Singapore shipping industry: addressing environmental concerns

MPA Maritime Roundtable
Business Times 15 Oct 08;

Specialists from various segments of the shipping industry give their take on the subject and suggest how to tackle the issue

OVERVIEW

THE issue of shipping and the environment is one that tends to polarise opinions. Singapore does its part as a responsible flag state through access to and enforcement of international regulations such as MARPOL in particular (with emphasis on Annex VI in relation to climate change) as well as adopting good practices at port/terminals and pushing research and development in clean technologies.

The third of the MPA Maritime Roundtable series gathers expert viewpoints on efforts to address the problem as well as some commercial/market-based solutions. The Business Times spoke to a panel of specialists involved in various segments of the industry to get their take on this important issue.

Vincent Wee: What are the environmental challenges confronting shipping?

S S Teo: The challenges facing us are dealing with emissions like NOx and SOx and greenhouse gases. Shipping - although still the most efficient means of transport - has been an easy target to blame for causing the emissions. We all have to care about the environment if we want to develop together. Also, whether the refining industry is able to cope with the latest requirements. We all need to work together and the regulatory bodies need to be practical in seeing what is feasible to be implemented. The industry also needs to improve our image more. Crew shortages are also an issue that needs to be addressed as the increase in world trade will inevitably lead to more ships and the need for crew to run them.

Tan Puay Hin: It is important for shipping to remain an environmentally friendly and energy-efficient mode of transport. The challenge is to identify and adopt realistic, pragmatic and workable solutions that improve the environment without impeding trade and commerce. Some of the measures introduced for the port industry seek to control emissions and minimise pollution, enhance energy-efficiency, and use greener fuel alternatives.

Isabella Loh: The issues that confront the shipping industry are not much different from those confronted by all other transport industries. Shell finds it helpful to describe this issue in terms of three 'hard truths'. The first is that global energy demand - for every use, including transport - is accelerating. The second is that resources are becoming more difficult to access and develop. Innovation will be important to keep energy supply matching demand. Government initiatives such as the EU short-sea and 'motorways of the sea' proposals are good examples of such action.

This is because, on a per ton, per mile basis, shipping is usually the most environmentally friendly mode of transport. New thinking is also urgently needed to deal with the third 'hard truth' - the need to contain the carbon dioxide impact of energy production and use. Clearly, there is much to be done, as it is generally agreed that we need to reduce CO2 levels in the atmosphere if we want to avoid climate change impacts beyond those we are already seeing. Currently, only around 30 per cent of marine fuel is used to power the vessel, the rest is dissipated as heat. Much can be done to halve the use of energy.

Tay Joo Hwa: Ballast water management, reduction of shipboard emission of particulate matter; green house gases and SOx, ocean dumping and oil spills.

Tim Wilkins: It would be fair to say that reducing greenhouse gas emissions from shipping is today's big focus, but the industry is continuing with a fine balance in handling a raft of environmental issues, some well known, others not so well known. Ship operators today have to determine how best to balance the requirements of, say, ballast water exchange with that of improving energy efficiency on board. This balance is a tough task and one which the regulators seem to be slow in understanding.

Vincent: What is shipping already doing to address environmental challenges, including climate change?

Mr Teo: For example, we are moving to burning low sulphur-content fuels and adhering to sulphur emissions control areas. Also, in terms of ballast water regulations where we cannot pump out in the port. We are also working with engine makers to see if there are new technologies available to reduce sulphur emissions.

Mr Tan: A global challenge requires a global solution. The International Maritime Organisation (IMO) as global regulator of the shipping industry remains an important platform to address environmental challenges. In recent years, the IMO and its member states have taken steps to safeguard the environment. The concerted efforts have focused on tackling air pollution, among other areas. For example, the provisions contained in Annex VI of the International Convention for the Prevention for Pollution from Seas play a significant role. They set limits on sulphur and nitrogen oxide emissions from ship exhausts and prohibit emissions of ozone-depleting substances.

Ms Loh: The shipping industry, together with governments, regulators, interest groups and industry bodies, has taken a proactive approach to address environmental challenges. The International Maritime Organisation's Marine Environment Protection Committee agreed to provide a clear way forward on the issue of sulphur emissions with its MEPC 57 agreement due for formal adoption this month. Essentially, they prescribe phased reductions in the permitted sulphur content of marine fuel used in SOx Emission Control Areas, or SECAs. They also specify phased reductions in the global cap on sulphur content in marine fuel used outside SECAs. Through recent initiatives like this in the International Maritime Organisation, the industry has embarked on a way forward where emissions related to SOx, NOx and particulate matter will all be dealt with by means of technology and regulations.

Prof Tay: Mostly through the efforts of IMO, shipowners could be more pro-active and educate the public.

Mr Wilkins: Tanker shipping has always been a leading sector when it comes to adapting and resolving environmental challenges. The industry's efforts can be seen on three levels: within individual companies it is clear that increasing resources are being allocated to assessing and improving energy efficiency on board tankers. Intertanko members are working collectively on a best practice document which will see an approved list of recommended measures for implementation by the Intertanko membership aimed at reducing emissions and improving efficiency on board tankers. This will be developed alongside a detailed guidance document which will present the measures listed in a manner which facilitates their implementation; the industry associations are working to assist the IMO in its endeavours to formulate and agree upon a design and operational index for ships. In addition, the industry associations at the IMO have committed to the development of a model Ship Efficiency Management Plan (SEMP) which the IMO member states wish to see as a mandatory element in relation to the IMO's work on greenhouse gases.

Vincent: Are shipping's environmental efforts and credentials widely known? Why? Why not?

Mr Teo: We need to let people know how important shipping is to world trade. Shipowners have a purpose to serve world trade which could not have grown without shipping. We also need to engage people from outside the industry to help them understand what we are doing. For example, we can arrange visits to ships to see how modern they really are.

Mr Tan: I believe there is room to engage the public at a broader level to publicise shipping's environmental credentials. Achievements made on this front can be further highlighted at public forums and through mass publications.

Ms Loh: It is fair to say that these efforts to proactively find solutions to the environmental challenges that the industry faces are known largely only to specific interest groups, regulators and within the shipping industry. This is not surprising as the industry has tended to work through the IMO, a specialised agency of the United Nations.

Prof Tay: Not widely known because most laymen are not aware of the issues relating to the shipping industry, perhaps due to the lack of public education.

Mr Wilkins: Shipping is a largely unnoticed industry in the first place. To increase awareness of the industry is a challenge in its own right. To then understand the more detailed elements of the industry in relation to its environmental performance and challenges is even more difficult. Intertanko is committed to the enhancement of the tanker industry's image and feels it is important to engage on a more broader level in terms of the environment.

Vincent: What more can shipping do in terms of addressing environmental concerns and generating greater awareness of its environmental credentials?

Mr Teo: We have to see how we can improve construction of ships, better educate our officers and crew and do proper risk management so that we try to prevent accidents as much as possible and when they happen, try to ensure no loss of life and minimise the impact on the environment.

Mr Tan: Carbon emissions and fuel efficiency are linked. Going forward, measures such as ship design, that is, improvements to hull and propeller designs, and engine technology, use of alternative fuels and a system for ships to evaluate their performance with regard to GHG emissions could be further explored and developed. The move by IMO to develop a regime that addresses the emission of greenhouse gases from ships is a positive step.

Ms Loh: The shipping industry has done very well so far in proactively addressing environmental concerns and issues. Once the emission standards proposed by the MEPC are ratified, perhaps shipowners and operators can begin to actively engage their customers in sharing information about the activities they are undertaking to address environmental concerns.

Prof Tay: More publicity on the efforts and dutiful accounts of its contribution and reduction efforts.

Mr Wilkins: There are two elements of importance: Enhanced awareness of the industry in schools and colleges. It is then essential to ensure that the shipping industry is ready to assist in sharing its knowledge; maintaining a commitment to the environment. The industry needs to continue moving with the times and the changing understanding of the world's oceans and atmosphere.

Vincent: How has PSA contributed towards addressing the environmental challenge? Are there other measures in the pipeline?

Mr Tan: With long-term sustainability in mind, PSA has adopted a multi-pronged approach. Firstly, to inculcate a mindset for energy conservation among all staff, energy-efficient awareness campaigns and messages are disseminated. Secondly, for buildings and infrastructure, we conduct regular audits to identify areas for energy conservation and tap natural lighting for our port infrastructure. Thirdly, on port equipment, our recent purchases of rubber-tyred gantry cranes (RTGs) have electronic-controlled injection engines, and power converters that have better fuel efficiency. For our prime movers, they are either Euro III or Euro IV compliant. At the national level, PSA works closely with the MPA, and the National Environment Agency to explore more green initiatives for the port industry.

Vincent: How is the industry responding to greater calls for cleaner marine fuels in response to concerns about global warming and increased greenhouse gas emissions?

Ms Loh: Aside from low sulphur fuel oil (LSFO), we have conducted tests using GTL gasoil as a replacement for marine gasoil in a Caterpillar marine auxiliary engine during 2007. In conjunction with TESO, a ferry operator on the Wadden Sea, has been running on pure GTL produced by our plant in Malaysia. Tests have shown that GTL gasoil results in significantly reduced emissions with benefits in NOx, SOx and particulate matters. Additionally, as GTL products are biodegradable and have improved eco-toxicity performance they are far better suited for use in environmentally sensitive areas. Gas-to-liquids is one example of using energy sources more intelligently. Shell is also discussing with OEMs on engine technology to find more sustainable solutions for the industry.

Vincent: How might technology be harnessed by the shipping community to address the environmental challenges?

Prof Tay: Through reduction of GHG, PM and SOx emissions, better ballast water management technologies, better satellite tracking and monitoring of ships' activities on open sea.

Vincent: What are the particular environmental issues that the tanker operators face?

Mr Wilkins: Environmental issues today are primarily cross-sectoral issues; invasive species, whale avoidance and, of course, greenhouse gas emissions are challenges which all sectors of shipping need to address. The tanker industry and Intertanko are still striving for zero pollution and one key aspect of this is zero oil pollution. This, of course, cannot be achieved without the commitment from the shore side, namely, the provision of adequate port reception facilities for annex I and II cargo residues.

PARTICIPANTS
in the Roundtable

Moderator:

Vincent Wee, correspondent, The Business Times

Panelists:

# SS Teo, president, Singapore Shipping Association

# Tan Puay Hin, chief operating officer, PSA Singapore Terminals

# Isabella Loh, chief executive/vice-president, Global Shell Marine Products, and chairman, Singapore Environment Council

# Prof Tay Joo Hwa, head, Institute of Environmental Science and Engineering, Nanyang Technological University

# Tim Wilkins, regional manager, Intertanko Asia-Pacific

Heeding siren calls for CSR
Business Times 15 Oct 08;

Shipowners face an uphill but essential task of promoting sustainable practices, reports VINCENT WEE

IN Asia, where corporate social responsibility (CSR) programmes are often seen as costs rather than benefits, getting shipping companies to embrace the idea of sustainable practices is always going to be a challenge, even more so as the economic climate takes a turn for the worse.

But the attitude towards CSR has changed a lot over the past 10 years, noted NOL corporate affairs vice-president Dave Goodwin. 'I think it's surprising just how active Asian companies are and have become over this decade,' he said. 'I feel that there is a strength of conviction in Asia now that's impressive and equal to what you see in the West.'

But even before talking about CSR, perhaps the more fundamental issue that needs to be addressed is whether it is possible to get people to care about shipping in the first place. 'Are we to some extent deceiving ourselves that we can ever get the general public to care that much about shipping?' asked BW Shipping managing director Andreas Sohmen-Pao.

Mr Sohmen-Pao was sharing his views along with other key shipping industry executives at the Seatrade Sustainability Seminar yesterday. Comparing shipping to the fibre-optic cable infrastructure that forms the backbone of the Internet, he said that shipping is not as obvious a factor in people's lives as aeroplanes or cars which they regularly experience at a personal level.

With this being the case, often the only time shipping comes into the public eye is when something bad happens. There is a need to persuade the shipping community that there are benefits to being seen and being more open and transparent than they have been in the past, said Hong Kong Shipowners' Association president Arthur Bowring.

Prescriptive regulations are not the answer as they only tend to lead to loopholes, said Mr Bowring. And to expect shipowners to take part in voluntary schemes there must be a reason for them to want to comply, he added. What it will ultimately boil down to, however, is what Mr Bowring calls the 'WIIFing factor' - in other words, 'What's in it for me?'. Whether it's to retain customers or to look better to the public, all voluntary schemes must have a reason for people to want to comply.

This drive could come from customers or from managing directors of companies who call for compliance with sustainable practices. 'The great incentive really comes from our customers; we deal with the Walmarts, Nikes and Ikeas of this world and they won't put up with it,' said Maersk Asia-Pacific chief executive officer Jesper Praestensgaard.

Apart from customers' demands, self-motivating change is also a very powerful force, said Mr Sohmen-Pao. But ultimately it cannot be at the cost of profitability, he emphasised. 'Enlightenment is nice as long as you are not being driven out of business by competitors because they are not doing the same as you and have a lower cost base or higher income because of that,' Mr Sohmen-Pao quipped. Sustainability and cost need not be in contradiction and, in fact, can lead to savings for shipowners.

Giving the example of some of the fuel-saving measures mentioned by National Iranian Tanker Company managing director Mohammad Souri earlier in his keynote speech, Mr Sohmen-Pao said: 'Sustainability which brings economic benefit is much more lasting than hoping that people are going to do things just out of goodwill.'

With worsening conditions also arises the issue of the strength of owners' commitment to the initiatives they've espoused when times were better, cautioned Mr Bowring. 'Do we have the commitment in our industry to do what we said we would do for crew, for stakeholders, for the environment in a market that might well be cash-flow orientated rather than profit orientated?' he asked.

Ultimately, however, they might not have much of a choice. Among the push factors is the need to attract talented young people who are looking for meaningful jobs and they do not want to be associated with companies that have unsustainable and unethical practices, noted Mr Praestensgaard.