Singapore — Thailand's Precious Shipping Public Company Limited is on track to curb its carbon footprint, with the company already achieving 9.941 grams of CO2 emitted per ton-mile of cargo carried, while also mulling over zero-carbon marine fuels such as ammonia for its fleet, after successfully transitioning to the International Maritime Organization's global sulfur limit mandate, managing director Khalid Hashim said.
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The IMO's GHG emissions targets "are eminently achievable targets," Hashim told S&P Global Platts in an interview.
In April 2018, the IMO laid out its strategy on GHG emissions, aiming to cut the shipping industry's total GHG emissions by at least 50% from 2008 levels by 2050, and reduce CO2 emissions per transport work by at least 40% by 2030.
"All the IMO has to do is to state clearly -- make into law -- that any ships keel laid after Jan. 1, 2025 must be a zero-carbon emitting vessel," he recommended.
That would give the engine builders/shipyards the required goal-based lead time to get their houses in order and start manufacturing and delivering the required quality and quantity of ships to meet IMO's goals, he said.
Some of the initiatives are already being undertaken in this regard, Hashim said, citing The Castor Initiative as an example.
The Castor Initiative comprises MISC Berhad, Lloyd's Register, Samsung Heavy Industries, MAN Energy Solutions, the Maritime and Port Authority of Singapore, and Yara International, who have partnered for the joint development of an ammonia-fueled tanker.
"Now if the law-making body like IMO put their considerable regulatory force behind such an initiative... it would solve this problem, and you would have no issues at all," Hashim said, adding that this would ensure a level-playing field for those concerned.
The playing field could be further smoothened by enacting a similar law like the Oil Pollution Act of 1990, he said.
The OPA90 set strict regulatory and liability controls to protect and clean up the marine environment from oil spills.
It is advisable to put a deadline for fuel burning ships to be laid to rest at recycling yards, which would allow existing fuel burning ships to be phased out in an orderly manner, while zero emitting ships are phased-in in a similar time frame, thereby making the transition smooth with no disruption to world trade at all, he said.
Once you have the appropriate laws in place, the bunker industry would have a time-based, goal-oriented vision and would rise to the challenge to have the necessary infrastructure in place before zero emitting ships hit the market, he said.
"All you need is the moral courage and backbone to formulate and enforce such a law," he added.
Precious Shipping, for its part, "will follow the law and buy/build ships that conform with the latest legislation," Hashim said, adding that the company could potentially opt for ammonia as a marine fuel, "but time will tell".
At the end of 2020, the company's fleet comprised 36 ships on the water with an aggregate capacity of 1,585,805 DWT.
IMO transition-case for scrubbers
Precious Shipping has decided not to install scrubbers on any of the ships in its fleet, Hashim said.
"If we were to examine the world fleet in our sector -- those geared ships that are between 10DWT-69,999 DWT -- then you would see that just 6% have installed scrubbers on their ships," Hashim said.
Scrubbers simply transfer air pollution into the sea and do not remove pollution in that sense, Hashim said, adding that there have also been some well publicized cases of scrubbers having failed in service.
Moreover, many countries around the world have banned the use of open loop scrubbers, with Singapore's MPA having taken the extraordinary step of labeling the discharge from open loop scrubbers as toxic waste.
Hashim noted that scrubbers are also costly to maintain and all the calculations based on the Hi-5, or HSFO-LSFO, spread are theoretical at best.
This comes even though some industry sources opine that widening spreads will likely support retrofits and new-build installations.
In Singapore, the world's largest bunkering port, the price differential between HSFO and Marine Fuel 0.5% sulfur averaged $298.90/mt in January 2020 as the market was transitioning to the IMO2020 mandate. The price differential narrowed to average as low as $60.32/mt in September, but recovered to average $103.33/mt in January 2021, Platts data showed.
"About 94% majority in the geared sector of ships in the world fleet, that we belong to, have deliberately taken the moral high ground of refusing to install scrubbers on their ships, and that, I am confident, will not change even if the Hi-5 spread were to increase," Hashim added.