Industry partnerships key to decarbonizing the commodity value chain
A KCC opinion piece first published in Petroleum Australia March 2022
The COP26 summit in Glasgow in November highlighted the increasing pressure for all industries, including the shipping industry, to decarbonize. The challenge for the Australian petroleum industry and other major users of deep-sea shipping will be to start preparation, and to find the most cost effective and low-risk ways to reduce emissions with seaborne logistics
Engebret Dahm
CEO, Klaveness Combination Carriers
The Call to Action for Shipping Decarbonization at the COP26 was developed by a multi-stakeholder taskforce stressing that full decarbonization of international shipping is both urgent and achievable, calling on governments to work together with the shipping industry to deliver policies and investments required to decarbonize global supply chains
In the absence of sufficient institutionalized regulations, the shipowner Klaveness Combination Carriers (KCC) is challenging the status quo by developing strategies and business models that reward collaboration and move from talk, to taking action today. The centerpiece of this strategy is to pursue the maximum possible operational efficiency, minimizing waste in the daily service to its customers and making large investments in its modern fleet to maximum the vessels’ energy efficiency. KCC CEO Engebret Dahm said, “delivering substantial cuts in carbon emissions per ton of cargo transported through operational and energy efficiency is the winning recipe in a future likely to see high costs of new type of fuels and probable carbon taxes to be levied on the shipping industry.”
Klaveness Sustainability Lead Ingrid Kylstad said, “shipping customers should support business models that incentivize collaboration to allow the participants to move ahead with decarbonization even as the regulatory framework is lacking, and they must efficiently reduce the risks of being a frontrunner.”
In 2021 KCC entered two new contracts of affreightment (COAs) for its CABU and CLEANBU fleet with well-known international charterers in the tanker market particularly focused on achieving sizable carbon emission reductions through close co-operation between the customer and KCC.
KCC recently signed a six-year COA with a South32 subsidiary in December 2021 for shipments of liquid caustic soda to the Worsley alumina refinery in Western Australia. The COA establishes a framework for how KCC and South32 will work together to further reduce carbon emissions associated with South32’s freight to WA. Included in the agreed sustainability framework are detailed carbon dioxide emissions reporting, as well as establishing trajectories for annual carbon dioxide reduction targets, and arrangements for how to cooperate to reach the set targets. It further includes an ambition to jointly establish a pathway to towards future zero emission freight.
CEO of KCC, Engebret Dahm said KCC and South 32 would together address the main challenge of our generation – climate change – in this next era of their relationship. He added, “we have jointly set ambitions to considerably reduce shipping carbon emissions through building on KCC’s low carbon caustic soda shipping solution, which already today provides South32 with a 30-40 per cent lower carbon footprint than competing tanker vessels.”
South32 Chief Human Resources and Commercial Officer Brendan Harris said it is partnerships like these that contribute to the decarbonization of their value chain and promote the responsible production of commodities needed in a low-carbon world.
Just prior to this, KCC also signed a COA for its new CLEANBU fleet with a major international charterer in the tanker market. The contract will provide the customer, from the outset, a 30-40 per cent lower carbon footprint of its ocean freight compared to similar sized standard tanker vessels and through identified initiatives, reach an additional targeted 20% emission reduction over the next 3-4 next years.
CLEANBU combination carriers are both large LR1 product tankers transporting clean petroleum products and Kamsarmax dry bulk vessels transporting various dry bulk cargoes such as grains, salt, and iron ore. Over the last year, KCC has succeeded in expanding its CLEANBU trading to Australia, frequently shipping clean petroleum products for Australian customers and calling to date at 10 ports and 9 terminals in WA, Queensland, NSW, Tasmania, and Victoria.
