Gaps in knowledge and disparities in ice regimes could undermine the effectiveness of a proposed Polar Code, which, once implemented, would introduce mandatory safety and environmental standards for shipping in Polar waters.

However, a workshop held at Lloyd’s on March 12 has resulted in a proposed initiative to foster a common ice regime in the Arctic that would support the Polar Code and improve safety standards.

Polar Code

Speaking at the recent Economist Arctic Summit 2014, Lloyd’s Director of Performance Management Tom Bolt expressed the market’s support for the proposed Polar Code, which is being developed by the International Maritime Organisation (IMO).

When ratified, the Polar Code should see ship owners mitigate the risks associated with operating in polar seas, explains Neil Roberts of the Lloyd’s Market Association (LMA).“Improving standards of ship design and operation in these waters can only be a good thing and would be welcomed by insurers,” says Roberts.

Unique risks

Ships operating in the Arctic and Antarctic are exposed to a number of unique risks, explains Dr Heike Hoppe, Senior Deputy Director, Marine Environment Division at the IMO.

The remoteness of the areas makes rescue or pollution clean-up operations difficult and costly, according to Ms Hoppe. Cold temperatures may reduce the effectiveness of equipment and machinery, while ice can impose additional loads on the hull and propulsion system, she says.

“IMO has long recognised the need to ensure the safety of ships operating in the harsh, remote and vulnerable polar areas and to protect the pristine environments around the two poles,” she adds.

International effort

A Polar Code is needed to respond to the increased volume of shipping in both the Arctic and Antarctic, and in order to provide a comprehensive set of internationally agreed standards for ships operating in these distinctive environments, according to Dr Hoppe.

The draft Polar Code was completed earlier this year and, once ratified by governments, is due to be implemented through amendments to the International Convention for the Safety of Life at Sea (SOLAS) and the International Convention for the Prevention of Pollution from Ships (MARPOL).

Once agreed, this would mean that all parties to those treaties – which represent over 98% of world merchant shipping tonnage - would then have an obligation to ensure all ships engaged on international voyages and operating in polar waters comply with the Polar Code, explains Dr Hoppe.

Arctic exploration

Interest in the Arctic, in particular, has been growing in recent years as the perceived benefits of new shipping routes, reportedly significant oil and gas reserves and mineral deposits has become apparent.

Overall, investment in the Arctic could potentially exceed $100bn within the next decade, according to Lloyd’s 2012 Arctic Opening report, which highlighted the opportunities and challenges of economic development in the region.

For example, there could be significant opportunities for shipping if the annual summer sea-ice continues to recede with climate change - transit times between Asia, Europe and North America using the Northern Sea Route could be cut by as much as 40%, said CSIC.

Frontier risks

However, while the Arctic offers significant opportunities, it also presents extreme and fast changing risks, according to Nick Beecroft, Manager, Emerging Risks & Research, Lloyd's Exposure Management. “It’s a genuine frontier environment,” he says.

The remoteness of polar waters, extreme weather, the risk of ice, a lack of recoverability should a vessel get into difficulty, as well as poor maps and problems with satellite navigation, are all risk factors to be considered when operating in the Arctic, notes Roberts.

Speaking at the Arctic Summit, Bolt also highlighted another risk - the gaps in knowledge and understanding of the region. “There is a need to fill in the gaps in knowledge - for more research, something Lloyd’s is actively engaged with,” he told delegates.

Arctic ice regime

The need to address gaps in knowledge and co-ordinate ice data and ice regimes was the focus of a workshop held at Lloyd’s last week in conjunction with the Swedish Club, the Swedish Polar Research Secretariat, and The Nordic Association of Marine Insurers.

The meeting saw representatives of the insurance and maritime industries, governments, and the research community, as well as a number of prominent ice captains, discuss how best to gather knowledge and foster an integrated approach.

“A lack of knowledge and the absence of an advanced ice data regime - coupled with limited Arctic expertise among some Flag States and wanting national Port State regulation in a number of Arctic jurisdictions - would undermine the effectiveness of the Polar Code and are a recipe for disaster,” said Michael Kingston, Partner at DWF LLP who organised Lloyd's involvement in the workshop.

Forum for an ice regime

Following the workshop, proposals are now being drafted to establish a forum to develop a comprehensive ice regime, and to agree an enforcement regime in international waters outside the Exclusive Economic zone. The proposals, which would enhance the Polar Code and create industry-led standards, will be sent to the Arctic Council.

“The workshop and the submissions that will be made to the Arctic Council are a significant step forward for sustainable shipping in the Arctic and should go some way to closing the knowledge gap which will protect the indigenous people, those who work in the industry, and the environment” said Kingston, who also worked with Lloyd’s on its Arctic Report.

“Lloyd’s has shown great leadership in fostering such a positive and integrated approach,” he adds.