: 10.2 m³
– E-Waste: 94 m³
As part of our efforts to minimize ship generated garbage we endeavor to receive as little as possible packaging on board our ships. Towards this direction we have agreed with our approved ship-chandlers to a number of practices such as:
– Using supplies that come in bulk packaging, considering factors such as adequate shelf-life (once a container is open).
– Using supplies that come in reusable or recyclable packaging and containers.
– Avoiding supplies that are packaged in plastic, unless a reusable or recyclable plastic is used.
– Wrapping which protect goods on its way to the ship should be replaced in the port before receiving the goods. Crew should return to suppliers’ plastic, paper, and wooden packing materials.

We have further taken measures to improve the management of waste generated in our headquarters. We monitor the average paper consumption per employee per day and we encourage our people to reduce the paper consumption. The consumption of A4 sheets in the office has decreased by a further 7% for the second year in a row.
Waste that is categorized as Hazardous and Medical is carefully segregated, clearly labelled and disposed ashore according to international and national regulations.

In the frame of the 3R program our intention is to install compactors in all company vessels by 2025 and thus reduce the waste volume onboard by 50%

Conforming to Environmental Laws & Regulations

Environmental protection and pollution prevention are matters of top priority by all crew. An action plan is in place to mitigate the risk of oil spill, including maintenance of all critical machineries for the related operations, routine drills and simulations, training both onboard and onshore through safety meetings, and a strong crisis management policy. In Danaos we implement a Zero MARPOL Incident policy, and any oil spill or leak is documented, reported, and analyzed with a view to ensure that similar incidents do not occur in the future.

We have established and implemented a robust Environmental Management System and our fleet systematically complies with or exceeds environmental laws and regulations as imposed by:

IMO
U.S. Oil Pollution Act of 1990
CERCLA (spills and releases of hazardous substances)
Clean Water Act
Clean Air Act
EU MRV regulation

In 2021 we reported no incidents of non-compliance with environmental laws and regulations, no spills, and no fines.

Innovation and Digitization

According to the next-generation business model for vessel ownership, the shipping industry will be a digital, circular and decarbonized utility supplying vessel capacity to the market as a service. The performance data collected from operating the vessels will be shared with equipment manufacturers and other stakeholders in the supply chain to help them improve their operations and products. Digitalization of the shipping industry and increased focus on sustainability are powering a new business model innovation.
The digital transformation of the shipping industry is a fundamental element in the global shift towards more sustainable practices, and the maritime industry’s deeper integration into global supply chains. Moving towards circularity within the shipping sector requires the involvement of the whole ecosystem to create transparency, set common goals and objectives, and establish the right financial incentives and structures for commercial viability. Data availability will enable transparency and traceability of materials, as well as partnerships across the value chain.
Danaos embraces the concept of fully digitalizing its processes and operations via its state-of the-art WAVES architecture and focuses on a transformation as a “Block Chain Ready” partner. An important driver for the optimization of digitalization, is the transparent data exchange that enables all involved parties to share and access it. Moving our architecture towards data sharing, the system is designed to provide strict and formal APIs for enabling third-party stakeholders, to have automated access to our data in a formal, real-time, secure, efficient, and controlled manner, while eliminating compliance issues, duplication of effort, data losses and long processing times.

Innovation and digitization towards a carbon neutral 2050

Danaos is heading full speed towards the company’s digitalization to ensure first class services for customers, while saving time and optimizing all processes. Our response to the current demanding market is immediate. Under the umbrella of driving a culture of innovation, Danaos proceeds with the integration of services and facilitates communication among departments, empowering decision making by using Big Data analytics.
Danaos monitors individual vessels any time on the 3 following pillars:

Speed reduction
Various optimizations for energy savings
Use of biodiesels

With the use of the WAVES platform and based on a pre-selected operating profile, Danaos can identify the speed that is needed to achieve desired ratings. Moreover, by assuming a potential saving can be achieved, the “new” rating is also calculated. Thus, with every study that concludes to a % saving, same can be tested in order to identify how this is reflected in vessel’s actual performance and rating. Vessels are compared to IMO CII reference curve and rating, Poseidon Principles and Climate Bond Initiative.

Danaos Fleet CII Rating and forecast basis 2020 profiling and 1 knot reduction

Moving one step forward Danaos investigating a range of biodiesels can estimate the exact quantity that is needed to cover a specified trajectory. Various scenarios can be tested per vessel in order to get the full picture of the future and be in a position to identify the best-fit solution in order to optimize the vessel and her performance. Since the Market Based Measures (MBMs) are a major topic discussed among the shipping industry, Danaos has formulated a special tool within Waves that enables the company to assess the amount of the excess CO₂ tons, along with any monetary consequence that comes along. Scenarios based on a specified by user price for CO₂ tn can be tested and relevant report can be produced since an internal shadow ICP is in place from early 2022 onwards. Every scenario with a specified CO₂ tn has a source and info is circulated to the management for their review and evaluation. Moreover, detailed dashboard with all Scope 1,2 and 3 emissions is produced through Waves providing a fast and transparent monitoring of the company’s emissions. Danaos is closely monitoring all developments related to carbon emissions enabling the company to have deep knowledge of the fleet state anytime within the year and with various scenarios. Danaos is on track for a carbon neutral future and remains pioneer in the new demanding field that combines needs for decarbonization and digitization.

Dashboard with AER/CO₂ surplus & financial impact

Protection of Marine Biodiversity

We adopt a Ballast Water exchange policy which prevents the transfer of harmful alien aquatic species from one region of the world to another. All engineering, plan approval and installation work has been carried out in- house by Danaos’ R&D and Technical department. Each Ballast Water Treatment System has been evaluated for its efficiency, technical competence, operational flexibility, durability, and environmental friendliness, through principal certification and acceptance by the IMO, the US Environmental Protection Agency and the European Committee.
In 2021, a total volume of 5,401,298 cubic meters of ballast water was produced from Danaos’ fleet.
As a major container company, our impact on marine eco-systems can potentially be significant due to the ballast water quantities that are needed for vessels operation and stability. In this respect, we aim at the lowest possible impact to the marine life and in order to achieve it we strictly follow all relevant regulations in place.
We ensure compliance with all IMO regulations and protect marine biodiversity by installing water treatment systems at first opportunity, even well ahead of the official compliance dates.
Danaos initiated Water Ballast Treatment (WBT) installation o/b vessels back in 2018. Our plan is to have WBT units installed in 100% of the fleet by 2023. Currently almost 50% of the fleet is already equipped with WBT. These are fully operational units and are used regardless of whether they have passed the IMO compliance date or not. UV light is used for water sterilization, this eliminates any bacteria and pathogens from the water volumes used. By the end of 2022, another 28 vessels will have the system installed and running.
In 2021 WAVES was enriched with maps of areas listed as special, i.e., areas where emission are controlled, sensitive areas under Marpol (MEPC. 1/Circ. 778 has been used in order to identify all relevant areas). A total 2% of time is spent in special designated areas while operation in ECA areas reaches 19% for the whole fleet.

Ballast Water	2019	2020	2021
*Increase in FO consumption is attributed to the energy consumed for the operation of Ballast Water Treatment Systems (50% of fleet is equipped with BWTS)
Total Ballast (m3)	5,996,209.8	6,055,711.8	5,401,298
Ballast Exchange compared to last year	1,3% (decrease)	1,0% (increase)	12 % (decrease)
Change in FO consumption per ton of ballast exchange compared to last year	8,6% (increase)	9,6% (decrease)	45% (increase)*

Installation per year
2020 and before	25
2021	4
2022	28
2023	6

Waste Sludge and oil spills

Danaos has developed a Safety Management System and policies that promote pollution prevention

The waste liquids category includes mostly oil residues (sludge) produced by the operation of ship’s main engine and other auxiliary machinery, resulting from the purification of oil. The handling of these residues onboard is regulated under MARPOL, Annex I. The amount of sludge generated is proportional to the fuel consumed onboard. By analyzing the quality of fuels in specialized laboratories and the constant maintenance of purification machineries we ensure the minimum quantity of fuel residues. The produced quantity for the year 2021 is 17,256m3. Sludge is disposed to shore reception facilities where after special treatment is used further in industrial processes.
The most common reason for spillages is human factor while minimizing the exposure risk associated with pollution is a challenging task. Danaos has developed a Safety Management System and policies that promote pollution prevention and we have taken a step further to predict and prevent any potential threats to the marine environment. Danaos is continuously operating with “zero spills”, reflecting the structure and the efforts of the Company.

Environment

Material Issues

Fighting Climate Change