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Q&A: Monjasa’s Jesper Nielsen on how bunker traders can help decarbonize shipping

22 December 2021 Max Tingyao Lin

A growing number of multinational firms have started to establish targets to reduce emissions across their value chains, also known as Scope 3 emissions, in their bids to help limit climate change. And they will need to tackle emissions from maritime transportation, with over 90% of international trade being facilitated by ships.

Many refer to shipping as a hard-to-abate sector. And it's a complex equation. On one hand, marine engines powered by low or zero emissions fuels are still under development. On the other, shipowners generally purchase marine fuel from trading houses rather than producers, so calculating lifecycle emissions for fuel combustion can be a difficult task.

With a fleet of 25 bunkering vessels and a supply volume of 4.9 million metric tons last year, Monjasa is one of the world's largest bunker traders. The Danish company has partnered with Deloitte to prepare its first annual carbon account, which will be published in April 2022. Having started to track lifecycle fuel emissions, Monjasa said it is offering its clients—mainly shipowners—reports on CO2 emissions from their fuel orders in an effort to help the industry decarbonize.

Net-Zero Business Daily spoke with Jesper Nielsen, group responsibility director at Monjasa, on shipping decarbonization and the company's climate initiatives.

Net-Zero Business Daily: How can a bunker trader help decarbonize shipping, in your view?

Nielsen: Global bunker suppliers like Monjasa hold a special role in the supply chain between upstream partners [like fuel producers] and downstream customers. In the future, our industry will be providing the infrastructure for decarbonizing shipping, and until then our industry role allows us to bring full transparency on the environmental impact of fossil fuels delivered to the maritime industry.

In oil and shipping, we are all connected, and only by being able to measure our joint impact on the environment and climate will we be able to manage and minimize it. In this way, and by offering our logistics knowledge to the industry, we will be able to support the transition towards alternative fuels [that emit less].

Net-Zero Business Daily: What are Monjasa's own decarbonization initiatives?

Nielsen: Monjasa is working on several fronts, ranging from extended data transparency across the supply chain to how our expert knowledge of maritime logistics can support the overall green transition in shipping. In addition, as a shipowner ourselves, we are determined to accelerate fleet energy efficiency based on global standards.

Looking at bringing transparency on CO2 emissions, Monjasa has recently launched the world's first "Customer CO2 Reports". This means that we are now able to provide our partners with CO2 reporting linked to each individual fuel order placed with Monjasa. Since launching this new report format, we have learned that there is a significant pull effect on this type of new data.

[Note: "Pull effect" refers to the data offering's attraction to Monjasa's existing and potential customers.]

Besides CO2 reporting, we are delivering improvements on our own climate impact by creating vessel- and office-related energy consumption baselines and documenting progress as part of our responsibility framework.

Net-Zero Business Daily:After launching the Customer CO2 Reports, will Monjasa set Scope 1, 2, and 3 emissions targets based on the Paris Agreement's climate goals? If so, how do you plan to achieve those goals?

Nielsen: As a member of Danish Shipping (a trade group representing Danish maritime firms), Monjasa is committed to working together with the International Maritime Organization (IMO) and delivering CO2 reductions in line with globally accepted climate goals.

Although more than 99% of Monjasa's total CO2 emissions relates to Scope 3 and the products we sell, we are of course accelerating processes under our own control.

First of all, what the bunker industry needs is an enforceable regulation which takes into account small and large shipping companies, fleet operation patterns, and different types of ships.

The current Energy Efficiency Existing Ship Index and the operational Carbon Intensity Indicator measures are currently not fit for bunker operation schemes, where sea voyages and waiting times differ significantly from current shipping practices. This is important work, which we are pleased to be taking part in, and offering our views and data to the rest of the industry.

At the same time, Monjasa, as well as most other shipowners, will be spending additional resources on overall fleet management in the coming years to meet the requirements. Scheduled maintenance for existing vessels will be the center of attention for the coming years in order to ensure compliance. Going forward, it will involve drydocking surveys on how vessels have improved their onboard energy efficiency.

Net-Zero Business Daily:You teamed up with Deloitte to prepare your carbon accounts. In your view, what are the greatest challenges bunker suppliers face when developing carbon accounting standards?

Nielsen: We teamed up with Deloitte because we needed answers to what our current impact was and where we should prioritize to reduce or expand our impact across the oil and shipping industries.

Initially, this collaboration with Deloitte led to the completion of the Monjasa Group's first group carbon accounts in 2021. During this process, we discovered that our group carbon accounts could be made into Customer CO2 Reports as well.

However, we also realized that obtaining upstream emissions data was surprisingly difficult. So, looking specifically at the accounting standards, we believe that developing a common language across the supply chain is currently one of our main challenges. In our view, the need for high-quality data is already here and we all have a responsibility to start filling in the gaps.

Net-Zero Business Daily: Some countries and environmentalists want the IMO to have more ambitious decarbonization targets. What's your view on this?

Nielsen: Together with Danish Shipping and another 140 of the world's biggest stakeholders in the shipping industry, Monjasa expects the IMO to ensure the shipping sector is aligned with the Paris Agreement on climate change. To achieve this target, IMO therefore needs to agree on a target of net zero-emissions by 2050. This work is still ongoing with Danish Shipping as the external voice representing Danish shipowners.

Net-Zero Business Daily: Do you expect more governments to set higher emissions standards for marine fuels in the future, with the EU already proposing GHG intensity caps in the Fit for 55 policy package?

Nielsen: We believe that any great transition needs its frontrunners, and regional approaches to higher emissions standards may contribute positively to achieving our common goal of becoming a CO2-neutral industry. Having said this, Monjasa supports the IMO and Danish Shipping's aspiration of global governing of CO2 reductions. We believe that this is the only way of ensuring a level-playing field across this highly competitive global industry.

Net-Zero Business Daily:What kind of marine fuels will bunker firms be supplying in 2030 and 2050, respectively, in your view?

Nielsen: We believe that by 2030 the marine fuels industry—to a large degree—will be supplying the currently available oil products. We will see more LNG bunkering, more biofuels blends, and some methanol supplies, but we do not expect the current bunker market to be revolutionized in terms of alternative products of scale during the next eight years. According to S&P Global Platts Analytics, 80% of global bunker demand will remain oil-based in the next two decades.

Forecasting the demand for bunkers in 2050 is indeed a challenging discipline. It is still early days to comment on new and preferred fuel solutions. The way to future fuels depends on new and still unknown technologies being developed in order for the industry to meet the goal of zero-emission shipping by 2050.

Net-Zero Business Daily:What will be the main driving forces for shipping decarbonization?

Nielsen: We believe that strong global governing of decarbonization will be the main driver for the overall shipping industry to meet the goals set out by the IMO. But we also see that both the industry and the market can contribute to the developments.

For instance, leading shipping companies such as Maersk are investing heavily in research and development companies, new fuel technologies, and newbuild programs. At the same time, we are also seeing major shippers such as Ikea, Walmart, and Nike already asking their carriers to further extend responsibility towards decarbonization of shipping. Altogether, we foresee a pull effect also playing a role for shipping to find new ways to decarbonize global trade in the years to come.

[Note: "Pull effect" here refers to better emissions abatement as a result of customers' demand.]

Posted 22 December 2021 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability

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