1 00:00:00,520 --> 00:00:03,360 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,600 --> 00:00:07,080 Speaker 1: the B andF podcast. Seaborn freight is a critical part 3 00:00:07,120 --> 00:00:10,520 Speaker 1: of the global economy and supply chains are inescapable. The 4 00:00:10,560 --> 00:00:13,280 Speaker 1: shirt you bought, or perhaps the phone or the toy, 5 00:00:13,640 --> 00:00:16,440 Speaker 1: all of them probably shipped to you at some point, 6 00:00:16,640 --> 00:00:18,560 Speaker 1: if not in the end state that you bought it in, 7 00:00:18,760 --> 00:00:21,680 Speaker 1: perhaps as the components that were put together. So let's 8 00:00:21,720 --> 00:00:24,439 Speaker 1: use an electric vehicle as an example. Even with more 9 00:00:24,520 --> 00:00:27,680 Speaker 1: onshoring and near shoring of manufacturing of batteries, the raw 10 00:00:27,720 --> 00:00:31,280 Speaker 1: materials the nickel, cobalt, and lithium that are required to 11 00:00:31,440 --> 00:00:34,040 Speaker 1: make the battery are sourced from all over the world 12 00:00:34,200 --> 00:00:36,960 Speaker 1: and were sent to the manufacture on you guessed it. 13 00:00:37,200 --> 00:00:41,200 Speaker 1: Ships with oil based bunker fuels powering the vast majority 14 00:00:41,240 --> 00:00:45,320 Speaker 1: of the global shipping fleets. The emissions are significant. Consumption 15 00:00:45,360 --> 00:00:48,320 Speaker 1: of marine fuels accounted for over five percent of global 16 00:00:48,320 --> 00:00:51,360 Speaker 1: oil demand and two point five percent of global CO 17 00:00:51,560 --> 00:00:54,760 Speaker 1: two emissions in twenty twenty two. Shipping remains one of 18 00:00:54,800 --> 00:00:59,400 Speaker 1: the hardest to abate sectors faced with economic and regulatory challenges. Now, 19 00:00:59,400 --> 00:01:02,040 Speaker 1: if we look at shipbuilders order books and the new 20 00:01:02,160 --> 00:01:04,920 Speaker 1: vessels that are coming online. We're starting to see ships 21 00:01:04,920 --> 00:01:08,680 Speaker 1: that are powered by cleaner fuels such as methanol, biofuels, 22 00:01:08,720 --> 00:01:12,000 Speaker 1: and liquefied natural gas. On today's show, we're going to 23 00:01:12,040 --> 00:01:15,800 Speaker 1: talk about the BNAF twenty twenty four Marine Fuel Outlook 24 00:01:15,920 --> 00:01:19,600 Speaker 1: with Mohit Vallamala, a senior associate from BNF's oil team. 25 00:01:19,800 --> 00:01:22,520 Speaker 1: We'll dive deep into the different marine fuels that could 26 00:01:22,560 --> 00:01:25,319 Speaker 1: shape the future of the maritime industry, which has the 27 00:01:25,360 --> 00:01:28,240 Speaker 1: potential to include things like ammonia. We're going to get 28 00:01:28,240 --> 00:01:32,320 Speaker 1: into the decarbonization target set by the International Maritime Organization 29 00:01:32,560 --> 00:01:35,160 Speaker 1: and talk about what it might take for these targets 30 00:01:35,200 --> 00:01:38,720 Speaker 1: to become a reality. BNAF subscribers are going to be 31 00:01:38,800 --> 00:01:42,160 Speaker 1: able to access this report, twenty twenty four Marine Fuel 32 00:01:42,200 --> 00:01:45,959 Speaker 1: Outlook Methanol set sail at BNAF dot com or at 33 00:01:45,959 --> 00:01:48,960 Speaker 1: BNFO on the Bloomberg terminal. Subscribe to this show for 34 00:01:49,040 --> 00:01:51,600 Speaker 1: updates when we publish future episodes, and give us a 35 00:01:51,600 --> 00:01:54,040 Speaker 1: review to share us with others. But right now, let's 36 00:01:54,080 --> 00:02:06,920 Speaker 1: talk to Mohit about shipping fuels. Mohit, thank you very 37 00:02:07,000 --> 00:02:08,600 Speaker 1: much for joining us on the show today. 38 00:02:08,800 --> 00:02:10,679 Speaker 2: Thank you, Denna. It's a pleasure to join here. 39 00:02:10,840 --> 00:02:13,639 Speaker 1: We're here to talk about shipping and the related emissions, 40 00:02:13,680 --> 00:02:15,919 Speaker 1: something that you think about a lot, and let's start 41 00:02:16,000 --> 00:02:19,160 Speaker 1: with talking about pollution. I mean, really, how polluting is 42 00:02:19,480 --> 00:02:22,280 Speaker 1: the global shipping fleet which we use to get so 43 00:02:22,400 --> 00:02:25,880 Speaker 1: many items around the world, you know, integral part to 44 00:02:26,360 --> 00:02:28,880 Speaker 1: not just the consumer goods that we have, but actually 45 00:02:28,919 --> 00:02:31,799 Speaker 1: to the transition. How much pollution is actually coming from 46 00:02:31,840 --> 00:02:33,040 Speaker 1: this part of the economy. 47 00:02:33,320 --> 00:02:35,840 Speaker 2: Yeah, I think when we look at pollution, it's mostly 48 00:02:35,840 --> 00:02:38,680 Speaker 2: from the fuel that powers this ship. And right now 49 00:02:38,720 --> 00:02:41,800 Speaker 2: most of it is predominantly oil. So it's five percent 50 00:02:41,840 --> 00:02:44,520 Speaker 2: of the global oil demand and that translates around two 51 00:02:44,600 --> 00:02:48,600 Speaker 2: point five percent of global carbon dix have emissions. 52 00:02:48,240 --> 00:02:50,440 Speaker 1: And is this something that's going to be increasing? And 53 00:02:50,639 --> 00:02:53,880 Speaker 1: the question I'm asking really is what's the growth forecast 54 00:02:54,000 --> 00:02:55,240 Speaker 1: in terms of shipping. 55 00:02:55,480 --> 00:02:58,440 Speaker 2: Yeah, I think it's in the very short term for 56 00:02:58,480 --> 00:03:01,239 Speaker 2: the past one hundred years. Anyway. Now it's increasing a 57 00:03:01,320 --> 00:03:05,079 Speaker 2: lot because of all the inefficiencies that come from Russia's 58 00:03:05,240 --> 00:03:07,440 Speaker 2: vision of Ukraine. There's like a lot of trade that's 59 00:03:07,480 --> 00:03:10,520 Speaker 2: being rerouted and now recent attacks in Red Sea, all 60 00:03:10,520 --> 00:03:12,639 Speaker 2: the ships are going around Africa instead of using the 61 00:03:12,680 --> 00:03:15,560 Speaker 2: sewiss Canar route. But like over time, the trade itself, 62 00:03:15,600 --> 00:03:17,959 Speaker 2: we expect a growth of on like twenty percent between 63 00:03:17,960 --> 00:03:19,920 Speaker 2: now and twenty fifty. But when it comes to like 64 00:03:20,000 --> 00:03:23,359 Speaker 2: emissions itself, there are like a lot of efficiency increases 65 00:03:23,440 --> 00:03:26,079 Speaker 2: both from like whether it's a new shape, new engine, 66 00:03:26,200 --> 00:03:28,239 Speaker 2: or new fuel and the various things, and like a 67 00:03:28,280 --> 00:03:31,280 Speaker 2: lot of technology side of things. So while the trade increase, 68 00:03:31,360 --> 00:03:34,320 Speaker 2: but the fuel consumption and the related emissions historically it's 69 00:03:34,360 --> 00:03:37,240 Speaker 2: been like more and less the same correlated with the 70 00:03:37,280 --> 00:03:39,960 Speaker 2: growth in seabond trade itself, but we don't see that 71 00:03:40,080 --> 00:03:41,280 Speaker 2: happening forward from now. 72 00:03:41,600 --> 00:03:45,640 Speaker 1: So better ships, better engines, better fuels can lead us 73 00:03:45,680 --> 00:03:49,600 Speaker 1: to potentially not growing emissions as this industry continues to grow, 74 00:03:49,760 --> 00:03:52,200 Speaker 1: even potentially maybe taking a step back. So then let's 75 00:03:52,200 --> 00:03:54,840 Speaker 1: talk about the fuels. What is the current fuel mix 76 00:03:54,880 --> 00:03:56,640 Speaker 1: and what do you need to move a ship forward? 77 00:03:56,680 --> 00:03:59,280 Speaker 1: Anybody who's listening, who's in the commodity space is probably 78 00:03:59,320 --> 00:04:01,400 Speaker 1: sitting here going, But I mean for those who are not, 79 00:04:01,720 --> 00:04:04,360 Speaker 1: what actually what are the fuels in ships? 80 00:04:04,800 --> 00:04:06,480 Speaker 2: Yeah? I think I would just put it like on 81 00:04:06,600 --> 00:04:10,160 Speaker 2: a high level, it's oil products. But for the oil markets, 82 00:04:10,200 --> 00:04:12,760 Speaker 2: it's mostly like fuel oil that's there. And then there's 83 00:04:12,800 --> 00:04:15,560 Speaker 2: also a mix of diesel that's called marine gas oil, 84 00:04:15,640 --> 00:04:18,320 Speaker 2: that's the diesel equivalant fuel that's being used. So it 85 00:04:18,400 --> 00:04:20,920 Speaker 2: also depends on certain things. Like back in twenty twenty, 86 00:04:20,920 --> 00:04:24,159 Speaker 2: there was this big regulation shift in terms of what 87 00:04:24,279 --> 00:04:27,359 Speaker 2: fuel you can burn in ships internationally, and that was 88 00:04:27,360 --> 00:04:29,960 Speaker 2: a change from like three point five sulfur fuel oil 89 00:04:30,040 --> 00:04:33,279 Speaker 2: to point by sulfur maximum fue oil and then like 90 00:04:33,320 --> 00:04:36,559 Speaker 2: the whole industry mostly moved from that high sulfur fuel 91 00:04:36,520 --> 00:04:38,279 Speaker 2: oil to low surfur fue oil. But then there are 92 00:04:38,279 --> 00:04:41,880 Speaker 2: also something called as ec emission control areas where the 93 00:04:41,920 --> 00:04:44,640 Speaker 2: sulfur emission is much more stricter, so you would have 94 00:04:44,760 --> 00:04:47,400 Speaker 2: like something with a maximum cap of point one sulfur. 95 00:04:47,480 --> 00:04:49,800 Speaker 2: So you see more use of marine gas oil that's 96 00:04:49,839 --> 00:04:53,280 Speaker 2: the diesel equivalent, and also elng G. But LNG is 97 00:04:53,480 --> 00:04:57,000 Speaker 2: predominantly used in just LNG tankers as of now, but 98 00:04:57,080 --> 00:04:59,560 Speaker 2: that's changing a lot. Actually, if you look at all 99 00:04:59,600 --> 00:05:02,240 Speaker 2: the new vessels that are in order that are being 100 00:05:02,360 --> 00:05:05,240 Speaker 2: that has a commercial agreement to build maybe like over 101 00:05:05,320 --> 00:05:07,599 Speaker 2: two years, so those ones, when we check that, we 102 00:05:07,640 --> 00:05:10,800 Speaker 2: see a lot of LNG powered vessels and that's around 103 00:05:10,839 --> 00:05:13,479 Speaker 2: like thirty percent of the total order book right now 104 00:05:13,560 --> 00:05:16,119 Speaker 2: in terms of what's on order, but the dominant fuel 105 00:05:16,160 --> 00:05:18,880 Speaker 2: still remains to be oil. So that's something that can 106 00:05:18,960 --> 00:05:22,200 Speaker 2: run on fuel oil and marine gas oil for instance, 107 00:05:22,200 --> 00:05:25,080 Speaker 2: and that's around fifty eight percent of the total autobook. 108 00:05:25,120 --> 00:05:29,120 Speaker 2: But what's very interesting and very optimistic is also looking 109 00:05:29,160 --> 00:05:32,400 Speaker 2: at how the new alternative fuels which are much cleaner. 110 00:05:32,520 --> 00:05:35,720 Speaker 2: While these fuels are mostly like methanol or ammonia, but 111 00:05:35,800 --> 00:05:37,960 Speaker 2: like in the order book, we just see methanol and 112 00:05:38,000 --> 00:05:40,200 Speaker 2: that's not like ten percent of the total autobook. 113 00:05:40,520 --> 00:05:43,599 Speaker 1: So when you talk about LNG tankers, we're actually talking 114 00:05:43,640 --> 00:05:47,239 Speaker 1: about ships that are transporting LERNG but then also using 115 00:05:47,360 --> 00:05:50,400 Speaker 1: the liquefied natural gas as one of the fuels that 116 00:05:50,440 --> 00:05:53,960 Speaker 1: they're using. And I want to know why LNG is 117 00:05:53,960 --> 00:05:56,240 Speaker 1: not used more widely in other ships. 118 00:05:56,720 --> 00:05:58,760 Speaker 2: Just a bit of context on that. So most of 119 00:05:58,800 --> 00:06:02,480 Speaker 2: these ships are like dual fuel. I mentioned previously about 120 00:06:02,600 --> 00:06:05,520 Speaker 2: various other fuels like methanol in the order book, and 121 00:06:05,560 --> 00:06:07,520 Speaker 2: also most of them are dual fuel as well. So 122 00:06:07,600 --> 00:06:09,560 Speaker 2: because it's a combustion engine, they can also run on 123 00:06:09,640 --> 00:06:12,359 Speaker 2: oil based fuels. And historic like energie started as a 124 00:06:12,440 --> 00:06:15,880 Speaker 2: very niche industry and I would even club LPG tankers 125 00:06:15,920 --> 00:06:19,080 Speaker 2: in that the tankers that carry liquified petroleum gas, and 126 00:06:19,120 --> 00:06:22,280 Speaker 2: that's basically your propane and buttane that's used in cooking 127 00:06:22,560 --> 00:06:26,200 Speaker 2: and also in petrochemicals. LNG is basically methane. And then 128 00:06:26,360 --> 00:06:29,000 Speaker 2: if you want to transport inland, like you just use pipelines, 129 00:06:29,040 --> 00:06:31,400 Speaker 2: but like if you want to transport for a far distance, 130 00:06:31,680 --> 00:06:34,120 Speaker 2: you can't use an oil tanker for this because it 131 00:06:34,200 --> 00:06:37,159 Speaker 2: has to withstand that high pressure. And then because of 132 00:06:37,200 --> 00:06:39,719 Speaker 2: that high pressure, there's also something that's called a boil off, 133 00:06:39,839 --> 00:06:42,680 Speaker 2: So that's basically the allergy that gets the gassified and 134 00:06:42,800 --> 00:06:44,800 Speaker 2: comes out, and they use some of that as a 135 00:06:44,839 --> 00:06:47,560 Speaker 2: fuel in allergy tankers as well. And one of the 136 00:06:48,040 --> 00:06:51,680 Speaker 2: reasons why ellernge is not used elsewhere it's historically being 137 00:06:51,680 --> 00:06:54,760 Speaker 2: in a very small market and now obviously it's very big, 138 00:06:54,800 --> 00:06:56,839 Speaker 2: and even in terms of like growth areas as where 139 00:06:56,839 --> 00:06:59,080 Speaker 2: we see a lot of growth both for LNG use 140 00:06:59,279 --> 00:07:02,160 Speaker 2: demand and also energy shippings, and also you have to 141 00:07:02,200 --> 00:07:04,800 Speaker 2: think about like port infrastructure. So it was initially meant 142 00:07:04,880 --> 00:07:07,440 Speaker 2: just for like llergy tankers, but obviously now we're seeing 143 00:07:07,440 --> 00:07:10,120 Speaker 2: a lot of change in that and what's interesting is 144 00:07:10,160 --> 00:07:13,119 Speaker 2: when you look at LNG use as a shipping fuel. 145 00:07:13,280 --> 00:07:16,440 Speaker 2: Historically it's been only in energy tankers, but now we're 146 00:07:16,480 --> 00:07:17,440 Speaker 2: seeing let's. 147 00:07:17,200 --> 00:07:18,320 Speaker 3: Say a bulk carrier. 148 00:07:18,640 --> 00:07:23,280 Speaker 2: Bulk carriers basically it's a segment that carries all try goods. 149 00:07:23,320 --> 00:07:24,360 Speaker 3: So if it's your. 150 00:07:24,240 --> 00:07:27,360 Speaker 2: Coal, iron ore, all the metals, and even in the grain. 151 00:07:27,440 --> 00:07:30,240 Speaker 2: So these are a majority component of that. So LERG 152 00:07:30,440 --> 00:07:33,360 Speaker 2: is used as a bunker fuel is definitely expanding at 153 00:07:33,360 --> 00:07:36,520 Speaker 2: more and more ship owners they're ordering these lergy vessels. 154 00:07:36,760 --> 00:07:39,920 Speaker 1: So you actually need a different ship and a different 155 00:07:39,960 --> 00:07:42,000 Speaker 1: engine in order to be able to make that work. 156 00:07:42,040 --> 00:07:44,320 Speaker 1: But then how about what we would consider to be 157 00:07:44,400 --> 00:07:47,840 Speaker 1: more drop in fuels? So with then bile fuels and 158 00:07:47,880 --> 00:07:50,960 Speaker 1: then ammonia and methanol, how do those fit into the 159 00:07:51,080 --> 00:07:54,920 Speaker 1: existing infrastructure? And you start with whatever your favorite one is. 160 00:07:55,520 --> 00:07:58,120 Speaker 2: Because you mentioned drop in fuel, I would consider buy 161 00:07:58,160 --> 00:08:01,360 Speaker 2: fuel as a drop in fuel. When we talk about biofuel, 162 00:08:01,520 --> 00:08:04,280 Speaker 2: you're just like blending it with the fossil fuel. Like 163 00:08:04,360 --> 00:08:06,800 Speaker 2: let's say, if you're talking about fuel oil or even 164 00:08:07,080 --> 00:08:09,800 Speaker 2: gas oil, that's the easily equivalent, So you would just. 165 00:08:09,880 --> 00:08:11,560 Speaker 3: Like blend a part of it. 166 00:08:11,720 --> 00:08:14,200 Speaker 2: And I think in Rotterdam, one of the biggest part 167 00:08:14,240 --> 00:08:17,200 Speaker 2: in Europe, so that's where you use a thirty percent blend. 168 00:08:17,280 --> 00:08:19,560 Speaker 2: And lately, over the past few years we are seeing 169 00:08:19,600 --> 00:08:22,200 Speaker 2: a pickup in sales of what we call it bio 170 00:08:22,320 --> 00:08:25,280 Speaker 2: blended fuel oil. And that's one aspect, and you can 171 00:08:25,320 --> 00:08:28,000 Speaker 2: also have like various blends, but in terms of scale, 172 00:08:28,040 --> 00:08:30,600 Speaker 2: most of the current uptake is in Rotterdam and it's 173 00:08:30,720 --> 00:08:33,320 Speaker 2: very promising. A Q four of twenty twenty three, so 174 00:08:33,400 --> 00:08:36,079 Speaker 2: twenty five percent of the loss of for fueil says 175 00:08:36,240 --> 00:08:39,120 Speaker 2: was bio blended, but I guess the actual biofuel volumes 176 00:08:39,120 --> 00:08:41,240 Speaker 2: would be much lower because if it's a thirty percent 177 00:08:41,320 --> 00:08:43,240 Speaker 2: blend or something, then it will be an eight percent thing. 178 00:08:43,320 --> 00:08:45,400 Speaker 2: So if we are seeing le's peak up right now 179 00:08:45,440 --> 00:08:48,840 Speaker 2: today in Europe, musty and also concentrated in all the 180 00:08:48,920 --> 00:08:50,800 Speaker 2: key hubs. So that is something that we'll call it 181 00:08:50,960 --> 00:08:53,840 Speaker 2: drop in fuel because you can use the existing vessels, 182 00:08:53,840 --> 00:08:56,520 Speaker 2: you can use existing infrastructure, you just use it and 183 00:08:56,880 --> 00:09:00,640 Speaker 2: your I guess average intensity carbon intensity would be lower. 184 00:09:01,040 --> 00:09:03,280 Speaker 1: So it's a part way solution for us right now. 185 00:09:03,880 --> 00:09:04,160 Speaker 3: Yeah. 186 00:09:04,280 --> 00:09:07,600 Speaker 2: Yeah, and it's also I think what's really important able 187 00:09:07,679 --> 00:09:10,400 Speaker 2: like these shipping fuels as well it's not stand alone 188 00:09:10,480 --> 00:09:13,520 Speaker 2: where it's shipping is the only sector. They kind of 189 00:09:13,600 --> 00:09:16,760 Speaker 2: interact with other sectors as well. Like we spoke about biofuel, 190 00:09:16,800 --> 00:09:19,640 Speaker 2: biofuels is used. You know, you can put sustainable aviation 191 00:09:19,760 --> 00:09:22,960 Speaker 2: fuel in that, you can have the road biofuels, so 192 00:09:23,200 --> 00:09:26,880 Speaker 2: they interact with all the other sectors. Methanol and ammonia 193 00:09:27,120 --> 00:09:29,679 Speaker 2: is much more complicated, and like I've been having a 194 00:09:29,679 --> 00:09:33,240 Speaker 2: lot of conversations at ending conferences, no one is really 195 00:09:33,520 --> 00:09:37,160 Speaker 2: satisfied with methanol and ammonia itself. One way to look 196 00:09:37,160 --> 00:09:39,400 Speaker 2: at is where is the money flowing, so that shows 197 00:09:39,400 --> 00:09:41,600 Speaker 2: a sign of confidence, and most of it is going 198 00:09:41,720 --> 00:09:45,080 Speaker 2: for methanol, and that's the initial momentum is with methanol. 199 00:09:45,160 --> 00:09:47,559 Speaker 2: But then if you want to talk about what happened 200 00:09:47,600 --> 00:09:51,199 Speaker 2: until twenty fifty, everyone's like, oh, maybe not just methanol 201 00:09:51,280 --> 00:09:53,640 Speaker 2: because they are like other concerns with methanol. They're talking 202 00:09:53,679 --> 00:09:56,400 Speaker 2: about like ammonia, But ammonia has its own issues with 203 00:09:56,600 --> 00:09:59,920 Speaker 2: how do we handle ammonia. It's toxic, there might be in 204 00:10:00,440 --> 00:10:03,360 Speaker 2: it's a lot of crew training, so it's bit complicated. 205 00:10:03,520 --> 00:10:06,600 Speaker 2: But that that's not even like accounting the new engines 206 00:10:06,640 --> 00:10:08,840 Speaker 2: that you have to make to run these fuels because 207 00:10:08,840 --> 00:10:11,840 Speaker 2: they've not been used before. And then even the concept 208 00:10:11,920 --> 00:10:14,640 Speaker 2: of having the whole end to end value chain, the 209 00:10:14,679 --> 00:10:16,640 Speaker 2: bunker infrastructure, it's not easy. 210 00:10:17,080 --> 00:10:19,120 Speaker 1: So moving away from the drop in fuels and then 211 00:10:19,200 --> 00:10:22,000 Speaker 1: to what are essentially coming from hydrogen, where there's a 212 00:10:22,000 --> 00:10:23,960 Speaker 1: lot of attention on at the moment, tell us how 213 00:10:24,000 --> 00:10:26,760 Speaker 1: to think about ammonia and methanol and really just kind 214 00:10:26,800 --> 00:10:29,360 Speaker 1: of well, what the future of this shipping fleet could 215 00:10:29,360 --> 00:10:30,680 Speaker 1: potentially look like. 216 00:10:31,320 --> 00:10:34,559 Speaker 2: Yeah, I think like hydrogen is definitely important for both 217 00:10:34,559 --> 00:10:37,440 Speaker 2: ammonia and methanol as well. Like, yeah, so both of 218 00:10:37,440 --> 00:10:40,840 Speaker 2: them have like a hydrogen atominate, So it's clearly like 219 00:10:40,840 --> 00:10:43,920 Speaker 2: a hydrogen question. So the cost of producing like greene 220 00:10:43,960 --> 00:10:47,040 Speaker 2: hydrogen is also important. That kind of like flows into 221 00:10:47,120 --> 00:10:50,000 Speaker 2: the prices into the cost of producing creen methanol or 222 00:10:50,120 --> 00:10:53,000 Speaker 2: creane ammonia itself. So one of the things that most 223 00:10:53,040 --> 00:10:55,240 Speaker 2: shipowners at least say is they don't want to bet 224 00:10:55,280 --> 00:10:58,000 Speaker 2: on one fuel because what happens is as a shipowner, 225 00:10:58,240 --> 00:11:01,640 Speaker 2: you build a ship for someone else to charter, and 226 00:11:01,679 --> 00:11:04,520 Speaker 2: then if you have a fuel, and if you're committed 227 00:11:04,559 --> 00:11:06,800 Speaker 2: to one fuel, and then there's shortage of the fuel 228 00:11:06,840 --> 00:11:08,960 Speaker 2: in the port that you want, So that kind of 229 00:11:08,960 --> 00:11:11,800 Speaker 2: complicates the whole equation. So everyone's like, Okay, we want 230 00:11:11,800 --> 00:11:14,920 Speaker 2: to try our different fuels, and then there's not clear evidence. 231 00:11:14,960 --> 00:11:18,079 Speaker 2: There are no major like ammonia ships running right now, 232 00:11:18,120 --> 00:11:21,120 Speaker 2: so it's very hard for them to make business decisions 233 00:11:21,160 --> 00:11:23,040 Speaker 2: on fuel that's not being used. 234 00:11:22,760 --> 00:11:24,439 Speaker 3: To run and power these ships. 235 00:11:24,520 --> 00:11:28,160 Speaker 2: So that's something that causing headaches for these ship onwners. 236 00:11:28,320 --> 00:11:31,520 Speaker 2: While we've seen methanol ships in the auto book, most 237 00:11:31,559 --> 00:11:34,840 Speaker 2: of this is being placed by a particular class of 238 00:11:34,960 --> 00:11:38,200 Speaker 2: the shipping so that's container ships. I think these container 239 00:11:38,240 --> 00:11:40,840 Speaker 2: ships are I would say in a well of position 240 00:11:41,080 --> 00:11:44,959 Speaker 2: where the market itself is consolidated, where three to five 241 00:11:45,000 --> 00:11:47,800 Speaker 2: companies control like majority of the market share. So there's 242 00:11:47,800 --> 00:11:50,680 Speaker 2: a consolidation there in terms of companies. Next, when you 243 00:11:50,720 --> 00:11:52,960 Speaker 2: look at what they carry, these are all like finished 244 00:11:53,000 --> 00:11:56,280 Speaker 2: products and they have higher margins for it. So if 245 00:11:56,320 --> 00:11:59,240 Speaker 2: you look at who their clients are, it's probably like Amazon, 246 00:11:59,400 --> 00:12:02,080 Speaker 2: I hear the other companies and they have their own 247 00:12:02,120 --> 00:12:04,199 Speaker 2: needs like oh, we want to clean up our valid chain. 248 00:12:04,320 --> 00:12:06,959 Speaker 2: So in a way, there's pressure on shipping companies to 249 00:12:07,040 --> 00:12:10,360 Speaker 2: provide carbon neutral shipping to retain their clients itself, and 250 00:12:10,400 --> 00:12:12,080 Speaker 2: most of them are like based in Europe and they 251 00:12:12,160 --> 00:12:15,760 Speaker 2: have shareholder pressure, they have exposure to EUTS and all 252 00:12:15,800 --> 00:12:19,080 Speaker 2: the emission schemes that are coming up in Europe itself, 253 00:12:19,120 --> 00:12:22,040 Speaker 2: So that's why they're like relatively well off. And you 254 00:12:22,160 --> 00:12:26,280 Speaker 2: hardly see any orders from the other major vessel categories 255 00:12:26,360 --> 00:12:29,480 Speaker 2: like the bulk carriers or oil tankers like one, it's 256 00:12:29,520 --> 00:12:33,040 Speaker 2: a cost issue as well, but also especially for oil tankers, 257 00:12:33,120 --> 00:12:36,280 Speaker 2: this whole thing is to move away, to decarbonize, to 258 00:12:36,320 --> 00:12:39,160 Speaker 2: move away from oil, that's the core commodity you are 259 00:12:39,200 --> 00:12:42,760 Speaker 2: building a ship to transport, and that makes them very nervous. 260 00:12:43,240 --> 00:12:45,800 Speaker 1: So, as you said, the goal is ultimately to decarbonize. 261 00:12:45,800 --> 00:12:48,160 Speaker 1: So let's talk about some of the targets that are 262 00:12:48,160 --> 00:12:51,400 Speaker 1: out there, and you know, really who is trying to 263 00:12:51,440 --> 00:12:55,680 Speaker 1: reach net zero versus just reducing emissions, because the maritime 264 00:12:55,720 --> 00:12:58,360 Speaker 1: industry is one of the hard to abate spaces where 265 00:12:58,440 --> 00:13:00,839 Speaker 1: there's a degree of innovation that we're going to need 266 00:13:00,840 --> 00:13:03,880 Speaker 1: in order to be able to reach a net zero future. 267 00:13:04,440 --> 00:13:06,160 Speaker 2: So I guess if you look at like who's setting 268 00:13:06,160 --> 00:13:10,440 Speaker 2: the targets, it's the International Maritime Organization also known as IMO. 269 00:13:10,920 --> 00:13:16,200 Speaker 2: So last year they updated their greenhouse gas strategy, finally 270 00:13:16,240 --> 00:13:20,040 Speaker 2: targeting net zero by twenty fifty. Before even the target 271 00:13:20,160 --> 00:13:22,920 Speaker 2: was just fifty percent reduction in twenty fifty compared to 272 00:13:22,960 --> 00:13:25,960 Speaker 2: like the two thousand and eight baseline, So all the 273 00:13:26,000 --> 00:13:27,920 Speaker 2: conversations that we had last year was or even like 274 00:13:28,000 --> 00:13:31,080 Speaker 2: IMO is not targeting net zero, so what but like 275 00:13:31,160 --> 00:13:33,720 Speaker 2: at least now at least the targets are set in place, 276 00:13:34,240 --> 00:13:37,240 Speaker 2: so that's one thing. But they also have a target 277 00:13:37,280 --> 00:13:41,280 Speaker 2: for twenty thirty that's a twenty percent reduction, but that's 278 00:13:41,280 --> 00:13:44,040 Speaker 2: something that I would say, there's consensus that the shipping 279 00:13:44,080 --> 00:13:46,960 Speaker 2: industry is not going to meet those targets. So that's 280 00:13:47,000 --> 00:13:50,560 Speaker 2: a missed opportunity because all of the change, it's mostly 281 00:13:50,600 --> 00:13:54,120 Speaker 2: post twenty thirties, is highly much change, and even like 282 00:13:54,200 --> 00:13:57,000 Speaker 2: these new fuels, we won't see an ammonia vessel up 283 00:13:57,080 --> 00:14:00,320 Speaker 2: until probably twenty twenties. So in terms of targets, obviously 284 00:14:00,360 --> 00:14:02,480 Speaker 2: the main one is the IOMO because that's such the 285 00:14:02,520 --> 00:14:05,720 Speaker 2: targets elsewhere, but I would say the European Union have 286 00:14:05,960 --> 00:14:10,840 Speaker 2: like two schemes they included shipping in EU ets this year. 287 00:14:11,080 --> 00:14:14,679 Speaker 2: In terms of impact itself, right now ideally it should 288 00:14:14,720 --> 00:14:17,280 Speaker 2: be like talk of the town, but it's not that 289 00:14:17,480 --> 00:14:20,480 Speaker 2: significant because of all the near term changes in the 290 00:14:20,520 --> 00:14:22,520 Speaker 2: Red Sea and all the attacks. 291 00:14:22,880 --> 00:14:26,000 Speaker 1: One of the things that you're referring to is that, 292 00:14:26,240 --> 00:14:29,200 Speaker 1: first of all, that's this EU emissions trading system, which 293 00:14:29,240 --> 00:14:33,240 Speaker 1: is essentially a policy intervention, and then there's the International 294 00:14:33,240 --> 00:14:36,880 Speaker 1: Maritime Organization, which is a specialized group that's a part 295 00:14:36,920 --> 00:14:39,520 Speaker 1: of the United Nations. So I'm seeing that these targets 296 00:14:39,560 --> 00:14:42,680 Speaker 1: are really largely coming. We're talking about policy right now. 297 00:14:43,200 --> 00:14:47,080 Speaker 1: Are there also targets coming from some of the companies themselves? 298 00:14:47,160 --> 00:14:50,320 Speaker 1: Who are the ships that are going around the world. 299 00:14:50,440 --> 00:14:53,440 Speaker 1: Are the shipping organizations themselves, Are they ambitious about driving 300 00:14:53,440 --> 00:14:54,160 Speaker 1: down emissions? 301 00:14:54,440 --> 00:14:57,440 Speaker 2: Yeah, definitely. I think most of them are like consolidated 302 00:14:57,840 --> 00:15:01,720 Speaker 2: in the contingent containership vessel class, so we're seeing a 303 00:15:01,760 --> 00:15:04,480 Speaker 2: lot of them have their own net zero targets, as 304 00:15:04,520 --> 00:15:06,880 Speaker 2: I've mentioned, for like various reasons. But then there's also 305 00:15:06,880 --> 00:15:10,440 Speaker 2: a few companies outside, particularly like Costco that's the Chinese 306 00:15:10,480 --> 00:15:13,560 Speaker 2: shipping company, have their target, and shipping companies in Japan 307 00:15:13,680 --> 00:15:15,640 Speaker 2: as well come up. But there's overall, I would say 308 00:15:15,720 --> 00:15:19,520 Speaker 2: the trend is very high in container ship companies, whereas 309 00:15:19,560 --> 00:15:22,680 Speaker 2: in bulk carriers and oil tankers, I think there are 310 00:15:22,760 --> 00:15:26,320 Speaker 2: very few targets from that set. And while that is welcome, 311 00:15:26,600 --> 00:15:28,960 Speaker 2: you need these companies to set up targets so that 312 00:15:29,080 --> 00:15:32,240 Speaker 2: there's a willingness to pay the green premium for the fuels, 313 00:15:32,280 --> 00:15:36,120 Speaker 2: because today probably the green fuels like green methanol like 314 00:15:36,120 --> 00:15:39,280 Speaker 2: I'm on, at least four to five times more expensive. Obviously, 315 00:15:39,320 --> 00:15:42,640 Speaker 2: like all the carbon price from EUTS would not bridge 316 00:15:42,640 --> 00:15:45,200 Speaker 2: that gap. So you just need willingness either from the 317 00:15:45,240 --> 00:15:47,840 Speaker 2: shipping companies to go ahead and do it, or the 318 00:15:47,880 --> 00:15:50,600 Speaker 2: clients of the shipping companies requesting, oh, yes, we need 319 00:15:50,640 --> 00:15:53,360 Speaker 2: carbon neutral shipping for this, So someone has to pray 320 00:15:53,400 --> 00:15:55,200 Speaker 2: the premium, and like you need the willingness to pay, 321 00:15:55,200 --> 00:15:57,400 Speaker 2: and this comes from setting targets themselves. 322 00:15:57,480 --> 00:15:59,880 Speaker 1: So that's on the companies themselves and then the consumer. 323 00:16:00,160 --> 00:16:02,520 Speaker 1: And then you know, just going back one more time 324 00:16:02,520 --> 00:16:04,840 Speaker 1: to the policy end, because I switched you to companies 325 00:16:04,880 --> 00:16:08,040 Speaker 1: before you had an opportunity to talk about the third intervention, 326 00:16:08,200 --> 00:16:11,120 Speaker 1: which is also from the European Union, which is fuel EU. 327 00:16:11,280 --> 00:16:14,120 Speaker 1: Can you talk a little bit about the targets there. 328 00:16:14,360 --> 00:16:17,520 Speaker 2: So the EU has two schemes of the EETs, which 329 00:16:17,560 --> 00:16:21,560 Speaker 2: I mentioned before. So you pay a carbon price based 330 00:16:21,600 --> 00:16:25,440 Speaker 2: on what you emit, but the EU the fuel you 331 00:16:25,520 --> 00:16:28,800 Speaker 2: married time is it sets the targets on the average 332 00:16:28,880 --> 00:16:33,760 Speaker 2: creenouse gas intensity and those targets get stricter over time. 333 00:16:33,920 --> 00:16:36,360 Speaker 2: So right now I think like fuels like LNG is 334 00:16:36,360 --> 00:16:39,160 Speaker 2: still compliant, but you know, they gets like stricter over time, 335 00:16:39,200 --> 00:16:41,560 Speaker 2: and then maybe on late twenty thirties, that's where we 336 00:16:41,600 --> 00:16:45,080 Speaker 2: see energ not being compliant. Fuels like fuel oil and 337 00:16:45,120 --> 00:16:47,680 Speaker 2: all of them won't be compliant starting from next year. 338 00:16:47,600 --> 00:16:49,840 Speaker 1: So they won't be able to be used in Europe. 339 00:16:50,160 --> 00:16:52,760 Speaker 2: Oh no, so you can use them, but it's more like, 340 00:16:52,880 --> 00:16:55,560 Speaker 2: so you pay the differential. So let's say if you 341 00:16:55,840 --> 00:16:58,960 Speaker 2: exceed the target by like five percent, then you pay 342 00:16:59,080 --> 00:17:00,880 Speaker 2: how much of a fuel you consume, and then you've 343 00:17:00,880 --> 00:17:03,240 Speaker 2: paid the five percent in access, so you could still 344 00:17:03,320 --> 00:17:06,040 Speaker 2: use them, but it's just like you start paying for that. 345 00:17:06,600 --> 00:17:08,600 Speaker 1: And does that price fluctuate the same way that the 346 00:17:08,640 --> 00:17:12,119 Speaker 1: carbon price fluctuates the trading scheme or is it different? 347 00:17:12,359 --> 00:17:14,680 Speaker 2: So it doesn't, So there's a penalty that's fixed by 348 00:17:14,720 --> 00:17:18,040 Speaker 2: the EU that doesn't like fluctuate that much. But what 349 00:17:18,200 --> 00:17:21,680 Speaker 2: happens is there's something that's called a pooling mechanism, So 350 00:17:21,760 --> 00:17:24,440 Speaker 2: that's kind of I wouldn't call it necessarily a loophole, 351 00:17:24,520 --> 00:17:28,000 Speaker 2: but you could probably take advantage of that where if 352 00:17:28,000 --> 00:17:30,240 Speaker 2: you have one vessel that has if you use like 353 00:17:30,280 --> 00:17:32,679 Speaker 2: an ammonia like methanol vessel, then you can. 354 00:17:32,600 --> 00:17:34,480 Speaker 3: Pull together as a flea. 355 00:17:34,680 --> 00:17:37,000 Speaker 2: You can have one methanol and then like two three 356 00:17:37,080 --> 00:17:39,480 Speaker 2: oil based fuels, and then you can pull them together 357 00:17:39,840 --> 00:17:42,800 Speaker 2: and then have an average fleet wide intensity and then 358 00:17:42,880 --> 00:17:45,679 Speaker 2: comply with the target as well. So that kind of 359 00:17:45,800 --> 00:17:48,520 Speaker 2: leaves the door open for more and more I guess 360 00:17:48,520 --> 00:17:51,400 Speaker 2: like consolidations, at least the fleet operation side of things. 361 00:17:51,400 --> 00:17:54,639 Speaker 2: They could consolidate them to meet the targets. But I 362 00:17:54,680 --> 00:17:58,440 Speaker 2: would still say, yeah, while Europe is setting up these targets, 363 00:17:58,440 --> 00:18:01,040 Speaker 2: this is very important. But also the emissions that are 364 00:18:01,119 --> 00:18:04,600 Speaker 2: under Europe is still fourteen percent of the global shipping emissions. 365 00:18:04,800 --> 00:18:08,080 Speaker 1: So Europe has aggressive targets, but they actually are not 366 00:18:08,280 --> 00:18:11,160 Speaker 1: the vast majority of these shipping emissions, and so other 367 00:18:11,200 --> 00:18:13,560 Speaker 1: parts of the world need to start kind of either 368 00:18:13,600 --> 00:18:17,560 Speaker 1: adopting these or other other ways in order to I guess, 369 00:18:17,600 --> 00:18:20,760 Speaker 1: get these shipping companies to actually look at adopting these 370 00:18:20,880 --> 00:18:23,800 Speaker 1: newer fuels and newer technologies. And one of the questions 371 00:18:23,840 --> 00:18:25,760 Speaker 1: I have as a follow on to that, and I 372 00:18:25,760 --> 00:18:29,040 Speaker 1: think a parallel would be the automotive market, where you 373 00:18:29,080 --> 00:18:32,760 Speaker 1: look at let's say the United States and the more 374 00:18:32,840 --> 00:18:36,640 Speaker 1: strict emission standards they have in California and the fact 375 00:18:36,680 --> 00:18:40,120 Speaker 1: that certain automotive manufacturers have then had to make less 376 00:18:40,160 --> 00:18:42,960 Speaker 1: polluting vehicles and then ultimately they sold them in other 377 00:18:43,040 --> 00:18:45,880 Speaker 1: parts of the country because they already designed the technology. 378 00:18:46,000 --> 00:18:49,360 Speaker 1: Do you think that even though Europe is a smaller 379 00:18:49,400 --> 00:18:54,600 Speaker 1: portion of the overall shipping industry and total emissions, do 380 00:18:54,640 --> 00:18:57,440 Speaker 1: you still think that the technological advances that are being 381 00:18:57,520 --> 00:19:01,400 Speaker 1: driven by these stricter standard it will have a benefit 382 00:19:01,440 --> 00:19:02,639 Speaker 1: to other parts of the world. 383 00:19:03,200 --> 00:19:05,320 Speaker 2: I think the beauty of the shipping market is it 384 00:19:05,359 --> 00:19:08,399 Speaker 2: connects different regions. So what's happening in Europe is not 385 00:19:08,480 --> 00:19:10,760 Speaker 2: just Europe. Talk about your example, like if there's a 386 00:19:10,800 --> 00:19:13,720 Speaker 2: car that's driving in California, then it'll probably remain most 387 00:19:13,760 --> 00:19:15,879 Speaker 2: likely in US where when you talk about like a ship, 388 00:19:15,920 --> 00:19:18,480 Speaker 2: and if it's even like exporting oil from Houston to 389 00:19:18,640 --> 00:19:21,399 Speaker 2: somewhere in Europe, so that still pays like even though 390 00:19:21,440 --> 00:19:23,960 Speaker 2: it's fifty percent, that still pays a carbon price based 391 00:19:23,960 --> 00:19:26,520 Speaker 2: on its emissions even something come from China to Europe 392 00:19:26,680 --> 00:19:28,920 Speaker 2: foot page. So that's a good start. There's a lot 393 00:19:29,000 --> 00:19:31,240 Speaker 2: more visibility. Over the past four years, there was like 394 00:19:31,240 --> 00:19:33,240 Speaker 2: a lot more data on an individual vessel, like how 395 00:19:33,320 --> 00:19:35,760 Speaker 2: much they emit, how much they consume. Once the data 396 00:19:35,840 --> 00:19:38,159 Speaker 2: is there, that's very important as well. Last week I 397 00:19:38,280 --> 00:19:40,320 Speaker 2: was in Stamford, Connecticut, and this was one of the 398 00:19:40,359 --> 00:19:43,440 Speaker 2: panel discussions, like what's going to be your US response 399 00:19:43,560 --> 00:19:46,159 Speaker 2: to the EU ets and what they did with shipping, 400 00:19:46,320 --> 00:19:48,679 Speaker 2: And I think like some of the discussion points was 401 00:19:48,760 --> 00:19:51,240 Speaker 2: it is unlikely to see the national level thing, but 402 00:19:51,359 --> 00:19:53,520 Speaker 2: as you mentioned, there will be like states that can 403 00:19:53,600 --> 00:19:55,960 Speaker 2: come up and then set targets for themselves. 404 00:19:56,000 --> 00:19:58,040 Speaker 1: I mean, shipping is about as global of an industry 405 00:19:58,080 --> 00:19:59,720 Speaker 1: as it gets. And we've talked a bit about Europe, 406 00:19:59,720 --> 00:20:01,760 Speaker 1: but I I want to know which part of the 407 00:20:01,760 --> 00:20:04,879 Speaker 1: world is the largest source of shipping emissions. 408 00:20:05,160 --> 00:20:08,080 Speaker 2: The way we look at it is where you purchase 409 00:20:08,320 --> 00:20:12,240 Speaker 2: the shipping fuel. So if you look at that, Unfortunately, Singapore, 410 00:20:12,440 --> 00:20:16,119 Speaker 2: a very tiny country, would account for the highest share 411 00:20:16,119 --> 00:20:19,040 Speaker 2: of emissions because it's a bunkering hub, but the actual 412 00:20:19,119 --> 00:20:21,560 Speaker 2: demand comes from probably from like China in Europe and 413 00:20:21,600 --> 00:20:24,159 Speaker 2: they're like probably fueling and Singapore on the way. So 414 00:20:24,240 --> 00:20:27,239 Speaker 2: it's things like that where it is very easy to 415 00:20:27,600 --> 00:20:31,600 Speaker 2: enforce it at the point of consumption. So that's why 416 00:20:31,640 --> 00:20:34,680 Speaker 2: it's important to look at these hubs as well, and 417 00:20:34,960 --> 00:20:38,240 Speaker 2: that's why ports have a very important role to play. 418 00:20:38,400 --> 00:20:40,720 Speaker 2: And when you think about it, let's say the Port 419 00:20:40,760 --> 00:20:43,800 Speaker 2: of Singapore, like Port of Rotterdam, they're all showing this 420 00:20:44,000 --> 00:20:46,159 Speaker 2: new data on how much of these green fuels are 421 00:20:46,200 --> 00:20:49,160 Speaker 2: being used, and they're like setting up studies and infrastructure 422 00:20:49,240 --> 00:20:52,680 Speaker 2: required to have these bunkering hubs. It's also in their 423 00:20:52,760 --> 00:20:55,800 Speaker 2: best interest because they're the biggest hubs. They want to 424 00:20:55,880 --> 00:20:58,960 Speaker 2: remain the biggest hub even if the fuel changes or something, 425 00:20:59,000 --> 00:21:01,280 Speaker 2: so they in a way they are also like leading 426 00:21:01,320 --> 00:21:04,640 Speaker 2: the drive to get the new infrastructure so that they 427 00:21:04,680 --> 00:21:08,640 Speaker 2: can provide the fuels required and then maintain their hub status. 428 00:21:08,800 --> 00:21:12,080 Speaker 1: Yeah, because these emissions are largely they're shared with everyone 429 00:21:12,080 --> 00:21:14,679 Speaker 1: who is receiving the goods from the ship, so it 430 00:21:14,760 --> 00:21:17,360 Speaker 1: is really hard to pinpoint. Let's talk a little bit 431 00:21:17,400 --> 00:21:21,080 Speaker 1: about the demand side of things, and specifically I'm referring 432 00:21:21,080 --> 00:21:24,280 Speaker 1: to oil demand, and when our research says that it's 433 00:21:24,320 --> 00:21:28,120 Speaker 1: possible that oil demand for use in maritime could actually 434 00:21:28,240 --> 00:21:31,720 Speaker 1: peak if these other technologies actually start to get real 435 00:21:31,800 --> 00:21:33,000 Speaker 1: traction get underway. 436 00:21:34,000 --> 00:21:36,480 Speaker 2: Yeah, I think like we expect it, it's actually fairly soon, 437 00:21:36,520 --> 00:21:39,200 Speaker 2: like in the twenty twenty five where we see a peak, 438 00:21:39,240 --> 00:21:42,160 Speaker 2: but then the peak doesn't mean it's a fall off 439 00:21:42,160 --> 00:21:44,840 Speaker 2: from there. So right now, like it's ninety eight percent 440 00:21:45,080 --> 00:21:47,720 Speaker 2: of the total share, but they are like various other 441 00:21:48,000 --> 00:21:51,639 Speaker 2: regulations as well that kind of drive efficiency in the 442 00:21:51,680 --> 00:21:54,560 Speaker 2: shipping market, and then their fire they will reduced their 443 00:21:54,560 --> 00:21:57,760 Speaker 2: fuel consumption and emissions from there. So we see oil 444 00:21:57,800 --> 00:22:00,440 Speaker 2: demand and like shipping peaking at lound like five point 445 00:22:00,520 --> 00:22:03,640 Speaker 2: five million birass per day in twenty twenty five, and 446 00:22:03,840 --> 00:22:06,520 Speaker 2: that would go down to around that's a two point 447 00:22:06,600 --> 00:22:09,600 Speaker 2: seven millionmbarrass per day by twenty fifty, and that would 448 00:22:09,640 --> 00:22:12,879 Speaker 2: still be fifty percent of the total market share in 449 00:22:12,960 --> 00:22:16,520 Speaker 2: twenty fifty, So even though there's a decline, it's still 450 00:22:16,560 --> 00:22:19,120 Speaker 2: half of the market. So that just shows how difficult 451 00:22:19,240 --> 00:22:22,000 Speaker 2: it is for like other fuels to ramp up because 452 00:22:22,040 --> 00:22:24,600 Speaker 2: most of these vessels that are coming in and even 453 00:22:24,600 --> 00:22:26,560 Speaker 2: the vessels that are there, they're going to stay on 454 00:22:26,600 --> 00:22:28,840 Speaker 2: the sea for a long time because with the lifetime 455 00:22:28,880 --> 00:22:31,640 Speaker 2: of like twenty five years approximately, it's some even extending 456 00:22:31,680 --> 00:22:32,280 Speaker 2: more than that. 457 00:22:32,280 --> 00:22:34,720 Speaker 3: It's hard to drive change. It's going to be slow. 458 00:22:34,960 --> 00:22:37,600 Speaker 2: So that's where like the regulations should be like much 459 00:22:37,600 --> 00:22:39,480 Speaker 2: strict and like most of these ship on ers are 460 00:22:39,480 --> 00:22:42,639 Speaker 2: not against playing even like higher cost as long everyone 461 00:22:42,680 --> 00:22:44,480 Speaker 2: has to do it, but it will pass the cost 462 00:22:44,520 --> 00:22:47,560 Speaker 2: across the value chain. That's for like oil. And then 463 00:22:47,800 --> 00:22:50,160 Speaker 2: I think the biggest increase we see is for LNG, 464 00:22:50,400 --> 00:22:52,680 Speaker 2: like with financial gas, but like there's also a lot 465 00:22:52,680 --> 00:22:54,760 Speaker 2: of heat on LERNG with when it comes to like 466 00:22:55,119 --> 00:22:59,800 Speaker 2: methane slips. So that's basically the fuel that's not exactly consumed, 467 00:23:00,160 --> 00:23:02,880 Speaker 2: like a leakage kind of thing. So that's something that's 468 00:23:02,920 --> 00:23:05,879 Speaker 2: concerning and there's more and more scrutiny over that as well. 469 00:23:05,960 --> 00:23:08,800 Speaker 2: But in terms of looking at what's on order and 470 00:23:08,840 --> 00:23:12,959 Speaker 2: although uptake and like growth in infrastructure, and then we 471 00:23:13,000 --> 00:23:15,320 Speaker 2: have the alternative fuels well. 472 00:23:15,160 --> 00:23:17,000 Speaker 1: And when we talk about the next phase with these 473 00:23:17,000 --> 00:23:19,359 Speaker 1: alternative fuels, one of the things that comes up at 474 00:23:19,400 --> 00:23:21,280 Speaker 1: a lot of the summits, and I hear people on 475 00:23:21,320 --> 00:23:24,320 Speaker 1: stage in particular when they're referring to biofuels, is that 476 00:23:24,359 --> 00:23:27,479 Speaker 1: the demand is there and the market is willing to 477 00:23:27,800 --> 00:23:30,120 Speaker 1: pay a premium for some of these fuels in order 478 00:23:30,160 --> 00:23:33,879 Speaker 1: to decarbonize, but the supply isn't necessarily there yet. So 479 00:23:34,480 --> 00:23:37,800 Speaker 1: will we be able to ramp up the supply of 480 00:23:37,840 --> 00:23:41,640 Speaker 1: biofuels or even these much newer fuels that have their 481 00:23:41,680 --> 00:23:45,320 Speaker 1: own set of drawbacks, like ammonia or green methanol. Are 482 00:23:45,320 --> 00:23:47,720 Speaker 1: we going to be able to balance supply and demand 483 00:23:48,119 --> 00:23:49,840 Speaker 1: and will it catch up I guess in time in 484 00:23:49,960 --> 00:23:52,639 Speaker 1: order to reach some of these emissions targets that have 485 00:23:52,720 --> 00:23:54,000 Speaker 1: been outlined by the IMO. 486 00:23:54,480 --> 00:23:56,960 Speaker 2: Yeah, I think when we look at biofuel, and then 487 00:23:57,160 --> 00:24:00,760 Speaker 2: the biofuel from shipping context is biodiesel because that's the 488 00:24:01,000 --> 00:24:03,439 Speaker 2: one that's been used and like you blend it with 489 00:24:03,520 --> 00:24:06,199 Speaker 2: various fossil fuels to get the standard blend that you 490 00:24:06,240 --> 00:24:08,560 Speaker 2: want that you can use on ships. So in terms 491 00:24:08,560 --> 00:24:11,679 Speaker 2: of supply, as I mentioned like how like shipping is interconnected, 492 00:24:11,840 --> 00:24:15,800 Speaker 2: so biodiesel that comes from biofeedstocks, So it also depends 493 00:24:15,840 --> 00:24:19,600 Speaker 2: on what the aviation industry is doing, what other sectors 494 00:24:19,600 --> 00:24:22,560 Speaker 2: with biofuel will be used as doing as well, because 495 00:24:22,680 --> 00:24:25,440 Speaker 2: as I've mentioned before, like there is uptake of biofol 496 00:24:25,560 --> 00:24:28,800 Speaker 2: in certain regions, but not everywhere in terms of availability. 497 00:24:29,320 --> 00:24:32,000 Speaker 2: I think going forward we see even when the demand 498 00:24:32,000 --> 00:24:35,920 Speaker 2: from SAFF. That's very important because if airlines are paying 499 00:24:36,080 --> 00:24:39,000 Speaker 2: to secure the sustainable aviation fuel, and like, if you're 500 00:24:39,000 --> 00:24:42,600 Speaker 2: producing sustainable aviation fuel in a biorefinery, you won't get 501 00:24:42,600 --> 00:24:45,040 Speaker 2: one hundred percent of sustainable aviation fuel from it. So 502 00:24:45,080 --> 00:24:47,280 Speaker 2: if there's technical limitation as to how much you can 503 00:24:47,359 --> 00:24:50,000 Speaker 2: maximize that, so you would have like by products from 504 00:24:50,000 --> 00:24:51,640 Speaker 2: that as well. And if it is less, say fifty 505 00:24:51,680 --> 00:24:55,439 Speaker 2: percent sustainable aviation fuel, you'll have thirty percent of biodiesel 506 00:24:55,520 --> 00:24:57,040 Speaker 2: or something. So there will be like a lot of 507 00:24:57,119 --> 00:25:00,000 Speaker 2: biodiesel supply that's going to come online on the back 508 00:25:00,080 --> 00:25:03,359 Speaker 2: of let's say a SAFF uptake in airlines or something 509 00:25:03,400 --> 00:25:06,160 Speaker 2: like that. But something that I find it very interesting 510 00:25:06,359 --> 00:25:09,600 Speaker 2: is what's happening in the roads sector. So eventually we 511 00:25:09,640 --> 00:25:13,199 Speaker 2: see ev uptakes in the roads displacing passenger cars that 512 00:25:13,400 --> 00:25:16,760 Speaker 2: run on like gasoline and diesel, and we see a 513 00:25:16,800 --> 00:25:20,600 Speaker 2: displacement of diesel in the road sector. And then when 514 00:25:20,600 --> 00:25:22,879 Speaker 2: you displace diesel, like in a way, you're displacing the 515 00:25:22,920 --> 00:25:26,359 Speaker 2: biodiesel that's used in the road as well. So once 516 00:25:26,520 --> 00:25:30,359 Speaker 2: the displacement deepens after twenty thirties, we can see more 517 00:25:30,400 --> 00:25:33,439 Speaker 2: of that supply that is available to use in like shipping, 518 00:25:33,560 --> 00:25:36,160 Speaker 2: or even the feedstock that go into making that by 519 00:25:36,280 --> 00:25:39,359 Speaker 2: diesel can be diverted to the biorefiners to make like 520 00:25:39,440 --> 00:25:42,480 Speaker 2: saff and renewable diesel that can again be used in 521 00:25:42,520 --> 00:25:43,439 Speaker 2: like the shipping sector. 522 00:25:43,800 --> 00:25:45,879 Speaker 1: We're in the business of talking about the future and 523 00:25:45,920 --> 00:25:49,480 Speaker 1: about transformations and industries that are actively changing, and within 524 00:25:49,520 --> 00:25:52,720 Speaker 1: here it's always some combination of the companies operating in 525 00:25:52,760 --> 00:25:56,120 Speaker 1: that industry and the financial players and the policy incentives 526 00:25:56,240 --> 00:26:00,000 Speaker 1: all coming together in this very mixed number of insects. 527 00:26:00,640 --> 00:26:02,920 Speaker 1: But really, what do you think is most impactful here 528 00:26:02,960 --> 00:26:06,119 Speaker 1: in terms of driving change? Will it come from the 529 00:26:06,160 --> 00:26:10,560 Speaker 1: companies or the emissions targets or from technology innovation that 530 00:26:10,720 --> 00:26:14,520 Speaker 1: is ultimately pushed by the companies and the emissions targets. 531 00:26:14,560 --> 00:26:16,240 Speaker 1: I mean, really, what do you think is going to 532 00:26:16,240 --> 00:26:19,679 Speaker 1: be the most important linchpin to achieving anything close to 533 00:26:19,760 --> 00:26:23,600 Speaker 1: what the IMO target is for net zero emissions? 534 00:26:23,880 --> 00:26:27,520 Speaker 2: Yeah, I think initial change should definitely come from the 535 00:26:27,600 --> 00:26:31,399 Speaker 2: companies itself because the price premium, even if it's double 536 00:26:31,440 --> 00:26:35,000 Speaker 2: the cost. You could have governments step in like have incentives, 537 00:26:35,040 --> 00:26:38,040 Speaker 2: but they're giving tax credits to like the producers to 538 00:26:38,119 --> 00:26:40,840 Speaker 2: make these screen fuels. You could bridge that gap. Right now, 539 00:26:40,880 --> 00:26:44,360 Speaker 2: the premiums are it's like four to five times, so 540 00:26:45,119 --> 00:26:47,560 Speaker 2: you you can't really go and spend as a shipping 541 00:26:47,600 --> 00:26:50,600 Speaker 2: company and then like liable to the shareholders like why 542 00:26:50,640 --> 00:26:53,960 Speaker 2: would you sending increase all these costs, So that's very difficult. 543 00:26:54,000 --> 00:26:57,239 Speaker 2: So I think like when the companies set targets and 544 00:26:57,280 --> 00:27:00,600 Speaker 2: then their clients request that, So it's very that the 545 00:27:00,640 --> 00:27:03,840 Speaker 2: container ship companies are paving the way and that kind 546 00:27:03,880 --> 00:27:07,679 Speaker 2: of sets the whole ecosystem of these green fuels that 547 00:27:07,720 --> 00:27:10,240 Speaker 2: are being used in like various pots. It will drive 548 00:27:10,280 --> 00:27:14,560 Speaker 2: the infrastructure and then like other shipping vessel categories like 549 00:27:14,680 --> 00:27:17,680 Speaker 2: bulk carriers, they can use that infrastructure. They can see 550 00:27:17,720 --> 00:27:20,639 Speaker 2: these container ship companies and they get the confidence like okay, 551 00:27:20,680 --> 00:27:23,680 Speaker 2: we can invest in these assets as well. So it's 552 00:27:23,720 --> 00:27:25,960 Speaker 2: more like a confidence thing that comes. So in the 553 00:27:26,040 --> 00:27:28,680 Speaker 2: near term, I think the companies should take the lead. 554 00:27:28,800 --> 00:27:31,800 Speaker 2: And also posts we're seeing something that's called the green 555 00:27:31,920 --> 00:27:35,359 Speaker 2: corridors where like two ports and different regions come together 556 00:27:35,400 --> 00:27:38,080 Speaker 2: and like set up pack basically like okay, let's use 557 00:27:38,119 --> 00:27:41,200 Speaker 2: green fuels for these two posts. And that does trial 558 00:27:41,320 --> 00:27:43,879 Speaker 2: a lot of change as well. Particularly while shipping is 559 00:27:43,880 --> 00:27:46,199 Speaker 2: like global, there's sometimes there are like some routes that 560 00:27:46,240 --> 00:27:48,840 Speaker 2: are consolidated, like a trade, whether it's want to take 561 00:27:48,880 --> 00:27:52,680 Speaker 2: iron ore from Australia to China or something that they're 562 00:27:52,680 --> 00:27:55,560 Speaker 2: like always these commodities and for each commodities there's a 563 00:27:55,600 --> 00:27:58,240 Speaker 2: particular route that's there that's frequently used. 564 00:27:58,600 --> 00:28:00,920 Speaker 1: I like that A green corridor is this good old 565 00:28:01,000 --> 00:28:05,520 Speaker 1: fashioned collaboration between kind of two areas of the emissions 566 00:28:05,520 --> 00:28:08,159 Speaker 1: and like you were talking about before, these points on 567 00:28:08,240 --> 00:28:10,280 Speaker 1: the planet that we actually look at when we are 568 00:28:10,400 --> 00:28:13,280 Speaker 1: measuring the emissions, that could be a substantial part of 569 00:28:13,280 --> 00:28:13,719 Speaker 1: the solution. 570 00:28:14,160 --> 00:28:19,040 Speaker 2: Yeah, And ultimately IOMO has to drive the final change 571 00:28:19,080 --> 00:28:22,960 Speaker 2: because like I trust in their abilities to get things 572 00:28:22,960 --> 00:28:27,800 Speaker 2: done and aside the reason like twenty twenty regulation change. 573 00:28:27,920 --> 00:28:30,280 Speaker 2: In twenty eighteen, twenty nineteen, that was all the oil 574 00:28:30,359 --> 00:28:32,359 Speaker 2: industry was talking about, Oh there's going to be a 575 00:28:32,400 --> 00:28:35,320 Speaker 2: new fuel. We don't know like how to produce that fuel. 576 00:28:35,520 --> 00:28:38,080 Speaker 2: With discussions of first producing the fuel and then like 577 00:28:38,080 --> 00:28:40,240 Speaker 2: those concerns of like hip notes as well, or we've 578 00:28:40,240 --> 00:28:43,040 Speaker 2: not used this fuel before. But then when it came, 579 00:28:43,360 --> 00:28:46,040 Speaker 2: you know, there was almost a compliance. It was higher costs. 580 00:28:46,120 --> 00:28:48,480 Speaker 2: They had to pay much higher cost for a new fuel. 581 00:28:48,680 --> 00:28:51,600 Speaker 2: Everyone paid for it there complying with it. So see, 582 00:28:51,680 --> 00:28:54,280 Speaker 2: if IOMO wants it, they can easily get it done 583 00:28:54,480 --> 00:28:57,160 Speaker 2: the countries together and then have like some kind of 584 00:28:57,320 --> 00:29:02,680 Speaker 2: enforcement of that without IOMO police around the whole the 585 00:29:02,760 --> 00:29:03,320 Speaker 2: high seas. 586 00:29:03,360 --> 00:29:06,600 Speaker 1: I guess all right, the iMOS, the Lynchpin mohit. Thank 587 00:29:06,640 --> 00:29:08,360 Speaker 1: you very much for joining us on the show today. 588 00:29:08,600 --> 00:29:10,000 Speaker 2: Yeah, thank you so much for seeing me. 589 00:29:10,040 --> 00:29:21,800 Speaker 1: Denna Switched On is produced by Cam Gray with production 590 00:29:21,840 --> 00:29:26,080 Speaker 1: assistance from Kamala Shelling and Lushi Karunorade. 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