The article ‘Gearing up for the green transition’ was first published on Issue 5 of the Singapore Maritime Week 2024 Show Dallies; it has been reproduced in its entirety on Singapore bunkering publication Manifold Times with permission from The Nutgraf and the Maritime and Port Authority of Singapore:

Toh Wen Li
[email protected] 

The maritime services cluster has a key role to play in facilitating the green and digital transition, especially in supporting companies as they grapple with the challenges ahead, said Mr Teo Eng Dih, Chief Executive of the Maritime and Port Authority of Singapore (MPA).

Speaking at the start of the Maritime Services Leaders Forum on Day 4 of Singapore Maritime Week, Mr Teo said that as the industry transforms, the services cluster can also evolve.

“The services cluster has a key role to play in facilitating this transition. Financiers and insurers support investment and cyber risk management, while the legal sector establishes clear frameworks for collaboration,” he said.

“This includes examining the implications of emerging issues and new developments, such as the adoption of alternative fuels, on legal clauses and obligations in shipping forms and contracts.”

MPA has given the Singapore Chamber of Maritime Arbitration (SCMA) its “full support” to set up Working Groups to examine contractual implications that might arise from emerging trends, as well as develop new provisions to tackle any gaps, Mr Teo added.

In his speech, which touched on areas ranging from risk to the green and digital transformation, he also noted “considerable traction” in alternative fuel vessels on the international shipping front.

Singapore is building up its infrastructure for electrification of harbour craft, and will roll out charging infrastructure for electric operations on the island, he noted.

“It is therefore opportune for financiers and insurers to step forward to support these new vessels or charging infrastructure,” he said, adding that since launching an expression of interest in 2023, the MPA had received nearly 20 financing and insurance proposals to support early movers of electrical harbour craft. 

NAVIGATING COMPLEXITY 

Maritime service providers also agreed with Mr Teo’s assessment, saying that the landscape is becoming more complex. 

“We are heading into an environment that is becoming more complex, with more regulations and more reporting requirements,” said Mr Demetris Chrysostomou, Managing Director Asia Region at Columbia Shipmanagement at a panel at the same forum titled Opportunities for Maritime Services. 

But there are also opportunities for services providers and parties looking to adopt green solutions. 

“There’s a lot of sustainable financing, a lot of green financing, a lot of transition finance capital waiting to be mobilised,” said Mr Roger Charles, Executive Director, Institutional Banking Group, Sustainability, DBS Bank. 

But he cautioned that smaller companies will need a leg-up to adopt green operations. 

“It’s the smaller guys, the mid-caps, who need the financing. They don’t want to take too much of a risk right now, say (by going) into ammonia,” added. “Banks are having to look at this from a slightly different lens, because it is a risk for them.” 

He described Singapore as a “unique” example, given the support from bodies such as the MPA and Enterprise Singapore. From April 2024, harbour craft owners and operators in Singapore have been able to apply for loans with a risk-share of 70 per cent from participating financial institutions.  Maritime companies can also tap a grant for energy-efficient equipment.

“This allows us to then go and finance (smaller companies)…But how about other countries, where you don’t have these grant systems, where you don’t have these risk-sharing (initiatives)?” he added.

As for the impact of the decarbonisation push on insurance, Dr Wu Chao, Special Advisor of the China P&I Club, said this was still early days.

“We have to wait and see how the situation develops, and how P&I (protection and indemnity) can respond (to the changes)… At this stage, we are watching the risks and trying to learn (more),” she said.

“In terms of protection of the environment, we have seen over the years the CFC (chlorofluorocarbons) convention, the bunkers convention, the forthcoming HNS (Hazardous and Noxious Substances) convention, but none of these conventions cover the risk arising potentially from the usage of new fuels.”

Singapore Maritime Week 2024 was organised by Maritime and Port Authority of Singapore from 15 to 19 April. 

Photo credit: Maritime and Port Authority of Singapore
Article credit: The Nutgraf/ Maritime and Port Authority of Singapore
Published: 29 April 2024