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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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- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Posco Energy - South Korea
- PTC India Limited - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
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