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Cargill: It’s time to double down on efficiency technology

The shipping industry needs to take a punt on efficiency technology now and work out the detail later, Cargill Ocean Transportation president Jan Dieleman, says in an interview

Shipping must get comfortable with being uncomfortable when it comes to climate investments. Unless there is a significant shift in the willingness of industry stakeholders to back projects and see them scale up, the industry’s current misalignment with emissions reduction targets will only widen

“WIND, biodiesel, new energy sources… we need them all and we need them now,” says Cargill Ocean Transportation president Jan Dieleman.

A week after the voluntary climate data reporting scheme Sea Cargo Charter disclosed the detail of shipping’s shortcomings in meeting international greenhouse gas emissions reduction targets, Cargill’s shipping chief and chairman of the Global Maritime Forum has been busy stressing that there is no single solution to the industry’s climate challenges, but investment is needed urgently across a range of technologies.

With a backdrop of post-coronavirus growth coupled with supply chain disruptions, even the most ambitious companies replete with green programmes and technology investments have struggled to show progress.

The growth of economies, higher demand in freight, port congestion and higher sailing speeds of the global fleet all contributed to increased emissions last year. The results of the Sea Cargo Charter reporting revealed the programme’s signatories to be well above where they needed to be over this period to maintain the trajectory of emissions cuts in line with international targets.

However, without the efforts and investment already deployed, that picture could have been much worse.

“We are 5.9% above the required Sea Cargo Charter trajectory for 2021, this is an increase year on year,” said Mr Dieleman. “But I am convinced that this figure would have been higher without the interventions we have implemented to date.”

Cargill, on June 21, said a Mitsubishi Corp bulk carrier it has chartered — 80,962 dwt Pyxis Ocean (IMO: 9798856) — will be the first ship fitted with BAR Technologies’ WindWings wind sail technology expected to generate average fuel savings of 30%.

The project, kicked off in 2019 with Yara Marine Technologies, Mitsubishi Corp’s shipping arm MC Shipping and partially funded by the European Union’s Horizon 2020 Project, is just one of around a dozen shipping efficiency projects currently being trialled by Cargill.

“We strongly believe it has to be a portfolio of solutions and you can’t just sit there waiting for one thing to solve it all,” said Mr Dieleman.

Even the most optimistic projections envisage 5% of fuel being zero carbon by 2030, which implies a significant and long-term balance of efficiency measures applied to conventional fuels to run alongside longer-term investments in zero-carbon alternatives.

“This idea that we can reach 5% zero carbon by 2030 basically means that in the best-case scenario 95% of the ships are still running on what we have today and I think a lot of people forget that. That’s why it’s so important that we invest in energy saving devices and supply chain optimisation now and we don’t just sit there and wait for the new fuels to arrive — we still have a big part of the fleet that we just have to deal with.”

Mr Dielemen characterises the current period of technology trails as an industry in limbo where there is increasing frustration from stakeholders “waiting for something to happen”. Despite Cargill’s determination to continue investing with partners on projects there is still a huge amount of hesitancy and reluctance to commit.

“We’re sitting there in this kind of in the middle period, where people will say they want to do something, but I don’t know if they're going to pay for it. I don't know if they're going to underwrite it. I don’t know if it’s just going to be a one story to look good or whether this is a project with some real scaling behind it?”

Another frustration from Cargill is their inability to control the efficiency of their spot market exposure. The commercial reality of the market requires pragmatic choices where climate is not the only factor in play.

“Where we are in control of our long-term chartered fleet, we have been doing very well managing the climate alignment of our operations. But the spot market is much, much harder. You have to deal with the ships that you have been dealt with and then suddenly, your climate alignment score is just through the roof.”

Ultimately, however, Mr Dieleman argues that without companies prepared to invest in projects that do not currently have the guaranteed outcomes that most investors are looking for, progress will not be made.

“Take a methanol-powered ship — you want to know exactly if the methanol is available. You want to know exactly what the price is going to be and you want to know that someone is actually going to pay for it on the receiving end, right? The problem is we will not find out if that fuel is going to be available in the next couple of years. There are too many question marks around it let alone the pricing of that. If somebody can tell me what green methanol was going to cost in two years’ time, good luck, because I think we just we just don’t know.”

That mentality, he argues has seen the industry running in circles unable to make progress.

Cargill has instead opted to take a punt to get trial projects onto the water and work out the details later, at least on a limited number of projects.

“If we don’t do this, we will be sitting here in five years’ time still arguing if ammonia is going to be X or Y or if it is going to available here or there and we will not have made any progress. Taking a leap like this is something the industry is not used to and it’s uncomfortable.

“But you can be uncomfortable and sit back and let other people do it, or you find it uncomfortable and at least you're going to try to do your bit to progress this this whole thing. That’s the camp that we’re in.”

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