In this article, ESG thought leaders from Moore Stephens, share views on decarbonization challenges and the way forward for the Singapore maritime industry.

CHALLENGES FACED BY SINGAPORE MARITIME INDUSTRY TO DECARBONISE

Contributed by Moore Singapore

1.0 Singapore's Commitment to Maritime Decarbonisation


Ports are gateways for global trade and thus considered a catalyst for countries' economic development. Likewise, ships are also crucial for the world economy and trade. Thousands of ports all over the world handle seaborne trade. During the second half of 2020 and into 2021, world trade gradually recovered from the extended economic lockdown due to COVID-19, with maritime trade projected to increase by 4.3 per cent. Despite the fact that both ships and ports are pivotal in the world economy and fundamental to global supply chains, their being dependent on fossil fuels generates anthropogenic emissions, including environmental externalities, such as greenhouse gas (GHG) emissions and the air pollutants (Sulphur emissions (SOx), Nitrogen Oxide (NOx), and particular matters (PM), leading to climate change.

However, climate change remains a complex global challenge requiring concerted global action. According to the Paris Agreement, an absolute reduction of emissions is the primary outcome. Article 4.1 in the Paris Agreement highlights that net-zero can be achieved as a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases (GHGs) in the second half of this century; hence all stakeholders must work together to address this existential threat. Although Singapore contributes only 0.11% of global emissions, the maritime sector needs to continue to do its part to advance Singapore's national agenda on sustainable development and climate action outlined under 'The Singapore Green Plan 2030' launched in February 2021. Hence, it remains imperative for Singapore's maritime sector  to achieve net-zero emissions by 2050 if it's serious about meeting the Paris Agreement's 1.5 °Celsius goal.

This report aims to bring a whole-system understanding of Singapore's shipping, port and energy sectors, acknowledging the need for shipping companies to embed resilience and sustainable outcomes through this transformation process. This report delves further into the various regulatory frameworks to address decarbonisation, including the Task Force on Climate-Related Financial Disclosure (TCFD) framework to develop the actual reduction strategy. The following section highlights shipping companies' technical and operational measures to transition into green energy. Finally, a section is dedicated to exploring the various challenges and constraints faced by shipping companies in Singapore in adopting alternative fuels such as hydrogen.


2.0 Regulatory Framework to Support Decarbonisation

 
Global ports, including Singapore, must address their GHG emissions, including shipping, under the Paris Agreement to pursue the United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol. Therefore , several GHG reduction regulations related to shipping exist, relevant to the public and port authorities for consideration for implementation. Port authorities, as regulators, implement such provisions by enacting applicable regulations, making them legally binding, and monitoring compliance that support the goals of the Paris Agreement to reduce emissions to a state of net-zero emissions and beyond. Table 1 below are examples of international, national and international regulations and policies pertaining GHGs emissions.
 

Table 1: Regulations, policies and frameworks relevant to shipping GHG reduction

Scope

Examples

 
International

 

  • United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol.

  • The United Nations Convention on the Law of the Sea (UNCLOS).

  • IMO International Convention for the Prevention of Pollution from Ships (MARPOL)-(EEDI and SEEMP).

  • IMO GHG strategy (2018).

  • IMO fuel data collection system (2019).

 

 
Singapore Governmental Framework

 

  • Maritime Singapore Green Initiative, Green Port Program-Discount on port dues for exceeding IMO's EEDI and for the use of low carbon fuel.

 

  • Maritime Singapore Green Initiative, Green Ship Program-Rebates and discount on tonnage tax for exceeding IMO's EEDI and low carbon fuel use.

 
International Policy Framework (initiatives)

 

  • The International Association of Ports and Harbours (IAPH) and the World Port Climate

  • Initiative (WPCI) guides emissions reduction and carbon footprint.

  • The world port sustainability program (WPSP) focuses on UN sustainable development goals, e.g., climate change and energy efficiency.

  • World Ports Climate Action Program.

 
 
 

Note: This is a non-exhaustive list; thus, other regulations and frameworks may exist in support of the same goal.
 
Australia and Singapore have set out to create a $30 million partnership to accelerate the deployment of low-emission fuels and technologies, such as clean hydrogen, in maritime and port operations. This partnership recognises Singapore's role as a major global shipping hub and its ambition to emerge as a leader in the growing use of clean hydrogen.

Furthermore, PSA Corporation Limited (PSAC) and Jurong Port (JPPL) have collaborated with agencies and industry partners to develop a hydrogen-based ecosystem to adopt hydrogen fuel to be commercially viable. This project will pilot the commercial viability of tapping hydrogen in the power generation industry. When commercially viable, PSAC plans to deploy hydrogen-fuelled prime movers to transport containers that will contribute to Singapore's commitments under the UN's 2030 Sustainable Development Agenda, Paris Agreement and the Initial IMO Strategy and strengthen its value proposition as a leading global hub port and International Maritime Centre.

Based on these developments, the balance of this report will focus on Singapore shipping's transition to hydrogen-based low, carbon fuels. The analysis will focus on sustainability and cost challenges associated with hydrogen fuels that could play a pivotal role in diversifying into a low carbon fuel ecosystem among vessel operators in Singapore.
 

3.0 Ships' Technical and Operational Measures

 
Singapore is a major international maritime transport hub. The Port of Singapore is currently the world's second-busiest port in container throughput, with ship arrival tonnage exceeding 2.8 billion gross tons in 2021. Singapore is also one of the world's leading bunkering hubs, supplying over 50 million tonnes of marine bunker fuel to vessels that ply international shipping routes in 2021. When we consider the projected increase in shipping GHGs, meeting the IMO's ambitious goals is not straightforward and requires ships to implement radical changes in the adoption of decarbonisation technologies and alternative fuels, for example, but not limited to ammonia or hydrogen, which are not yet mature. In its drive to reduce GHG emissions, mainly CO2, ships usually tend to implement technical and operational measures listed in Table 2 below.

The strategies outlined under the Maritime Singapore Decarbonisation Blueprint 2050 indicate that technical and operational measures would reduce shipping GHG emissions by 40% and 70%. Measures include advanced design and speed for efficient fuel consumption, alternative fuel (hydrogen), and energy-saving technologies (IMO, 2015). While the technical measures have costs and require some engineering breakthroughs, the operational standards require low operating costs and investment with promising abatement potential (Wan et al., 2018).

On the other side of the spectrum, the Singapore port authority seems to have recognised the environmental externalities in their operations and logistics by implementing various measures and policies to reduce emissions. The port and public authorities (government, city municipality) may utilise policy and management tools to reduce shipping GHG emissions, among other pollutants, in the port area and beyond. To facilitate this process, the Maritime Singapore Decarbonisation Blueprint 2050 has outlined a target to increase investment in its technical and operational measures that vessels can utilise at the ship‐port interface, for instance, 'Onshore Power Supply (OPS) services. Table 2 below highlights the various technical and operational implementation schemes that can be introduced in Singapore ports based on national, regional and international environmental regulations.
 

Table 2: Ships' Technical and Operational Measures To Reduce GHG Emissions

Technical Measures

 
Hull and Propeller Measure

 
Energy-saving devices, stabilisers, becker rudder, bulbous bow, hull coating, hull cleaning robots (grooming) and air trapping fern, propeller trailing edge modification, electrification of propulsion through a pod propulsion system, hull performance monitoring techniques, air lubrication.
 

 
Machinery

 
Variable speed fans and pumps, advanced waste and heat recovery systems, dual engines (LNG, ammonia, hydrogen, methanol, etc.), hybrid diesel-electric engines, and engine de-rating.
 

 
Energy Saving

 
Energy-saving lighting such as LEDs, use of solar, photovoltaic, and wind energy (e.g., Flettner rotors), energy efficiency technologies, fittings of OPS, waste-heat recovery systems (e.g., Steam Rankine Cycle, Organic Rankine Cycle (ORC) and (Kalina Cycle), energy storage (e.g., batteries and supercapacitors).
 

 
Alternative Fuel

 
Sustainable biofuels, LNG, Hydrogen, Methanol, Ammonia, fuel cell, synthetic fuel.
 

 
Exhaust Treatment Technologies
 

 
Methane oxidation catalysts, carbon capture and storage (CCS).
 

Operational Measures

 
Optimisation Software

 
Weather routing, route optimisation, trim optimisation, fuel consumption data collection and analytics such as advanced data analytics and Artificial Intelligence for energy consumption optimisation (e.g., Artificial Neural Network (ANN)and other algorithms).

 
 
Ship Handling Measures
 

 
Slow steaming, speed reduction, virtual and just-in-time arrival.

 
Digitalisation for
Turnaround Time
Reduction

 
The utilisation of e-navigation, electronic data exchange with ports, integration with port community systems and single windows, use of big data, blockchains, Internet of Things (IoT), and internet broadband connectivity through mobile and satellite communications.
 

 
Others

 
Hull cleaning and propeller polishing, nuclear power, energy management and auditing systems.
 

Source: The International Maritime Organisation (IMO), 2018
 
Thus, the maritime decarbonisation agenda will bring about new areas of green growth for Singapore by facilitating shipping companies to implement both technical and operational measures, for example, in the development of alternative fuels and green technologies. To ensure that Singapore's shipping companies' net-zero targets translate into action that is consistent with achieving a net-zero world by 2050, the World Business Council for Sustainable Development (WBCSD) has proposed a six-step process to develop the first science-based targets (SBT) for the corporate sector to achieve net-zero targets which are aligned to detailed guidance launched during the Conference of Parties (COP26) in November 2021 and the Task Force on Climate-Related Financial Disclosure (TCFD) framework.
 
Table 3 details the six-step SBT that can help companies plan and execute their journeys to achieve net-zero emissions before 2050.
 

Table: 3 Six steps shipping companies can take to reduce GHG emissions

STEPS RECOMMENDATIONS
1 Calculate your carbon footprint and become familiar with the significant dangers and opportunities.
 
2		 Establish emission reduction targets in accordance with the carbon mitigation hierarchy and, whenever practicable, in accordance with science. Consider the level of ambition, for example, a mid-term aim of considerably below 2°C, 1.5°C, or a longer-term net-zero target with consistent interim milestones.
 
3		 Reduce your company's absolute carbon footprint first within its operations and supply chain.
 
4		 Neutralise unavoidable residual emissions in the company's supply chain by permanently removing carbon from the atmosphere or using quality, permanent carbon removal credits.
 
5		 Compensate for unavoidable residual emissions in the company's supply chain by permanently removing carbon from the environment or utilising high-quality, permanent carbon offsets.
6 Disclose the progress of your journey YoY for steps 1 to 5.

Source : World Business Council for Sustainable Development (WBCSD)
 

4.0 Meeting Growing Demand for Alternative Energy

Singapore port terminal operators aim to achieve at least a 60% reduction of total emissions from port operations by 2030 compared to 2005 levels and net zero emissions by 2050. The demand at Singapore hub ports supporting green shipping could be supplied in several ways, including fuel locally generated from renewable energy such as hydrogen. Table 4 below highlights Singapore shipping companies' key challenges and opportunities to shift to alternative energy.

 
Table 4: Challenges for Shipping Companies to adopt Green Technology

ISSUES

Key feasibility challenges

 
Supply Constraints

 
In the short to medium term, Singapore's renewable supply will be constrained, often competing with more efficient uses of indirect electrification. Supply from the local grid will, in many places, not yet be fully decarbonised. The market availability of alternative energy such as hydrogen could be a key constraint to development in the short term. However, suppliers are investing in the supply chain to increase production capacity.
 

 
Operational Feasibility

 
Though the in-port infrastructure in Singapore is small compared to the production facility, the operational feasibility of environmental safety and integration with other port operations may be critical to the overall feasibility of hydrogen as a future fuel. A standardised approach between ports and shipping companies will be vital.
 

 
Local Renewable Energy Generation Facilities

 
Dedicated renewable energy generation facilities in Singapore may require large spatial requirements. Marine facilities such as floating solar or tidal lagoons could become favourable.
 

 
Integrated industrial Hubs

 
Reformers used to produce hydrogen are non-modular, making the uncertain demand picture more challenging to manage. Creating integrated industrial hubs to supply multiple sectors could help Singapore appropriately manage risk.
 

 
Cost

 
 
Although this shift to hydrogen could unlock supply at scale in the short term, the fluctuating costs of natural gas as a feedstock and uncertain costs of long-term carbon sequestration could render this option uneconomical for Singapore. Exploiting opportunities for repurposing existing infrastructure will be vital to reducing costs.
 
 
 

 
Demand Uncertainty

 
The demand for hydrogen fuel for shipping has significant uncertainty in Singapore, particularly in the medium to long-term.
 

Source: The Maritime Singapore Decarbonisation Blueprint 2050 & Arup Report
 

5. Conclusion and Discussion


To conclude, shipping decarbonisation is a critical component of global climate action. Its international nature, high relative whole-life cost, the uncertainty of technology pathways, and vessel's long lifespan make it a particularly challenging area. At the same time, there is a huge opportunity to create a resilient and low carbon shipping system in Singapore while realising co-benefits for people and the planet.

However, shipping companies in Singapore can also reference the Task Force on Climate-Related Financial Disclosure (TCFD) framework to develop the actual reduction strategy. The TCFD framework outlines potential emission reduction opportunities that should be identified on a scope-by-scope, item-by-item basis before planning how a possible strategy could work within a set target timeframe. The crux of the matter is that the natural solution for the maritime sector differs per sector and scope. Still, the TCFD framework broadly includes energy efficiency measures, including solutions to decarbonise cooling or heating systems, switching to renewable energy/low-carbon electricity generation and supplying where feasible stakeholder engagement such as with suppliers and customers. It could also include charging internal carbon pricing, which can be utilised to undertake further reduction measures or purchase carbon credits.

Thus, shipping companies in Singapore should frequently and critically review the available emission reduction pathways and solutions. As the renewable energy sector evolution demonstrates, technologies or solutions previously considered expensive or not at scale may become easier to adopt due to technological developments, falling costs, or new incentives.