In seven years, Odfjell has reduced its carbon intensity index by 50%. This is above the 40% that IMO has set as the requirement by 2030. Because it is good business. Laurence Odfjell is clear: Most shipping segments should be able to reach the goals set by IMO with available technology in the 7-8 years remaining to 2030. No excuses! At SNIC 2022 on 18 November, Odfjell will openly share their tool kit.
But we are not there yet. It is still three weeks to SNIC 2022. Statsraad Lemkuhl is berthed in Singapore. The tallship is raising awareness for the ocean through the One Ocean Expedition. Laurence is showing the tall ship to the next generation, represented with his son Jon Alexander and his classmate Sahir Vikram Visaria.
Parallelly, I am watching Kenneth Lam, Chairman & CEO of Credit Agricole Asia Ship finance, interviewing Laurence Odfjell during the 21st Annual Marine Money Week Asia. I think someone should challenge Laurence, and I decide to take on the task.
You can watch the Marine Money interview here. I highly recommend it.
Laurence Odfjell is the Chairman of Odfjell SE, one of the leading players in the global market for seaborne transportation and storage of chemicals and other specialty bulk liquids. He is the fourth generation of the Odfjell family at the helm of a company that has survived two world wars and “all kinds of family issues.” He is also on the NBAS board and a driver in our development of the Singapore Norway Innovation Conference 2022 (SNIC 2022) at Conrad Centennial in Singapore on 18 November.
NBAS, The Norwegian Embassy in Singapore, and Innovation Norway will jointly host the SNIC 2022. All speakers and panelists participate in person. Hence, SNIC2022 is an excellent networking platform for identifying new business opportunities within the green shift for shipowners, solution providers, and other key stakeholders in the maritime industry.
An economic necessity
I watch Mr. Kenneth Lam’s Marine Money-interview with Laurence. Then, I mail my questions to Laurence.
Laurence, in your interview with Mr. Lam, you explain that Odfjell started a process of energy efficiency initiatives after seven years of hurt from the financial crisis. Now, seven years later, you have reached a 50% reduction in emissions. Could you elaborate on the milestones in the Odfjell story from 2007 until today?
We started data-driven improvements, such as weather routing, in 2007/2008 and saw significant savings with little investment.
Due to tough market conditions after the financial crisis, too many ships were delivered compared to slower than expected trade growth. In 2014, we embarked on a significant turnaround operation to become more cost-competitive. This obviously encompassed an increased focus on fuel efficiency, our single most significant cost item.
In seven years, we have reduced the carbon intensity index by 50% using available technology. This is above and beyond the 40% that the IMO has set as the requirement by 2030. That means that most shipping segments should be able to reach the goals set by IMO with available technology in the 7-8 years remaining to 2030. No excuses!
We will share more about our journey at SNIC 2022 on 18 November – Tune in!
Fuel efficiency, fuel efficiency, fuel efficiency
You are apparently in a good place, economically and environmentally now – in that order. And you are clear on the strategy that got you there: Fuel efficiency, fuel efficiency, fuel efficiency. Use of existing technology. Your message to your competitors is: Here is the playbook; you are welcome. Why are you sharing so openly? Are others doing the same, or are they losing out? Why is that do you think?
First, the climate crisis is the most critical challenge of our time. So, we all should take on a moral commitment to contribute to reducing the problem.
At Odfjell, we have been laser-focused on technical and operational efficiency measures since starting our turnaround in 2014. We have become increasingly vocal about the need for the shipping industry to take better advantage of available technology to reduce emissions. There is a lot of low-hanging fruit that also makes good business sense. The more adapters of the many good technological solutions available, the lower the cost of such will become over time as well. A win-win for the industry and for planet earth.
This is important; we are not naïve about what drives change. If improving efficiency makes good economic sense and we can show that in our case, we think more players will follow. Simply put: more players will do this for economic reasons than for moral reasons. We have made a deliberate decision in Odfjell that we are willing to share our experiences about how we have reduced our carbon intensity because of the moral dimension of the climate challenge. Simply put, we are willing to show our ever-improving tool kit of measures because we hope we can nudge more actors to make similar improvements, thereby contributing to bending the emissions curve for the maritime industry.
Choosing the right ship managers
Of course, there are structural challenges to implementing even sometimes easy technical improvements (such as a Mewis duct-a low cost and simple investment with quick return on investment) because many owners/operators rely on third-party management of their ships. It is, indeed, difficult to find the right incentives for third-party managers to do anything but run the ships within budget and basically never go outside of ‘business as usual.’
We need the many world-class ship managers to tap into their their expertise as technical managers and proactively propose implementing energy efficiency measures.
Starting in 2023, the IMO, the EU, and the SEC in the US will oblige the industry to provide reliable carbon emissions data related to the specific cargo on a specific voyage. This is great news for planet earth! Why? The transparency of the reporting on emissions will drive change. There will begin to appear reliable benchmarking on how managers perform. So, charterers, owners, and operators can make informed decisions about which ship managers to choose.
At SNIC 2022, we have split the conference into two main parts, Innovation Delivered, and Innovation Pipeline. You will headline the first main part. With Erik Hjortland, Vice President of Technology, Odfjell SE, you will dive deep into the knowledge and competence you have gained over the past seven years. What will be your main message?
- Investing in sensible energy efficiency measures, the way we have done is good business for your bottom line. The technology exists.
- The climate crisis demands that we act now. There is no reason to wait to implement improvements on the many ships on the water. The sooner we act, the sooner we start to bend the curve and reap economic benefits from such investments
- Do not bet the farm on one fuel. Seek fuel flexibility in your newbuildings because a lot will change over the lifetime of a ship.
Acting in the right order
In your interview with Mr. Lam at Marine Money, I think you paint a rather gloomy picture of renewables. The argument being that it simply takes too much electricity to produce. However, I assume there is no way to net zero simply by being efficient with fossil fuels. What is your perspective on the innovation pipeline? How can we solve what seems to be an almost unsolvable problem to create enough green electricity to produce renewable fuel?
I do not consider the picture gloomy. I want to make sure we understand the challenge from a holistic perspective, so we do not make wrong choices in our journey to net zero. The energy transition requires a lot of new power generation (electricity). Governments need to ambitiously invest in power generation, be it solar, wind, or nuclear (even LNG if required to replace coal), and radically improve the power grid’s capacity. With time, shipping will have access to green fuels, but for the moment, the quickest way to reduce the problem is via efficiency, efficiency, efficiency.
The power to change
The in-person SNIC 2022 on 18 November at Conrad Centennial in Singapore is almost full, with 200 confirmed participants. All speakers and panelists are there in person, which makes SNIC 2022 an excellent networking platform. What do you hope we can achieve with SNIC 2022?
If participants gain a more holistic view of what is needed, then we have achieved something significant. Within that, I hope many will realize that they have the power and possibility to improve their emissions significantly and that it makes good economic sense to do so as soon as possible. And hopefully, we can provoke some good discussions on what it takes to solve some of the structural challenges in the industry so that more players can and will implement technical and operational measures.
Finally, do you think we will be able to hand over a liveable planet to the next generations, or will it go down in flames?
My glass is ¾ full, always. I am optimistic about our future, but there is no time for complacency. Join us at SNIC 2022!