Neptune Pacific Line Acquires Pacific Direct Line

in International Shipping News 14/03/2020

Friday, Neptune Pacific Line (Neptune) announced it has acquired Pacific Direct Line (PDL) from PDL’s parent holding company, Pacific International Lines (PIL). The combined business will seamlessly link transport, warehousing, depots and customs clearance services and fully integrate customers’ supply chains across 18 South Pacific markets.

The acquisition of PDL will strengthen Neptune’s Melanesian and Polynesian network, provide a link to Micronesia and the French territories, and enhance connectivity to global markets via strategic hubs in New Zealand and Fiji.

“This purchase supports our long-term vision of creating the strongest and best regional network of shipping and logistics services in the Pacific Islands,” said Rolf Rasmussen, Managing Director of Neptune. “By acquiring PDL, we can further develop our mainline shipping network to provide fixed-day services and increase the utilization of our combined fleet, enabling us to continue to offer competitive freight rates. PDL’s extensive logistics network will allow us to support our customers across their entire supply chain needs.”

“Our group strives to optimise our resources and to review our overall business approach for new business opportunities,” said Teo Siong Seng, Executive Chairman and Managing Director of PIL. “The divestment of PDL is part of our strategic move that enables PIL to focus its resources on growing in the key liner markets that it operates in Asia, the Middle East, Africa and South America. We will continue to improve our liner services between Asia and Oceania including the South Pacific Islands.”

PDL currently operates throughout the South Pacific region and specialises in providing liner shipping services from New Zealand and Australia to the South Pacific Islands. With the acquisition of PDL, Neptune will now have a specialized fleet of nine vessels dedicated to South Pacific Island trades and a team of more than 800, most of whom are based in supply chain services in the region.

“Pacific Direct Line was founded to support the socio-economic development of the Pacific Islands by providing reliable, consistent shipping and logistics services,” said Oliver Ravel, CEO of PDL. “Today, with the support of PIL, PDL has grown to become a market leader in the South Pacific. By selling the business to our regional partner, we can ensure that this legacy will live on and that our customers will continue to be supported by a local service provider that understands the needs of the region.”
Source: Neptune Pacific Line (Neptune)

How decarbonizing shipping could unlock a global energy transition

Climate change requires urgent action in all sectors of the economy – including maritime shipping, which carries close to 80% of global trade and accounts for 2-3% of global greenhouse gas emissions (GHG) annually. This is comparable with the emissions of large economies such as Germany and Japan. As global trade flows increase to serve a growing and more prosperous world population, emissions from shipping could grow between 50% and 250% by 2050 if no action is taken.

Shipping is not included in the Paris Agreement. However, to curb emissions, member states of the International Maritime Organization (IMO), a specialized agency of the United Nations responsible for regulating shipping, adopted an initial GHG strategy in April 2018. The strategy prescribes that GHG emissions from international shipping must peak as soon as possible and that the industry must reduce its total annual GHG emissions by at least 50% of 2008 levels by 2050, with a strong emphasis on zero emissions. This will ultimately align emissions from shipping with the Paris Agreement.

Shipping’s moon-shot ambition

At the UN Climate Action Summit in New York in September 2019, the Getting to Zero Coalition – a partnership between the Global Maritime Forum, the Friends of Ocean Action and the World Economic Forum – was launched with the moon-shot ambition of having commercially viable zero-emission vessels operating along deep-sea trade routes by 2030. This would put the industry on track to meet the target set by the IMO. Merchant ships have an average lifespan of 20 years or more, which means that ships entering the world fleet around 2030 can be expected to still be in operation in 2050. Similarly, infrastructure associated with fuel supply chains can have an economic lifespan of up to 50 years, and reconfiguration to new fuels can be a lengthy process. Consequently, if shipping is to halve its emissions by 2050, there is a need for zero-emission vessels to enter the global fleet by 2030 – only 10 years from now – as well as for a clear path to providing the large amounts of zero-emission fuels needed to allow for rapid uptake over the following decades.

Shipping is considered a hard-to-abate sector, and the decarbonization of shipping and its energy value chains can only be achieved through close collaboration and deliberate collective action between the maritime, energy, infrastructure and finance sectors, with support from government and international organizations. Since its launch in September, the Getting to Zero Coalition has grown to unite more than 100 public and private sector stakeholders.

The $1 trillion question

A new study by UMAS and the Energy Transitions Commission for the Getting to Zero Coalition spells out the scale of the challenge. According to their analysis, the cumulative investment needed between 2030 and 2050 to halve shipping’s emissions amounts to approximately $1-$1.4 trillion, or an average of $50-$70 billion annually for 20 years. This should be seen in the context of global investments in energy, which in 2018 amounted to $1.85 trillion.

If shipping was to fully decarbonize by 2050, this would require further investments of some $400 billion over 20 years, bringing the total to $1.4-$1.9 trillion.

Full decarbonization could cost $1.9 trillion
Image: Getting to Zero Coalition

Need for land-based investments outweighs the rest

The analysis also sheds light on where investments need to take place. These can be broken down into two main areas: ship-related investments, which include engines, on-board storage and ship-based energy-efficiency technologies; and land-based investments, which include investments in the production of low-carbon fuels, and the land-based storage and bunkering infrastructure needed for their supply.

The biggest share of investments is needed in the land-based infrastructure and production facilities for low-carbon fuels, which make up around 87% of the total.

Only 13 % of the investments needed are related to the ships themselves. These investments include the machinery and onboard storage required for a ship to run on low-carbon fuels both in new-builds and, in some cases, for retrofits. Ship-related investments also include investments in improving energy efficiency, which are estimated to grow due to the higher cost of low-carbon fuels compared to traditional marine fuels.

What’s the World Economic Forum doing about the transition to clean energy?

A trillion-dollar market opportunity

While the exact numbers on total bunker fuel consumption for shipping are not readily available, they are estimated to be around 250-300 million tons of fuel consumed annually. This means that shipping’s decarbonization has the scale to be a catalyst for the broader energy transition, unlocking the market for zero-emission fuels – a shift that represents a trillion-dollar market opportunity.

In order for companies and governments to make the investments required to accelerate the shift to zero-carbon fuels for shipping and other hard-to-abate sectors, we need to bring together the full range of the upstream and downstream fuel value chains to create a deeper understanding of the production and supply of the zero-carbon fuels that will pave the way for shipping’s decarbonization.

We invite stakeholders who share this ambition to join us in our mission to serve global trade in a sustainable manner.
Source: World Economic Forum

Shipping’s Big Bang Sends Two Global Industries Spinning

Two weeks ago, the vast majority of the world’s ships were forced to change the fuel they use. Some big winners — and potential losers — are starting to emerge from what was a historic switch for the world’s oil refining and maritime industries.

Regulations began on Jan. 1 forcing vessels to sharply reduce emissions of sulfur oxides from burning so-called bunker fuel. If successful, the rules could turn out to be the single-biggest, globally mandated improvement to air quality ever. The pollutant is blamed for worsening human health conditions like cardiovascular disease and asthma, and causing acid rain.

But the cost of the new fuel has skyrocketed to the point where it recently surpassed diesel and gasoline in Singapore, Asia’s oil-trading hub. The dynamic adds to the cost of transporting goods and raw materials — a potential impediment to global supply chains since fuel represents the maritime industry’s single-biggest expense.

IMO fuel surpasses gasoline and diesel

“The cost of world trade is rising when the bunker costs go up,” said Peter Sand, chief shipping analyst at BIMCO, a trade group for many of the world’s vessel operators. Even if the hike will be largely invisible to end consumers, it’s important to owners, some of whom may end up in financial difficulty if fuel prices stay high, he said.

IMO 2020, as the rule is known, is a global sulfur cap on marine fuel of 0.5%, down from 3.5% in most parts of the world. The Jan. 1 start date was set back in October 2016.

The price surge points to significant support for those refineries that make the new product. Likewise, some shipowners are making fortunes because they invested in kit allowing them to burn the old sulfur-rich variety, which is several hundred dollars a ton cheaper.

Ship Shape

Before the rules took effect, some shipowners plowed billions of dollars into exhaust-gas cleaning systems that prevent the sulfur from being released into the air. The equipment allows their vessels to keep using the old fuel without breaking the rules.

Those who invested appear to be gleaning a competitive advantage because the discount for the old fuel is so big.

Supertankers hauling 2 million barrels earned about $20,000 a day more so far this year if they were fitted with scrubbers, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. That’s about $7 million a year in savings if the current market were to continue.

Scrubber investments could pay off in less than a year, according to Richard Matthews, head of research at E.A. Gibson Shipbrokers Ltd.

Rates for the oil tankers are very high by historical standards, meaning even those without are doing well.

However, where it may become more of an issue is in freight markets that are weak. For example, giant iron-ore carrying Capesizes bulkers built in 2010 earned about $4,000 a day so far this year. That’s not enough to even cover operating costs including crewing and repairs. The same carriers fitted with scrubbers earned about $10,000 a day more than that. Not great, but a level they can survive at.

If the current market doesn’t improve, those lower earnings might eventually discourage some ship operators from transporting cargoes, something that would help the owners of vessels that do have scrubbers.

Sand, from BIMCO, says that there could even be loan defaults if the price of compliant fuel doesn’t drop.

Refineries Diverge

For oil refiners, IMO 2020 has transformed marine fuel from essentially a waste material sold at a discount to crude into one of the industry’s most valuable products. What’s widely now seen as the dominant new propellant — very low-sulfur fuel oil, or VLSFO — is about twice the price of the old material in Singapore and Rotterdam. A similar trend is playing out for marine gasoil, the other main clean-fuel shippers can use to comply with IMO 2020.

The main new fuel’s high price is in some ways hard to explain. In theory, it shouldn’t be more expensive than products like gasoline and diesel because it’s easier to make.

Today’s sky-high prices are the result of both the refining and shipping sectors wanting the other to invest in making it, said Alan Gelder, vice president for refining and chemicals, at Wood Mackenzie Ltd., an energy consultant.

There have also been fuel availability issues at some ports around the world, as well as a shortage of barges to deliver, according to Melissa Williams, a marine fuel sales and marketing manager at Royal Dutch Shell Plc.

Standard Club, a marine and energy insurer, said Tuesday that it’s been notified of concerns about a lack of compliant fuel at some ports, without identifying which ones.

“The impact on refiners isn’t the same across the board,” said Mark Williams, principal refining analyst at Wood Mackenzie. Refiners in the U.S. Gulf coast which can process high-sulfur fuel oil — the old propellant that has become much cheaper since the switch — are doing very well, he said. But any refiners that lack upgrading equipment and process sulfur-rich crudes will be feeling squeezed.

More broadly, refiners are having to rethink their whole approach to fuel production as other margins are pulled around by the IMO 2020 effect. Low-sulfur feedstocks like vacuum gasoil and straight-run fuel oil that, among other things, can be used to make the new product, have shot up in value relative to crude. If large volumes get diverted to the maritime market, more traditional outputs like gasoline, that can also be made from them, could tighten.

The diesel market, meanwhile, has largely shrugged off the IMO 2020 boost many were expecting. Warm weather across the globe is partly to blame, along with recent downward revisions to oil demand growth forecasts, said Steve Sawyer, director of refining at FGE. The result is VLSFO rising above diesel in Singapore, a “bizarre” pricing dynamic, he said.

Looking forward, Sawyer expects VLSFO to remain at a premium to crude as long the crude oil price remains in a $60-70 a barrel range.

Gelder and Williams expect the VLSFO price to fall going forward, while the price of HSFO is set to rise by about 20% by the fourth quarter as more shippers fit scrubbers. The IMO transition period, meanwhile, is set to last for a couple more years, they said.

So the current price surge is just the start of a process. Refineries will need to decide if it’s worth spending the money on equipment to make new fuels, and shipping companies will have to consider buying more scrubbers.

“If you’re going to reduce the impact of these extra costs on the overall economy, there’s more investment needed,” Gelder said.

Smooth Sailing for Ships After Historic Fuel Switch

A major switch in maritime fuel aimed at reducing emissions from ships is proceeding smoothly, shipping executives say, with new blends available in most ports and operators reporting few problems adapting to the fuel.

The mandatory change began on Jan. 1, when some 60,000 oceangoing vessels were ordered by the International Maritime Organization, the United Nations’ marine regulator, to slash their sulfur emissions by more than 80%. It is the first in a series of environmental steps the maritime industry is due to take in the coming years that will alter operating costs and raise fundamental questions about how ships should be powered.

To comply with the 2016 Paris climate accord, members of the IMO have also agreed to cut greenhouse-gas emissions to half of their 2008 level by 2050. Ships now contribute up to 3% of the world’s global air pollution, a share comparable to that of a major country.

Shipping executives say the low-sulfur directive alone will add around $50 billion in new fuel costs over the next three to four years, and they say they plan to pass the expenses on to cargo customers.

Low-sulfur fuel in Singapore, one of the world’s biggest refueling hubs, was quoted this week at an average $670 a ton, 64% higher than the $409 a ton for the heavy oil, known in the maritime sector as bunker, that has long powered ships. Bunkering brokers said the price spread is at least 10% higher than shipowners originally expected, but the gap is expected to narrow over the next couple of months.

“It’s very expensive right now,” a senior broker in Singapore said. “Demand is high and many bunkering barges are still flushing the old fuel from their tanks, meaning not enough is out there and ships are held up longer to refuel.”

Fuel represents up to half of a ship’s operating expenses, and some operators will see their earnings take a hit this year as the cost is absorbed through supply chains.

“If shipping companies take on all the cost, they will collapse,” said Kitack Lim, secretary-general of the IMO, the global marine regulator that mandated the fuel switch. “But compared to the value of the cargo, price increases to consumers will be very small.”

The fears of some shipowners that there wouldn’t be enough low-sulfur fuel availability, or that it wouldn’t work well with maritime engines, so far appear to be unfounded.

“The switch went well and we haven’t experienced issues with performance or fuel availability,” said Ole Graa Jakobsen, head of fleet technology at Denmark’s A.P. Moller-Maersk A/S, the world’s largest operator of container ships by capacity. “We have lab-tested a broad range of fuel formulations to determine optimal blends for our vessels.”

Maersk’s French rival CMA CGM SA, which operates more than 500 container ships, said prices vary from port to port, with rates at big European gateways being cheaper.

“There is a wide spectrum of different blends, that may not all be available in some ports in Africa and South America” said Farid Trad, the group’s vice president for oil management. “There is high demand so fuel barges take more time now. The challenge is to get the entire supply chain to work together, from fuel suppliers to refueling barges to shipowners managing their fuel needs.”

Bunkering suppliers say new fuel supplies are short for smaller vessels doing coastal sailings on the east coast of India, the Philippine archipelago and Bangladesh.

“There was not enough preparation in India and new fuel supply is low, especially for small tankers and container ships in the east coast,” said Venkat Argawal, who runs three refueling barges at India’s Port of Chennai.

“Some are breaking the rules and run on heavy oil until supply is restored.”

One of the IMO’s biggest challenges is that member states enforce the new fuel regulations. This week, China caught two ships that were allegedly using noncompliant fuel according to the Standard P&I Club, a major maritime insurer.

“We are monitoring the situation and to date, whilst there have been some reports of tight supply of compliant fuel oil in some markets, so far we have not received reports of any significant issues,” an IMO spokeswoman said.

Some vessel operators, especially tanker owners, have chosen to limit their sulfur emissions with exhaust systems called scrubbers that trap sulfur created by fuel-burning engines.

The systems cost several million dollars, but companies using them could benefit from big operating cost savings in the next few years over carriers that are spending more for new, more expensive low-sulfur fuel.
Source: Wall Street Journal

Massive R&D needed to decarbonize deep-sea shipping beyond 2050

The goal of the International Maritime Organization (IMO) to turn the oceangoing vessel industry emissions and carbon free beyond 2050 will require a technological replacement to the dominant fossil fuel-burning engines of the world’s maritime fleet, World Shipping Council President and CEO John Butler told U.S. lawmakers of the House Coast Guard and Maritime Transportation Subcommittee on Tuesday.

While emissions- and carbon-free technologies, such as battery and hydrogen power, are already in the development stages for short-sea and ferry vessel applications, their scale is nowhere near the level to power today’s large oceangoing vessels.

“We have to keep in mind that the scale is different for the transoceanic, larger international vessel sector than it is for the short-sea sector,” Butler said. “We can’t make the mistake that batteries work for ferries and we just need a bigger battery [for oceangoing ships].”

Maersk (OTCMKTS: AMKBY) is currently testing a 40-foot container-size battery on board one of its container ships, Lee Kindberg, the carrier’s North American head of environment and sustainability, told the House subcommittee.

Kindberg said the battery will not provide power for ship propulsion but will be tested for potential onboard power uses, such as shipboard lighting, electric pumps and refrigerated containers.

However, she said Maersk has committed to “net-zero carbon emissions” for its worldwide operations by 2050 and is currently retrofitting vessels with new technologies and testing “carbon-neutral” biofuels, such as those made from cooking oil and an ethanol made from the byproducts of agriculture, paper and wood products manufacturing.

“The transformation from low- to zero-carbon emissions is an energy transformation, not just a vessel modification,” Kindberg said. She added that it will require not only massive industry and government investments in new vessel propulsion systems development but also shoreside-support energy production and infrastructure.

In 2018, the IMO, a United Nations body of which the U.S. is a member, adopted a resolution that called for a 40% increase in overall fleet efficiency compared to 2008 by 2030 and then a 50% reduction in absolute greenhouse gas emissions by 2050, with emissions being reduced to zero or near zero within ocean shipping beyond the half-century mark.

Butler told the House subcommittee members that it is possible for the ocean shipping industry to achieve the IMO’s 2030 goal.

“A highly competitive liner shipping market, fuel price increases associated with the IMO 2020 marine fuel sulfur cap regulation and increasing societal and customer requirements to reduce emissions provide vessel operators with powerful incentives to make their operations as efficient as possible,” he said in his testimony.

However, to achieve the organization’s 2050 goal and beyond will require a substantial, globally funded and driven research and development effort, Butler said.

On Nov. 18, the World Shipping Council and seven other shipping organizations proposed that the 174-member IMO establish a $5 billion to $6 billion research and development effort over the next 10 to 12 years to identify fuels and related technologies to aggressively achieve the IMO’s decarbonization goals for the global ocean shipping industry. The International Maritime Research and Development Board (IMRB) would be funded by a mandatory contribution based on each ton of fuel burned, Butler said.

“Because oceangoing vessels are long-lived assets (20-25 years), we must move as quickly as possible to develop and deploy low-carbon and zero-carbon propulsion systems and fuels to avoid stranded assets and delays in implementing next-generation technologies,” he said.
Source: Freight Waves

Shipping companies propose crash program to reduce CO2

in International Shipping News 30/12/2019

A group of eight trade organizations that collectively represent 90% of the world’s merchant fleet have proposed a collaborative shipping research and development program to help eliminate CO2 emissions from international shipping.

Their plan includes funding the program with $5 billion over a 10-year period.

The shipowner groups said they are seeking to accelerate the development of commercially viable zero-carbon emission ships by the early 2030s.

The groups making the proposal include organizations that represent a broad base of shipping companies – BIMCO and the International Chamber of Shipping – as well as groups that represent particular sectors of the shipping industry: the World Shipping Council, which represents the container liner industry; Cruise Lines International Association; Interferry; Intercargo, which represents dry bulk carriers; Intertanko, which represents tanker operators; and the International Parcel Tankers Association.

In a joint press release, the groups note “international maritime transport carries around 90% of global trade and is currently responsible for approximately 2% of the world’s anthropogenic CO2 emissions. To achieve the Paris Agreement’s climate change goals, rapid decarbonisation is vital – also for international shipping.”

They note the United Nations International Maritime Organization (IMO) agreed in 2018 to target an absolute cut in the sector’s total greenhouse gas emissions of at least 50% by 2050, regardless of trade growth, with full decarbonisation shortly after.

“The 2050 target will require a carbon efficiency improvement of up to 90%, which is incompatible with a continued long-term use of fossil fuels by commercial shipping,” the shipping groups said.

“Meeting the IMO’s GHG reduction goals will require the deployment of new zero-carbon technologies and propulsion systems, such as green hydrogen and ammonia, fuel cells, batteries and synthetic fuels produced from renewable energy sources. These do not yet exist in a form or scale that can be applied to large commercial ships, especially those engaged in transoceanic voyages and which are currently dependent on fossil fuels.”

The eight organizations have proposed establishing an International Maritime Research and Development Board (IMRB), a non-governmental research and development organisation that would be overseen by the countries belonging to the IMO and financed with a mandatory contribution of $2 per tonne of marine fuel purchased for consumption by shipping companies worldwide. That would bring in about $5 billion over 10 years.

“Additional stakeholders’ participation is welcomed,” they added.

In a proposal to the IMO, the industry group set out details for governance and funding of the program, which they say can be put in place by 2023 via amendments to the existing IMO Convention for the Prevention of Pollution from Ships (MARPOL).  

They said the plan will be discussed by governments in London at the next meeting of the IMO Marine Environment Protection Committee in March 2020.
Source: FreightWaves

Shipping is overtaking aviation in emission reductions

in International Shipping News 14/10/2019

Shipping and aviation emit more than 5% (pdf) of the world’s greenhouse gases, not to mention black carbon, sulfur dioxide, and nitrogen oxides. Left unchecked, their emissions could eat up nearly a third of the world’s “carbon budget,” the allowable emissions to keep the Earth’s climate below 2°C of warming this century.

It has left a giant hole in the world’s climate strategy because the industries don’t fall under any single country’s jurisdiction. But the aviation and shipping sectors, seeing a low-carbon future, have begun to act.

Aviation went first.

In 2010, international aviation said it would halt emissions growth after 2020 and committed to 2% annual fuel efficiency improvements starting in 2021. It set up an offsetting scheme to reduce emissions as it transitioned away from fossil fuels.

Shipping, as late as 2016, did little despite being responsible for more than 3% (pdf) of global emissions and set to hit 17% by 2050.

Shipping has not only caught up, it has exceeded aviation, says Ned Harvey, who manages the heavy-industry program for the nonprofit Rocky Mountain Institute (RMI). “Eighteen months ago, shipping was the laggard,” he said in an interview. “Now it’s leading.”

In 2018, the International Maritime Organization agreed to emission reductions of 50% below 2008 levels by mid-century. Financiers are adopting an emissions standard for shipping to assess their climate risk. Perhaps even more important is the launch of a carbon-neutral fleet of commercial ships starting in 2030. By that time, say scientists in the Intergovernmental Panel on Climate Change, emissions must have begun their steep decline toward net-zero by 2050 to avert catastrophic warming.

While neither sector’s emission targets will meet the 1.5°C goal agreed upon in the Paris climate agreement in 2015, shipping is now far closer than aviation. The airline industry lacks a clear plan to cut absolute emissions before 2030 or an accelerated program to wean itself off high-carbon fuels. That’s likely to exert enormous pressure on the aviation sector.

Why shipping?
Three factors have come together to accelerate shipping’s ambitions. First, pressure in the supply chain is driving cargo ship operators to clean up their act. Companies such as Amazon are committing to make their operations carbon neutral (or negative), and turning screws on companies that don’t help them comply.

Second, technology favors emission reductions in shipping. Whereas design tolerances for aircraft are tight, ships can more easily be modified for new fuels, larger batteries, and new hull designs. Hydrogen fuels, for example, may substitute for fossil fuels. Today’s (updated) ships could be retrofitted, while aircraft would need to be entirely redesigned at a cost of many billions of dollars. “We can (and are) building engines that can burn zero-emission fuels,” states the Global Maritime Forum, which is testing fuels derived from biomass, hydrogen from renewable electricity, and natural gas combined with carbon capture and storage.

Finally, banks are already moving to identify the highest emitters in the shipping industry, and evaluate them against international climate targets. That may restrict their access to capital in the future as banks seek to reduce their exposure to climate risk. The Poseidon Principles, announced this June, is the first shared standard for banks to measure and disclose climate risk in shipping, or any sector for that matter, says RMI, which helped negotiate it over two years. Eleven banks with $100 billion in shipping debt have now agreed on an emission baseline to assess climate risk and companies’ ability to meet international targets.

The Poseidon Principles, argues RMI, solve a central problem for global emission reductions: collective action. Any one firm (or country) acting alone is ineffective, even putting it at a competitive disadvantage. To succeed, firms need to compete on the same playing field. By giving banks leverage, transparency, and accountability to enforce emission targets and reduce their portfolios’ “carbon exposure” and risks related to climate regulation, laggards are pressured to catch up. A quarter of the shipping industry’s senior debt is now held by banks in the Poseidon agreement, a share that should rise to more than half by the end of the year, says RMI.

The industry’s “moon shot” goal is to float a commercial deep-sea zero-emission vessel by 2030 as a prelude to decarbonizing the fleet. Last year, the International Maritime Organization agreed to cut GHG emissions 50% below 2008 levels by mid-century, putting it, theoretically, within reach of emissions reduction consistent with the Paris Agreement temperature goals. In the meantime, the industry is exploring a suite of options, including slowing down ship speeds by 30% to save fuel (supported by chief executives of at least 107 shipping companies) and alternative fuel sources (biofuels, ammonia, hydrogen, or batteries). Little time is left to act. Given the 30-year lifespan of modern container ships, the next 18 months will be crucial for investors, ports, and shipyards to develop new marine fuels, propulsion, and infrastructure for a carbon-free transition.

Warming skies
The aviation industry isn’t idle. US airlines’ fuel efficiency rose 130% between 1978 and 2018, according to the trade association Airlines for America, allowing the industry to transport 42% more passengers and cargo while only releasing 3% more emissions.

But its early ambitious goals are now behind the science calling for a world with less than 2°C warming. The rise in the number of air passengers, set to double by 2035, has swamped efficiency gains by a factor of three in recent years. Cutting back emissions has become harder as efficiency improvements yield less gains over time (most were from normal turnover of aging aircraft). Flying, which already accounts for more than 2% (pdf) of global CO2 emissions, could soar to nearly a quarter of global GHG emissions by mid-century.

Unlike shipping, aviation doesn’t have an clear path to give up fossil fuels in the foreseeable future. The industry has agreed to keep emissions at 2020 levels, but to meet its goal of zero-carbon growth it must invest in emission reductions in other sectors. It’s relying on a combination of better technology, efficiencies such as satellite aircraft control, and offsets. Lots of offsets.

The Carbon Offsetting and Reduction Scheme for International Aviation, properly administrated, say groups like the Environmental Defense Fund, could tamp down emissions, but a few details have to be ironed out. If not well designed, or kept cheaper than alternatives, the industry will never be incentivized to develop low-carbon synthetic fuels. Such solutions are years (perhaps decades) away from leaving the ground. While electric and hybrid aircraft are taking off (Sweden and Norway plan to eliminate fossil fuels for all short-haul flights by 2040), they won’t be suitable for longer flights for the foreseeable future.

Yet pressure is building. If governments don’t act, customers will. “Flight shaming” is spreading from Europe to the US, convincing travelers to forgo air flights and ratcheting up pressure on the industry to move faster. In Sweden, flights have fallen by 9% this year, in part due to flygskam, or flight shame. Germany is proposing taxing airlines and subsidizing rail. “Unchallenged, this antiflying sentiment will grow and spread,” Alexandre de Juniac, head of the International Air Transport Association, told Bloomberg. “Politicians aren’t sticking up for us.”
Source: QZ

UK Sets Ambitious Targets To Cut Shipping Emissions

in International Shipping News,Shipping: Emission Possible 12/07/2019

All new ships for UK waters ordered from 2025 should be designed with zero-emission capable technologies, in ambitious plans set out by Maritime Minister Nusrat Ghani to cut pollution from the country’s maritime sector.

The commitment is set out in the Clean Maritime Plan published today. The government is also looking at ways to incentivise the transition to zero-emission shipping and will consult on this next year.

The plan also includes a £1 million competition to find innovative ways to reduce maritime emissions and is published alongside a call for evidence to reduce emissions on UK waterways and domestic vessels.

The Clean Maritime Plan is part of the Government’s Clean Air Strategy, which aims to cut down air pollution across all sectors to protect public health and the environment. It will also help deliver the United Kingdom’s commitment to be net zero on greenhouse gases by 2050.

Maritime Minister Nusrat Ghani

Maritime Minister Nusrat Ghani said:

“Our maritime sector is vital to the success of the UK’s economy, but it must do everything it can to reduce emissions, improve air quality and tackle climate change.

“The Clean Maritime Plan sets an ambitious vision for the sector and opens up exciting opportunities for innovation. It will help make the UK a global hub for new green technologies in the maritime sector.”

The maritime sector has already taken significant strides to reduce emissions – hybrid ferries are already being used in UK waters, including in the Scottish islands and on cross-Solent journeys to the Isle of Wight. The Port of London Authority – where the Maritime Minister launched the Plan today – also uses hybrid vessels.

Sarah Kenny, Chief Executive of BMT Group and representing the Mari-UK consortium, said:

“The Clean Maritime Plan is an important step towards achieving a zero-emission future for the UK. Getting to net zero will not be easy, but it will present significant opportunities as well as the obvious challenges for all parts of our £40bn maritime sector. Maritime is already the greenest way of moving freight, but we can and must do more to reduce emissions.

“The good news is that the UK is well-placed to not only decarbonise our own economy, but also to share our expertise and capability with the rest of the world as they, too, embark on this most global of missions.

“For the first time, companies and universities from across the country have come together to collaborate through MarRI-UK, accelerating the UK’s maritime technological capabilities, particularly on decarbonisation.

“The key ingredient to realising our clean maritime ambitions is collaboration. Between companies, academia and with government. Today’s plan and government’s broader Maritime 2050 strategy, crafted with Maritime UK, provides a framework to do just that.”

Guidance has also today been issued to ports to assist them in developing air quality strategies. This will both address their own operations and support improving air quality across the country.

Tim Morris, chief executive of the UK Major Ports Group and member of the Clean Maritime Council, said:

“The Clean Maritime Plan is a really valuable piece of work, setting out an ambitious path forward for the transformation of the maritime sector in the UK. It doesn’t shy away from the scale or complexity of the challenge of such a transformation. But it’s a transformation that the ports industry, along with the rest of the maritime sector and working in partnership with Government and other stakeholders, is determined to take on.”

A further consultation to increase the uptake of low carbon fuels will also take place next year.

The Clean Maritime Plan is part of the government’s Maritime 2050, a long-term strategy published in January 2019 to keep the UK as a world leader in the maritime sector for decades to come.
Source: UK Department of Transport

Singapore retains top spot as international shipping centre

in International Shipping News 12/07/2019

Based on objective factors including port throughput and facilities, depth and breadth of professional maritime support services, as well as general business environment, the report is a collaboration between the Chinese state news agency, Xinhua, and international freight benchmark provider, the Baltic Exchange.

Acquired by the Singapore Exchange (SGX) in 2016, the Baltic brings together complementary strengths of Singapore and London, two of the world’s most important maritime centres.

In the six years since this report has been published, there has been a general rise in the performance of Asian and Middle Eastern locations. The first report in 2014 included three European locations in the top five; in 2019 only London remains. The top five international shipping centres are Singapore, Hong Kong, London, Shanghai and Dubai.

Lu Su Ling, Head of Baltic Exchange Asia, says; “Singapore commands a strategic position as a maritime hub in the regional and global arena. The maritime industry is, and will remain, a big contributor to Singapore’s economy and it is therefore important that we continue to innovate and invest in this sector to achieve long-term success.”

“We are honoured to top the 2019 Xinhua-Baltic International Shipping Centre Development Index for six years running. It is a vote of confidence to the quality of services offered by the Port of Singapore, as well as the conducive business environment that facilitates an array of maritime activities in Singapore. This would not have been possible without the strong support from the maritime establishments, industry partners and unions. We look forward to an even closer working relationship to bring the Singapore maritime industry to even greater heights,” said Dr Lam Pin Min, Senior Minister of State, Ministry of Transport and Ministry of Health.

Xu Yu Chang, President of The China Economic Information Service, a wholly-owned company of the Xinhua News Agency, says; “Shipping is an essential method of international trade transportation and has become a significant pillar in the evolution of globalisation. Over the years, the joint index by Xinhua and the Baltic Exchange has become a globally recognisable evaluation tool for shipping centres around the world. In the context of continued globalisation, I believe our index will play an even greater role in optimising the allocation of global shipping resources and promoting the scientific development of international shipping centres in the future.”

Based on the evaluation scores, Singapore shows strength in ship management and shipbroking services, while Hong Kong is benefiting from China’s Belt and Road Initiative and economicopportunities in the Guangdong-Hong Kong-Macau Greater Bay Area. London’s first-class services in shipbroking, legal and shipping finance were highlighted. As important cities in emerging economies, Shanghai and Dubai are catching up with London in their level of shipping development, and were ranked fourth and fifth respectively.

Table: Top 10 port cities of Xinhua-Baltic International Shipping Centre Development Index

Ranking201920182017201620152014
1SingaporeSingaporeSingaporeSingaporeSingaporeSingapore
2Hong KongHong KongLondonLondonLondonLondon
3LondonLondonHong KongHong KongHong KongHong Kong
4ShanghaiShanghaiHamburgHamburgRotterdamRotterdam
5DubaiDubaiShanghaiRotterdamHamburgHamburg
6RotterdamRotterdamDubaiShanghaiShanghaiDubai
7HamburgHamburgNew York – New JerseyNew York – New JerseyDubaiShanghai
8New York – New JerseyNew York – New JerseyRotterdamDubaiNew York – New JerseyTokyo
9HoustonTokyoTokyoTokyoBusanNew York – New Jersey
10AthensBusanAthensAthensAthensBusan

2019 Xinhua-Baltic International Shipping Centre Development Index report [PDF]

Source: The Baltic Exchange

NYK Introduces Japan’s 1st Additive for IMO 2020-Compliant Fuel Oil


Japanese shipping company Nippon Yusen Kaisha (NYK) and shipping and marine supplier Nippon Yuka Kogyo, a NYK Group company, have jointly developed a new fuel oil additive for low-sulfur compliant fuel-oil that meets SOx emission requirements.

Yunic 800VLS — patent pending — is Japan’s first additive for very low sulfur fuel oil (VLSFO), NYK said.

The additive is said to improve safety by helping to avoid troubles that may be caused by certain contents of VLSFO, according to the company.

A global sulfur cap will enter into force on January 1, 2020, and one way ships can meet the requirement is by using VLSFO – a fuel oil with a sulfur content below 0.5%. However, a wide variety of VLSFO is expected to be supplied because the manufacturing process differs from conventional heavy fuel oil, which has a sulfur content of up to 3.5%.

NYK and Nippon Yuka Kogyo thus began examining VLSFO at an early stage and have developed an additive that will lessen the likelihood of the VLSFO causing engine problems.

Specifically, Yunic 800VLS disperses asphaltene and paraffin (wax) specific within VLSFOs to suppress sludge formation.

The effect of Yunic 800VLS has been certified by ClassNK.

“The NYK Group seeks to be compliant with the 2020 SOx cap and enrich safe operations by introducing this new fuel-oil additive for VLSFO,” NYK said in a statement.

NYK in biofuel research and testing
Separately, NYK Line and Japan Engine Corporation (J-ENG) revealed they would start the research and development of biofuel using a test engine as one of the solutions for decarbonization.

Considered to be a carbon-neutral fuel, biofuel is a fuel derived from organic substance or biomass.

Biofuel has been attracting attention as an alternative fuel as one of the promising renewable energy toward decarbonization and one of the solutions against the energy crisis due to the depletion of natural resources such as fossil fuel.

In addition, since biofuel emits almost no sulfur oxides (SOx) in combustion, its use as a marine fuel is expected to be expanded.

In collaboration with NYK Line, J-ENG plans to carry out the engine test using the biofuel from GoodFuels, a biofuel supplier based in the Netherlands.