More pictures of the seminar can be found here.
Jan Peter Balkenende, chairman of the Dutch Sustainable Growth Coalition and also chair of the event, was in good spirits and with titles such as ‘Yes, we did it’, the agenda already gave away part of the answer to the first pressing question. David Samad, Maersk project leader, did indeed seem very satisfied with the results of the biofuel trial. “Sound preparations meant we were able to keep the trial’s risks to a minimum. There were no operational complications during the journey and we have proven that it is possible for ships to run on biofuel in the present day and age.”
“Businesses need to take action”
The biofuel trial in the shipping industry was an initiative of the Dutch Sustainable Growth Coalition. Having focused on the development of sustainable and circular business models from its founding in 2012 and launched the Sustainable Development Goals in 2015 (which had a major influence on companies determining the direction they need to head in), this coalition of the Netherlands’ eight biggest companies decided it was time for the next phase—setting up specific sustainability projects that could potentially be copied throughout the market. “Given the impact ships have on global greenhouse emissions, a project to make the shipping industry more sustainable was a logical choice,” explained Balkenende. “We need companies to take measures in this area.” The Dutch employers’ federation VNO-NCW has supported DSGC right from day one and thinks the pilot is a good example of sustainable partnerships that are worth copying.
Unique trial on this scale
The participating DSGC multinationals—DSM, Heineken, FrieslandCampina, Shell, Unilever and Philips—teamed up with Maersk, a shipping company keen to take on a challenge. Shell was eager to supply the second-generation biofuel. After a few months of discussions and tests, the Mette Maersk set sail for Shanghai, loaded with 20,000 containers and with a fuel mixture initially including 7 per cent biofuel made from used frying fat, and later 20 per cent. A trial had never before been done on this scale and with these percentages. “Mixing regular shipping fuel with biofuel is not something we can do easily yet, due to the properties of the fuels,” says Ewald Breunesse of Shell. “We started out with 7 per cent biofuel to be on the safe side. Once we saw that was going well, we scaled it up to 20 per cent.”
Higher biofuel ratios possible in the future
Maersk’s David Samad explained the preventive measures taken to mitigate risks. These included having Shell and Maersk experts on board to monitor the response of the ship’s engine to the fuel mixture and taking along additional spare parts so that any filter problems could be fixed. The Mette Maersk’s motor ran like a well-oiled machine on the biofuel. “It’s a relatively new, clean motor and we take good care of it. That helps,” said Samad. The technical team concluded that the trial had proved that this type of Maersk ship can run on biofuel, and that a higher percentage of second-generation biofuel may be possible in the future.
Working together with other companies in the supply chain
The companies that took part in the trial are also pleased with the results. Although they stress that shipping only accounts for a marginal portion of the multinationals’ overall carbon footprints, they do feel that, since they are the biggest shippers in the Netherlands, they need to take the lead in making the shipping industry greener. They also feel that collaboration with other companies wanting to ship goods around the world sustainably is the key to making the trial a success. Coalitions such as DSGC have a crucial role to play and other coalitions with the same goal include the Clean Cargo Working Group, of which Heineken is a member, or the BICEPS Network, which includes FrieslandCampina and DSM. One element of collaboration in particular has proven to be vital, and that is collaboration in the supply chain. After all, shipowners and fuel suppliers are also needed to enable cleaner transport by water; the shippers cannot do it alone.
‘Yes, we did it’, now on to the next steps
The ‘Yes, we did it’ part of the programme met with great applause. However, Jan Peter Balkenende had a word of caution to all the enthusiastic listeners. “Let me be clear about this, this is only the beginning. We now need to make sure the results of the trial are put into practice.” Luckily, the seminar in Scheveningen had the first answers to the bigger question: what next?
Be a pioneer
The seminar participants were motivated to get to work with the trial results. Among them were representatives of companies providing technical solutions, trade organisations, financial institutions, fuel suppliers and major shippers. Also present was Esther Sliepen of Cargill, one of the world’s biggest shippers. Sliepen wondered what the single most convincing argument is that will get everyone in a company on board to enable greener shipping. Taking the lead and wanting to be a pioneer was the answer from the trial participants, who acknowledged that internal stakeholder management is an intensive aspect of their work. Sliepen decided to try this out back at Cargill.
Networking towards a follow-up
Another attendee, Marc Soesman, Commercial Manager at Sunoil Biodiesel, decided to be bold and attended the seminar to find out more about the technical and operational results of the Maersk and Shell pilot. “Sunoil turns used frying fat into biodiesel, the same type of biofuel that got the Mette Maersk to the other side of the world,” explained Soesman. He thinks it may be possible for Sunoil to supply Shell with biofuel for future journeys. A representative of FarmFrites, with some old frying fat available, also joined the conversation. This is just one example of the connections made that could enable a closed-loop supply chain and a successful follow-up.
Carbon tax, carbon shadow price and carbon credits
Naturally, the participants and attendees also looked at the financial aspects of the pilot. The technical feasibility of biofuel is great, but who will pay for it? Biofuel is significantly more expensive than regular ship fuel at the moment, but the price of regular fuel is expected to increase due to pending legislation that will largely curb sulphur emissions. Some participants also anticipated possible implementation of a carbon tax due to companies internally applying a carbon shadow price. A system of issuing carbon credits was proposed as a compensatory measure.
The role of financial institutions
Second-generation biofuel is seen as a bridge fuel, i.e. a necessary solution to use until fully sustainable alternatives are available. Other avenues therefore need to be explored when it comes to more environmentally-friendly shipping. Electrification does not yet appear to be an option for shipping, but there are interesting recent developments when it comes to LNG. These require new techniques in the shipping industry and completely new ships. Financial institutions have a key role in encouraging sustainability in this area.
Poseidon Principles and Clean Shipping Green Deal
Michael de Visser, Transportation Managing Director at NIBC bank, proudly shared the story of the ‘Shipping Green Deal’ recently signed by banks. This deal is an expression of the Dutch maritime industry’s sustainability ambitions, which go further than the climate ambitions set by the International Maritime Organization (IMO). The deal is considered a catalyst in making shipping cleaner. Also hot off the press are the ‘Poseidon Principles’, in which international banks have agreed to finance sustainable shipping. “We cannot rely on banks alone for financing. There’s enough money around,” stated De Visser. “It’s up to the banks to look for the right financial partners to make sure that money reaches shipowners.” He also envisaged an advisory role for banks. “We will need to tempt companies into choosing a sustainable ship. A ship has a service life of thirty years, you know. The world is changing rapidly and you need to take the changes into account now. By engaging in dialogue with companies, you try to change their culture,” explained De Visser.
Trial becomes commercial product
The Mette Maersk trial has resulted in Maersk deciding to offer commercial shipping of goods using biofuel. “This is a fine result when it comes to making shipping sustainable and it is a direct consequence of our successful trial. We see that companies are willing to invest in clean shipping and scale up together,” said David Samad. Fashion retailer H&M has already agreed to ship its clothes using this more environmentally-friendly method. “More major companies will probably follow their example.”
Spread the knowledge and then carry on
“That is exactly what we want,” said Dutch Sustainable Growth Coalition chairman Jan Peter Balkenende in closing. “We’re not going to keep this trial to ourselves. The idea is to share knowledge and have other people use it. I’m impressed by the detailed discussions that have taken place here today and the willingness the parties have shown to help make shipping more sustainable. We are now going to see what else we can do. We already have ideas about projects to reduce water usage and plastic packaging.”