In an exclusive interview to SAFETY4SEA, Mr. Andrea Olivi, Global Head of Wet Freight for Trafigura, reveals their strategy for the next five years, highlighting that sustainability remains at the top and that the green ammonia will play vital role in industry’s journey towards decarbonization.
rafigura has recently published its Sustainability Report and as Mr. Olivi explains, signing up to initiatives like the Sea Cargo Charter can make a difference. However, it is equally important to push for more actions towards level playing field. For example, a price on carbon would force the industry to take decarbonisation more seriously, which will then allow all organizations to take more ambitious decisions when it comes to reducing emissions and sustainability.
SAFETY4SEA: What does sustainability mean for Trafigura and how is it embedded in your business?
Andrea Olivi: Shipping sustainability has been at the top of our agenda for many years now. We like to think of sustainability in practical terms. It is not only about making efforts to reduce our own group’s emissions, but also to drive change in the industries in which we operate. In that sense, we try our best to instil in our staff a sense of responsibility to always consider sustainability in their daily tasks, but also to engage the wider shipping community in more sustainable practices. We do this by introducing new clauses in our contracts, new technologies, new pricing systems, pushing for new regulations, these are all aspects of our daily work that impact Trafigura’s business, and also the wider industry we operate in. To that end, we have moved from having quarterly meetings about decarbonisation to weekly discussions, so we can improve and constantly re-valuate our strategy. We are conscious about the impact of our actions. Last year, we concluded more than 5,000 shipping fixtures between our oil and bulk divisions, which makes us one of the biggest players in the shipping industry. Our decisions can have a meaningful impact on the rest of the industry.
S4S: How are you addressing the issue of climate change over the next five years?
A.O.: For us, the top priority in the near term is to reduce the intensity of our emissions, something that has taken on increased importance with the introduction of new regulations, but also because of the targets we have set as a company to reduce the carbon intensity of our shipping activities by 25% by 2030. At the same time, we are working hard to identify ways we can eventually reduce our absolute emissions in the long term. Ultimately, that is about investing in projects that will help develop zero carbon shipping fuels, while at the same time working with shipyards and shipowners to build vessels that are capable of running on low or zero carbon fuels. I think our collaboration with MAN Energy Solutions to develop a two-stroke dual fuel ammonia engine is a perfect example of that.
S4S: What is your strategy for the next five years?
A.O.: To break things down, we have three strategies. A short term strategy, which is all about ‘quick wins’; for example, reducing emissions by improving the efficiency of our day-to-day operations; this includes chartering modern vessels, pushing for clauses such as virtual arrivals that allow us to reduce a vessel’s speed if a berth is not available, as well as adding biofuels to the current fuel mix consumed by our vessels. In the medium term, it is all about promoting and investing in energy saving devices and dual fuel engines while raising awareness on what regulations need to be implemented on a global scale to accelerate shipping decarbonization. Beyond that, it is about promoting and supporting supply and demand for zero carbon fuels. Like many other people, we think green ammonia is going to be a key future fuel in the journey to a zero carbon future for shipping.
S4S: Are you satisfied with the progress Trafigura has made so far on sustainability?
A.O.: It’s tough to be entirely satisfied because we need to keep pushing forwards, but it is really encouraging to see just how much time and effort Trafigura senior managers and the board have put behind our sustainability agenda. Huge amounts of resources have gone into this initiative (staff, data management, software, new teams, departments, etc.) and the dividends will start paying off very soon. By signing up to initiatives like the Sea Cargo Charter, we’re going beyond what is required . And while we would like to do more, it is difficult because there isn’t a level playing field at the moment. And this is why I think it’s very important to push for a carbon levy, because a price on carbon will force the industry to take decarbonisation more seriously, which will then allow us to do more and take more ambitious decisions when it comes to reducing emissions and sustainability.
S4S: What is your wish list for shipping decarbonisation?
A.O.: Subsidies for companies willing to invest in zero emission fuels and a global carbon levy. They are the two main things I would like to see. And part of the funds raised through a carbon levy should go towards an innovation fund which can then help shipowners decarbonise as well as to train seafarers to help them develop the skills required to manage the transition and operate dual fuel engines. The US has taken a big step forward with the Inflation Reduction Act and the tax credits on offer to developers of clean hydrogen projects that can ultimately be used to produce zero carbon shipping fuels. We need to see more initiatives like this in other parts of the world. Europe’s decision to add shipping to its Emissions Trading Scheme is another positive move. I say this, because the International Maritime Organisation, the industry’s de facto regulator, has historically followed Europe, for example with the introduction of sulphur cap regulations.
S4S: How can we accelerate the development of green hydrogen projects?
A.O.: With green fuels, one of the most important things that policymakers can do is to help develop the market in terms of supply and demand. There are lot of shipowners that would like to order vessels capable of running on low carbon fuels, but there are reluctant either because they are worried demand won’t materialise or there won’t be enough production of green ammonia or methanol to meet demand. At the same time, the project developers also need to be confident they can secure competitively priced offtake agreements. So, it is a bit of a chicken or egg situation. The demand side won’t move until the supply side moves and vice versa. That’s why there is a need for subsidies, incentives, and a global carbon levy to break the deadlock.
S4S: What is your key message to industry stakeholders and policy makers on shipping decarbonisation?
A.O.: The industry and policymakers need to approach shipping decarbonisation on a global basis rather than on a regional basis; which is why our hope is that the EU ETS scheme could one day transition to become a global scheme. It is also vital to understand how critical it is to align incentives for business performance and sustainability. We won’t achieve change unless it makes financial sense across the entire supply chain and for all market participants, as we cannot expect companies to pursue sustainability at the cost of their own survival. Finally, we must never forget to prioritize seafarers in our decision: their safety and wellbeing are paramount for this energy transition to happen smoothly.
The views presented hereabove are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.