Q&A: Singapore leads push for marine decarbonisation

Argus spoke to Ashish Anilan, assistant director at classification society Bureau Veritas Marine & Offshore, about the expected trends and the impact of EU-led emissions compliance regulations on the Asian maritime sector this year.

How will Singapore impact the push for maritime decarbonisation in the coming few years?

Though Singapore's position as the world's largest bunkering hub attracts decarbonisation initiatives, its true impact hinges on concrete actions. Initiatives like the Singapore Green Plan 2030 translate sustainability goals into action plans. Recent expressions of interest in electric harbour craft and bunkering for cleaner fuels like methanol and ammonia demonstrate Singapore's commitment to clean energy solutions and alternative fuel adoption. Additionally, digital and green corridor initiatives foster regional collaboration, supply chain resilience and operational efficiency, all crucial for achieving broader sustainability goals. By embracing concrete action, Singapore is showing the way as a true leader in maritime decarbonisation and this can inspire other ports and hubs across the world.

What are your expectations for 2024?

The maritime sector in 2024 still faces continued fuel price volatility, increased scrutiny on alternative fuels and a push for infrastructure development. Policy-wise, the implementation of EU regulations and potential expansion of regional or international carbon pricing mechanisms are anticipated. At IMO we will see the first year of CII [Carbon Intensity Indicator] verification and conversations on market-based measures.

Shipping is a "hard-to-abate" sector and the inherent fragmentation makes decarbonisation a harder challenge. Do you think mandates will drive the change or market economics?

Despite being a highly fragmented and a "hard-to-abate" sector, the shipping industry presents a unique opportunity for cost-effective emissions reduction schemes and efficiency improvement plans. It is crucial to recognise that international shipping primarily functions as a commodity mover, and its decarbonisation plays a key role in both supply chain resilience and the life-cycle emissions footprint of the cargo it carries. While regulations and mandates can offer valuable measurement tools, market forces often drive the primary change, facilitated by commitments from cargo owners and incentives provided by financial institutions.

Will the implementation of EU ETS, CII ratings and the upcoming EU FuelMaritime regulations be a deterrent or pave the way for fuel adoption by shipowners in Asia?

While the upcoming EU regulations will initially increase compliance costs for Asian shipowners and their charterers engaging in European trade, they will also create multifaceted pathways towards cleaner fuel adoption. The premium for the cleaner fuels will be justified by the penalties imposed by market-based-measures. Alongside cost-effective efficiency measures, a long-term strategy incorporating supply chain collaboration and effective cost sharing mechanisms will be essential for these regulations to truly help incentivise the energy transition. Additionally, the broader Asian market may benefit from the potential harmonisation of environmental regulations spurred by the European framework.

By Mahua Chakravarty