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Wednesday, 02 September 20
MARKET INSIGHT - INTERMODAL
 The imminent global shift towards eco-friendliness has caused divide among the shipping community because there is no outlined, clear-cut way via which shipowners can start approaching the future IMO targets. In 2018, the Marine Environmental Protection Committee adopted a greenhouse gas (GHG) emissions reduction strategy entailing (among others): reduction of CO2 emissions by at least 40% by 2030 and by at least 50% by 2050, compared to 2008 levels. Earlier this month, the 4th IMO GHG study forecasted that shipping emissions are due to increase by approximately 50% till 2050! This will undoubtedly speed up the need for effective GHG mitigation techniques in the maritime industry. It can be argued that realistic attainment of the IMO 2050 target will likely need to encompass a combination of market-based, technological, logistical and ship finance measures. Propulsion methods such as LNG and ammonia currently offer high yet expensive CO2 mitigation potentials. On the other hand, a bunker levy could offer a directly implementable and R&D cost-free approach towards the IMO targets.
A bunker levy may be implemented by a direct carbon tax or an emission trading scheme (ETS). The latter is less desirable since it can only absorb (40-75)% of emissions captured by a current respective bunker levy. Carbon neutral fuels would set a zero-levy baseline; the levy could be increased with increasing carbon footprint of fuels. This method would require a tax per ton of CO2 ($/CO2) emission equivalent (as an industry benchmark). The three current levy implementation strategies proposed in 2019 by the Technical University of Denmark led by Dr. Harilaos Psaraftis include low, medium and high levy intensity strategies.
A horizontal IMO-imposed levy could be enacted on a gradual basis starting from 2023-24 to account for the current newbuilding orders placed. Current IFO price is at around $280/ton, therefore a carbon levy of $75/ton (even at a [15-25]% initial implementation) would increase fuel costs by approximately [5-7]%. Alternatively, a greater than 70% levy imposition by 2030 could be overly aggressive as it would require the timely development of GHG reduction technologies to avoid the shifting of costs from shipowners to end consumers. This is because total annual costs to the shipping industry would exceed $65 billion (computed based on BP’s Statistical Energy Review & Outlook, 2019). The revenue stream distribution of the carbon levy would have to be carefully allocated by the IMO. Arguably, a significant proportion of the funds would have to be used to finance greener shipbuilding methods (inclusive of R&D required) and end-products (vessels). The policy could also incentivize investment in eco-friendly vessel newbuildings by providing lower carbon taxation rates on vessels with better Energy Efficiency Design Indices (EEDIs).
In conclusion, an industry-wide carbon levy may be an efficient approach towards carbon neutrality in shipping due to its direct implement-ability and cost-effectiveness. Regardless of the method(s) employed, successful and feasible GHG mitigation would need to impact all shipowners fairly; this could be accomplished by accurate assessment of each vessel’s carbon footprint. Achieving the IMO 2050 target will require sound collaboration among regulators, industry players and research and financial institutions which could in turn result in the much anticipated and needed re-designing of the international seaborne landscape.
By Dionysis Kourouniotis
Research & Valuations Department
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Saturday, 01 August 20
ASIA HOPE FOR LONG-TERM OIL DEMAND - BALTIC BRIEFING
Oil demand in Asia Pacific might be expected to plunge 1.8m barrels per day (bpd) this year, but there are still strong prospects for growth over t ...
Friday, 31 July 20
SHORT-TERM IMPACT ON THE CHEMICAL SHIPPING MARKET IF THE INDIA-CHINA DISPUTE ESCALATES - DREWRY
Due to the India-China dispute, the threat of deteriorating trade relations between the two countries has become real. Meanwhile, we expect freight ...
Friday, 31 July 20
PANAMAX: THE PERIOD MARKET REMAINS QUIET WITH FEW FIXTURES REPORTED - FEARNLEYS
Capesize
After weeks of dropping rates, there are finally some resistance for the Capes. Pacific rounds improving to upper15,000s by the middle ...
Friday, 31 July 20
PANDEMIC SENDING SOUTH AFRICAN COAL INDUSTRY TO EARLIER GRAVE - IEEFA
Could South Africa’s coal export industry, one of the largest in the world, be about to take a severe hit from the coronavirus?
...
Friday, 31 July 20
BOTSWANA PLANS MORE COAL-FIRED POWER AS AFRICAN SOLAR ACCELERATES - IEEFA
An African economic leader like Botswana should embrace solar to reduce subsidies and tariff hikes
As Sub-Saharan solar ambition has ...
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- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- The University of Queensland
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
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