The Business Times recently expressed their thoughts on the green incentive programmes that Maritime and Port Authority of Singapore (MPA) have put in place just last week. The article is in full below.
Shipping in Singapore: Going Clean and Green
Last week, the Maritime and Port Authority of Singapore (MPA) launched a comprehensive package to promote environment-friendly shipping.
Now, before we go any further I would make it absolutely clear that this is the right thing to do – on all sorts of levels. It is right for Singapore’s own environment and for the health of the global environment.
Moreover, basing the Maritime Singapore Green Initiative on incentives rather than bans or penalties is definitely the right approach. The International Maritime Organization (IMO) provides the minimum standards, and to avoid a hotchpotch of national and regional rules, IMO should be the only regulator of the global shipping industry.
Because Singapore has such a pivotal role in global shipping, the measures announced are likely to have a significant effect.
Raymond Lim, Minister for Transport and Second Minister for Foreign Affairs, summed up the objectives of the initiative thus: ‘To encourage companies that are ready or thinking about undertaking environment-friendly shipping practices above and beyond what is IMO-mandated, MPA will invest up to S$100 million over the next five years in the Maritime Singapore Green Initiative. This initiative underscores Singapore’s commitment as a responsible flag and port state to clean and green shipping.’
While you might be thinking that going green and clean is a very straightforward commitment, the action is to some extent a brave move into a complex area.
The initiative comprises three programmes: Green Ship, Green Port, and Green Technology.
MPA says that under the Green Ship Programme targeted at Singapore-flagged ships, MPA will provide incentives to ship owners who adopt energy efficient ship designs that reduce fuel consumption and carbon dioxide emissions.
Singapore-flagged ships which go beyond the requirements of IMO’s Energy Efficiency Design Index (EEDI) will enjoy a 50 per cent reduction of Initial Registration Fees (IRF) and a 20 per cent rebate on Annual Tonnage Tax (ATT) payable.
That is fine but the EEDI is still rather controversial with debate continuing particularly on its application to some classes of vessel, including ferries, which require large reserves of power for occasional use. With luck and goodwill, these issues should be ironed out at the IMO Marine Environment Protection Committee meeting in July.
There are those, however, who are worried that EEDI will turn out to be a blunt instrument.
There are other ways of cutting fuel consumption, and of reducing CO2 emissions. A recent study found, for example, that fluoropolymer foul release technology can reduce greenhouse gas (GHG) and other emissions by an average of 9 per cent.
Maybe in the long run, a more sophisticated way of measuring energy efficiency can be developed.
The Green Port Programme is aimed at encouraging ocean-going ships calling at the Port of Singapore to reduce the emission of pollutants like sulphur oxides and nitrogen oxides. Ships that use type-approved abatement/scrubber technology or burn clean fuels with low sulphur content beyond MARPOL requirements within the port can enjoy a 15 per cent reduction on port dues payable.
It is interesting that the announcement mentions scrubbers first and then ‘clean’ fuels. That does, though, reflect the way thinking is changing in the shipping industry worldwide.
Owners considering fitting scrubbers would be well advised to read a new US publication, written by Glosten Associates for the government-funded Ship Operations Cooperative Program (SOCP). This well-researched guide goes a long way towards explaining the considerations operators need to bear in mind.
The author of the guide, Kevin Reynolds, stresses that each ship operator will need to consider the discussions for and against each exhaust gas cleaning system (EGCS) (scrubber) in the light of their own specific situation.
The guide says that ‘ship operators considering this option should conduct an individual analysis, and consider a prototype installation in the near future’.
The guide notes that the cost of 0.1 per cent sulphur (the 2015 level for IMO emission control areas) distillate fuel oil has historically been 50 per cent higher than high-sulphur marine-grade residual fuel oils.
An analysis of fitting scrubbers on three ship types, each of which operated at least partially within an ECA (emission control area), predicts net present values of between US$5 million and US$20 million, and internal rates of return of between 20 and 53 per cent.
This assumes operations from 2015 through 2025, and an 8 per cent fuel escalation rate. If fuel prices were to escalate at a rate of 11 per cent annually, the net present value would increase almost 50 per cent.
The guide concludes: ‘These cost savings are so significant that some ship operators may find installing an EGCS a competitive necessity.’
Perhaps the most important aspect of the whole initiative is the Green Technology Programme, which aims to encourage local maritime companies to develop and adopt green technologies through co-funding of up to half of qualifying costs. Singapore is already doing well in this area and there is bound to be lots of scope for innovation.
In this regard, the Memorandum of Agreement between Sembawang Shipyard has signed and Ecospec Global Technology to provide ‘customised and greener environmental solutions to the marine and offshore industry’ is well timed.
Ecospec’s CSNOx system is the world’s first emissions abatement system capable of removing carbon dioxide (CO2) emissions from greenhouse gases. At the same time, it also removes – in a single system and in one process – sulphur dioxide (SO2), nitrogen oxide (NOx) and other pollutants, without the use of harmful chemicals.
As I understand it, CSNOx is still awaiting type approval. The sooner the better because this Singapore-developed technology has the potential to provide much of the solution to the problems addressed by the Maritime Singapore Green Initiative.
Image taken from Observe the Banana