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Speaker 1: This is Tom Rowland's Rease and you're listening to Switched

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Speaker 1: on the podcast brought to you by Bloomberg NEF Maritime

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Speaker 1: shipping makes up two point five to three percent of

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Speaker 1: global emissions, and decarbonizing it remains a major challenge. Over

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Speaker 1: the past year, new European rules, including the EU ETS

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Speaker 1: and Fuel EU Maritime, have begun pushing the sector towards

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Speaker 1: cleaner fuels, while the IMO's vote on a global net

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Speaker 1: zero framework has been delayed to twenty twenty six, leaving

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Speaker 1: the industry without a unified international pathway Against this backdrop,

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Speaker 1: LNG has emerged as a prominent transition fuel. It offers

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Speaker 1: lower emissions than fuel oil, is supported by growing global infrastructure,

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Speaker 1: and can be swapped for BIOLNG without changing engines. At

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Speaker 1: the same time, efficiency technologies such as advanced coatings, window

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Speaker 1: cyst systems and optimized routing are helping cut fuel use,

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Speaker 1: adding another lever for reducing emissions. So how far can

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Speaker 1: alternative fuels and efficiency measures take the maritime sector on

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Speaker 1: its decarbonization journey. On today's show, I'm joined by Bloomberg

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Speaker 1: and EF's global head of Gas Falsiomarzuki, and joining her

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Speaker 1: is Nicolas Sulopolos are head of Commercial Transport. Together we

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Speaker 1: discussed findings from some of their team's recent reports, including

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Speaker 1: marine fuel cost to twenty forty, oil to biofuels and beyond,

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Speaker 1: and Global Shipping's net zero framework delays a worse option.

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Speaker 1: BNEF clients can find these reports, along with other shipping,

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Speaker 1: transport and gas notes by heading to BNF go on

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Speaker 1: the Bloomberg terminal or BNEF dot com. If you'd like

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Speaker 1: to learn more about how BNF approaches strategy research on

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Speaker 1: the energy transition, including developments in commodity markets, trends across

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Speaker 1: different sectors, and the cross cutting technology shaping the future,

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Speaker 1: you can find more information on BNF dot com, and

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Speaker 1: if you'd like to speak with a member of our

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Speaker 1: team about becoming a client, email US at Sales dot

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Speaker 1: BNF at Bloomberg dot net. So let's dive in and

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Speaker 1: unpack how these fuel and efficiency choices shape the sector's

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Speaker 1: path forward. Welcome to the podcast, Nico, Thanks Tom, it's

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Speaker 1: great to be here, and welcome to the podcast files.

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Speaker 2: Thanks Tom.

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Speaker 3: Happy to be here.

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Speaker 1: So we're here to talk about the maritime sector, and

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Speaker 1: you know, specifically to talk about some of the ways

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Speaker 1: that that is being decarbonized or fueled differently in the future.

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Speaker 1: Just to put it in perspective, what proportion of global emissions

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Speaker 1: are tied up with the maritime sector.

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Speaker 3: We're talking about two and a half to three percent

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Speaker 3: of global equivalent emissions we're talking here about, you know,

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Speaker 3: the majority of the vast majority of those comes from

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Speaker 3: those oceangoing vessels, large bullcarriers, tankers, containerships and everything that

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Speaker 3: go from Latin America to China, from Asia to Europe,

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Speaker 3: or from China to Australia, from Australia to the United States.

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Speaker 3: So these these large vessels.

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Speaker 1: From all the countries to all the other countries. Yeah, exactly,

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Speaker 1: that's except for the landlocked countries. So two to three

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Speaker 1: percent is a pretty big propo. Well, it depends on

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Speaker 1: your perspective. That's a lot of emissions in total. But

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Speaker 1: I suppose in terms of the global total, we're not

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Speaker 1: going to climate change just by decarbonizing maritime emissions. But

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Speaker 1: this is a hard to abate sector. So is there

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Speaker 1: a sense that this is an area where if you

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Speaker 1: can decarbonize maritime emissions, you also maybe pave the way

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Speaker 1: for decarbonizing other areas as well, because it's a hard

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Speaker 1: problem to solve.

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Speaker 3: That's a good question of having to looked at it

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Speaker 3: from that angle. Ever, to be honest, what I'd say

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Speaker 3: is that I don't know if which sector would come first,

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Speaker 3: you know, from all those sectors that are are difficult

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Speaker 3: to reduce the emission shelf. I mean, in maritime, we

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Speaker 3: have some specific challenges that make it harder to reduce

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Speaker 3: the carbon footprint that have to do with the size

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Speaker 3: of the vessel, the energy source us, the availability of fuels,

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Speaker 3: so the fact that these vessels go one day here

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Speaker 3: the other day somewhere totally different elsewhere in the world.

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Speaker 3: And we'll have to take into account of course that

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Speaker 3: this is the most efficient way to move cargo along

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Speaker 3: very long distances. So whether that maritime shipping can be

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Speaker 3: the trigger for other sectors to reduce their emissions, to

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Speaker 3: develop some of the technologies for example, or the fuels

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Speaker 3: and everything, or it's the other way around, I couldn't say.

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Speaker 3: I'd say that the challenges are real, they're here, and

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Speaker 3: the industry has been facing those head on for the

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Speaker 3: last literally one to two years.

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Speaker 1: What's been changing in the last year or so in

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Speaker 1: this sector, and in particular in relation to the decarbonization

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Speaker 1: of the maritime shipping.

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Speaker 3: What has been changing is the regulatory environment and pridically,

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Speaker 3: what's the new regulations that are coming online. And these

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Speaker 3: are primarily at least the big pieces, the moving pieces there,

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Speaker 3: primarily those in Europe is the EUTS, the emissions trading

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Speaker 3: scheme in Europe, the carbon trading scheme and the so

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Speaker 3: called fuey HU maritime prictically amundate to reduce the carbon

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Speaker 3: footprint of fuel used on board vessels. These are online

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Speaker 3: since the beginning of twenty twenty five, the UTS a

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Speaker 3: little bit just maybe a year or two earlier than that.

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Speaker 3: And these are pushing ship owners, charters, the whole industry

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Speaker 3: in fact to gradually start reducing their emissions fut pren Now,

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Speaker 3: given that the industry is a global one and the

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Speaker 3: vessels that call into European ports the following month may

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Speaker 3: be doing something completely different. These regulations, the European ones,

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Speaker 3: the Union ones, in fact, they only address a given

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Speaker 3: share of those global emissions from shipping. We're talking maybe

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Speaker 3: about fifteen twenty percent or so, I think that's the

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Speaker 3: number there. So what's important for a number of reasons

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Speaker 3: as well, and we can go into more detail on those,

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Speaker 3: is that there is some global framework for emission reductions

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Speaker 3: that makes the life of literally everyone easier and a

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Speaker 3: lot more efficient and keeps up with the efficiency of

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Speaker 3: the maritime operations. And what happened is that the International

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Speaker 3: Maritime Organization practically in short, a UN agency that regulates

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Speaker 3: safety and other matters that have to do with global

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Speaker 3: shipping and also emissions, and has what they call it

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Speaker 3: a strategy to go to net zero emissions by twenty

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Speaker 3: fifty in the sector. And as part of that strategy

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Speaker 3: or that ambition better, they had proposed in fact i

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Speaker 3: so called net zero framework practically a limit on again

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Speaker 3: the life cycle seal to emissions of the fuel used

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Speaker 3: on board vessels that would gradually decline year over year

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Speaker 3: and everything that was set to be voted on in

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Speaker 3: the last October. It wasn't. And that is what one

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Speaker 3: of the big kind of developments that happened the sector

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Speaker 3: in the in the last year.

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Speaker 1: So let me get this straight. The UN agency, the IMO,

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Speaker 1: the International Maritime Organization, right, they had a net zero

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Speaker 1: framework and they were going to vote on it in October,

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Speaker 1: and that didn't happen. Have I got that right?

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Speaker 3: That's correct?

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Speaker 1: So what happened?

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Speaker 3: So they delayed the vote for a year, So they're

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Speaker 3: set to vote in October twenty twenty six. Now for

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Speaker 3: the net zero network, I.

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Speaker 1: Mean, delaying of vote by a year on a strategy

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Speaker 1: that's supposed to go to twenty fifty. It's kind of unusual.

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Speaker 1: Why what was the reason?

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Speaker 3: I think we have to take a step back from

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Speaker 3: the shipping sector and look at it in the broader

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Speaker 3: geopolitical environment of the last year. More or less so,

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Speaker 3: there was a huge pushback, primarily from the United States

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Speaker 3: and some other countries. Saudi Arabia was one of the

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Speaker 3: most vocal ones that literally campaigned over the last few

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Speaker 3: months in order to keep the discussion going for longer.

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Speaker 3: I mean, they had some legitimate arguments and there wouldn't

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Speaker 3: be a unanimous decision. Let me just say like that

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Speaker 3: in the sense that most of the countries have to

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Speaker 3: they don't have to vote for the rules, but it's

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Speaker 3: better if all of them agree so that they are

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Speaker 3: uniformly applied across the globe. And there was that disagreement

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Speaker 3: there and so in order.

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Speaker 1: Because if you can't get lie census you're gonna basically

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Speaker 1: be losing out if you follow the rules.

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Speaker 3: So it gets a little bit on the practicalities of art.

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Speaker 3: I mean, the if the IMO voted even with the

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Speaker 3: slightest of majorities, then that would have been a global rule,

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Speaker 3: of course, but it would be down to individual countries

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Speaker 3: to implement it. So if some of the countries, for example,

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Speaker 3: withdrew from that particular convention for example, or even even

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Speaker 3: if they decided not to enforce it, then you would

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Speaker 3: have these sort of gaps in global enforcement, gaps in

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Speaker 3: the regulatory compliance difficulty, friction, cost, and the rest.

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Speaker 1: So I suppose, yeah, there's been this kind of political

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Speaker 1: bump in the road for the decarbonization of the maritime sector.

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Speaker 1: It's certainly not game over. It's just more that consensus

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Speaker 1: hasn't been reached at a sufficient level yet. So that's

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Speaker 1: the kind of the politics and the policy side of things.

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Speaker 1: I'd be kind to understand, you know. It's one thing. Yeah,

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Speaker 1: even if we came up with a policy to decarbonized

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Speaker 1: shipping is one thing, like what would you actually do?

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Speaker 1: What are the technologies being evolved and what are the

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Speaker 1: kind of the new trends on that front?

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Speaker 2: That's a probably where I come in. And the fuel

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Speaker 2: that's really got the maritime sector talking about is liquified

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Speaker 2: natural gas LNG. It's one of the commodities that has

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Speaker 2: seen tremendous growth over the years, particularly with the rise

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Speaker 2: of US l G in particular. You've got a whole

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Speaker 2: bunch more LNG supply in the world today, which also

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Speaker 2: means you have a whole bunch more LNG infrastructure today

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Speaker 2: across various different countries that now both export and import LNG,

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Speaker 2: and the availability of that as a fuel source is

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Speaker 2: becoming increasingly competitive for shippers for all types of ships. Now,

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Speaker 2: let me maybe unpack the history of LERG bunkering a

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Speaker 2: little bit. So LNG ships, ships that carry LNG and

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Speaker 2: trade LNG, they usually use two fuels, so the traditional

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Speaker 2: fuel oil that you'll find in most maritime vessels, but

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Speaker 2: you're also carrying your your own kind of fuel, so

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Speaker 2: you might as well use it, So they usually use

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Speaker 2: a dual fuel system of some kind. Sometimes there's even

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Speaker 2: like a trifuel system, but for simplicity purposes, most lerngy

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Speaker 2: carriers today use LERNG as in some form of a

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Speaker 2: fuel as well, and they usually kind of optimize it.

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Speaker 2: Depending on the fuel oil's cheaper, they'll use that. If

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Speaker 2: the LNG is cheaper, they'll use that. LENG also has

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Speaker 2: this aspect of what we call boilof. It's liquid natural gas,

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Speaker 2: but of course it naturally becomes its gashous state. Again,

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Speaker 2: they take that and they use that to actually run

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Speaker 2: your engines, and you might that's basically how they run efficiently.

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Speaker 2: They're using that boiloff gas that happens naturally during the

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Speaker 2: journey of an energy tanker as part of fuel. Now,

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Speaker 2: so because of that, you know, kind of other ships,

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Speaker 2: other types of ships, so you're talking cruise liners, you're

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Speaker 2: talking container ships that they are starting to also actually

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Speaker 2: build ship that use LNG as this fuel instead of

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Speaker 2: traditional fuel oil. And that's the cool thing and the

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Speaker 2: interesting thing, well at least that the gas community and

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Speaker 2: the shipping community is talking about.

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Speaker 1: But so obviously LNG is not a zero emissions fuel.

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Speaker 1: Implicit I'm guessing to your answer is that LNG is

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Speaker 1: a has a lower emissions footprint than using fuel oil

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Speaker 1: for shipping. Correct, So it's stepping in the right direction,

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Speaker 1: not completely solving the problem.

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Speaker 2: You're absolutely right, just in the same way that burning

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Speaker 2: natural gas in a power plant is better than burning

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Speaker 2: coal for power generation, but it is not a zero

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Speaker 2: emission fuel.

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Speaker 1: No, But let's talk about zero emissions fuel because I mean,

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Speaker 1: I'm aware of the research you do, and I know

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Speaker 1: that you've also been looking at biolerg for shipping, which

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Speaker 1: obviously would be a zero emissions option. So yeah, tell

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Speaker 1: us a bit more about what's going on there. Is

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Speaker 1: that of the next logical step.

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Speaker 2: Sure, I don't want to say zero emissions fuel option,

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Speaker 2: and I'll kind of unpack that a little bit. So

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Speaker 2: biolg let's let's talk about what is biolerg. Biolergy is

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Speaker 2: also sometimes called liquefied biomethane. So how do you get

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Speaker 2: biomethane You get biogas.

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Speaker 1: So this is.

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Speaker 2: Natural gas formed from organic matter of some kind, no

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Speaker 2: different than kind of how you produce biofuels, and that

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Speaker 2: is then purified to biomethane. We're talking a very high

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Speaker 2: percentage of methane, nine to nine percent methane that is

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Speaker 2: then liquified in the same way that natural gas is

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Speaker 2: liquefied negative hundred and sixty degrees celsius to get it

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Speaker 2: into liquid form. So it's the same technology It's just

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Speaker 2: that the gas that you're using is of biocredentials if

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Speaker 2: you like, or sort of lower carbon credential. So that's

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Speaker 2: how you get bioelergy.

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Speaker 1: Can I just ask ask a quick question, because you know,

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Speaker 1: we're talking about now the shift to energy and then

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Speaker 1: there's this potential of bioelergy. Is it that it's not

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Speaker 1: possible to go from like fuel oil to biofuel oil?

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Speaker 1: If you see what I mean? Is that is bioelergy

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Speaker 1: a more realistic proposition? Biofuel oil?

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Speaker 2: A fantastic question, And I'll answer a little bit, and

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Speaker 2: then I'll let Nico kind of chime in as well.

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Speaker 2: So fuel oil and like biofuel alternative do not necessarily

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Speaker 2: actually have the same physical characteristics, and that's actually what

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Speaker 2: limits the amount of blending that you're able to do

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Speaker 2: and the swamp that you're kind of able to do

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Speaker 2: between the two. Now, what's good about biolergy Because it

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Speaker 2: is biomethane, which is pure methane that gets liquefied, it

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Speaker 2: is actually interchangeable with normal fossil fuel lerngy. You do

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Speaker 2: not need to actually change your engine in your ship.

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Speaker 2: You don't actually really need to change your infrastructure, It

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Speaker 2: is actually chemically and physically the same molecule largely.

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Speaker 1: So let me understand then the big picture of energy

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Speaker 1: in shipping and emissions. Energy is of itself a lower

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Speaker 1: emissions option than fuel oil, but not only that, it

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Speaker 1: opens the door to having a drop in bio alternative

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Speaker 1: as well if you want to reduce emissions.

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Speaker 2: Even though absolutely and I don't need to change my ship,

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Speaker 2: I can basically keep an energy fueled ship on the

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Speaker 2: water for longer.

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Speaker 1: Got it?

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Speaker 3: In general, biofuels, I mean beyond the just to going

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Speaker 3: to your question, Tom, of any generation as we call them,

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Speaker 3: like either first generation or second generation biofuels advanced by

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Speaker 3: A fuels, You can see them with their positives and

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Speaker 3: negatives as part of the broader fuel replacement story in

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Speaker 3: shipping s you have LERG for sure for the ships

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Speaker 3: that are using in those that are being ordered to

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Speaker 3: use lergy, and the potential for those to use biolergy.

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Speaker 3: But there is, as you mentioned, a range of other

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Speaker 3: biofuels again with their positives and negatives. There advantage and disadvantageation.

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Speaker 3: How much of those you can get at what price? Where?

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Speaker 3: And what is the long term potential before we go

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Speaker 3: all the way to potentially synthetic fuels of either methano ammonia, diesel,

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Speaker 3: natural gas, and everything else. A hard proposition for shipping

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Speaker 3: in the near and mid term still part of the

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Speaker 3: potentially part of the longterm picture.

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Speaker 1: So let's talk about I mean, I suppose this question

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Speaker 1: can apply to biofuels generally, but I think because we're

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Speaker 1: specifically the interesting thing here right now with shipping is

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Speaker 1: BIOALNGE is the possibility. How much does that cost compared

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Speaker 1: to the alternative? How much of a premium would you

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Speaker 1: be paying?

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Speaker 2: Okay, so I'm going to answer it from the LNG

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Speaker 2: bunker perspective, and then how about we get NICO to

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Speaker 2: answer it from the other alternative fuel perspective. So in

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Speaker 2: terms of LNG bunker, so we're talking normal LNG bunker

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Speaker 2: as a fuel, the price of that is highly related

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Speaker 2: to the prevailing price of normal LNG. Now it's the

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Speaker 2: exact same fuel, but the availability of it is different.

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Speaker 2: It also has separate market dynamics because you need to

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Speaker 2: kind of trade it off the alternative, which is fuel oil.

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Speaker 2: Usually energy as a bunker fuel trades at a premium

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Speaker 2: than normal energy delivered in that region, in that port,

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Speaker 2: for that particular market. Now, biolergy in particular is going

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Speaker 2: to be more expensive just it is because the cost

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Speaker 2: of the biomething is more expensive than natural gas. That

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Speaker 2: is just you know, there are very few permutations and

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Speaker 2: technologies which is going to get you biomething that is

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Speaker 2: going to cost less than natural gas prices.

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Speaker 1: And well, let's put it. Put it this way, if

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Speaker 1: it was cheaper, there wouldn't be no more conventional natural gas.

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Speaker 1: It would be replaced by biomethink si. So's there's always

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Speaker 1: going to be demand for it. That is going to

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Speaker 1: mean it has a premium, yes, exactly.

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Speaker 2: So right now, the biolng cost range is incredibly wide

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Speaker 2: depending on the production pathway. So we're talking you know,

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Speaker 2: the difference between municipal ways versus animal maneuver versus you know,

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Speaker 2: thermal gasification. So you got a whole large spectrum of

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Speaker 2: the potential for biomethan. What we've assumed in our BNTH

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Speaker 2: analysis is to actually assume a one thousand, two hundred

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Speaker 2: dollars per metric ton of a biolng cost. However, that

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Speaker 2: can go much lower to you know, the six hundred

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Speaker 2: less than six hundred, but also you know, well over

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Speaker 2: into the thousand plus. You could even reach you know,

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Speaker 2: two thousand dollars per per metric ton, So it is

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Speaker 2: a huge range.

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Speaker 3: That's a I think that's a characteristic for all alternative fuels,

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Speaker 3: so alternative fuels meaning biofuels, synthetic fuels, and the rest,

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Speaker 3: in the sense that you have to pay a premium.

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Speaker 3: You will pay a premium on average, perhaps a factor

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Speaker 3: of two and potentially at least a factor of two

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Speaker 3: with respect to the prevailing fuel oil or LERG, primarily

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Speaker 3: these two fuels. And that's where regulation, of course is important.

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Speaker 3: That's why we started off our discussion with that, because

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Speaker 3: unless you start stucking up the different regulatory penalties that

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Speaker 3: either the eut as the fuel U Marie time or

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Speaker 3: the potential net your framework from the IMO have, you're

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Speaker 3: never going to be in the money with any clean

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Speaker 3: fuel in shipping.

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Speaker 2: I want to also talk about a particular nuance with

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Speaker 2: this trade of bio energy in particular and biomethane supply.

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Speaker 2: So unlike perhaps the trade of biofuels and the availability

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Speaker 2: of biofuels for shipping and really other applications, it's usually

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Speaker 2: a physical plant, actually physically making biofuels, and you are

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Speaker 2: physically blending that biofuel with a type of fuel oil,

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Speaker 2: a type of oil product. Now, in the case of BIOLNG, yes,

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Speaker 2: there are supply chains that actually liquefy directly biomethan But

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Speaker 2: what's happening in Europe in particular is that it's actually

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Speaker 2: biomethane is being produced somewhere and then it's being put

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Speaker 2: into the gas grid, into the gas system, and then

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Speaker 2: that molecule gets a certificate basically to say, okay, yes,

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Speaker 2: I have put in this much biomethane into the system,

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Speaker 2: and then at the LNG bunker service port there will

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Speaker 2: be another certificate to say, okay, this amount of biomethane

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Speaker 2: was put into the system. I am loading this much

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Speaker 2: equivalent of energy onto this ship for fuel purpose. It

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Speaker 2: is now certified the equivalent amount as BIOLG. But let's

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Speaker 2: be clear that that is not necessarily that physically liquefied

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Speaker 2: biomethane that was injected into the system.

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Speaker 1: Right. It's it's like renewable energy certificates the grid, y

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Speaker 1: you know, is I mean it's already an abstract concept anyway,

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Speaker 1: And so then saying which one is green and it

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Speaker 1: becomes a question of human accounting, not of the actual physical,

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Speaker 1: inherent property of what is being burned.

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Speaker 2: Absolutely, So this is where I bring it up because

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Speaker 2: there's a price as well to that certificate. Right, If

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Speaker 2: the demand for you know, the future need of biolg increases,

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Speaker 2: the demand for that certificate is going to go up

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Speaker 2: and therefore push up prices to a degree and vice versa. Right,

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Speaker 2: So there's an element of carbon markets playing a really

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Speaker 2: big role in getting bio lergy kind of you know,

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Speaker 2: to really be a thing in the in the maritime sector.

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Speaker 1: So how liquid is the trade for the I don't

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Speaker 1: know what they called the bio lergy certificates in Europe.

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Speaker 2: Right, So it's it's for it's for biomethane certificates. You know,

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Speaker 2: every jurisdiction kind of calls it something different, but its

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Speaker 2: guarantees of origins, it's proof of sustainabilities. There's an entire

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Speaker 2: kind of accounting system that goes with it, and there's

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Speaker 2: some international certification and accreditation for it. But at this

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Speaker 2: point it is I mean, the trade has been increasing,

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Speaker 2: but it has been fairly localized to the European market.

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Speaker 2: With the implementation of Fuel EU this year, Now, these

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Speaker 2: renewable gas certificates also do exist in the US, and

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Speaker 2: that trade of renewable natural gas does exist through a

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Speaker 2: booking claim system. But what we quite haven't seen as

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Speaker 2: much yet is it really taking off for this like

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Speaker 2: so to find biolg bunk if you're coming out of

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Speaker 2: the US. There were a couple deals, but it's not

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Speaker 2: taken off in the same way as it has in Europe,

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Speaker 2: again because of the maritime legislations implemented in the EU.

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Speaker 1: With these guarantees of origin type schemes. And you've seen

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Speaker 1: this with rex and corporates and their renewable energy targets.

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Speaker 1: It's up to a point it doesn't actually matter how

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Speaker 1: divorced from the physical system you're drawing your fuel is

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Speaker 1: that the certificate is from. So can you see a

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Speaker 1: situation where, for example, if someone wants quote unquote biolergy

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Speaker 1: in the US, they might buy certificates from Europe because ultimately,

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Speaker 1: so long as you're depriving someone else of the opportunity

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Speaker 1: to claim that they're using green bioenergy, then you can

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Speaker 1: claim to use the bio energy. So is there a

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Speaker 1: do you see a pathway for these markets to become

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Speaker 1: global yes and no.

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Speaker 2: So in Europe their particular system requires mass balancing, so

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Speaker 2: there is an element there needs to be some kind

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Speaker 2: of traceability to it, which is different than what they

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Speaker 2: practice in the North American markets of the booking claim system,

395
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Speaker 2: which is it can be completely virtual and completely detached

396
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Speaker 2: from each other, which is actually why there were some

397
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Speaker 2: deals that it was a sort of certified BIOLNG that

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Speaker 2: was loaded onto a ship and delivered to Japan right

399
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Speaker 2: from the US. Now that's been that's a certified biol

400
00:23:29,680 --> 00:23:33,360
Speaker 2: and Chicago. So with regards to the trade the certificates,

401
00:23:33,400 --> 00:23:36,840
Speaker 2: there are some international certifications that can be used, but

402
00:23:36,920 --> 00:23:41,360
Speaker 2: these different jurisdictions that basically offer LNG as a bunker

403
00:23:41,440 --> 00:23:43,919
Speaker 2: fuel or bio LNG as a bug fuel basically need

404
00:23:44,000 --> 00:23:46,119
Speaker 2: to come up with that framework. So for it to

405
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Speaker 2: become a real global trade of biol and G if

406
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Speaker 2: you like, you'll need some kind of framework, some kind

407
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Speaker 2: of standardization amongst all of these different markets. And quite frankly,

408
00:24:00,520 --> 00:24:03,240
Speaker 2: you know, we haven't even seen that for actual carbon

409
00:24:03,320 --> 00:24:07,040
Speaker 2: markets yet, like actual carbon offset markets yet. So until

410
00:24:07,359 --> 00:24:10,320
Speaker 2: kind of let's get sorted out to a degree, we

411
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Speaker 2: don't really have a playbook in terms of how we

412
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Speaker 2: would do it for this biolng trade. Now, having said that,

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Speaker 2: there are you know, you know, the largest bunkering ports

414
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Speaker 2: in the world. You know, you're talking Singapore, Fujira and

415
00:24:23,080 --> 00:24:25,600
Speaker 2: some of these other places like Singapore is actually trying

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Speaker 2: to think about how they can do this. There's a

417
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Speaker 2: lot of biomass potential in Southeast Asia that can turn

418
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Speaker 2: into this you know, a biogast to biomethan and turn

419
00:24:34,359 --> 00:24:36,399
Speaker 2: it into bioelerg and they can ship it and they

420
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Speaker 2: can send it, you know, they can put it in

421
00:24:38,320 --> 00:24:40,159
Speaker 2: a ship that's you know, headed to Europe and it

422
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Speaker 2: can meet compliance standards. But there still needs to be

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Speaker 2: an accepted governance framework that would allow for that trade.

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Speaker 2: But right now that still very much sits within the

425
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Speaker 2: EU jurisdiction and just very much just for the purposes

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Speaker 2: of meeting fuel eumeritime and the European ETS got it.

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Speaker 1: It kind of comes by the thing that Nico was

428
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Speaker 1: talking about at the start is the challenge around building

429
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Speaker 1: global consensus, especially around something that we can't see or hold.

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Speaker 1: It's something we all have to agree on.

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Speaker 2: And we also have to say that the shipping sector

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Speaker 2: touches so many different nations in different ways with different

433
00:25:17,680 --> 00:25:20,680
Speaker 2: sort of priorities. You've got the people, you know, you've

434
00:25:20,720 --> 00:25:24,320
Speaker 2: got the nations that are the biggest shipbuilders in the world,

435
00:25:24,359 --> 00:25:27,000
Speaker 2: who like finance all of these ships. You've got the

436
00:25:27,440 --> 00:25:30,880
Speaker 2: nations that supply the fuel for all of these ships.

437
00:25:30,920 --> 00:25:33,560
Speaker 2: And then you've got the nations who are highly reliant

438
00:25:33,600 --> 00:25:37,479
Speaker 2: on imports, who depend on ships for all of their things.

439
00:25:37,680 --> 00:25:39,679
Speaker 2: So you've got a lot of people, a lot of

440
00:25:39,760 --> 00:25:43,399
Speaker 2: nations who care very much about what happens in the

441
00:25:43,440 --> 00:25:47,040
Speaker 2: maritime sector because it really does actually impact their own

442
00:25:47,080 --> 00:25:48,840
Speaker 2: economies in their own ways.

443
00:25:49,560 --> 00:25:54,640
Speaker 1: Coming back to the broader question of decarbonizing the maritime sector,

444
00:25:54,920 --> 00:25:57,240
Speaker 1: we've talked a lot about, you know, fuel options, and

445
00:25:57,280 --> 00:25:59,639
Speaker 1: I'm sure we have more to say on that as well.

446
00:26:00,000 --> 00:26:04,080
Speaker 1: I'm just wondering, you know, beyond the fuel, what options

447
00:26:04,119 --> 00:26:04,600
Speaker 1: are there.

448
00:26:05,200 --> 00:26:07,680
Speaker 3: So you're correct, there is fuel is one of the

449
00:26:07,720 --> 00:26:11,119
Speaker 3: ways to reduce emissions in shipping, but there's of course

450
00:26:11,760 --> 00:26:15,440
Speaker 3: a very large range of technologies that increase efficiency and

451
00:26:15,840 --> 00:26:18,560
Speaker 3: practically there is you need less fuel to do what

452
00:26:19,280 --> 00:26:21,119
Speaker 3: you're doing, and we do see quite a bit of

453
00:26:21,440 --> 00:26:25,600
Speaker 3: truction recently on these fuel saving technologies in shipping, be

454
00:26:25,680 --> 00:26:30,760
Speaker 3: it from solid sales to better coatings for the huse,

455
00:26:30,960 --> 00:26:35,680
Speaker 3: or to improve hydrodynamics, or to bubbles around the house,

456
00:26:35,800 --> 00:26:39,120
Speaker 3: or to cleaning the house, or to managing your route

457
00:26:39,200 --> 00:26:42,280
Speaker 3: better using weather data and the rest. And the amount

458
00:26:42,320 --> 00:26:45,359
Speaker 3: of fuel that this can save is relatively wide. It

459
00:26:45,440 --> 00:26:48,200
Speaker 3: can range from let's say, five percent all the way

460
00:26:48,240 --> 00:26:52,600
Speaker 3: to twenty thirty forty percent in on some trials. The

461
00:26:52,720 --> 00:26:58,240
Speaker 3: difficulty there is one of knowing with certainty how much

462
00:26:58,480 --> 00:27:02,840
Speaker 3: that saving could look like throughout the year, throughout five years,

463
00:27:02,840 --> 00:27:05,520
Speaker 3: throughout ten years, or literally throughout the life cycle of

464
00:27:05,960 --> 00:27:08,639
Speaker 3: the vessel. It can be fifteen, twenty, twenty five years,

465
00:27:08,680 --> 00:27:11,240
Speaker 3: and that depends on one a very large number of factors.

466
00:27:11,560 --> 00:27:14,280
Speaker 3: One is of course, weather, which changes day by day,

467
00:27:14,320 --> 00:27:16,960
Speaker 3: and that does affect a lot of these The potential

468
00:27:16,960 --> 00:27:20,080
Speaker 3: of a lot of those technologies, we don't know well

469
00:27:20,200 --> 00:27:23,639
Speaker 3: enough how they behave a lot of that equipment or

470
00:27:23,760 --> 00:27:27,760
Speaker 3: these techniques over the long term. So it's still early days,

471
00:27:27,800 --> 00:27:30,240
Speaker 3: but a lot of the shipping companies and charters as

472
00:27:30,240 --> 00:27:33,960
Speaker 3: well are pushing those shipping companies to adopt gradually more

473
00:27:34,000 --> 00:27:36,400
Speaker 3: and more of these of these technology. So we see

474
00:27:36,720 --> 00:27:42,280
Speaker 3: that technology is stuck in shipping consisting not just fuels.

475
00:27:42,400 --> 00:27:44,840
Speaker 3: It's a story beyond the fuel alone. It is also

476
00:27:44,840 --> 00:27:47,800
Speaker 3: a story of efficiency improvements, and we expect to see

477
00:27:47,880 --> 00:27:50,920
Speaker 3: quite a large impact from those technologies.

478
00:27:51,040 --> 00:27:54,400
Speaker 2: Hey, Tom, can I ask Can I ask nicol a question? Yeah,

479
00:27:54,440 --> 00:27:59,639
Speaker 2: go on, Nico, what are our thoughts on slow stepping?

480
00:28:00,160 --> 00:28:03,200
Speaker 2: Is that actually going to help us in terms of

481
00:28:03,280 --> 00:28:06,840
Speaker 2: either lowering fuel consumption or at least lowering emissions.

482
00:28:07,160 --> 00:28:10,119
Speaker 3: So, yes, it does. Slow steaming is the practice of

483
00:28:10,560 --> 00:28:13,199
Speaker 3: sailing at a slower speed, and that can have an

484
00:28:13,200 --> 00:28:16,919
Speaker 3: impact on your fuel consumption for sure. So companies use that.

485
00:28:17,440 --> 00:28:21,240
Speaker 3: Is it practically the simplest lever that people have or

486
00:28:21,280 --> 00:28:23,600
Speaker 3: to do that? It works better in some segments than others.

487
00:28:23,600 --> 00:28:27,040
Speaker 3: I mean container ships sometimes they have to maintain a

488
00:28:27,160 --> 00:28:29,280
Speaker 3: consistent speed to get where they want to be at

489
00:28:29,280 --> 00:28:31,680
Speaker 3: a given point. But for many vessels it's one of

490
00:28:31,720 --> 00:28:32,919
Speaker 3: the simplest levers they have.

491
00:28:33,200 --> 00:28:35,919
Speaker 1: But I imagine that when you look at the economics

492
00:28:35,960 --> 00:28:38,000
Speaker 1: of that, you have to take into account that you're

493
00:28:38,200 --> 00:28:42,240
Speaker 1: making less usage of your asset over its lifetime. You know,

494
00:28:42,240 --> 00:28:45,800
Speaker 1: if you're doing you're going slower, you're doing less cargoes.

495
00:28:46,160 --> 00:28:47,160
Speaker 1: You're still getting.

496
00:28:46,920 --> 00:28:50,960
Speaker 3: Paid though, Yeah, it's not that you're you're steaming, your

497
00:28:51,080 --> 00:28:53,560
Speaker 3: slow steaming when you're carrying nothing.

498
00:28:53,880 --> 00:28:57,720
Speaker 1: Wait, hold on a second, sorry, let's just throbe into that.

499
00:28:57,960 --> 00:29:01,800
Speaker 1: If over ship's lifetime it delivers less cargoes, surely it's

500
00:29:01,840 --> 00:29:03,240
Speaker 1: going to earn less money.

501
00:29:03,520 --> 00:29:06,960
Speaker 3: That is interesting, but that's not the whole story. The

502
00:29:07,000 --> 00:29:09,760
Speaker 3: whole story has to do with the supply of ships

503
00:29:09,800 --> 00:29:13,360
Speaker 3: and the shipping cycle. I mean slow steaming or other

504
00:29:13,680 --> 00:29:16,600
Speaker 3: frictions that make you go longer in a rout like

505
00:29:16,680 --> 00:29:18,880
Speaker 3: around the cape run on this risk canal. What they

506
00:29:18,920 --> 00:29:22,640
Speaker 3: do is a decreased capacity in the shipping market. So

507
00:29:22,800 --> 00:29:26,720
Speaker 3: the impact of lower capacity is higher prices.

508
00:29:26,480 --> 00:29:29,040
Speaker 1: Right, And so in a world of slow steaming, it

509
00:29:29,120 --> 00:29:31,920
Speaker 1: might be that you have more ships going slower, but

510
00:29:32,000 --> 00:29:34,400
Speaker 1: it's efficient overall. I was going to say, I mean

511
00:29:34,440 --> 00:29:36,080
Speaker 1: a lot of this, and I want to relate it

512
00:29:36,120 --> 00:29:39,200
Speaker 1: back to this question of efficiency improvements with the ship

513
00:29:39,240 --> 00:29:42,560
Speaker 1: itself and then the question of fuels, and it kind

514
00:29:42,560 --> 00:29:44,600
Speaker 1: of relates back to the point Fous is making is

515
00:29:44,600 --> 00:29:47,400
Speaker 1: that you have all these different nations and stakeholders that

516
00:29:47,480 --> 00:29:51,520
Speaker 1: have an interest in decobnizing the maritime sector from a

517
00:29:51,520 --> 00:29:55,000
Speaker 1: different angle. So if you're a shipbuilding company or a

518
00:29:55,000 --> 00:29:59,240
Speaker 1: shipbuilding nation. You have a strong incentive to want shipping

519
00:29:59,280 --> 00:30:03,520
Speaker 1: to decarbon not by decarbonizing fuels with the drop in fuel,

520
00:30:03,520 --> 00:30:06,840
Speaker 1: but by all of the improvements to the actual ship itself,

521
00:30:06,920 --> 00:30:09,560
Speaker 1: because that means people pay more money to you for

522
00:30:09,680 --> 00:30:13,200
Speaker 1: the people providing the fuel, particularly the clean alternatives. Obviously

523
00:30:13,240 --> 00:30:15,400
Speaker 1: there's an incentive to want it to happen that way.

524
00:30:15,480 --> 00:30:18,200
Speaker 1: And then I don't even know where the incentive sits.

525
00:30:18,280 --> 00:30:22,240
Speaker 1: I suppose it's again for ship manufacturers. There's more ships

526
00:30:22,280 --> 00:30:24,959
Speaker 1: going slower, then that's a bigger business for them. So

527
00:30:25,000 --> 00:30:28,680
Speaker 1: who benefits from these different pathways. It's quite different, that's true.

528
00:30:28,720 --> 00:30:32,000
Speaker 3: The one point I want to raise there is the following.

529
00:30:32,240 --> 00:30:35,680
Speaker 3: The shipping industry suffers, if we can say that, from

530
00:30:35,680 --> 00:30:38,880
Speaker 3: a practice of split incentives. So the people who build

531
00:30:38,880 --> 00:30:42,640
Speaker 3: the ships, the shipowners are most of it, or a

532
00:30:42,640 --> 00:30:45,080
Speaker 3: lot of the times, not the people who pay for fuel,

533
00:30:45,120 --> 00:30:47,040
Speaker 3: the people who pay for fuel at of the charterers.

534
00:30:47,320 --> 00:30:50,280
Speaker 3: So the shipowner does not want to spend one single

535
00:30:50,400 --> 00:30:53,600
Speaker 3: cent more than what they have to, right, So that's

536
00:30:53,600 --> 00:30:57,360
Speaker 3: where you get to perhaps the counter argument your thesis

537
00:30:57,400 --> 00:31:00,160
Speaker 3: in the sense that the more technology, more money or

538
00:31:00,400 --> 00:31:03,080
Speaker 3: for the shipbuilders, no one is at a very basic

539
00:31:03,200 --> 00:31:05,000
Speaker 3: level asking for that technology.

540
00:31:05,200 --> 00:31:08,640
Speaker 1: It's like the tenant landlord split incentive when it comes

541
00:31:08,680 --> 00:31:11,800
Speaker 1: to building efficiency. You know, why would the landlord pay

542
00:31:11,920 --> 00:31:16,520
Speaker 1: for a more efficient building to save their tenant utility builds? Yeah,

543
00:31:16,560 --> 00:31:19,400
Speaker 1: this is such an interesting discussion, and I think we

544
00:31:19,440 --> 00:31:22,920
Speaker 1: could go on all day. But it's what I find

545
00:31:22,960 --> 00:31:28,040
Speaker 1: interesting here is the maritime sector has its own unique features,

546
00:31:28,040 --> 00:31:30,040
Speaker 1: but at the same time, some of these challenges are

547
00:31:30,080 --> 00:31:33,680
Speaker 1: a mirror of challenges you find in decarbonizing all sorts

548
00:31:33,680 --> 00:31:36,400
Speaker 1: of different sectors. You know, some of this is some

549
00:31:36,440 --> 00:31:40,960
Speaker 1: of these challenges there are complete analogous parallels in buildings, etc.

550
00:31:41,520 --> 00:31:42,960
Speaker 1: And it kind of comes back to what I was

551
00:31:43,080 --> 00:31:45,600
Speaker 1: saying at the start is with all of these hard

552
00:31:45,640 --> 00:31:48,800
Speaker 1: to abate sectors, the winds that can be made, whether

553
00:31:48,840 --> 00:31:51,040
Speaker 1: we can see the pathway to how it impacts other

554
00:31:51,120 --> 00:31:53,960
Speaker 1: sectors or not, you know that it's going to lead

555
00:31:54,040 --> 00:31:57,320
Speaker 1: to progress being made elsewhere. To solving these problems is

556
00:31:57,520 --> 00:31:59,960
Speaker 1: important in its own right, but I think it's also

557
00:32:00,040 --> 00:32:04,560
Speaker 1: so those victories create momentum across the energy transition more broadly,

558
00:32:04,600 --> 00:32:08,200
Speaker 1: which is why I think this is such an interesting topic. Nico,

559
00:32:08,320 --> 00:32:10,880
Speaker 1: Thank you so much for joining today. Thank you very much,

560
00:32:10,920 --> 00:32:13,880
Speaker 1: Tom and Foles, thank you for joining as well.

561
00:32:13,960 --> 00:32:15,400
Speaker 2: Thanks so much, John, great to be here.

562
00:32:24,400 --> 00:32:27,520
Speaker 1: Today's episode of Switched On was produced by Cam Gray

563
00:32:27,720 --> 00:32:31,440
Speaker 1: with production assistants from Kamala Shelling. Bloomberg NEIF is a

564
00:32:31,480 --> 00:32:34,600
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565
00:32:34,720 --> 00:32:37,880
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566
00:32:37,920 --> 00:32:41,360
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00:32:41,360 --> 00:32:44,560
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00:32:44,600 --> 00:32:47,920
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00:32:48,000 --> 00:32:50,960
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00:32:51,000 --> 00:32:54,719
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00:32:54,760 --> 00:32:57,760
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